This excerpt taken from the DTV DEF 14A filed Apr 27, 2007.
2006 Company Performance and Incentive Programs
For purposes of performance-based components of executive compensation, performance is evaluated using a number of important measures of success for the Company. For evaluation purposes through 2006, the following performance measures were used: (i) net subscriber growth, (ii) churn, (iii) subscriber acquisition costs, or SAC, per gross additional subscriber, (iv) pre-SAC margin improvement, (v) average revenue per unit (i.e., per subscriber), or ARPU growth, and (vi) cash flow, each, except for pre-SAC margin improvement, as defined in the Executive Officer Cash Bonus Plan and the 2004 Stock Plan. Pre-SAC margin improvement is defined as the year-to-year percentage point difference in the fraction determined by dividing (a) operating profit before depreciation and amortization, or OPBDA, for the year plus the aggregate amount of SAC for the year by (b) revenues for the year. In the discussion of the performance-based measures that follows, the specific targets for all measures are not provided except for the 2004 RSU Plan and 2006 Bonus Plan that were just completed because the Company believes that those targets are competitively sensitive information. Sharing those specific numerical targets might inform competitors as to future decisions and would result in competitive harm to the Company. The targets can be achieved provided that the Company sustains or improves its performance year-to-year.
Other performance measures may be identified as the best indicators of the success of the business from year to year, or the measures may be weighted differently. Because the Company operates in an ever-changing environment that is impacted by economic, technological, regulatory and competitive factors beyond the Company's control, such factors may be considered in the assessment of Company performance against the specific performance targets. Ultimately, the design and value of the incentive award programs are intended to provide an incentive for Company employees, including senior management, to diligently pursue improvements in the performance of the Company that will result in sustained increase in shareholder value.