dtvg8k022509.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of
report (Date of earliest event reported) February 19, 2009
THE
DIRECTV GROUP, INC.
(Exact
Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of
Incorporation)
1-31945
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52-1106564
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(Commission
File Number)
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(IRS
Employer Identification No.)
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2230
East Imperial Highway
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El
Segundo, California
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90245
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(310)
964-5000
(Registrant’s Telephone Number,
Including Area Code)
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General
Instruction A.2. below):
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
ITEM
5.02. Departure of Directors or Principal Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers
Departure
of Directors orPrincipal Officers
Effective
February 19, 2009, the Board of Directors of The DIRECTV Group, Inc. (the
“Company”), accepted the resignation of James M. Cornelius as a member of the
Board and as Chairman of the Board’s Audit Committee. The Board
appointed Ralph F. Boyd, Jr. as Chairman of the Audit Committee to replace Mr.
Cornelius and also appointed Neil R. Austrian as a member of the Audit
Committee. The Board determined that Nancy S. Newcomb and Neil R.
Austrian, current members of the Audit Committee, each qualifies as a financial
expert for the Audit Committee. All members of the Audit Committee
are independent directors as that term is defined by the U.S. Securities and
Exchange Commission, the NASDAQ and policies of the Company.
Compensation
Grants and Awards
On
February 19, 2009, the Compensation Committee of the Board (the “Compensation
Committee”) approved:
(i) 2009
base salaries for the Company’s named executive officers,
(ii) cash
bonuses for 2008 pursuant to the Company’s Amended and Restated Executive
Officer Cash Bonus Plan (“Bonus Plan”),
(iii)
vesting and issuance of shares of the Company’s common stock pursuant to prior
performance-based restricted stock units or RSUs granted in 2006 to the named
executive officers, other than the Chief Executive Officer, for the performance
period 2006-2008 pursuant to the Company’s Amended and Restated 2004 Stock Plan
(“2004 Stock Plan”), and
(iv)
grants to such other named executive officers of performance-based RSUs for the
performance period 2009-2011 pursuant to the 2004 Stock Plan, as
follows:
Name and Position of Executive
Officer with the Company
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Base Salary
for 2009
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Cash Bonus
for 2008
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Shares To Be
Issued Pursuant
to 2006 RSU
Award
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Restricted
Stock
Unit Grant
for 2009
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Chase
Carey -
President
and Chief Executive Officer
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no
change from 2008 ($2,304,000)
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$3,500,000
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N/A
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(1)
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Bruce
Churchill -
President
- New Enterprises and DIRECTV Latin America, LLC
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$1,174,000
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$1,256,000
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57,120
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60,000
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Michael
Palkovic –
Executive
Vice President - Operations
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$822,000
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$512,000
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52,360
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55,000
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Larry
Hunter
Executive
Vice President, Legal, Administration and Human Resources, General Counsel
and Secretary
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$801,000
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$511,000
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52,360
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57,500
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Patrick
Doyle -
Executive
Vice President and Chief Financial Officer
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$600,000
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$285,000
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28,560
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40,000
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(1)
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In
August 2007, Mr. Carey received a performance-based restricted stock unit
award for the performance period 2008-2010, and a stock option award,
which are described in Exhibits 10.2 and 10.3 to Form 8-K of The DIRECTV
Group, Inc. filed August 14, 2007 (the “August 14, 2007
8-K”). No additional stock grants, restricted stock units or
stock options are presently anticipated to be awarded to Mr. Carey through
the term of his current Employment Agreement, which expires December 31,
2010 and which is attached as Exhibit 10.1 to the August 14, 2007
8-K.
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In
establishing the cash bonus payment to each executive officer, the Compensation
Committee first determined and certified, pursuant to the terms of the Bonus
Plan, that the performance target for 2008 was satisfied, so that the Company
could have paid the maximum bonus under the Bonus Plan of $10 million to the
Chief Executive Officer and two times base salary for each other named executive
officer. The Compensation Committee exercised its discretion in
establishing the amounts of individual bonus awards for each executive officer
with each final bonus for 2008 being less than the maximum. The
Compensation Committee took into consideration, among other things, each
individual’s performance, the financial and operating performance of the
Company, including customer satisfaction, and stock price performance in
2008.
With
respect to the performance goals for RSUs granted to all the named executive
officers in 2006 (other than the Chief Executive Officer), the Compensation
Committee determined that for the three-year period ending 2008,
performance was above threshold and below target for net annual subscriber
growth, churn, SAC and pre-SAC margin improvement and exceeded target for ARPU
growth. After applying the applicable performance factors for each of the five
performance measures, which were 0.948, 0.835, 0.949, 0.741 and 1.285,
respectively, and averaging the five performance factors, overall performance
was determined to be 0.952 or 95.2% of the target performance level. The 95.2%
performance factor was multiplied by the number of 2006-2008 RSUs granted to
each such named executive officer to determine the number of RSUs that would be
converted one-for-one into shares of DIRECTV common stock and issued to each
such officer.
