The DirecTV Group (DTV)

Other Executive Compensation Policies

        What are the practices for awarding equity-based compensation such as RSUs or stock options?

        Other than in special circumstances involving an individual executive or the Company, the Committee intends to grant long-term stock-based incentives to executives not more than once each year, typically during the first quarter of the calendar year and at the same time as it sets performance goals for the year. The value of the incentive awards will be set on the date of the grant or on a future date that is established on the date the awards are granted. As needed, for example, to recruit a new executive, long-term incentives would be awarded at the hire date with the value of the incentive award set on the date of the grant.

What are the equity or other security ownership guidelines?

        The Company and the Committee have established guidelines and regular reviews for stock ownership levels among executives, policies on insider trading and hedging, and annual reviews on the use of Company stock in the stock incentive programs.

        Stock Ownership.    Stock ownership is an additional way to align the interests of the executive officers with those of our stockholders. Our guidelines cover all elected officers of the Company and, at subsidiaries, all executives with the title of Executive Vice President or higher. These executives are expected to acquire and maintain until termination of employment, shares of Common Stock or Common Stock equivalents equal in value to a multiple of the executive's base salary. The multiple for the Chief Executive Officer is six times base salary and the multiple for the other executive officers is two times base salary. Each executive has four years to attain the target ownership level. An executive may satisfy the requirement through direct purchase of shares or retention of shares acquired through stock option exercises or through the Company's savings plans or equity-based incentive plans. The value of unvested stock units and vested in-the-money stock options is reduced 50% as an approximation of shares that would be withheld for tax payments upon vesting or exercise. As of the record date, all the named executive officers meet or exceed the target ownership level.

        Insider Trading and Hedging.    Insider trading is illegal and hedging the economic risk of owning stock or receiving stock-based incentive compensation is contrary to the best interests of our stockholders. We maintain a policy that is applicable to all employees and bars insider trading and ownership of financial instruments or participating in investment strategies that hedge the economic

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risk of Company stock ownership. Executive officers generally are only permitted to trade shares of the Company's Common Stock during limited periods after public dissemination of the Company's annual and quarterly financial results. However, the Company permits our executives to enter into plans that are intended to comply with the requirements of Rule 10b5-1 of the Securities Exchange Act of 1934 in order to permit our executive officers to prudently diversify their asset portfolio and to assure that granted stock options may be exercised before their scheduled expiration date consistent with our policies on insider trading. The General Counsel of the Company or his designee must approve such 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, both measures as compared to the peer group. Currently, both the run rate and dilution caused by stock based awards are significantly below the median of the peer group.

What is the Company's position and practice on severance and change-in-control agreements?

        Severance Agreements.    The Company has entered into employment agreements with severance compensation arrangements with each of the named executive officers. Based on research on the peer group and general industry conducted by the Consultant plus the Committee's own experience, the Company believes that pre-established severance arrangements provide assurances of fair treatment to the executives and help to retain key executives for the benefit of the Company. Such agreements support the development of an experienced management team and are competitive with practices among the peer group.

        The Committee has developed the following guidelines for the Company to limit compensation in severance agreements.

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Although common in the entertainment industry, employment and severance agreements should be used only for a limited group of executives.



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Termination of employment for cause should result in the forfeiture of all unpaid compensation, all unpaid cash or stock incentive compensation, and the Company may consider forfeiture of certain benefits that are not protected by federal or state law.



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Death or disability should normally result in payment of compensation earned through that date, plus cash and stock compensation and other employee benefits under the terms and conditions of those plans.



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Voluntary termination of employment or retirement should normally result in payment of compensation earned through that date, plus other vested employee benefits under the terms of the applicable plans and, in the case of retirement, accrued bonus and stock compensation under the terms of the applicable plans.



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For involuntary termination of employment without cause or for constructive termination, the value of cash severance arrangements should be limited to compensation normally payable through the end of the employment agreement, but generally not less than one year's base salary and target bonus. Stock compensation should follow the vesting rules set by the Committee in the stock grant's terms and conditions, although the Committee varies from this practice depending on the facts and circumstances. Employee benefits remain payable under the terms and conditions of the benefit plans.

