The DirecTV Group (DTV)

What process does the Compensation Committee generally follow in determining executive compensation?

        As part of its processes and procedures, the Compensation Committee, with assistance from the Consultant and Company personnel:

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Approves incentive plans' performance targets, which are linked to Company performance;



•

Reviews executive officer compensation to ensure that a significant portion is performance-based to create incentives for above-target performance and consequences for below-target performance;



•

Confirms with the Committee's Consultant that total compensation paid to the Chief Executive Officer and the other executive officers is appropriate based on the Company's performance relative to that of the peer group as measured by financial measures, including stockholder returns, over one-year and longer periods;



•

Approves base salary adjustments and annual and long-term incentive award payouts based on actual performance achieved relative to the pre-established performance targets and evaluation of individual performance;



•

Reviews the peer group of companies to benchmark Company performance and executive officer compensation opportunity; and



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Reviews tally sheets of total compensation and benefits for each executive officer to ensure the Committee understands all aspects of each executive officer's total compensation.

What information does the Committee consider when making executive compensation decisions?

        In setting executive compensation levels, the Committee considers a number of sources of information, including internal and peer group compensation data, and uses various analytical tools.

        These tools include tally sheets that (i) summarize the value of each element, including benefits and perquisites, and the total of an executive's compensation over the current and previous years, (ii) show current stock holdings and incentive compensation denominated in stock and the potential value from increases in the share price, (iii) show amounts payable upon termination of employment under different scenarios and including elements such as pensions and savings that have accumulated over a number of years of service, and (iv) summarize cumulative payments over the past five years for base salary, bonuses and stock payments.

        To evaluate past performance and to set future performance goals, the Committee reviews Company reports on past and forecasted financial and operational performance measures for the Company, DIRECT U.S. and DIRECTV Latin America, as well as compilations of analysts' consensus forecasts.

        The Committee also reviews reports and analyses prepared by the Consultant. These reports typically include a pay for performance review on the alignment between Company performance and incentive plan payouts; a review of the performance measures and the difficulty of achieving them; analysis of "opportunity" pay as compared to the peer companies; for the CEO, the analysis includes "earned and estimated" pay, which consists of amounts actually earned during the most recent performance period plus the estimated "paper" earnings in stock options and RSUs granted in the same period, as compared to Company performance, peer company performance and the peer company CEOs' earned and estimated pay; progress on achieving desired stock ownership levels, and changes in

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the group of peer companies. Analyses of pay at the peer companies include appropriate job-matching of our executives to the peer group executives, changes in target pay, allocations between forms of pay, and changes in pay that affect the Committee's objectives (e.g., combined base salary and bonus opportunity approximately at the median). As needed, the Consultant also provides the Committee reports on third-party governance advisors' assessments of the Company's pay processes; analysis and advice on proposed employment agreements or other compensation programs or changes to existing programs, including the links between pay and performance; reports of trends and best practices in compensation design and disclosure, and assistance in designing compensation governance policies.

        The Committee considers the potential accounting and tax implications of its compensation decisions and, for stock-based compensation, the potential dilution to stockholders. The Committee considers other factors for each executive such as previous compensation, industry experience and achievements, and how the executive's skills and experience enable the successful achievement of our business plans.

        When setting pay levels, no particular weight is given to any factor, although compensation data from the peer group is considered more relevant to our pay levels than other sources of information. In the end, the Committee relies on its judgment and experience to set compensation for each executive that is competitive with the peer group, fair internally and appropriate based on the Company's performance and on the executive's level of responsibility, experience and contribution to the success of the Company.

Does the Committee benchmark compensation?

        The Committee annually evaluates pay practices among a peer group of companies to help set the level of the primary compensation elements of the executive officers' compensation—base salaries, annual bonus opportunities and long-term incentive opportunities—and the relative proportions of those elements. Opportunity pay is not guaranteed and actual values of bonuses and long-term incentives as measured at the end of the performance periods will vary from the target opportunity levels based on Company and individual performance.

