The DirecTV Group (DTV)

Long-Term Compensation

        Long-term incentive programs for executives are used to promote the long-term growth of the Company. As part of the focus on enhancing shareholder value, long-term incentive awards are denominated and paid in shares of Common Stock; at the Committee's discretion, awards may be paid in cash in lieu of stock. Executives earn these shares based on achievement of pre-established long-term goals (or fewer shares if the goals are partially achieved). By increasing the market price per share for all stockholders over the long term, the executives also increase the value of their own stock awards.

        Performance-Based RSUs.    In 2004, with input from both the Consultant and management, the Committee approved a long-term incentive program using performance-based restricted stock units, or RSUs. Target long-term incentive compensation levels were set such that the combined base salary, target bonus and target long-term incentive compensation are competitive with the peer group. The awards paid under this program are intended to meet the requirements of Section 162(m) of the Code, which is discussed on page 27.

        Performance-based RSUs are conditional awards of stock and the value of each RSU is equal to the fair market value of a share of Common Stock. RSUs were selected over other types of long-term incentives such as stock options because of the combination of performance factors and stock price that affect the value of the award. The RSU performance factors allow payment of the stock to be based on achieving various Company-specific financial and operational goals or external measures over a limited time period, which has been set as three years. Increases in stock price increase the value of the RSU in the same manner as stock options. Decreases in stock price for stock options reduce the value to zero, while in the RSUs, some value is retained, which maintains the incentive to achieve the RSU performance goals and earn the final stock award.

        The RSU program generally has a three-year performance measurement period to motivate the achievement of business goals over a longer term than the annual incentive bonus plan. A new three-year performance plan is established and RSUs are awarded each year, resulting in three such plans operating concurrently at any one time after the first two years. When RSUs are granted, the

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performance factors and the specific stretch levels of achievement that need to be attained to earn the RSUs are determined. No stock is issued until (i) the performance measurement period is completed, (ii) the Committee determines the actual level of performance that was achieved, and (iii) the Committee determines the number of RSUs to be converted one-for-one into shares of Common Stock to be issued to each executive for achieving that level of performance.

        The number of RSUs granted to an executive officer each year is determined by reference to a grant table developed in early 2004. The Committee requested the Consultant to develop a table of long-term incentive grant values based on survey data and using an executive's base salary and level (e.g., executive vice president). Management divided these values by the current price per share and, from that information, proposed a target number of shares to be granted, as well as a range above and below that target number to provide additional flexibility in the number of RSUs granted to an executive. The table was updated in June 2004 to use the current stock market price when stockholders approved the 2004 Stock Plan. The stock price is monitored periodically to determine if adjustments are needed to restore the target long-term incentive grant values in the table to the 2004 levels. No adjustments were necessary for the number of RSUs granted in 2005 and 2006.

        Stock Ownership.    Stock ownership is an additional way to align the interests of the executive officers with those of the Company's stockholders. Although no specific stock ownership guidelines were applicable for the named executive officers during 2006, the Committee subsequently adopted stock or stock equivalent ownership guidelines for senior executives including the named executive officers. The executive ownership guidelines anticipate that each U.S.-based executive, at the Company or its subsidiaries, with the title of Executive Vice President or higher will acquire within four years after adoption of these guidelines and maintain until termination of employment, shares of Common Stock or Common Stock equivalents equal in value to multiples of such executive's base salary. The multiple for the Chief Executive Officer is six times base salary and the multiple for the other named executive officers is two times base salary. The executive may obtain shares or share equivalents to satisfy the requirement either through purchase or through the Company's savings plans or equity-based incentive plans.

        Stock Usage.    The number of shares issued under the stock plan is monitored periodically by evaluating the annual number of shares awarded under incentive programs (also known as the run rate) and the potential dilution of stock ownership due to incentive awards accumulated over a period of time as compared to the peer group of companies. Currently, both the run rate and dilution caused by stock based awards are significantly below the median of the peer group.

Long-Term Compensation

        The Compensation Committee is committed to long-term incentive programs for executives that promote the long-term growth of the Company. The Compensation Committee believes that stock ownership and stock-based incentive awards are the best way to align the interests of the executive officers with those of the Company's stockholders.

        Equity-Based Compensation.    In 2005, the Named Executive Officers, other than Mr. Carey, were granted Special Performance-based Awards denominated in RSUs, with final payment, if any, in shares of DIRECTV stock or cash equivalent at the discretion of the Compensation Committee.

        The performance period for the 2005 RSU awards is January 1, 2005 to December 31, 2007. The final value of the RSU awards is determined by the Company's performance during the performance period and the market price of the underlying stock at the time the stock is issued or cash equivalent is paid. For the 2005 RSU awards, the Compensation Committee determined, at its meeting in February 2006, that for the first year (2005) of the three-year performance period, the Company achieved slightly in excess of the performance targets established by the Compensation Committee. These performance factors will be averaged with the performance in 2006 and 2007 to determine the adjustment factor to be multiplied by the number of RSUs granted to each executive officer in 2005, which will establish the number of shares to be issued to each executive officer following the end of the

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performance period, or the cash equivalent to be paid at that time. However, the Compensation Committee has retained its discretion to reduce payments or otherwise adjust downward RSU awards in accordance with the 2004 Stock Plan.

        For the 2004 RSU awards granted to the Named Executive Officers other than Mr. Carey, the Compensation Committee had previously determined that for the first year (2004) of the three-year performance period, the Company achieved slightly in excess of the performance targets established by the Compensation Committee and determined that in the second year (2005) the Company exceeded the performance targets established by the Compensation Committee. These performance factors will be averaged with the performance in 2006, to determine the adjustment factor to be multiplied by the number of RSUs granted to each such executive officer in 2004, other than Mr. Carey, in order to establish the number of shares to be issued to each such executive officer following the end of the performance period or the cash equivalent to be paid at that time. However, the Compensation Committee has retained its discretion to reduce payments or otherwise adjust downward restricted stock unit awards in accordance with the 2004 Stock Plan.

