UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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| 1. | Electing to the Board |
| 2. | Acting upon a proposal to ratify the appointment of Deloitte & Touche LLP as |
13, 2010.
By Order of the Board of Directors
/s/ Michael B. Targoff
| By Order of the Board of Directors | |
 | |
| Michael B. Targoff | |
| Vice Chairman of the Board, | |
| Chief Executive Officer and President |
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| Why did I receive this proxy statement? | We have sent you this Notice of Annual Meeting and Proxy Statement and proxy or voting instruction card because the Board of Directors of Loral Space & Communications Inc. (“Loral” or the “Company”) is soliciting your proxy to vote at our Annual Meeting of Stockholders on May | |
| Who is entitled to vote? | You may vote on each matter properly submitted for stockholder action at the Annual Meeting if you | |
| How many votes do I have? | Each share of our | |
| What am I voting on? | You will be voting on the following: | |
| • To elect to the Board | ||
| • To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, | ||
| How do I vote? | You | |
• By Mail: If you are a holder of record, you | ||
• By Telephone or Internet: If you hold your shares in street name, you may be able to provide instructions to vote your shares by telephone or over the Internet. Please follow the instructions on your voting instruction card. | ||
• At the Annual Meeting: If you are planning to attend the Annual Meeting and wish to vote your shares in person, we will give you a ballot at the meeting. If your shares are held in street name, you need to bring an account statement or letter from your broker, bank or other nominee indicating that you were the beneficial owner of the shares on April |
| What if I return my proxy or voting instruction card but do not mark it to show how I am voting? | Your shares will be voted according to the instructions you have indicated on your proxy or voting instruction card. If no direction is indicated, your shares will be voted “FOR” the election of the Class |
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| May I change my vote after I return my proxy or voting instruction card? | You may change your vote at any time before your shares are voted at the Annual Meeting in one of three ways: | |
| • Notify our Corporate Secretary in writing before the Annual Meeting that you are revoking your proxy; | ||
| • Submit another proxy | ||
| • Vote in person at the Annual Meeting. | ||
| What does it mean if I receive more than one proxy or voting instruction card? | It means you have multiple accounts at the transfer agent and/or with banks and stockbrokers. Please vote all of your shares. | |
| What constitutes a quorum? | Any number of stockholders, together holding at least a majority in voting power of the capital stock of the Company issued and outstanding and generally entitled to vote in the election of directors, present in person or represented by proxy at any meeting duly called, shall constitute a quorum for the transaction of all business. Abstentions and “broker non-votes” are counted as shares “present” at the meeting for purposes of determining whether a quorum exists. A “broker non-vote” occurs when shares held of record by a bank, broker or other holder of record for a beneficial owner are deemed present at the meeting for purposes of a quorum but are not voted on a particular proposal because that record holder does not have discretionary voting power for that particular matter under the applicable rules of the Nasdaq National Market and has not received voting instructions from the beneficial owner. | |
| What vote is required in order to approve each proposal? | Proposal 1 (Election of |
Proposal 2 (Ratification of appointment of Deloitte & Touche LLP): This proposal requires the affirmative vote of the holders of a majority of the voting power of | ||
| May my broker vote my shares? | Please note that this year the rules that govern how brokers vote your shares have changed. Under the new rules, brokers may no longer use discretionary authority to vote shares on the election of directors if they have not received instructions from their clients. It is important, therefore, that you cast your vote if you want it to count in the election of directors. Your broker will continue to have the authority to exercise discretion with respect to Proposal 2 (Ratification of appointment of Deloitte & Touche LLP) if it has not received your instructions for that proposal because that matter is treated as routine under applicable rules. | |
| How will voting on any other business be conducted? | We do not know of any business or proposals to be considered at the Annual Meeting other than those set forth in this Proxy Statement. If any other business is properly presented at the Annual Meeting, the proxies received from our stockholders give the proxy holders the authority to vote on the matter | |
| Who will count the votes? | Registrar & Transfer Company will act as the inspector of election and will tabulate the votes. |
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DIRECTORS
Stockholders will elect one Class II director at
nominees.
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| Michael B. Targoff | |||
| Age: | 65 | ||
| Director Since: | November 2005 | ||
| Class: | Class II | ||
| Business Experience: | Mr. Targoff has been Chief Executive Officer of Loral since March 1, 2006, President since January 8, 2008 and Vice Chairman of Loral since November 21, 2005. From 1998 to February 2006, Mr. Targoff was founder and principal of Michael B. Targoff & Co., a private investment company. | ||
| Other Directorships: | Director, Telesat Holdings Inc. (“Telesat Holdings”); Chairman of the Board and member of the Audit Committee of | ||
| | ||
| Qualifications: | Mr. Targoff’s qualifications for service on our Board include his extensive understanding and knowledge of our business and the satellite industry, as well as demonstrated leadership skills and operating experience, acquired during more than 20 years of serving as a senior executive of the Company and its predecessors. As a director of other public and private companies in the telecommunications industry, Mr. Targoff also brings to the Company a broad-based business knowledge and substantial financial expertise. |
| Sai S. Devabhaktuni | |||
| Age: | 38 | ||
| Director Since: | November 2005 | ||
| Class: | Class III | ||
| Business Experience: | Mr. Devabhaktuni is currently a managing principal of MHR Fund Management LLC (“MHR”), an investment manager of various private investment funds that invest in inefficient market sectors, including special situation equities and distressed investments. Mr. Devabhaktuni has served MHR |
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| Qualifications: | Mr. Devabhaktuni’s qualifications for service on our Board include his ability to bring and apply to the Company and its business his deep and extensive financial analytical skills and expertise developed while analyzing investment opportunities, as well as monitoring and supervising multiple investments on behalf of MHR. In addition, his thorough knowledge and analysis of various industries, including ours, enable him to offer the Board a broad perspective on the trends and competitive landscape faced by the Company. | ||
| Hal Goldstein | |||
| Age: | 44 | ||
| Director Since: | November 2005 | ||
| Class: | Class III | ||
| Business Experience: | Mr. Goldstein is a co-founder of MHR | ||
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| | Mr. Goldstein’s qualifications for service on our Board include his significant supervisory and oversight experience, as well as transactional expertise gained while structuring, acquiring and monitoring multiple and diverse portfolio investments and investment opportunities on behalf of MHR over the last 15 years. His role as a co-founder of MHR, together with his experience serving on the boards of various companies, also allows him to offer a broad perspective on corporate governance, risk management and operating issues facing corporations today. | |
| John D. Harkey, Jr. | |||
| Age: | 49 | ||
| Director Since: | November 2005 | ||
| Class: | Class I | ||
| Business Experience: | Mr. Harkey has been Chairman and Chief Executive Officer of Consolidated Restaurant Companies, Inc. since 1998. | ||
| Other Directorships: | Director and Chairman of the Audit Committee of Energy Transfer Equity, L.P. and Emisphere Technologies, Inc.; Director and member of the Audit Committee and the Nominating and Corporate Governance Committee of Leap Wireless International, Inc.; Director and member of the Audit Committee and Corporate Governance Committee of Energy Transfer Partners, LLC. |
| | ||
| Qualifications: | Mr. Harkey’s qualifications for service on our Board include his ability to provide the insight and perspectives of a successful and long-serving active chief executive officer of a major restaurant company. His service on the boards of several other public companies in diverse industries allows him to offer a broad perspective on corporate governance, risk management and operating issues facing corporations today. |
| Mark H. Rachesky, M.D. | |||
| Age: | 51 | ||
| Director Since: | November 2005 | ||
| Class: | Class III | ||
| Business Experience: | Dr. Rachesky has been non-executive Chairman of the Board of Directors of Loral since March 1, 2006. Dr. Rachesky is a co-founder of MHR | ||
Other Directorships (current): | Non-executive Chairman of the Board of Telesat Holdings; Non-executive Chairman of the Board, Chairman of the Nominating and Corporate Governance Committee and member of the Compensation Committee of Leap Wireless International, Inc. |
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Other Directorships (previous within the last five years): | Director of NationsHealth Inc. and Neose Technologies, Inc. | ||
| Qualifications: | Dr. Rachesky’s qualifications for service on our Board include his demonstrated leadership skills as well as his extensive financial expertise and broad-based business knowledge and relationships. In addition, as the President of MHR, with a demonstrated investment record in companies engaged in a wide range of businesses over the last 15 years, together with his experience as chairman and director of other public and private companies, Dr. Rachesky brings to the Company broad and insightful perspectives relating to economic, financial and business conditions affecting the Company and its strategic direction. | ||
| Arthur L. Simon | |||
| Age: | 78 | ||
| Director Since: | November 2005 | ||
| Class: | Class I | ||
| Business Experience: | Mr. Simon is an independent consultant. Before his retirement, Mr. Simon was a partner at Coopers & Lybrand L.L.P., Certified Public Accountants, from 1968 to 1994. | ||
| Other Directorships: | Director and member of the Audit and Corporate Governance Committees of L-3 Communications Corporation. | ||
| Qualifications: | Mr. Simon’s qualifications for service on our Board include his significant experience in the satellite industry, having served as a director of the Company and its predecessor for 14 years. He also has significant expertise and background with regard to accounting and internal controls, having served in a public accounting firm for 38 years, 25 of which were as a partner, and having founded the aerospace/defense contracting group at his former firm. In addition, he brings to the Company substantial business knowledge gained while serving as an independent director for another public company in the aerospace and defense industry. |
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| John P. Stenbit | |||
| Age: | 69 | ||
| Director Since: | June 2006 | ||
| Class: | Class I | ||
| Business Experience: | Mr. Stenbit is a consultant for various government and commercial clients. From 2001 to his retirement in March 2004, he was Assistant Secretary of Defense of Networks and Information Integration/ | ||
Other Directorships (current): | Director and member of the Nominating and Corporate Governance, Audit and Compensation Committees of Cogent, Inc. | ||
Other Directorships (previous within the last five years): | Director and member of the Governance and Nominating and Audit Committees of SM&A Corporation; Director and member of the Corporate Governance and Compensation Committees of SI International, Inc. | ||
| Qualifications: | Mr. Stenbit’s qualifications for service on our Board include his significant experience in the aerospace and satellite industries, having previously served as a senior executive of TRW for 10 years in positions with financial oversight responsibilities. He also has had a distinguished career of government service focused on the telecommunications and command and control fields. In addition, he brings to the Company a breadth of business knowledge gained while serving as an independent director for other technology companies. |
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As of the effective date of our plan of reorganization (November 21, 2005), we
Certain shareholder
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Relationships and Related Transactions — MHR Fund Management LLC.” These lawsuits are described below and in note 17 to our consolidated financial statements included in our Annual Report on Form 10-KVoting Common Stock except for the year ended December 31, 2007.