        We review the list of companies in the peer group periodically. The current list was last revised in 2008, as discussed below. The Consultant developed the list, focusing on companies in the entertainment, content development and distribution industries and incorporated suggestions from management and the Chairman of the Committee. The selected peer companies fall within a range (both above and below the Company) of comparison factors such as revenue, market capitalization and net income; thus, certain companies that were significantly larger or smaller than the Company were excluded from the final list. In November 2007, the following peer group of 20 companies was appropriate:

        In October 2008, effective for 2009 compensation planning, the Committee revised the peer group to remove companies that are no longer publicly traded and for which proxy data on executive officers' pay will no longer be available (Alltel Corp, Clear Channel Communications, Tribune Company and Univision Communications); to recognize Sirius Satellite Radio as the survivor of the merger with XM Satellite Radio; to replace EchoStar Communications with DISH Network Corp. (the relevant

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competitor following the restructuring of EchoStar Communications); and to add Time Warner Cable (spun off from Time Warner, Inc.) and Liberty Global, Inc.

What process does the Compensation Committee generally follow in determining executive compensation?

        As part of its processes and procedures, the Compensation Committee, with assistance from independent advisors and Company personnel,

•

Reviews the peer group of companies to benchmark Company performance and executive officer compensation,



•

Reviews executive officer compensation to ensure that a significant portion is performance-based to create incentives for above-target performance and consequences for below-target performance,



•

Reviews tally sheets of total compensation and benefits for each executive officer to ensure the Committee understands all aspects of each executive officer's total compensation,



•

Approves incentive plans' performance targets, which are linked to Company performance,



•

Confirms with the Committee's independent compensation consultant that total compensation paid to the Chief Executive Officer and the other executive officers is appropriate based on the Company's performance relative to that of the peer group as measured by financial metrics, including stockholder returns, over one-year and longer periods, and



•

Approves base salary adjustments and also approves annual and long-term incentive award payouts for each year based on actual performance achieved relative to the pre-established performance targets and evaluation of individual performance.

        To obtain access to independent compensation data, analysis and advice, the Committee retained the services of a compensation consultant that is hired by and reports to the Committee. The consultant is Watson Wyatt Worldwide, or the Consultant. The Committee retained the Consultant in 2004 and has maintained the relationship since then. Committee members can engage or initiate contact with the Consultant and have direct access to the Consultant without management involvement. The Consultant attends meetings as appropriate at the invitation of the Committee and representatives of the Consultant attended all Committee meetings in 2007.

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        Although the Committee receives information and recommendations regarding the design and level of compensation of our executive officers from both the Consultant and management, the Committee makes the final decisions as to the plan design and compensation levels for the named executive officers.

        The Consultant meets with Company management, including the Chief Executive Officer, from time to time, particularly when changes are contemplated to the bonus or stock incentive plans. The Consultant provides information and insight as to relevant plan design trends in general industry or among the peer group. The Consultant obtains information from Company management with regard to such matters as the Company's performance and performance of individual executive officers, business strategy and overall compensation plan design.

        Examples of projects that the Committee assigns to the Consultant include:

•

Analyze and advise on the composition of the peer group of companies,



•

Analyze and advise on the levels of executive compensation as compared to general market and peer group compensation data,



•

Analyze and advise on proposed employment agreements or other compensation programs or changes to existing programs, including the links between pay and performance,



•

Discuss trends and best practices in compensation design and disclosure, and



•

Assist in designing compensation governance policies.

        The Consultant may have other relationships with the Company, so long as those relationships do not interfere with its ability to provide independent advice. To ensure independence of the Consultant, the Committee annually reviews all other services performed by the Consultant for the Company and we minimize such other work. In 2007, the Consultant provided services only to the Committee and none to the Company. We purchased compensation survey reports from Watson Wyatt Worldwide on the same basis as its other clients; fees for the survey reports totaled less than $10,000.

        The Committee retained Simpson Thacher & Bartlett LLP as independent legal counsel in 2007 to assist in the preparation of our Chief Executive Officer's new employment and stock grant agreements. Simpson Thacher & Bartlett LLP also performed services as independent counsel for another committee of the Board of Directors in 2007, but provided no other services to the Company nor did the Company have any relationship with such firm prior to its engagement by such committees.