The DirecTV Group (DTV)

Annual Compensation

        Annual compensation includes (i) a base salary at a level consistent with individual responsibilities and contributions and (ii) an annual incentive bonus linking each executive officer's compensation to the level of Company performance against pre-established business objectives and the officer's individual contribution to achieving those objectives.

        Base Salary.    Base salaries for the executive officers are positioned at levels that are consistent with market norms, with consideration of (i) the executive's scope of responsibility in relation to other officers and key executives within the Company, (ii) individual performance of each executive and (iii) the performance of the Company. The compensation practices of the peer group are also considered. Increases in base salary are generally effective in January each year.

        Bonuses.    The Company's Executive Officer Cash Bonus Plan, or Bonus Plan, provides for the payment of annual cash incentive bonuses based on the Company's performance in relation to pre-established objectives and individual executive performance for the year. Achieving target level performance provides a target level bonus; performance that is below target reduces the final bonus, while performance above target may increase the bonus. The performance period is January 1 to December 31 each year. The employment agreements for certain individual executive officers specify the individual target incentive bonus level, subject to annual review. The Committee sets annual target incentive bonus compensation levels such that the combined base salary and target bonus is competitive with the peer group. The bonuses paid under this program are intended to meet the requirements of Section 162(m) of the Code, which is discussed on page 27.

Annual Compensation

        Base Salary.    The Compensation Committee aims to position base salaries for the executive officers annually at levels that are consistent with market norms, with consideration of (i) the performance of the Company, (ii) individual performance of each executive and (iii) the executive's scope of responsibility in relation to other officers and key executives within the Company. The Compensation Committee also considers the compensation practices of its peer group. Based upon these and other factors which it considers relevant, and in light of the Company's overall long-term performance, the Compensation Committee has considered it appropriate, and in the best interests of the stockholders, to target base salary compensation at the median level of the peer group. However, to enable the Company to continue to attract, retain and motivate the highest level of executive personnel, in selected cases, other factors may also be considered and the Compensation Committee may approve base salaries for executive officers in excess of the median level.

        Bonuses.    The Company's Executive Officer Cash Bonus Plan (the "Bonus Plan") provides for the payment of cash bonuses based on the Company's performance in relation to predetermined objectives and individual executive performance for the year then ended.

        For 2005 bonuses, the Compensation Committee determined that the Net Subscriber Growth target had been substantially achieved. The Committee then considered other factors in the Company's performance such as churn, growth in average revenue per unit, management of subscriber acquisition cost, margin improvement and other factors including the executive officer's individual performance. The Committee determined that while overall performance had been positive, the individual awards would be granted in amounts that in each case were less than the maximum payment permitted under the Bonus Plan.

Annual Compensation

Base Salary. The Compensation Committee aims to position base salaries for the executive officers annually at levels that are consistent with market norms, with consideration of (i) the performance of the Company, (ii) individual performance of each executive and (iii) the executive’s scope of responsibility in relation to other officers and key executives within the Company. The Compensation Committee also considers the compensation practices of its peer group. Based upon these and other factors which it considers relevant, and in light of the Company’s overall long-term performance, the Compensation Committee has considered it appropriate, and in the best interests of the stockholders, to target base salary compensation at least at the median level of the peer group to enable the Company to continue to attract, retain and motivate the highest level of executive personnel. In selected cases, other factors may also be considered. In 2004, the Compensation Committee reviewed and approved the base salaries in the employment agreements of each of the named executive officers.

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Bonuses. The Company’s Executive Officer Cash Bonus Plan (the “Bonus Plan”) provides for the payment of cash bonuses based on the Company’s performance in relation to predetermined objectives and individual executive performance for the year then ended.

For 2004 bonuses, the Compensation Committee determined that the Net Subscriber Growth target had been achieved which permitted the maximum payment to be made under the Bonus Plan. The Committee then considered other factors in the Company’s performance such as churn, ARPU growth (Average Revenue Per Unit), SAC (Subscriber Acquisition Cost), margin improvement, and other factors including the executive officer’s individual performance and determined that while overall performance had been positive, the individual awards would be granted in amounts that in each case were less than the maximum payment permitted under the Bonus Plan.