The plaintiff, Mrs. Babus, died in November 2006, and, in August 2007, her son was substituted as plaintiff in place of his deceased mother. After discussions between the parties in which it was decided not to proceed with a Memorandum of Understanding entered into in March 2007 (more fully described in the Company’s Report on Form 8-K filed on March 21, 2007, and the full text of which is attached as Exhibit 10.1 thereto) in light of a further advanced Delaware shareholder litigation (discussed below), the parties have agreed, and the court in an order dated December 5, 2007 ordered, that theBabus lawsuit be stayed pending final resolution of such Delaware shareholder litigation.
On or about May 14, 2007, the Court of Chancery of the State of Delaware in and for New Castle County entered an order consolidating two civil actions previously commenced by certain stockholders of the Company against the Company, the MHR Entities and the individual membersarose out of the Company’s Boardsale of Directors under the captionIn re: Loral Space and Communications Inc. Consolidated Litigation. Plaintiffs in this action are certain stockholders of the Company who allege that they hold over 25% of the outstanding common stock of the Company (the “Blackrock Plaintiffs”) and Highland Crusader Offshore Partners, L.P. (“Highland,” and, together with the Blackrock Plaintiffs, the “Delaware Plaintiffs”), the purported owner of over 7% of Loral’s outstanding common stock. The Blackrock Plaintiffs have brought the case derivatively on behalf of the Company and directly on behalf of the Blackrock Plaintiffs individually. The case has also been brought by Highland as a class action on behalf of a class of Loral stockholders consisting of all security holders of the Company (except the defendants and persons or entities related to or affiliated with the defendants) who, as alleged in the amended and consolidated complaint, “are or will be threatened with injury arising from Defendants’ actions” as described in the amended and consolidated complaint.
In the amended and consolidated complaint, the Blackrock Plaintiffs have brought derivative claims alleging, among other things, that, in connection with the Securities Purchase Agreement, pursuant to which the Company sold $300 million of preferred stock to the MHR Funds the directors and the MHR Entities breached their fiduciary dutiespursuant to the Company, including the fiduciary duties of care and loyalty, the MHR Entities have aided and abetted the directors’ breach of fiduciary duty, and the directors have engaged in conduct, or intentionally or recklessly approved conduct, that has caused the Company to waste valuable corporate assets. In addition, the Blackrock Plaintiffs have brought a direct claim against the MHR Entities and Dr. Rachesky alleging breach of their fiduciary duties allegedly owed to the Blackrock Plaintiffs, and a claim alleging that, by approving, engaging in and closing the transactions contemplated by the Securities
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Purchase Agreement, defendants violated the restriction on transactions between companies and their interested stockholders contained in Section 203 of the Delaware General Corporation Law.
In the amended and consolidated complaint, Highland has brought class claims alleging,Agreement. The plaintiff alleged, among other things, that the sale was not fair to the Company and resulted from breach of fiduciary duties by Loral’s directors. In light of the decision in the Delaware shareholder litigation discussed above, in April 2009, the plaintiff requested, and, in June 2009, the court entered, a voluntary discontinuance of the action with prejudice.
In May 2007, the defendants filed answers, denying any allegations of wrongdoing and asserting various defenses. On February 20, 2008, the court entered an order (i) certifying a class action asCommunications Inc. Consolidated Litigation
In a pre-trial stipulation and order entered into in February 2008, the Delaware Plaintiffs stated that the relief they were seeking was, among other things, (a) an order directing that MHR Fund Management and affiliated entities (“MHR”) offer the preferred stock purchasedFunds pursuant to the Securities Purchase Agreement, and the related Babus shareholder litigation in New York. The Company has purchased directors and officers liability insurance coverage that provides the Company with coverage of up to $40 million for amounts paid as a result of the Company’s indemnification obligations to its directors and officers and for losses incurred by the Company in certain circumstances, including shareholder derivative actions.
A trial in this action commenced in early March 2008. Fact testimony was completed, but expert testimony is scheduled to be heard on May 12, 2008.
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| | | | | | |||||||||||||||||
| Annual Fee(1) | In-Person Meeting Fee(2) | Telephonic Meeting Fee (over 30 minutes)(3) | Annual Stock Award(4) | Medical | ||||||||||||||||||
| Board of Directors | $25,000 | $1,500 | $1,000 | 2,000 Shares of Restricted Stock; 5,000 Shares of Restricted Stock for non-executive Chairman (vesting over two years) | Eligible for Loral Medical Plan at Company’s expense if not otherwise employed full-time | |||||||||||||||||
| Executive Committee | No extra fees unless set on an ad hoc basis by Board of Directors | |||||||||||||||||||||
| Audit Committee | ||||||||||||||||||||||
| Chairman | $15,000 | $1,000 | $ 500 | |||||||||||||||||||
| Member | $ 5,000 | $1,000 | $ 500 | |||||||||||||||||||
| Compensation Committee | ||||||||||||||||||||||
| Chairman | $ 5,000 | $1,000 | $ 500 | |||||||||||||||||||
| Member | $ 2,000 | $1,000 | $ 500 | |||||||||||||||||||
| Nominating Committee | ||||||||||||||||||||||
| Chairman | $ 5,000 | $1,000 | $ 500 | |||||||||||||||||||
| Member | $ 2,000 | $1,000 | $ 500 | |||||||||||||||||||
| Telephonic | |||||||||||||||
| Meeting Fee | |||||||||||||||
| Annual | In-Person | (over | Annual | ||||||||||||
Fee(1) | Meeting Fee(2) | 30 minutes)(3) | Stock Award(4) | Medical | |||||||||||
| Board of Directors | $ | 25,000 | $ | 1,500 | $ | 1,000 | 2,000 Restricted Stock Units; 5,000 Restricted Stock Units for non-executive Chairman (vesting over two years) | Eligible for Loral Medical Plan at Company’s expense if not otherwise employed full-time | |||||||
| Executive Committee | No extra fees unless set on an ad hoc basis by Board of Directors | ||||||||||||||
| Audit Committee | |||||||||||||||
| Chairman | $ | 15,000 | $ | 1,000 | $ | 500 | |||||||||
| Member | $ | 5,000 | $ | 1,000 | $ | 500 | |||||||||
| Compensation Committee | |||||||||||||||
| Chairman | $ | 5,000 | $ | 1,000 | $ | 500 | |||||||||
| Member | $ | 2,000 | $ | 1,000 | $ | 500 | |||||||||
| Nominating Committee | |||||||||||||||
| Chairman | $ | 5,000 | $ | 1,000 | $ | 500 | |||||||||
| Member | $ | 2,000 | $ | 1,000 | $ | 500 | |||||||||
| (1) | Annual fees are payable to all directors, including Company |
| (2) | In-person meeting fees are not paid to Company |
| (3) | Telephonic meeting fees are not paid to Company |
| (4) | The annual grant of restricted stock units is not awarded to directors who are Company |
2009
Directors were not granted stock awards in 2006 because there were no shares available for grant under our 2005 Stock Incentive Plan.
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On June 7, 2006, Loral entered intodeath of the director, the date the director undergoes a consulting agreement with a director, Dean A. Olmstead. Pursuant to this agreement, Mr. Olmstead provided consulting services toseparation of service from the Company relating generally to explorationand the date of strategic and growth opportunities for Loral and achievement of efficiencies within the Company’s divisions. The consulting agreement was terminated effective as of October 31, 2007, and, on January 10, 2008, Mr. Olmstead resigned from the Board of Directorsa change in control of the Company. For a more detailed description of Mr. Olmstead’s consulting agreement, the option grant associated therewith and termination of the consulting agreement, see “Certain Relationships and Related Transactions — Consulting Agreement with Dean A. Olmstead.”
2007
| | | | | ||||||||||||
| Name | Fees Earned or Paid in Cash(1) | Stock Awards(2) | All Other Compensation | Total | ||||||||||||
| Mark H. Rachesky, M.D. | $ | 38,000 | $ | 259,477 | $ | 297,477 | ||||||||||
| Michael B. Targoff(3) | $ | 25,000 | $ | 25,000 | ||||||||||||
| Sai Devabhaktuni | $ | 32,500 | $ | 103,791 | $ | 136,291 | ||||||||||
| Hal Goldstein | $ | 33,500 | $ | 103,791 | $ | 137,291 | ||||||||||
| John D. Harkey, Jr. | $ | 81,500 | (4) | $ | 103,791 | $ | 185,291 | |||||||||
| Dean A. Olmstead | $ | 25,000 | $ | 37,600 | $ | 3,355,221 | (5) | $ | 3,417,821 | |||||||
| Arthur L. Simon | $ | 89,500 | (4) | $ | 103,791 | $ | 193,291 | |||||||||
| John P. Stenbit | $ | 44,000 | $ | 103,791 | $ | 147,791 | ||||||||||
| Fees | ||||||||||||
| Earned | ||||||||||||
| or Paid | Stock | |||||||||||
| Name | in Cash | Awards(1) | Total | |||||||||
| Mark H. Rachesky, M.D. | $ | 35,500 | $ | 169,550 | $ | 205,050 | ||||||
| �� | ||||||||||||
Michael B. Targoff(2) | $ | 25,000 | — | $ | 25,000 | |||||||
| Sai Devabhaktuni | $ | 30,000 | $ | 67,820 | $ | 97,820 | ||||||
| Hal Goldstein | $ | 33,000 | $ | 67,820 | $ | 100,820 | ||||||
| John D. Harkey, Jr. | $ | 46,000 | $ | 67,820 | $ | 113,820 | ||||||
| Arthur L. Simon | $ | 50,500 | $ | 67,820 | $ | 118,320 | ||||||
| John P. Stenbit | $ | 70,500 | (3) | $ | 67,820 | $ | 138,320 | |||||
| (1) | The |
| Does not include compensation paid |
| Includes |
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| | |||
| Members: | Arthur L. Simon (Chairman), John D. Harkey, Jr., John P. Stenbit | |||
| Number of Meetings in |
The Board of Directors has also determined, as required by the Audit Committee charter, that Mr. Harkey’s service on the audit committee of more than three public companies does not impair his ability to effectively serve as a member of our Audit Committee.
| | |||
| Members: | Mark H. Rachesky, M.D. (Chairman), John D. Harkey, Jr. | |||
| Number of Meetings in |
In 2007, the Compensation Committee met three times and acted by unanimous written consent once.