With
respect to the performance goals for RSUs granted in 2007 to executive officers
(other than the Chief Executive Officer), the Compensation Committee determined
the results for the three performance factors: annual cash flow growth before
interest and taxes, or CFBIT; annual growth in operating profit before
depreciation and amortization or OPBDA and annual revenue growth. The
Company exceeded the target amounts for each performance
factor. After applying the applicable weighting factor to the three
performance factors, overall average performance for 2008 exceeded target
(1.440). This amount will be averaged with the overall average
performance for 2007 (1.07) and 2009 to determine the final 2007-2009 adjustment
factor. In each case, to determine the final adjustment factor, the
Compensation Committee has reserved discretion to reduce payments or otherwise
adjust downward restricted stock unit awards in accordance with the 2004 Stock
Plan, and in no event may the final adjustment factor for the entire performance
period exceed 1.20.
With
respect to the performance goals for RSUs granted in August 2007 to the Chief
Executive Officer and in 2008 to the other named executive officers, the
Compensation Committee determined, for the first year of the 2008-2010
three-year performance period, the results of the three performance factors,
which are the same as the performance factors for the 2007 RSU awards described
above. Consequently, overall average performance for 2008 exceeded
target (1.440) and will be averaged with the overall average performance for
2009 and 2010 to determine the final 2008-2010 adjustment factor. In
each case, to determine the final adjustment factor, the Compensation Committee
has reserved discretion to reduce payments or otherwise adjust downward
restricted stock unit awards in accordance with the 2004 Stock Plan, and in no
event may the final adjustment factor for the entire performance period exceed
1.25.
The
Compensation Committee established performance goals under the 2004 Stock Plan
for the RSUs awarded to named executive officers (other than the Chief Executive
Officer), for 2009, with the following performance factors: annual CFBIT growth,
annual growth in earnings per share, and annual revenue growth over the
three-year period from January 1, 2009 through December 31, 2011. A copy
of the summary terms and conditions for the 2009 RSU grants is attached to this
report as Exhibit 10.1. The Compensation Committee also established the
performance target for determination of the maximum tax-deductible amount
payable to any executive officer in calendar year 2009 under the Bonus Plan,
which is to be based on CFBIT. A copy of the summary terms and conditions
for the 2009 Bonus is attached to this report as Exhibit 10.2.
Policy
Regarding Recovery of Compensation
The
Compensation Committee also adopted the following policy for recovery of bonuses
and stock awards (a “clawback” policy), which applies to all elected officers of
the Company and all executive vice presidents of the Company’s
subsidiaries:
“In
addition to any other remedies available to the Company, (i) if any of the
financial or operating results of the Company is restated or otherwise adjusted,
and (ii) after taking any such restatement or adjustment into account, the
amount of any bonus or equity award paid within the preceding three years would
have been reduced, then the Company may require any of its current or former
elected officers and other employees or former employees designated at least
executive vice president of the Company or any of its subsidiaries
(collectively, “Officers”) to return to the Company all or any portion of the
bonus or equity award in excess of the amount which would have been paid after
taking into account such restatement or adjustment.
The
Compensation Committee will determine whether to require any present or former
officers to return any such amounts and may also direct the Company to seek
recovery from other present or former Officers. In making such
determinations, the Committee may consider such factors as it considers
appropriate under the circumstances, including the reasons for, and persons
responsible for, any such restatements or other adjustment, the amount of the
excess bonus or equity award resulting from such restatement or other
adjustment, the risks, costs and benefits associated with pursuing the recovery
of such excess amount, other actions the Company or third parties may take, or
may have taken, with respect to the person(s) who was responsible for the
misstatement, and any other legal or other facts or circumstances the
Compensation Committee considers appropriate.”
The
description of each document in this report, including the Bonus Plan and 2004
Stock Plan, previously filed with the SEC on April 27, 2007 as exhibits to the
Company’s Definitive Proxy Statement on Schedule 14A, is qualified in its
entirety by reference to the applicable document, which is included herein by
reference.
ITEM
9.01
Financial Statements and Exhibits
(d)
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Exhibits.
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10.1
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Summary
Terms – 2009 Restricted Stock Unit Grants
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10.2
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Summary
Terms – 2009 Bonus
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this Report to be signed on its behalf by the undersigned hereunto
duly authorized.
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THE
DIRECTV GROUP, INC.
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(Registrant)
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Date:
February 25, 2009
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By:
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/s/
Larry D. Hunter
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Name:
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Larry
D. Hunter
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Title:
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Executive
Vice President, Legal, Administration and Human Resources,
General
Counsel and
Secretary
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