This excerpt taken from the DTV DEF 14A filed Apr 27, 2007.
Benefit Programs and Perquisites
The Company provides the executive officers with benefits and perquisites that are intended to be a part of a competitive compensation package that provides health, welfare, savings and retirement programs comparable to those provided to employees and executives at other companies in our industry. The benefit plan descriptions in this proxy statement and accompanying the following tables provide an explanation of the major features of the Company's employee benefit plans. These plans are administered and governed at all times by the official plan documents and the descriptions in the proxy statement of these plans are qualified in their entirety by reference to the applicable document. The Company reserves the right to amend, suspend or terminate the plans completely or in part at any time and for any reason. Stockholders may request a copy of a plan document by contacting the Corporate Secretary as provided on page 70.
Savings Plans. The Company provides the executive officers the opportunity to participate in two defined contribution savings plans: the employee 401-K Plan, and the Excess Plan Savings Benefit. Through 2006, the Company also offered the Executive Deferred Compensation Plan.
The 401-K Plan is a tax-qualified broad-based employee savings plan that also has an after-tax savings feature; employee contributions up to 12% of base salary and annual incentive bonuses are permitted up to dollar limits established annually by the Internal Revenue Service, or IRS. The Company matches 100% of employee contributions up to the first 4% contributed by the employee; company-matching contributions vest after three years of service. Contributions to the 401-K Plan are invested at the employee's direction in a variety of mutual funds, including a Company stock fund. Withdrawals from the 401-K plan are permitted as provided by applicable regulations.
The Excess Plan Savings Benefit is a non-qualified pre-tax savings plan that is provided for employees and executives whose base salary and annual incentive bonuses exceed the limits established by the IRS on compensation and benefits eligible under Section 401-K of the Code.
The Executive Deferred Compensation Plan was a non-qualified pre-tax savings plan for senior executives (the executive's contributions are also called deferrals). In November 2006, it was determined that the Executive Deferred Compensation Plan no longer met its objectives as a retirement savings plan and the plan was amended to bar all future contributions, effective December 31, 2006. The plan will continue to be administered until all account balances are withdrawn by executives upon termination of employment or retirement.
The Excess Plan Savings Benefit and the Executive Deferred Compensation Plan are discussed at greater length in the narrative following the 2006 Nonqualified Deferred Compensation Table on page 45.
Pension Plans. The Company provides a defined benefit employee retirement program consisting of the Pension Plan and the Excess Plan Pension Benefit, or the Excess Plan, for employees. The Pension Plan is a tax-qualified pension plan whose maximum benefits are limited by legislation. The Excess Plan is a non-qualified supplemental pension benefit that restores benefits that may not be paid from the Pension Plan due to limitations imposed by the Internal Revenue Code of 1986 as amended from time to time, or the Code, on qualified plan compensation and benefits. All employees whose compensation exceeds the Code limits are automatically eligible to participate in the Excess Plan. The named executive officers participate in both of these plans on the same basis as all other employees.
The pension plans are the primary element of compensation in which the Company provides compensation based on an employee's length of service or tenure. The company-matching contributions in the savings plans also provide a lesser amount of compensation that vests based on years of service. In the pension plans, length of service for the executive officers is calculated on the same basis as all other employees.
The Pension Plan formulas and the Excess Plan formulas are identical and benefits are calculated using base salary and annual incentive bonus, which means that the value of a pension depends partially on achievement of business goals. Both Plans exclude from consideration the value of stock awards and all other long-term incentive awards. There is no double counting of compensation between the Pension Plan and the Excess Plan. Both Plans are described in more detail following the 2006 Pension Benefits Table beginning on page 43.
Health and Welfare Plans. The Company provides a variety of competitive health and welfare plans to its employees and executive officers, including medical, dental and vision care; life insurance, accidental death and dismemberment insurance and dependent life insurance; short-term and long-term disability insurance; and paid time-off for vacations, illness, holidays and other personal needs. The Company provides an arrangement for the executive officers in the medical, dental and vision care plans such that the executive pays no premiums or out-of-pocket costs. For all employees whose salary exceeds a pre-established level, including all of the named executive officers, the Company provides long-term disability insurance equal to 60% of base salary at no cost to the employee; in 2006, the pre-established salary level was $140,000 per year. The Company also provides personal liability
insurance with a coverage limit of $10 million to each of the named executive officers. The IRS treats the premium value of this personal liability insurance as income to the executive and the executive pays the related taxes. Executive officers may also receive post-employment welfare benefits, which are discussed at "Potential Payments upon Termination or Change in Control" beginning on page 47.
Severance Compensation. Each of the named executive officer's employment agreements contains terms and conditions of compensation upon termination of employment under various circumstances. The Company previously entered into a Change in Control Severance Agreement with Mr. Palkovic, which has been extended to expire on March 19, 2008 as part of his most recent employment agreement. The terms and conditions of both types of agreements are described at greater length at "Potential Payments upon Termination or Change in Control" beginning on page 47. Other than Mr. Palkovic's agreement, no compensation or benefits plans, programs or other arrangements have any features that are triggered by a change in control.
Company Transportation. The Company previously provided a car allowance for executives. That perquisite is now closed to new participants but continues for executives who previously received these allowances. Each of the named executive officers participates in this program and is provided with a monthly payment intended to cover some of the costs associated with the purchase or lease and maintenance of a vehicle. The Company owns a plane, which is available for senior executives. The executive officers are encouraged to use the Company plane for business travel. The Company plane is available for personal use on a limited basis as approved by the Chief Executive Officer and only when not needed by the Company for business travel. The Board encourages the Chief Executive Officer to use the Company aircraft even for personal travel to ensure his personal safety and to maximize his availability and the time available for Company business. The IRS treats the car allowance and the personal use of the Company plane as income to the executive and the executive pays the related taxes.
Complimentary Programming. The Company provides all full-time employees with complimentary DIRECTV programming (including home installation) for TOTAL CHOICE Premier, local channels and a variety of premium programming packages and channels. The named executive officers also receive a DIRECTV HD DVR, all other channels (including all subscription channels and HD), local channels, all sports, music and special events, two pay-per-view movies per month and a subscription to "DIRECTV-The Guide." The IRS does not treat complimentary programming as income for employees or for the executives, and, thus, it is not taxed.
Financial Planning. The Company previously provided financial planning benefits to executive officers. That plan was closed to new participants in 2004 and, among the named executive officers, only Mr. Hunter was eligible to participate. The IRS treats part of the cost associated with this service as income to the executive and the executive pays the related taxes.