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| | |||
| Members: | Michael B. Targoff (Chairman), Mark H. Rachesky, M.D. | |||
| Number of Meetings in |
| | |||
| Members: | John D. Harkey, Jr. (Chairman), Hal Goldstein | |||
| Number of Meetings in |
12
The aggregate
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fiscal years ended 20062008 and 2007 totaled approximately $15,000 and $45,000, respectively. These fees related to consulting on internal control matters and were approved by2009.
The Audit Committee has considered whether the provision of non-audit services is compatible with maintaining Deloitte’s independence.
the Committee of Sponsoring Organizations of the Treadway Commission.
2009.
2009.
2009.
SEC and PCAOB Auditing Standard No. 5.
The Audit CommitteeArthur L. Simon, ChairmanJohn D. Harkey, Jr.John P. Stenbit
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| The Audit Committee | ||
| Arthur L. Simon, Chairman | ||
| John D. Harkey, Jr. | ||
| John P. Stenbit |
| | |
| Name | Title | |
| Michael B. Targoff | Vice Chairman of the Board of Directors, Chief Executive Officer and President | |
| C. Patrick DeWitt | Senior Vice President and Chief Executive Officer of Space Systems/Loral, Inc. | |
| Avi Katz | ||
| Richard P. Mastoloni | Senior Vice President — Finance and |
The Committee’s goal is to design a
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of Peer Groups, Survey and Market Analysis” below for a description of our peer companies). In the future, with respect to newly hired executives,set total direct compensation levels for our named executive officers will be designed and are expected to fall generally between the 50th and 75th percentile for comparable positions at our peer companies if target levels for the performance measures are achieved.
In
In 2007,
| | | ||
| American Tower | EchoStar Corporation | |||
| Arris Group Inc. | Harris Corporation | |||
| Ball | Hughes Communications Inc. | |||
| The Boeing Company | ITT Corporation | |||
| Centennial Communications | Lockheed Martin Corporation | |||
| Northrop Grumman Corporation |
| · | 2008 Hewitt Total Compensation Measurement (TCM™) Database — 68 manufacturing companies with revenues between $500 million and $1.5 billion |
| · | 2008 Radford Executive Survey — 105 technology companies with revenues greater than $200 million, using an average of two distinct segments (organizations with revenues between $200 million and $1 billion and organizations with revenues greater than $1 billion) |
The Committee typically completes a similar study annually to ascertain whether the Company is paying itsLoral’s named executive officers as compared to officers in accordancesimilar positions in the data sources. The study concluded that, overall, target total direct compensation for our named executive officers, excluding Mr. Targoff, fell at or considerably below, the market median, primarily as a result of the absence of any significant long-term incentive awards to Mr. DeWitt and the absence of any long-term incentive awards to Messrs. Rein, Katz and Mastoloni. Mr. Targoff’s target total direct compensation measured between the median and the 75th percentile for the Proxy Peer Group but exceeded the 75th percentile of the Hi-Tech/GI Group. The study also concluded that, overall, target total cash compensation (base salary and annual bonus) for the named executive officers is positioned between the median and the 75th percentile of the Proxy Peer Group and slightly above the 75th percentile for the Hi-Tech/GI Group.
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| · | Base salary; |
| · | Performance-based annual cash bonus; and |
| · | Equity incentive awards. |
For 2007, the base salary and target bonus percentages of each of the named executive officers were governed by their employment agreements (as discussed below under “Employment Agreements”).
We provide a base salary for services rendered by our named executive officers throughout the year to give them resources upon which to live and to provide a portion of compensation which is assured in order to help provide them with a certain level of financial security. When determining base salary, we may consider a number of factors, to the extent they are relevant to any named executive officer in any year, including market data, prior salary, job responsibilities and changes in job responsibilities, achievement of specified Company goals, individual experience, demonstrated leadership, performance potential, Company performance and retention considerations. These factors are not weighed or ranked in any particular way.
In 2007, except for Mr. DeWitt who receivedCommittee as an ordinary course cost of living adjustment. Mr. DeWitt did not receive a salary increase of 3.5%, no adjustments were made to base salaries for any named executive officer.
| Name | Target Bonus Opportunity (as a % of salary) | |
| Michael B. Targoff | 125% | |
| C. Patrick DeWitt | 60% | |
| Harvey B. Rein | 45% | |
| Avi Katz | 45% | |
| Richard P. Mastoloni | 45% |
The structure of our MIB programfactors was also changed somewhat from that used in 2007 changed significantly from the structure during 2006 and is described below.2008. These changes were made to more accurately link a named executive officer’s bonus opportunity to actual performance. For example, the metrics related to SS/L’s performance in 2009 were refined so that one metric – SS/L Backlog EBITDA (as defined below) – focused exclusively on performance for programs already in existence at the start of the year, while another metric – SS/L New Business Benefit (as defined below) – focused exclusively on contribution from new programs awarded during the year. Through this change, programs booked during the year were not counted in both the EBITDA and new business formulas, eliminating the disproportionate effect that new programs had in MIB programs for previous years. As in 2008, 50% of Mr. Targoff’s bonus opportunity was tied to Telesat performance because a significant portion of Mr. Targoff’s time is devoted to his service on Telesat’s board of directors, to consultations with senior management at Telesat and to overseeing Loral’s rights under the Shareholders’ Agreement with PSP, its Canadian partner in Telesat.1 Also, as in 2008, Mr. DeWitt’s bonus opportunity was tied solely to performance at SS/L, but the weighting of the various components was adjusted, with the weighting of the EBITDA-related factor increasing from 25% to 50%. The Committee believed that this was appropriate because Mr. DeWitt was responsible for the performance of the Company’s SS/L subsidiary and EBITDA achievement was, in the Committee’s view, the most important metric in driving stockholder value. In addition, the weighting for individual objectives for each of Messrs. Rein, Katz and Mastoloni was increased from 25% to 33⅓% in order to more closely align their annual bonus with the factors over which they had direct responsibility and control.
same date substantially all of the assets and related liabilities of its Loral Skynet subsidiary to Telesat. Loral holds a 64% economic interest and a 33⅓% voting interest in Telesat Holdings. In this Proxy Statement, we refer to Telesat Canada as “Telesat” and to the acquisition of Telesat and the related transfer of Loral Skynet to Telesat as the “Telesat transaction.”
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| | |||
| Metric | Weighting | |||
| Corporate MIB EBITDA Formula | 31¼% | |||
| SS/L | 18¾% | |||
| Telesat MIB EBITDA Formula | ||||
| | |||
| Metric | Weighting | |||
Messrs. Rein, Katz and MastoloniThe Corporate MIB Plan for 2009 for Messrs. Rein, Katz and Mastoloni measured executive performance based on the following metrics as explained more fully below:Metric Weighting Corporate MIB EBITDA Formula 41⅔% SS/L New Business Benefit 25% Individual Objectives 33⅓% EBITDA Formula. FormulasIn evaluating our financial performance, we use “Adjusted EBITDA” as a measure of our profit or loss. For a full discussion of how we calculate Adjusted EBITDA, please see Note 1815 to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2007. For purposes2009.Corporate MIB EBITDA Formula. As stated above, 31¼% of calculatingMr. Targoff’s MIB opportunity and 41⅔% of the MIB opportunity for Messrs. Rein, Katz and Mastoloni was based on a Corporate MIB EBITDA component of our MIB Plan, ourFormula. This formula is based on SS/L Adjusted EBITDA isfrom backlog programs (“SS/L Backlog EBITDA”), less corporate expenses for the year ended December 31, 2009, adjusted for non-recurring or unusual items and non-operating changes from the plan. This means that we first measure SS/L Adjusted EBITDA from programs in backlog at January 1, 2009 on a stand-alone basis. Then, we subtract corporate expenses for the year ended December 31, 2009 and further adjustedadjust both SS/L’s Backlog EBITDA and corporate expenses to exclude the effect of unusual and non-recurring charges and non-operating charges. In 2007, these2009, in addition to the exclusions included principally severance and other costs related to SS/L Backlog EBITDA discussed below, the Telesat Canada transaction,exclusions related to corporate expenses included deferred compensation expense, expense related to SS/L Phantom SARs (see “Long-term Incentive Compensation” below) and extraordinary legal fees, costs incurred to improve efficiencies at SS/L and a writeoff incurred in connection with the planned expansion at SS/L, partially offset by net periodic pension and other benefits costs that were lower than budget.fees. In this discussion, we refer to our reported AdjustedSS/L Backlog EBITDA, less corporate expenses, as further adjusted for these exclusions, as “MIB“Corporate MIB EBITDA.” Early in 2007,In 2009, management provided the Committee and the Board with a matrix of Corporate MIB EBITDA values defining five different performance levels — achievement ofat which officers could earn between 70%, 85%, 100%, 115% and 130% of plan. At that time, there was significant uncertainty regarding when the closing of the Telesat Canada transaction would occur and the effect the acquisition would have on the Company’s Adjusted EBITDA for 2007. Adjusted EBITDA would vary significantly based on the closing date of the acquisition.their target bonuses. The Committee, therefore, approved a matrix of MIB EBITDA values for each performance level depending on the date that the acquisition was completed. TheCorporate MIB EBITDA goals were as follows dependingfollows:22Corporate MIB EBITDA Target(dollars, in millions) Percent of Target Bonus 18.5 70% 22.9 85% 27.2 100% 31.6 115% 35.9 130% Telesat MIB EBITDA Formula. As stated above, 50% of Mr. Targoff’s MIB opportunity was based on Telesat performance. This formula is based on Telesat Adjusted EBITDA, adjusted for non-recurring or