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DTV » Topics » What are the elements of compensation? Why does the Company choose to pay these elements of compensation? How does each element and the Company's decisions regarding an element fit into the Company's overall compensation objectives and affect decisions re

This excerpt taken from the DTV DEF 14A filed Apr 21, 2008.

What are the elements of compensation? Why does the Company choose to pay these elements of compensation? How does each element and the Company's decisions regarding an element fit into the Company's overall compensation objectives and affect decisions regarding other elements?

        The key elements of compensation for the executive officers are a base salary, an annual bonus paid in cash and a long-term incentive award denominated and usually paid in shares of Company stock. The executive officers are also eligible for certain other benefits and perquisites that are intended to be a part of a competitive compensation package that provides health, welfare, savings and retirement programs comparable to those provided to employees and executives at other companies in our industry. Some elements of compensation are related, meaning that the value of one element affects the value of another element. Increasing base salary increases target bonus opportunities, savings, pension and disability benefits. Increasing bonuses also increases pension and savings plan benefits, but long-term incentive awards are excluded from both of these plans.

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        The purpose, key characteristics and target pay levels of each element of compensation are in the following table.


2007 SUPPLEMENTARY TABLE 1—ELEMENTS OF COMPENSATION

Pay Element
   Description / Purpose
   Characteristics
   Target Pay Level
Base Salary   Compensate for day-to-day performance at the executive's level of responsibility based on the executive's skills, experience and accomplishments. Support attracting and retaining executive talent.   Fixed, paid in cash, short-term.   Approximately at or slightly above median of peer group.

Annual Bonus
 
Motivate and reward current year results by aligning efforts across the Company to achieve specific measurable results.
 
Variable with performance, paid in cash, short-term.
 
Combined base salary and target bonus approximately at median of peer group (or above or below based on performance).

Long-term Incentives
 
Motivate and reward long-term results, typically over three years, by aligning efforts to achieve specific measurable results and increase the market price of the Company's Common Stock.
 
Variable with performance, paid in stock, long-term.
 
Combined base salary, target bonus and target long-term incentives approximately at median of peer group (or above or below based on performance).

Employee Benefits(1)
 
Protect against catastrophic expenses and loss of income (health, disability and life insurance plans) and provide retirement income (savings and pension). Benefits are provided to executives on the same basis as all other employees.
 
Fixed, indirect compensation: health, short- and long-term disability plans, life insurance, savings and retirement plans.
 
Combined value approximately at the median of general industry.

Perquisites
 
Assist in attracting and retaining executive talent at a practical value for the Company.
 
Fixed, indirect, short-term.
 
Approximately at or below median of general industry.

Post-Termination Compensation
 
Provide the basis for rapid transition out of the Company that is fair to the executive and to the Company by providing temporary income following an executive's involuntary termination (other than for cause).
 
Both fixed and variable elements, both cash and stock-based.
 
Approximately at median of peer group.
(1)
The benefit plan descriptions in this proxy statement and accompanying the following tables provide an explanation of the major features of our employee benefit plans. These plans are

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    administered and governed at all times by the official plan documents and the descriptions in the proxy statement of these plans are qualified in their entirety by reference to the applicable document. The Company reserves the right to amend, suspend or terminate the plans completely or in part at any time and for any reason. Stockholders may request a copy of a plan document by contacting the Corporate Secretary as provided on page 68.

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