The DirecTV Group (DTV)

How are specific forms of compensation structured and implemented to reflect performance?

        The Committee sets an individual executive's target compensation levels for annual bonuses and long-term incentive grants consistent with its objectives regarding compensation levels for similarly situated executives in the peer group. These target levels are reviewed annually and vary among executives based on the Committee's evaluation of the executive's skills, experience, past achievements, past compensation and potential for contributions to future Company success. The resulting target incentive levels for the named executive officers are shown in 2007 Supplementary Table 10 on page 36.

What specific items of corporate performance are taken into account in setting compensation policies and making compensation decisions?

        The Committee uses a variety of internal and external measures to gauge the level of performance as it affects compensation decisions. The Committee evaluates the performance measures established in the short- and long-term incentive plans in the context of other performance measures over the same time periods. To balance the focus on achievement of internal measures, the Committee also gauges the Company performance as compared to the peer group. As appropriate, the Committee measures Company performance over one year (typically used for annual bonuses) or longer periods of time (typically used for long-term incentive programs).

        The Committee designed the bonus plan and long-term stock plan to use operational and financial performance measures over short-term (annual) and long-term performance periods, respectively. Operational measures have included net subscriber growth, churn and customer satisfaction. Financial measures have included subscriber acquisition costs, or SAC, per gross additional subscriber, pre-SAC margin improvement, growth of average revenue per unit (i.e., per subscriber), or ARPU, cash flow, free cash flow, free cash flow growth, growth in cash flow before interest and taxes, revenue growth,

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OPBDA growth, total return to stockholders, return on investment, and earnings per share growth. The specific performance measures used in each of the current annual and long-term incentive plans are described in the 2007 Company Performance and Incentive Programs on page 31.

How are specific forms of compensation structured and implemented to reflect the named executive officer's individual performance and/or individual contribution?

        The performance measures apply to all plan participants as a group, that is, no performance goal has been assigned to an individual. Individual performance is a factor in the Committee's exercise of discretion with respect to each executive officer's annual bonus, although the final bonus generally reflects overall Company performance and performance of the executive officers as a group, rather than individual performance. The Committee also evaluates Company and individual achievements and shortfalls beyond the specific performance measures. The Committee does this in order to determine whether the payouts from the incentive plans are appropriate or require downward adjustment.

        The Committee has not increased any final incentive award above the maximum amount provided for in the relevant plan or award, based in part on consideration of applicable tax consequences. However, the Committee retains the authority to determine that the formula-based amount does not adequately reflect actual achievement and may approve an additional payout separate from the incentive plan to reward such an achievement. Typically, the Committee exercises its discretion to decrease the compensation which could be paid under the annual bonus plan, and the exercise of discretion to reduce an annual bonus from the formula-based maximum value applies to all participants in the plan, resulting in final bonuses that are generally a similar percentage above or below the original target bonus amount with modest variations due to individual performance. Individual performance can be a factor in the Committee's exercise of its discretion to reduce a long-term stock award below the formula-based value, however, to date, the Committee has not done so.