unusual items and non-operating changes from the plan. In 2009, these exclusions included the effect of foreign exchange rate changes, the effect of the sale of Telstar 10, EBITDA generated by the earlier-than-planned launch and in-service date of Nimiq 5 and severance and pension expenses. In this discussion, we refer to Telesat Adjusted EBITDA, as further adjusted for these exclusions, as “Telesat MIB EBITDA.” In 2009, management provided the Committee and the Board with a matrix of Telesat MIB EBITDA values defining five different performance levels at which Mr. Targoff could earn between 70% and 130% of his target bonus. The Telesat MIB EBITDA goals were as follows:Telesat MIB EBITDA Target(CAD, in millions) Percent of Target Bonus 510.6 70% 524.1 85% 537.5 100% 550.9 115% 564.4 130% SS/L MIB EBITDA Formula. As stated above, 50% of Mr. DeWitt’s MIB opportunity was based on SS/L Adjusted EBITDA. This formula is based on SS/L Backlog EBITDA, adjusted for non-recurring or unusual items and non-operating changes from the plan. This means that we first measure SS/L Adjusted EBITDA from programs in backlog at January 1, 2009 on a stand-alone basis. Then, we adjust SS/L’s Backlog EBITDA to exclude the effect of unusual and non-recurring charges and non-operating charges. In 2009, these exclusions included principally deferred compensation expense, expense related to SS/L Phantom SARs (see “Long-term Incentive Compensation” below) and net periodic pension and other benefits costs that were higher than plan, partially offset by certain benefits achieved as a result of overhead rates being lower than plan. In this discussion, we refer to SS/L Adjusted EBITDA, as further adjusted for these exclusions, as “SS/L MIB EBITDA.” In 2009, management provided the Committee and the Board with a matrix of SS/L MIB EBITDA values defining five different performance levels at which the Telesat Canada transaction closed:officers could earn between 70% and 130% of their target bonuses. The SS/L MIB EBITDA goals were as follows: MIB EBITDA Target Jun 30 Jul 31 Aug 31 Sep 30 Oct 31 Nov 30 Dec 31 (dollars, in millions) 70% of Plan 28.2 32.1 36.3 40.5 45.9 50.8 55.0 85% of Plan 34.3 39.0 44.1 49.2 55.8 61.6 66.7 100% of Plan 40.3 45.9 51.9 57.9 65.6 72.5 78.5 115% of Plan 46.3 52.8 59.7 66.6 75.4 83.4 90.3 130% of Plan 52.4 59.7 67.5 75.3 85.3 94.3 102.1
SS/L MIB EBITDA Target (dollars, in millions) | Percent of Target Bonus | |
| 32.0 | 70% | |
| 35.8 | 85% | |
| 39.5 | 100% | |
| 43.3 | 115% | |
| 47.0 | 130% |
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Performance Formulas
SS/L Year-End Cash Balance Target (dollars, in millions) | Percent of Target Bonus | |
| 48.3 | 70% | |
| 58.7 | 85% | |
| 69.0 | 100% | |
| 79.4 | 115% | |
| 89.7 | 130% |
In 2008, SS/L achieved performance at close to the 100% level with respect to similar (but not identical) performance targets. The Company believes that the actual dollar targets of the SS/L New Business Benefit formula are proprietary and confidential and that disclosure of such targets would be competitively harmful to the Company.
| · | provide leadership and oversight of the Company’s financial function; |
| · | timely and accurately file all SEC reports and improve the efficiency of periodic closes and financial reporting; |
| · | explore pension plan funding alternatives; and |
| · | complete transition as a result of restructuring efforts. |
| · | ensure timely (by SEC due dates) and accurate filing of all SEC reports under control of the legal department and other SEC support as required; |
| · | effectively manage all litigation; |
| · | provide legal support as required for SS/L and joint venture businesses and Company transactions; |
| · | manage and oversee corporate governance functions; and |
| · | design and implement a long-term incentive plan for SS/L and corporate employees. |
| · | manage the Company’s and SS/L’s Treasury groups to reach their objectives and support Treasury initiatives; |
| · | ensure and monitor funding and liquidity of the Company and SS/L at all times; |
| · | manage cash, currency and interest rate exposure; |
| · | maintain bank and institutional relationships for credit and services; |
| · | chair the Investment Committee and oversee management of our pension plan investments and 401(k) fund availability; |
| · | develop and execute other financing, investment, acquisition and/or strategic opportunities, at the direction of the CEO; |
| · | support financial aspects of Company and SS/L transactions, contracts and financings; and |
| · | oversee and manage investor relations and interface with institutional investors. |
The Telesat Canada transaction closed on October 31, 2007. Accordingly, the MIB EBITDA target for 2007 was $65.6 million, which was the target established for an October 31, 2007 closing of the Telesat Canada transaction. In 2007, the Company achieved MIB EBITDA of $65.5 million, resulting in achievement of 99.9% of the MIB EBITDA goal portion of the award.maximum 130% level. With respect to the SS/L formula,executive performance awards, SS/L senior executives achieved 114.0%awards of the contractmaximum 20.75% of base salary with respect to SS/L MIB EBITDA. SS/L senior executives did not achieve any additional award with respect to SS/L New Business Benefit, nor were their bonuses increased or decreased as a result of qualitative performance. With respect to individual objectives for Messrs. Rein, Katz and Mastoloni, the Committee awarded them 105% of their targets because of their outstanding performance component, 0.0% of the contribution from new business componentin fully, effectively and 129.9% of the 2007 spending component.timely achieving their objectives as well as achieving other tasks and assignments beyond their objectives. Taking into account these achievement levels and the relative weighting of each component resulted in bonus payments to the corporate named executives officersfor Messrs. Targoff, DeWitt, Rein, Katz and Mastoloni at an aggregate of 96.2%130.0%, 164.5%, 121.7%, 121.7% and 121.7% of their targets. Mr. DeWitt’s bonus was determined solely based on the SS/L formula and qualitative factors. Taking into account solely the SS/L achievement levels and the relative weighting of each component plus a 13.0% increase based on qualitative factors resulted in an aggregate bonus payment for Mr. DeWitt of 97.2% of his target. In addition, based on Mr. Targoff’s recommendation, the Committee
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approved a discretionary increase in Mr. DeWitt’s bonus to 120% of his target, in recognition of his efforts to greatly reduce the amount of capital spending necessary in connection with SS/L’s facility expansion and his involvement in certain strategic initiatives, principally related to broadening SS/L’s customer base.
In connection with the Telesat Canada transaction, Mr. Targoff requested that the Committee authorize a pool of $1 million to be used to pay discretionary bonuses to certain named executive officers and select other employees of the Company who were instrumental in the Company’s achieving the successful consummation of the transaction and its financing. Mr. Targoff recommended, and the Committee approved, special one-time bonus awards of $300,000 for Mr. Mastoloni, $150,000 for Mr. Rein and $125,000 for Mr. Katz in recognition of the responsibility they assumed, the effort they expended and their overall performance in the transaction.
The
The Committee administers the Amended and Restated 2005 Stock Incentive Plan and determines the level and type of awards granted to the named executive officers.
| · | The level of responsibility of each named executive officer; |
| · | The contributions of each named executive officer to our financial results; |
| · | Retention considerations; and |
| · | Practices of companies in our peer group. |
Prior to making a grant, we also consider our stock price, the volatility of the stock price and potential dilution.
The Committee did not grant any equity-based incentive awards during 2007, but, as discussed below, option awards to our CEO and former CFO that were granted in 2006 became effective in 2007. In 2006, we did not have shares available for grant under our 2005 Stock Incentive Plan, and, accordingly, did not grant any equity-based awards, with the exception of certain awards to our CEO and former CFO. The CEO’s option award was granted as his initial equity-based award in accordance with his employment agreement with
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a grant date of March 28, 2006. The former CFO’s option award was granted in accordance with the amendment to his employment agreement pursuant to which he agreed to reduce his base salary (see “Base Salary” above) with a grant date of June 14, 2006. These awards were subject to stockholder approval of our Amended and Restated 2005 Stock Incentive Plan which was obtained on May 22, 2007 at our 2007 annual meeting of stockholders, and the awards became effective on that date. In addition, pursuant to our Amended and Restated 2005 Stock Incentive Plan, one-third of the outstanding, unvested options held by our named executive officers other than Mr. DeWitt (i.e. 25% of the total number of options granted to such officers) were subject to accelerated vesting and vested on October 31, 2007 upon consummation of the Telesat Canada transaction.
Although the Committee did approve restricted stock awards to non-executive employees in 2007, equity-based awards in 2006 and 2007 to our named executive officers have been limited to the option grants to our CEO and our former CFO as discussed above. In 2008, however, the Committee intends to grant equity-based awards to named executive officers and other employees. It is the Committee’s intention to determine the nature and value of these awards by first looking both at market conditions and at the estimated value of the proposed equity-based awards to develop ranges of awards for personnel at various levels (including both executive officers and other employees). After developing the potential range of awards, the Committee will seek recommendations from management as to the value of the awards to be granted to specific individuals. The Committee will review the recommendations, consider the total recommended grant size as compared to outstanding shares and expected dilution and make the final grant decision. Although we currently expect that future equity awards are more likely to be in the form of shares of restricted stock, if stock options are the selected form of award, the Committee will use the Black-Scholes pricing model (a formula widely used to value exchange-traded options and determine the present value of the executive option award) to determine the value of the awards and for comparison to executives in our peer group.