        In 2004, Mr. Carey was granted an RSU award which is considered a multi-year award and no additional awards were made to Mr. Carey in 2005. The Compensation Committee has deferred the decision in 2004 and 2005 on the calculation of the adjustment factor for his 2004 RSU award for the four-year performance period ending December 31, 2007.

        If the Company pays dividends to stockholders during the performance period of an RSU award, the Committee may approve dividend equivalents on the underlying RSUs. Dividend equivalents, if any, would be paid at the same time as the RSUs to which they relate are paid. No such dividends have been declared or paid during the applicable performance periods.

        No stock options were granted to the Named Executive Officers or any other person in 2005.

        Other Long Term Incentives.    Prior to 2004, the Company made awards under a Long-Term Achievement Plan ("LTAP") that awarded equity-based compensation to senior executives if three-year performance targets established by the Compensation Committee were achieved. The final number of shares or cash compensation received by the executives at the end of the performance period, if any, depended on the Company's performance relative to those targets. The LTAP was initiated each January, resulting in three awards running concurrently.

        LTAP payouts were determined based on the Total Shareholder Return ("TSR") performance ranking (expressed as a percentile) of the Company's Common Stock as compared to the TSRs of companies that were selected by the Compensation Committee at the beginning of the three-year period. For the 2003-2005 LTAP, performance (including interpretation of the LTAP in order to factor in the effect of the split-off of the Company from GM, which occurred on December 22, 2003) was at the threshold for a payout but below target and therefore, reduced payouts were made for the period ended December 31, 2005. Although the target awards were denominated in the Company's shares, the Compensation Committee determined that the 2003-2005 LTAP payouts would be made in cash. This is the final performance period under the LTAP and it has been replaced by the RSU awards under the 2004 Stock Plan.

Long-Term Compensation

The Compensation Committee is committed to long-term incentive programs for executives that promote the long-term growth of the Company. The Compensation Committee believes that stock ownership and stock-based incentive awards are the best way to align the interests of the executive officers with those of the Company’s stockholders.

Equity Based Compensation. Historically, the Compensation Committee has granted to executive officers options to purchase shares of Common Stock under the Company’s stock plan that was adopted when the Company was a wholly owned subsidiary of GM. To align Mr. Carey’s interests with those of DIRECTV stockholders, Mr. Carey was granted stock options in connection with his agreement to surrender certain News Corporation options granted prior to his employment with the Company. In 2004, no stock options were granted to the other named executive officers or any other person.

With the stockholders approval of the 2004 Stock Plan, the named executive officers were granted Special Performance-based Awards denominated in restricted stock units, with final payment, if any, in shares of DIRECTV stock or cash equivalent at the discretion of the Compensation Committee. The award to Mr. Carey is considered a multi-year award and no additional awards are contemplated during the remainder of the original term of his employment agreement. The value of the awards varies with the Company’s performance and the market price of the underlying stock. The performance period is January 1, 2004 to December 31, 2006, except for Mr. Carey, whose performance period ends December 31, 2007. With respect to the performance goals for restricted stock units granted to the executive officers other than Mr. Carey, in 2004, the Compensation Committee determined that, for the first year of the three year performance period, the Company achieved slightly in excess of the performance targets established by the Compensation Committee in 2004. This amount will be averaged with the performance in 2005 and 2006, to determine the adjustment factor to be multiplied by the restricted stock units granted to each such executive officer in 2004, to establish the number of shares to be issued (or cash equivalent to be paid) to each such executive officer at the end of the three year performance period. The Compensation Committee has reserved discretion to reduce payments or otherwise adjust downward restricted stock unit awards in accordance with the 2004 Stock Plan. In the case of Mr. Carey and Mr. Stern, the Compensation Committee deferred the decision on the calculation of the adjustment factor for his restricted stock unit awards for the four year performance period ending December 31, 2007. If the Company pays dividends to stockholders during the Performance Period, the Committee may approve dividend equivalents on the restricted stock units underlying these awards. Dividend equivalents, if any, would be paid at the same time as the restricted stock units to which they relate are paid.

Other Long Term Incentives. The Company also had a Long-Term Achievement Plan (“LTAP”) that awarded equity-based compensation to senior executives if three-year performance targets established by the Compensation Committee are achieved. The final number of shares or cash compensation received by the executives at the end of the performance period, if any, depends on the Company’s performance relative to those targets. Prior to 2004, the LTAP was initiated each January, resulting in three plans running concurrently.

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Beginning with the three-year LTAP commencing in 2001, payouts are determined based on the Total Shareholder Return (“TSR”) performance ranking (expressed as a percentile) of the Company’s stock as compared to the TSRs of companies that were selected by the Compensation Committee at the beginning of the three-year period. In its discussion of Company performance, the Compensation Committee provided an interpretation of the LTAP in order to factor in the effect of the split off of the Company from GM, which occurred on December 22, 2003. For the 2002-2004 LTAP, performance was above the threshold for a payout but below target and therefore, reduced payouts were made for the period ended December 31, 2004. Although the target awards were denominated in the Company’s shares, the Compensation Committee determined that the 2002-2004 LTAP payouts would be made in cash. Because LTAP has been replaced by the 2004 Stock Plan, no awards were made under LTAP in 2004 and it is not anticipated that any future awards will be made under LTAP. The final payout under the LTAP, if any, will be for the 2003-2005 LTAP.