The DirecTV Group (DTV)

How does the Committee determine the amount to pay for each element of compensation? What other information does the Committee consider when making executive compensation decisions?

        The Committee believes that it should regularly adapt the compensation programs to respond to the competitive environment and provide the motivational value for executives to remain with the Company, develop new profitable entertainment and services for customers and increase the value of the Company to stockholders.

        In setting executive compensation levels, the Committee considers a number of sources of information, including internal and peer group compensation data, and uses various analytical tools. These include tally sheets that (i) summarize the value of each element and the total of an executive's compensation over the current and prior years, (ii) show current and potential stock holdings and incentive compensation denominated in stock, and (iii) show amounts payable upon termination of employment including elements such as pensions and savings that have accumulated over a number of years. The Committee also considers the potential accounting and tax implications of its compensation decisions and, for stock-based compensation, the potential dilution to shareholders. The Committee considers other factors for each executive such as previous compensation, industry experience and achievements, and how the executive's skills and experience enable the successful achievement of our business plans.

        The total of an executive officer's base salary, target annual bonus and target long-term stock award is intended to be competitive with the pay levels of similar executives among our peer group of companies. By "competitive," we mean that the total annual cash compensation (consisting of base salary and annual bonus opportunity) and total direct compensation (consisting of total cash compensation and the value of long-term incentive compensation opportunity) for our named executive

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officers approximates median compensation levels when compared to historical information on the peer group, with the possibility of receiving above or below median compensation based on performance, particularly with respect to long-term compensation. In this connection, based on information provided by the Consultant, the Company believes that at-risk, performance-based long-term incentives comprise a larger proportion of our executive officers' total compensation package than is typical among the peer group and that the performance criteria used generally exceeds consensus analysts' forecasts. Consequently, we believe that this focuses the efforts of our executive officers in achieving business goals that are expected to increase the value of the Company for shareholders generally.

        No particular weight is given to any factor, although compensation data from the peer group is considered more relevant to our pay levels than other sources of information. In the end, the Committee relies on its judgment and experience to set compensation for each executive that is competitive with the peer group, fair internally and appropriate based on the Company's performance and on the executive's level of responsibility, experience and contribution to the success of the Company.

What are the policies for allocating between long-term and currently paid out compensation? Between cash and non-cash compensation, and among different forms of non-cash compensation?

        The Committee has determined that the forms and relative proportions of an executive's direct compensation consisting of base salary, target annual bonus and target long-term incentive should take into consideration those among the peer group of companies. The Committee varies from these guidelines based on its assessment of an executive's experience and level of contribution to the Company's current and future success.

How is long-term compensation allocated among different compensation elements and alternatives?

        The Committee has determined that a long-term incentive program should reward successful development and execution of business plans that are expected to increase the value of the Company's stock over time. The Committee recognizes that different forms of long-term incentive compensation, both cash-based and stock based, meet this objective and that the forms of incentive compensation may be used singly or in combination.

        Mix of Incentives.    The Committee uses a mix of incentives and allocates the target long-term incentive opportunity value between multiple forms of long-term incentives. This allows the Committee to:

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Mix performance-based incentives with stock price appreciation or other objectives,



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Balance different levels of upside opportunities and downside risks related to performance targets, and



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Provide different forms of incentives with different time periods to achieve the performance objectives.

        For example, in 2007, for the Chief Executive Officer's new long-term equity incentive, approximately 50% of value was allocated to options and the remainder to performance-based restricted stock units, or RSUs. A stock option generally does not provide any value to the executive unless and until the market price of the stock increases, but provides greater upside potential than an equivalent-value restricted stock unit award. A performance-based RSU may provide some value to the executive even if the market price of the stock does not increase, but provides less upside potential than an equivalent-value stock option award. Also, depending on the Company's performance against the applicable performance measures, an RSU provides upside and downside unrelated to overall stock market performance which may affect the Company's stock price.

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        Performance-Based Shares.    The Committee has determined that performance-based shares, a form of long-term incentive that is denominated and paid in shares of Company stock, meet compensation program objectives identified above by:

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Awarding more or fewer shares compared to the initial target based on performance against one or more pre-set business performance measures, and



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Increasing or reducing the potential value of the shares to be paid out based on the market price of the Company's stock.

        The Committee intends to use performance measures that, if achieved or exceeded, are expected to increase the value of the Company's stock. Thus, the value of the incentive awards to the executives increase by the achievement of the business measures or by increasing the value of the stock, and the value of the incentive awards decrease if business measures are not achieved or the stock price declines. The Company believes that the performance measures which have been established for performance-based share awards issued to executives are challenging and generally exceeded consensus analysts' expectations at the time the performance criteria were established by the Committee.

        Stock Options.    Stock options also meet the Committee's objectives. If the stock price remains unchanged or decreases, a stockholder retains some value in their investment, while the executive earns no value for the stock option. However, stock options provide significant upside opportunity, based solely on increases in the market price of the Company's stock.

        To ensure that the stock market price increase is sustained, the Committee restricts the ability of the executive to exercise the option and purchase the underlying shares by establishing vesting schedules that require the passage of time before the option is exercisable (e.g., vesting one-third of the options per year for three years). This feature also serves as a retention tool, since the options will generally terminate if the executive voluntarily ceases his employment or is terminated for cause.