To date, all option grants have had an exercise price equal to the fair market valuewith those of our common stock onstockholders and provide incentive to them to increase stockholder value. The following describes the grant date. We do not grant equity-based awardsgrants made in anticipation of the release of material nonpublic information, nor do we time the release of material nonpublic information to coincide with our equity-based award grant dates. We have not yet adopted a fixed policy or practice with regard to the timing of equity-based award grants but may consider doing so in the future. We do not have a specific policy regarding ownership of Company stock by our named executive officers. Our policy on insider trading and confidentiality generally restricts executive officers from engaging in short-term or speculative transactions involving our stock, including short sales and publicly traded options.
| · | Stock Options. In June 2009, Mr. Targoff was awarded an option to purchase 125,000 shares of Voting Common Stock, with an exercise price of $35 per share. The option is vested with respect to 25% of the underlying shares upon grant, with the remainder of the option subject to vesting as to 25% of the underlying shares on each of the first three anniversaries of the grant date. The option expires on June 30, 2014. Vesting is subject to full or partial acceleration upon Mr. Targoff’s death, disability, termination of employment without cause or resignation for good reason, and upon a change of control of Loral. The Committee set the exercise price of these options at a price well above the $25.13 closing price of our stock on the grant date in order to align Mr. Targoff’s interest with that of the stockholders such that Mr. Targoff would realize benefit from exercise of the options only in the event of a significant increase in stockholder value. |
| · | Restricted Stock Units. In March 2009, the Committee approved grants of restricted stock units for Messrs. Targoff and DeWitt with respect to service in 2008. In June 2009, the Committee approved grants of restricted stock units for Messrs. Rein, Katz and Mastoloni. Each restricted stock unit generally provides the recipient with the right to receive one share of Voting Common Stock or cash equal to one share of such stock, at the option of the Company, on the settlement date. The Committee elected to make these equity incentive awards in the form of restricted stock units in order to minimize the dilutive effect on stockholders. The following describes the terms and conditions of the restricted stock units that were granted. |
| o | Targoff. Mr. Targoff was awarded 85,000 restricted stock units (the “Initial Grant”) on March 5, 2009. In addition, the Company agreed to grant to Mr. Targoff 50,000 restricted stock units on the first anniversary of the grant date and another 40,000 restricted stock units on the second anniversary of the grant date (the “Subsequent Grants”). Vesting of the Initial Grant requires the satisfaction of two conditions: a time-based vesting condition and a stock price vesting condition. No vesting of the Initial Grant will occur unless both vesting conditions are satisfied. Because both the time-based vesting condition and the stock-price vesting condition must be satisfied for the Initial Grant to vest, to the extent that one vesting condition is satisfied prior to the satisfaction of the other vesting condition, vesting will be delayed until the date that both vesting conditions are satisfied. Vesting of the Subsequent Grants is subject only to the stock-price vesting condition. The time-based vesting condition for the Initial Grant was satisfied upon Mr. Targoff’s continued employment through March 5, 2010, the first anniversary of the grant date. The stock price vesting condition, which applies to both the Initial Grant and the Subsequent Grants, is satisfied only when the average closing price of our stock over a period of 20 consecutive trading days is at or above $25 during the period commencing on the grant date and ending on March 31, 2013. This stock price vesting condition was satisfied during 2009. The Company’s obligation to make the Subsequent Grants is subject to full or partial acceleration upon Mr. Targoff’s death, disability, termination of employment without cause or resignation for good reason or upon a change of control of Loral. Vested restricted stock units, if any, will be settled, and cash or stock will be distributed to Mr. Targoff or his beneficiary, on the earliest to occur of (w) March 31, 2013; (x) Mr. Targoff’s death or disability; (y) Mr. Targoff’s separation from service; and (z) a change of control of Loral. The Committee believed that imposing the stock-price vesting condition at a price well above the $12.09 closing price of our stock on the grant date would align Mr. Targoff’s interest with that of the stockholders such that Mr. Targoff would realize benefit from the restricted stock units only in the event of a significant increase in stockholder value. |
| o | DeWitt. Mr. DeWitt was awarded 25,000 restricted stock units on March 5, 2009 with the following vesting schedule: 66.67% of Mr. DeWitt’s restricted stock units vest on March 5, 2010, and 4.16% of his restricted stock units vest over each of the next eight quarters on the second Monday of each June, September, December and March, through March 12, 2012, provided Mr. DeWitt remains employed or is serving on the board of SS/L on each vesting date. Vesting is subject to full or partial acceleration upon Mr. DeWitt’s death, disability or termination of employment without cause, or upon a change of control of Loral or SS/L. Vested restricted stock units will be settled, and cash or stock will be distributed to Mr. DeWitt, on the earliest to occur of (w) March 12, 2012; (x) Mr. DeWitt’s death or disability; (y) Mr. DeWitt’s separation from service; and (z) a change of control of Loral or SS/L. |
| o | Rein, Katz and Mastoloni. Messrs. Rein, Katz and Mastoloni were each awarded 1,500 Loral restricted stock units on June 16, 2009. Vesting of the restricted stock units requires the satisfaction of two conditions: a time-based vesting condition and a stock price vesting condition. No vesting will occur unless both vesting conditions are satisfied. Because both the time-based vesting condition and the stock-price vesting condition must be satisfied for the restricted stock units to vest, to the extent that one vesting condition is satisfied prior to the satisfaction of the other vesting condition, vesting will be delayed until the date that both vesting conditions are satisfied. The time-based vesting condition has the following vesting schedule: 25% vest immediately upon grant and 6¼% vest over each of the next twelve quarters on the second Monday of each September, December, March and June, through June 11, 2012, provided the named executive officer remains employed on each vesting date. The stock price vesting condition will be satisfied only when the average closing price of the Voting Common Stock over a period of 20 consecutive trading days is at or above $45 during the period commencing on the grant date and ending on June 30, 2016. The time-based vesting condition is subject to full or partial acceleration upon death, disability or termination of employment without cause, and upon a change of control of Loral. Vested restricted stock units will be settled, and cash or stock will be distributed to the named executive officer upon vesting. The restricted stock units expire on June 30, 2016. The Committee believed that imposing the stock-price vesting condition at a price well above the $25.13 closing price of our stock on the grant date would align the interests of Messrs. Rein, Katz and Mastoloni with that of the stockholders such that they would realize benefit from the restricted stock units only in the event of a significant increase in stockholder value. |
| · | SS/L Phantom SARs. In October 2009, the Committee approved a grant of SS/L Phantom SARs for Mr. DeWitt with respect to service in 2009. In June 2009, the Committee approved grants of SS/L Phantom SARs for Messrs. Rein, Katz and Mastoloni with respect to service in 2008 and 2009. As described above, the SS/L Phantom SARs were granted in order to incentivize the recipients to increase the equity value of SS/L in future years above the equity value established for SS/L as of the end of 2008. The following describes the terms and conditions of the SS/L Phantom SARs that were granted. |
| o | DeWitt. Mr. DeWitt was awarded 50,000 SS/L Phantom SARs on October 15, 2009. The SS/L Phantom SARs granted to him have the following vesting schedule: 25% vest on March 18, 2010, 2011, 2012 and 2013, respectively. These SS/L Phantom SARs expire on March 18, 2016. The other terms and conditions of his SS/L Phantom SARs are as described above. |
| o | Rein, Katz and Mastoloni. Messrs. Rein, Katz and Mastoloni were each awarded 35,000 SS/L Phantom SARs on June 16, 2009. The SS/L Phantom SARs granted to them have the following vesting schedule: 50% vest on March 18, 2010, 25% vest on March 18 of 2011 and 25% vest on March 18, 2012. These SS/L Phantom SARs expire on March 18, 2016. The other terms and conditions of their SS/L Phantom SARs are as described above. |
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upon a change in controloptions or, certain specified sale events as defined in our Amended and Restated 2005 Stock Incentive Plan orif payout upon termination of employment recipientsis delayed in order to comply with Section 409A of these deferred compensation arrangements vestthe Internal Revenue Code, upon termination of employment. As of December 31, 2009, all named executive officers have vested in their accounts ratably over four years fromin full. The vested balance as of December 31, 2009 for the datenamed executive officers (except Mr. DeWitt) was the full value originally accrued to the accounts. For Mr. DeWitt, the vested balance includes $177,019 of grant at the ratedeferred compensation that became locked upon exercise of 25% per year. These deferredoptions in 2007 plus interest earned thereon after such exercise. Deferred amounts, willif any, become payable on the earlier of the recipient’s termination of employment, a change in control of the Company or seven years from the date of grant. Pursuant to our Amended and Restated 2005 Stock Incentive Plan, one-third of the outstanding, unvested deferred compensation units held by our named executive officers other than Mr. DeWitt (i.e. 25% of the total number of deferred compensation units granted to such officers) were subject to accelerated vesting and vested on October 31, 2007 upon consummation of the Telesat Canada transaction.
Upon our emergence from bankruptcy in November 2005, we entered into employment agreements with each of our named executive officers (other than Mr. Targoff who was not an officer at the time) which
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expired in November 2007. On March 28, 2006, we entered into an employment agreement with Mr. Targoff for a term of approximately five years. Mr. Targoff is the only one of our named executive officers with a current employment agreement.
Mr. Targoff’s employment agreement also provides for an additional equity award to be granted to him for 2008 having a comparable Black-Scholes or present value or economic value of $2.875 million (which is 50% of the value of the stock option granted to him in 2006). This grant will be contingent upon Mr. Targoff performing at the “target level” of financial performance as annually approved by the Board in 2006 and 2007 and as a result of Mr. Targoff earning his target bonus for the 2006 and 2007 fiscal years. For 2006 and 2007, Mr. Targoff earned 130% and 96.2% of his target bonus, respectively, thereby earning an average of 113.1% of his target bonus for those two years. Mr. Targoff has asked, and expects, the Committee to issue him an equity award for 2008 in light of these achievements.
options.
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Upon emergence from bankruptcy in November 2005, the Company entered into employment agreements with each
| | | | | ||||||||||||
| Executive | Position During 2007 | Annual Salary(1) | Target Annual Bonus as a Percentage of Salary | Shares Underlying Initial Option Grant | ||||||||||||
| Harvey B. Rein | Vice President and Controller | $ 427,232 | 34.0% | 50,000 | ||||||||||||
| Richard P. Mastoloni | Vice President and Treasurer | $ 432,640 | 34.0% | 40,000 | ||||||||||||
| Avi Katz | Vice President, General Counsel and Secretary | $ 438,048 | 40.0% | 50,000 | ||||||||||||
| C. Patrick DeWitt | Vice President, and Chief Executive Officer of SS/L | $ 519,590 | 50.0% | 75,000 | ||||||||||||
| Eric J. Zahler(2) | President and Chief Operating Officer | $1,248,000 | 40.0% | 120,000 | ||||||||||||
| Richard J. Townsend(2) | Executive Vice President and Chief Financial Officer | $ 575,000 | 69.6% | 85,000 | ||||||||||||
These employment agreements expired on November 21, 2007, and, as such, all active named executives officers (except for Mr. Targoff whose employment agreement with the Company is described above) are currently working for the Company on an “at will” basis. Their compensation levels through the end of 2007
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were equivalent to those set forth in their employment agreements, except in the case of Mr. DeWitt who received an ordinary course cost of living increase in base salary.