        Change in Control.    We have no individual agreements, arrangements or other programs in which additional compensation is paid upon entering into or completing a change-in-control of the Company, nor is additional compensation or severance payable in the event of termination of employment

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following a change-in-control of the Company beyond amounts otherwise payable upon termination of employment.

What are the policies regarding the recovery of awards or payments?

        As part of its regular review of governance issues, the Committee reviews its practices and guidelines concerning the recovery of performance-based compensation from executives and employees. After discussing reports from the Consultant in 2008 and 2009, the Committee updated its prior practice and adopted the following policy in 2009:

        "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 employees or former employees designated at least executive vice president of the Company or any of its subsidiaries 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 Committee will determine whether to require any present or former elected officers to return any such amounts and may also direct the officers to seek recovery from other present or former employees. 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 Committee considers appropriate."

        Effective with incentive awards (bonuses and RSUs) granted in 2009, the terms and conditions of each grant refer to this updated policy on the recovery of compensation. At this time, none of the employment agreements or previously granted incentive awards expressly permit the Company to obtain reimbursement of compensation previously paid to the named executive officer. However, all the outstanding performance-based share awards and bonuses permit downward adjustment, at the discretion of the Committee, at any time prior to issuance of the related shares or cash.

What are the accounting and tax treatments of the compensation programs?

        The primary elements of executive compensation are generally considered taxable income to the executive and compensation expense to the Company when earned.

        Savings and Pension Plans.    Under Section 401-K of the Code, which applies to the DIRECTV Thrift and Savings Plan, or 401-K Plan, and Section 409A of the Code, which applies to the Excess Plan Savings Benefit, the Excess Pension Plan and the Executive Deferred Compensation Plan, executive and Company contributions to the plans are not treated as current income to the executive and the related income taxes are deferred until the amounts are paid out to the executive, typically upon termination of employment. Further, for tax purposes, the Company defers recognition of the compensation expense for the executives' contributions to the Section 409A plans until payout.

        Stock Awards.    For accounting purposes, we record compensation expense for RSUs and stock options on a straight-line basis over the service period of up to three years based upon the fair value of the award on the date approved, and adjusted for anticipated payout percentages related to the achievement of performance targets in accordance with Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment," or SFAS No. 123R. For tax purposes, the

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compensation expense is recognized when an RSU is earned and distributed in stock or an option is exercised.

        Deductible Compensation.    The Committee considers the potential impact of Section 162(m) of the Code on compensation decisions. Section 162(m) disallows a tax deduction by the Company for compensation exceeding $1 million in any taxable year for each of the chief executive officer and the other three highest compensated senior executive officers, excluding the chief financial officer. Performance-based compensation under a plan that is approved by the stockholders of the Company and that meets certain other technical requirements is excluded from the $1 million limitation. The annual bonus, the RSU and the stock option programs are intended to meet the performance-based compensation requirements, while base salary and perquisites do not. Based on these requirements, the Company has determined that it is entitled to a tax deduction for compensation paid to executive officers during 2008, other than the base salary and perquisites for Messrs. Carey and Churchill in excess of $1 million each. For 2008, the excess (and non-deductible) amount was estimated at slightly over $1.1 million and consisted primarily of Messrs. Carey's and Churchill's salaries in excess of $1 million.

        While accounting and tax treatment are relevant compensation issues, the Committee believes that stockholder interests are best served by not restricting flexibility in designing compensation programs, even though such programs may result in certain non-deductible compensation expenses. Accordingly, compensation arrangements for certain named executive officers that are not fully deductible have been considered by the Committee from time to time, and may be considered in the future. Also, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m), we can give no assurance that compensation intended to satisfy the requirements for deductibility does, in fact, do so.

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EXECUTIVE AND DIRECTOR COMPENSATION