Any termination or change in control benefits that had been set forth under the expired employment agreements have also expired, and the executives are eligible for termination benefits only as set forth in the Company’s Severance Policy for Corporate Officers or as set forth in individual equity award agreements as described below under “Compensation Tables — Potential Change in Control and Other Post-Employment Payments.”
Since the employment agreements for our named executive officers other than Mr. Targoff have expired, on a going forward basis, the Committee intends to follow the following procedure with respect to the setting of compensation for our named executive officers (other than Mr. Targoff whose compensation is governed by his employment agreement as discussed above). Generally, the Committee intends to begin its evaluation of total direct compensation for each year in the late fall of the prior year, meeting to preliminarily discuss compensation and related matters. During these meetings, matters such as changes in peer group market data, plan philosophy and design, expected performance and historical performance will be discussed. Final determinations of salaries, annual bonus targets, long-term incentive compensation awards and plan designs will be targeted to be made at a Committee meeting in the spring, which generally is held shortly after the public release of the prior year’s financial results. At that meeting, the Committee also will review prior year performance and the status of prior awards of long-term incentive compensation. The Committee believes that considering these matters at a spring meeting will allow the Committee not only to factor in the prior year’s financial results and the current year’s operating plan but also will allow it to assess prior years’ compensation. Generally, it is our intention that stock incentive awards will be granted effective as of the annual stockholder meeting date. In the ordinary course, it is also our intention to effect salary changes annually to reflect cost of living adjustments. Occasionally, grants of long-term incentive compensation or changes in compensation may be made at other meetings and for other reasons, such as promotions, new hiring or other special situations.
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received by them exceed an amount approximating three times their average annual compensation. The excise tax applies to all payments over one times annual compensation, determined by a five year average. Under Section 280G of the Internal Revenue Code, a company also loses its tax deduction for these “excess” payments. The employment agreement with our CEO provides that all severance benefits under that agreement that result from a change-in-control will be “grossed up,” if necessary, so that we reimburse him for these tax consequences. Although this gross-up provision and loss of deductibility increase the severance expense to us, the Committee believed it was important that the effects of this tax code provision not negate the protections which we intend to provide to our CEO in the event of a change in control. The Committee also believed it was necessary to provide this benefit to our CEO in order to encourage him to take the position of CEO in March 2006 when we were negotiating the terms of his employment with us.
The Compensation CommitteeMark H. Rachesky, M.D., ChairmanJohn D. Harkey, Jr.
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| | | | | | | | | ||||||||||||||||||||||||
| Mark H. Rachesky, M.D., Chairman | ||||||||||||||||||||||||||||||||
| John D. Harkey, Jr. | ||||||||||||||||||||||||||||||||
| Change in | ||||||||||||||||||||||||||||||||||
| Pension | ||||||||||||||||||||||||||||||||||
| Value and | ||||||||||||||||||||||||||||||||||
| Non-Equity | Non-Qualified | |||||||||||||||||||||||||||||||||
| Incentive | Deferred | |||||||||||||||||||||||||||||||||
| Stock | Option | Plan | Compensation | All Other | ||||||||||||||||||||||||||||||
| Name and Principal | Salary(2) | Bonus(3) | Awards(4) | Awards(5) | Compensation(6) | Earnings(7) | Compensation(8) | Total(9) | ||||||||||||||||||||||||||
Position | Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||
| Michael B. Targoff | 2009 | $ | 953,654 | $ | 1,489,513 | $ | 1,423,488 | $ | 1,543,750 | $ | 613,000 | $ | 1,076,900 | $ | 7,100,305 | |||||||||||||||||||
| Vice Chairman of | 2008 | $ | 957,308 | $ | 1,445,188 | $ | 428,000 | $ | (699,573 | ) | $ | 2,130,923 | ||||||||||||||||||||||
| the Board, Chief Executive | 2007 | $ | 953,654 | $ | 19,148,250 | $ | 1,142,375 | $ | 300,000 | $ | 586,063 | $ | 22,130,342 | |||||||||||||||||||||
| Officer and President | ||||||||||||||||||||||||||||||||||
C. Patrick DeWitt(1) | 2009 | $ | 475,186 | $ | 310,250 | $ | 436,500 | $ | 469,000 | $ | 286,000 | $ | 544,940 | $ | 2,521,876 | |||||||||||||||||||
| Senior Vice | 2008 | $ | 474,686 | $ | 338,000 | $ | 196,000 | $ | (360,006 | ) | $ | 648,680 | ||||||||||||||||||||||
| President and Chief | 2007 | $ | 401,140 | $ | 45,000 | $ | 192,296 | $ | 101,000 | $ | 190,578 | $ | 930,014 | |||||||||||||||||||||
| Executive Officer of Space Systems/Loral, Inc. | ||||||||||||||||||||||||||||||||||
| Harvey B. Rein | 2009 | $ | 482,801 | $ | 27,983 | $ | 120,750 | $ | 267,864 | $ | 225,000 | $ | 494,456 | $ | 1,618,854 | |||||||||||||||||||
| Senior Vice President and | 2008 | $ | 478,654 | $ | 240,415 | $ | 125,000 | $ | (344,956 | ) | $ | 499,113 | ||||||||||||||||||||||
| Chief Financial Officer | 2007 | $ | 428,875 | $ | 150,000 | $ | 139,739 | $ | 32,000 | $ | 258,213 | $ | 1,008,827 | |||||||||||||||||||||
| Avi Katz | 2009 | $ | 480,862 | $ | 27,983 | $ | 120,750 | $ | 266,789 | $ | 105,000 | $ | 494,971 | $ | 1,496,355 | |||||||||||||||||||
| Senior Vice | 2008 | $ | 476,731 | $ | 239,450 | $ | 62,000 | $ | (344,441 | ) | $ | 433,740 | ||||||||||||||||||||||
| President, General Counsel | 2007 | $ | 439,733 | $ | 125,000 | $ | 168,561 | $ | 23,000 | $ | 258,678 | $ | 1,014,972 | |||||||||||||||||||||
| and Secretary | ||||||||||||||||||||||||||||||||||
| Richard P. Mastoloni | 2009 | $ | 492,965 | $ | 27,983 | $ | 120,750 | $ | 273,504 | $ | 75,000 | $ | 396,667 | $ | 1,386,869 | |||||||||||||||||||
| Senior Vice President of | 2008 | $ | 488,731 | $ | 256,389 | $ | 45,000 | $ | (274,876 | ) | $ | 515,244 | ||||||||||||||||||||||
| Finance and Treasurer | 2007 | $ | 434,304 | $ | 300,000 | $ | 141,508 | $ | 13,000 | $ | 207,579 | $ | 1,096,391 | |||||||||||||||||||||
| (1) | |||||||||||||||||||||||||||||||||||
Mr. DeWitt retired from his position as Senior Vice President of | |||||||||||||||||||||||||||||||||||
| currently serves as Chairman of the Board of SS/L. | |||||||||||||||||||||||||||||||||||
| (2) |
| (3) | Special discretionary bonuses were awarded to Messrs. Rein, Katz and Mastoloni |
| (4) |
| (5) | For 2009, amounts |
| Amounts shown represent the annual incentive bonuses earned under our Management Incentive Bonus Plan. See |
| (7) | For 2009, represents the aggregate increase in the actuarial present value of pension benefits between fiscal year-end 2008 and fiscal year-end 2009. For 2008, represents the aggregate increase in the actuarial present value of pension benefits between fiscal year-end 2007 and fiscal year-end 2008. For 2007, represents the aggregate increase in the actuarial present value of pension benefits between fiscal year-end 2006 and fiscal year-end 2007. |
27
| The following table describes each component of the “All Other Compensation” column in the Summary Compensation Table above. |
| | | | | | | | |||||||||||||||||||||
| Name | Year | Value of Insurance Premiums Paid | Company Matching 401(k) Contributions | Medical Executive Reimbursement Expense | Deferred Compensation Expense | Other | Total | |||||||||||||||||||||
| Michael B. Targoff | 2007 | $ | 17,755 | $ | 9,000 | $ | 4,932 | $ | 504,867 | $ | 49,509 | $ | 586,063 | |||||||||||||||
| 2006 | $ | 34,901 | $ | 7,920 | $ | 4,932 | $ | 252,332 | $ | 63,706 | $ | 363,791 | ||||||||||||||||
| Harvey B. Rein | 2007 | $ | 8,206 | $ | 9,000 | $ | 4,982 | $ | 236,025 | $ | 258,213 | |||||||||||||||||
| Richard P. Mastoloni | 2007 | $ | 4,827 | $ | 9,000 | $ | 4,932 | $ | 188,820 | $ | 207,579 | |||||||||||||||||
| Avi Katz | 2007 | $ | 8,721 | $ | 9,000 | $ | 4,932 | $ | 236,025 | $ | 258,678 | |||||||||||||||||
| 2006 | $ | 8,721 | $ | 7,924 | $ | 4,932 | $ | 117,965 | $ | 139,542 | ||||||||||||||||||
| C. Patrick DeWitt | 2007 | $ | 8,627 | $ | 4,932 | $ | 177,019 | $ | 190,578 | |||||||||||||||||||
| 2006 | $ | 7,841 | $ | 4,932 | $ | 176,948 | $ | 189,721 | ||||||||||||||||||||
| Eric J. Zahler | 2007 | $ | 16,430 | $ | 9,000 | $ | 4,932 | $ | 817,875 | $ | 1,670,233 | $ | 2,518,470 | |||||||||||||||
| 2006 | $ | 21,746 | $ | 7,928 | $ | 4,932 | $ | 283,116 | $ | 317,722 | ||||||||||||||||||
| Richard J. Townsend | 2007 | $ | 14,235 | $ | 9,000 | $ | 4,982 | $ | 579,328 | $ | 607,545 | |||||||||||||||||
| 2006 | $ | 14,235 | $ | 7,920 | $ | 4,932 | $ | 200,541 | $ | 227,628 | ||||||||||||||||||
As
| Value of | Company | Medical | ||||||||||||||||||||||||
| Insurance | Matching | Executive | Deferred | |||||||||||||||||||||||
| Premiums | 401(k) | Reimbursement | Compensation | |||||||||||||||||||||||
| Name | Year | Paid | Contributions | Expense | Expense | Other | Total | |||||||||||||||||||
| Michael B. Targoff | 2009 | $ | 25,105 | $ | 9,800 | $ | 4,400 | $ | 1,009,734 | $ | 27,861 | $ | 1,076,900 | |||||||||||||
| 2008 | $ | 25,105 | $ | 9,200 | $ | 4,932 | $ | (785,656 | ) | $ | 46,846 | $ | (699,573 | ) | ||||||||||||
| 2007 | $ | 17,755 | $ | 9,000 | $ | 4,932 | $ | 504,867 | $ | 49,509 | $ | 586,063 | ||||||||||||||
| C. Patrick DeWitt | 2009 | $ | 9,484 | $ | 4,400 | $ | 531,056 | $ | 544.940 | |||||||||||||||||
| 2008 | $ | 8,984 | $ | 4,932 | $ | (373,922 | ) | $ | (360,006 | ) | ||||||||||||||||
| 2007 | $ | 8,627 | $ | 4,932 | $ | 177,019 | $ | 190,578 | ||||||||||||||||||
| Harvey B. Rein | 2009 | $ | 8,206 | $ | 9,800 | $ | 4,400 | $ | 472,050 | $ | 494,456 | |||||||||||||||
| 2008 | $ | 8,206 | $ | 9,200 | $ | 4,932 | $ | (367,294 | ) | $ | (344,956 | ) | ||||||||||||||
| 2007 | $ | 8,206 | $ | 9,000 | $ | 4,982 | $ | 236,025 | $ | 258,213 | ||||||||||||||||
| Avi Katz | 2009 | $ | 8,721 | $ | 9,800 | $ | 4,400 | $ | 472,050 | $ | 494,971 | |||||||||||||||
| 2008 | $ | 8,721 | $ | 9,200 | $ | 4,932 | $ | (367,294 | ) | $ | (344,441 | ) | ||||||||||||||
| 2007 | $ | 8,721 | $ | 9,000 | $ | 4,932 | $ | 236,025 | $ | 258,678 | ||||||||||||||||
| Richard P. Mastoloni | 2009 | $ | 4,827 | $ | 9,800 | $ | 4,400 | $ | 377,640 | $ | 396,667 | |||||||||||||||
| 2008 | $ | 4,827 | $ | 9,200 | $ | 4,932 | $ | (293,835 | ) | $ | (274,876 | ) | ||||||||||||||
| 2007 | $ | 4,827 | $ | 9,000 | $ | 4,932 | $ | 188,820 | $ | 207,579 | ||||||||||||||||
.
2006.
For Messrs. Rein, and Townsend, the “Medical Executive Reimbursement Expense” column in the table above for 2007 includes a $50 gift certificate awarded in connection with our medical plan.
28
| (9) | The “Total” column for 2008 includes the effect of the loss sustained by each named executive officer in his deferred compensation account due to the value of our stock on December 31, 2008 being below $19 (the threshold above which the deferred compensation accounts have positive value). See Note 8 above. Without giving effect to these losses, total compensation for 2008 for Messrs. Targoff, DeWitt, Rein ,Katz and Mastoloni would have been $2,916,579, $1,022,602, $866,407, $801,034 and $809,079, respectively. |
2009
| | | | | | | | | ||||||||||||||||||||||||
| Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | All Other Option Awards: Number of Securities Underlying Options(2) (#) | Exercise or Base Price of Option Awards ($/sh) | Effective Date Fair Value of Option Awards ($) | |||||||||||||||||||||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Effective Date | |||||||||||||||||||||||||||
| Michael B. Targoff | 5/29/07 | $ | 831,250 | $ | 1,187,500 | $ | 1,543,750 | |||||||||||||||||||||||||
| 3/28/06 | 5/22/2007 | 825,000 | $ | 26.915 | $ | 19,148,250 | ||||||||||||||||||||||||||
| Harvey B. Rein | 5/29/07 | $ | 101,681 | $ | 145,259 | $ | 188,837 | |||||||||||||||||||||||||
| Richard P. Mastoloni | 5/29/07 | $ | 102,969 | $ | 147,098 | $ | 191,227 | |||||||||||||||||||||||||
| Avi Katz | 5/29/07 | $ | 122,653 | $ | 175,219 | $ | 227,785 | |||||||||||||||||||||||||
| C. Patrick DeWitt | 5/29/07 | $ | 158,197 | $ | 197,747 | $ | 237,296 | |||||||||||||||||||||||||
| Eric J. Zahler | 5/29/07 | $ | 320,320 | $ | 457,600 | $ | 594,880 | |||||||||||||||||||||||||
| Richard J. Townsend | 5/29/07 | $ | 280,140 | $ | 400,200 | $ | 520,260 | |||||||||||||||||||||||||
| 6/14/06 | 5/22/2007 | 20,000 | $ | 27.135 | $ | 499,200 | ||||||||||||||||||||||||||
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Possible Payouts Under Equity Incentive Plan Awards(2) | All Other | All Other | Exercise or Base | Grant Date | |||||||||||||||||||||||||||||||||
| Number of | of Shares | Securities | Price of | and | ||||||||||||||||||||||||||||||||||
| Phantom | Target | of Stock | Underlying | Option | Option | |||||||||||||||||||||||||||||||||
| Grant | Threshold | Target | Maximum | SS/L SARs | Value | or Units | Options | Awards | Awards | |||||||||||||||||||||||||||||
| Name | Date | ($) | ($) | ($) | (#) | ($) | (#) | (#) | ($/sh) | ($) | ||||||||||||||||||||||||||||
| Michael B. Targoff | $ | 831,250 | $ | 1,187,500 | $ | 1,543,750 | ||||||||||||||||||||||||||||||||
| 3/5/2009 | 175,000 | (3) | $ | 1,489,513 | ||||||||||||||||||||||||||||||||||
| 6/16/2009 | 125,000 | $ | 35.00 | $ | 1,423,488 | |||||||||||||||||||||||||||||||||
C. Patrick DeWitt(4) | $ | 199,578 | $ | 285,112 | $ | 475,186 | ||||||||||||||||||||||||||||||||
| 3/5/2009 | 25,000 | $ | 310,250 | |||||||||||||||||||||||||||||||||||
| 10/15/2009 | 50,000 | $ | 703,500 | $ | 436,500 | |||||||||||||||||||||||||||||||||
| Harvey B. Rein | $ | 154,114 | $ | 220,163 | $ | 286,211 | ||||||||||||||||||||||||||||||||
| 6/16/2009 | 1,500 | $ | 27,983 | |||||||||||||||||||||||||||||||||||
| 6/16/2009 | 35,000 | $ | 492,450 | $ | 120,750 | |||||||||||||||||||||||||||||||||
| Avi Katz | $ | 153,495 | $ | 219,278 | $ | 285,062 | ||||||||||||||||||||||||||||||||
| 6/16/2009 | 1,500 | $ | 27,983 | |||||||||||||||||||||||||||||||||||
| 6/16/2009 | 35,000 | $ | 492,450 | $ | 120,750 | |||||||||||||||||||||||||||||||||
| Richard P. Mastoloni | $ | 157,358 | $ | 224,798 | $ | 292,237 | ||||||||||||||||||||||||||||||||
| 6/16/2009 | 1,500 | $ | 27,983 | |||||||||||||||||||||||||||||||||||
| 6/16/2009 | 35,000 | $ | 492,450 | $ | 120,750 | |||||||||||||||||||||||||||||||||
| (1) | Amounts represent the annual incentive opportunity available under the Company’s |
| (2) |
| (3) | Mr. Targoff was granted 85,000 restricted stock units on March 5, 2009, and |
| The amounts shown for Mr. DeWitt in the “Estimated Possible Payouts Under Non-Equity Incentive Plan Awards” columns represent the threshold, target and maximum annual incentive opportunity based on Mr. DeWitt’s actual cash base salary of |
29
| | | | | | |||||||||||||||
| Option Awards | ||||||||||||||||||||
| Name | Option Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price(1) ($) | Option Expiration Date | |||||||||||||||
| Michael. B. Targoff(2) | 12/21/2005 | 80,214 | 26,738 | $ | 28.441 | 12/21/2012 | ||||||||||||||
| 3/28/2006 | 481,250 | 343,750 | $ | 26.915 | 3/28/2011 | |||||||||||||||
| Harvey B. Rein | 12/21/2005 | 37,500 | 12,500 | $ | 28.441 | 12/21/2012 | ||||||||||||||
| Richard P. Mastoloni | 12/21/2005 | 30,000 | 10,000 | $ | 28.441 | 12/21/2012 | ||||||||||||||
| Avi Katz | 12/21/2005 | 37,500 | 12,500 | $ | 28.441 | 12/21/2012 | ||||||||||||||
| C. Patrick DeWitt | 12/21/2005 | 18,750 | 37,500 | $ | 28.441 | 12/21/2012 | ||||||||||||||
| Eric J. Zahler | 12/21/2005 | 120,000 | — | $ | 28.441 | 12/21/2012 | ||||||||||||||
| Richard J. Townsend(2) | 12/21/2005 | 63,750 | 21,250 | $ | 28.441 | 12/21/2012 | ||||||||||||||
| 6/14/2006 | 10,000 | 10,000 | $ | 27.135 | 6/14/2013 | |||||||||||||||
| Option Awards | Stock Awards | ||||||||||||||||||||||||
| Equity | |||||||||||||||||||||||||
| Incentive | |||||||||||||||||||||||||
| Plan | �� | ||||||||||||||||||||||||
| Awards: | Market | ||||||||||||||||||||||||
| Number of | Number of | Number of | Number of | Value of | |||||||||||||||||||||
| Securities | Securities | Securities | Shares or | Shares or | |||||||||||||||||||||
| Underlying | Underlying | Underlying, | Units of | Units of | |||||||||||||||||||||
| Unexercised | Unexercised | Unexercised | Option | Stock That | Stock That | ||||||||||||||||||||
| Options | Options | Unearned | Exercise | Option | Have Not | Have Not | |||||||||||||||||||
| Exercisable | Unexercisable | Options | Price | Expiration | Vested | Vested | |||||||||||||||||||
| Name | (#) | (#) | (#) | ($) | Date | (#) | ($) | ||||||||||||||||||
| Michael. B. Targoff | 106,952 | — | $ | 28.441 | 12/21/2012 | 175,000 | (1) | $ | 5,531,750 | (2) | |||||||||||||||
| 825,000 | — | $ | 26.915 | 3/28/2011 | |||||||||||||||||||||
| 31,250 | 93,750 | $ | 35.000 | 6/30/2014 | |||||||||||||||||||||
| C. Patrick DeWitt | 56,250 | — | $ | 28.441 | 12/21/2012 | 25,000 | (5) | $ | 790,250 | (2) | |||||||||||||||
50,000(3) | $ | 10.00 | (4) | 3/18/2016 | |||||||||||||||||||||
| Harvey B. Rein | 50,000 | — | $ | 28.441 | 12/21/2012 | 1,500 | (5) | $ | 47,415 | (2) | |||||||||||||||
35,000(3) | $ | 10.00 | (4) | 3/18/2016 | |||||||||||||||||||||
| Avi Katz | 50,000 | — | $ | 28.441 | 12/21/2012 | 1,500 | (5) | $ | 47,415 | (2) | |||||||||||||||
35,000(3) | $ | 10.00 | (4) | 3/18/2016 | |||||||||||||||||||||
| Richard P. Mastoloni | 40,000 | — | $ | 28.441 | 12/21/2012 | 1,500 | (5) | $ | 47,415 | (2) | |||||||||||||||
35,000(3) | $ | 10.00 | (4) | 3/18/2016 | |||||||||||||||||||||
| (1) |
| (2) | Represents market value of restricted stock units outstanding on December 31, 2009 based on the |
| (3) | Represents number of SS/L Phantom SARs as of December 31, 2009. For Mr. DeWitt, the SS/L Phantom SARs have the following vesting schedule: 25% vest on March 18, 2010, 2011, 2012 and 2013, respectively. For Messrs. Rein, Katz and Mastoloni, the SS/L Phantom SARs have the following vesting schedule: 50% vest on March 18, 2010, 25% vest on March 18, 2011 and 25% vest on March 18, 2012. See “Executive Compensation – Compensation Discussion and Analysis – Long-term Incentive Compensation – SS/L Phantom SARs” for a further description of the |
| (4) | Represents the strike price of the SS/L Phantom SARs based on the synthetically derived equity value for SS/L. See “Executive Compensation – Compensation Discussion and Analysis – Long-term Incentive Compensation – SS/L Phantom SARs” for a further description of the SS/L Phantom SARs. |
| (5) | Represents number of restricted stock units as of December 31, 2009. For Mr. DeWitt, the restricted stock units have the following vesting |
30
The following table provides information on the options exercised by2009
| | | ||||||
| Option Awards | ||||||||
| Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | ||||||
| Michael. B. Targoff | — | — | ||||||
| Harvey B. Rein | — | — | ||||||
| Richard P. Mastoloni | — | — | ||||||
| Avi Katz | — | — | ||||||
| C. Patrick DeWitt | 18,750 | $ | 360,356 | |||||
| Eric J. Zahler | — | — | ||||||
| Richard J. Townsend | — | — | ||||||
2009
31
2007,benefits above amounts available under our pension plan because of IRS limits. The SERP is unfunded and is not qualified for tax purposes. For 2009, an employee’s annual SERP benefit was accrued under the same formulas used in the pension plan with respect to amounts earned above the $225,000$245,000 maximum noted above. Benefits under the SERP arein the past have generally been payable at the same time and in the same manner as benefits are payable under the pension plan.
The timing and manner of benefit payments under the SERP after 2008, however, will be in compliance with Section 409A. For example, payments will begin on a mandatory basis at the later of age 55 or six months after termination and a participant will be entitled to elect one of two actuarially equivalent forms of annuity benefits — either a single life annuity or a 50% joint and survivor annuity.
| | | | | ||||||||||||
| Name | Plan Name | Number of Years of Credited Service(1) (#) | Present Value of Accumulated Benefit(2) ($) | Payments During Last Fiscal Year ($) | ||||||||||||
| Michael B. Targoff | Pension Plan | 19 | $ | 186,000 | — | |||||||||||
| SERP | 19 | $ | 1,080,000 | — | ||||||||||||
| Harvey B. Rein | Pension Plan | 28 | $ | 339,000 | — | |||||||||||
| SERP | 28 | $ | 512,000 | — | ||||||||||||
| Richard P. Mastoloni | Pension Plan | 10 | $ | 60,000 | — | |||||||||||
| SERP | 10 | $ | 88,000 | — | ||||||||||||
| Avi Katz | Pension Plan | 11 | $ | 97,000 | — | |||||||||||
| SERP | 11 | $ | 172,000 | — | ||||||||||||
| C. Patrick DeWitt | Pension Plan | 34 | $ | 569,000 | — | |||||||||||
| SERP | 34 | $ | 799,000 | — | ||||||||||||
| Eric J. Zahler | Pension Plan | 16 | $ | 250,000 | $ | 1,655 | ||||||||||
| SERP | 16 | $ | 1,493,000 | $ | 9,877 | |||||||||||
| Richard J. Townsend | Pension Plan | 9 | $ | 146,000 | — | |||||||||||
| SERP | 9 | $ | 633,000 | — | ||||||||||||
| Present Value of | ||||||||||||||
| Number of Years | Accumulated | Payments During | ||||||||||||
of Credited Service(1) | Benefit(2) | Last Fiscal Year | ||||||||||||
| Name | Plan Name | (#) | ($) | ($) | ||||||||||
| Michael B. Targoff | Pension Plan | 21 | $ | 300,000 | — | |||||||||
| SERP | 21 | $ | 2,007,000 | — | ||||||||||
| C. Patrick DeWitt | Pension Plan | 36 | $ | 752,000 | — | |||||||||
| SERP | 36 | $ | 1,098,000 | — | ||||||||||
| Harvey B. Rein | Pension Plan | 30 | $ | 463,000 | — | |||||||||
| SERP | 30 | $ | 738,000 | — | ||||||||||
| Avi Katz | Pension Plan | 13 | $ | 151,000 | — | |||||||||
| SERP | 13 | $ | 285,000 | — | ||||||||||
| Richard P. Mastoloni | Pension Plan | 12 | $ | 98,000 | — | |||||||||
| SERP | 12 | $ | 170,000 | — | ||||||||||
| (1) | The number of years of credited service is rounded to the nearest whole number as of December 31, |
| (2) | The accumulated benefit for all named executive officers |
32
The deferred compensation account becomes vested at the rate
| | | ||||||
| Name | Aggregate Earnings in Last FY(1) ($) | Aggregate Balance at Last FYE(2) ($) | ||||||
| Michael B. Targoff | — | $ | 1,009,734 | |||||
| Harvey B. Rein | — | $ | 472,050 | |||||
| Richard P. Mastoloni | — | $ | 377,640 | |||||
| Avi Katz | — | $ | 472,050 | |||||
| C. Patrick DeWitt | $ | 8,883 | $ | 716,958 | ||||
| Eric J. Zahler | $ | 4,835 | $ | 1,137,755 | ||||
| Richard J. Townsend | — | $ | 802,485 | |||||
| Aggregate Earnings | Aggregate Balance | |||||||
in Last FY(1) | at Last FYE(2) | |||||||
| Name | ($) | ($) | ||||||
| Michael B. Targoff | $ | 1,009,734 | $ | 1,009,734 | ||||
| C. Patrick DeWitt | $ | 532,049 | (3) | $ | 723,201 | |||
| Harvey B. Rein | $ | 472,050 | $ | 472,050 | ||||
| Avi Katz | $ | 472,050 | $ | 472,050 | ||||
| Richard P. Mastoloni | $ | 377,640 | $ | 377,640 | ||||
| (1) | At December 31, |
| (2) |
33
| (3) | Includes earnings of $531,056 on the vested but unfixed portion, and $993 of interest earned on the fixed balance, of Mr. DeWitt’s deferred compensation account during 2009. |
In June 2006,
An eligible officer with the title of Chief Executive Officer, President, Chief Operating Officer, Chief Financial Officer or Executive Vice President will be entitled to acash severance payment equalpayments aggregating to (i) six monthsthe sum of (x) twelve months’ pay (defined as base salary plus average annual incentive bonus compensation paid over the last two years of employment), payable in a and (y) twelve months’ base salary. The officer will receive an initial lump sum followingpayment within twenty days of termination, (ii) an additionalnot subject to mitigation, equal to the greater of (A) six monthsmonths’ pay ifand (B) the sum of three months’ pay plus two weeks’ base salary for every year of service with the Company plus one twelfth of two weeks’ base salary for every month of service with the Company in excess of the officer’s full years of service with the Company. If the officer is unemployed after six months (or if thenthe officer is employed at a rate of pay that is less than the participant’shis rate of pay immediately prior to termination), payablethe remainder of his cash severance (the “Remainder”) will be paid in biweekly installments over eighteen months beginning on the six-month anniversary of termination, the first thirteen payments, if any, aggregating to the lesser of six months’ pay and such Remainder, and the next twenty-six payments, if any, aggregating to the lesser of one year’s base salary and the excess of the Remainder over six months butmonths’ pay. In all events, the Remainder is subject to mitigation (i.e., the reduction by any amount of any severance benefits to which a participant is entitledcompensation then being received by the amount being receivedofficer from other employment with another company), and (iii) an additional 12 months base salary only, if unemployed after one year (or if then employed at a rate of pay that is less than the participant’s rate of pay immediately prior to termination), payable over 12 months but subject to mitigation.
(including self-employment).
34
month of service with the Company in excess of the participant’sofficer’s full years of service with the Company (inCompany. The officer will receive an initial lump sum payment within twenty days of termination, not subject to mitigation, equal to the casesum of (B) and (C) up to a maximum of twenty-six years), payable biweekly at the employee’s pre-terminationthree months’ pay plus two weeks’ base salary for every year of service with the Company plus one twelfth of two weeks’ base salary for every month of service with the Company in excess of the officer’s full years of service with the Company. If the officer is unemployed after three months (or if the officer is employed at a rate followingof pay that is less than his rate of pay immediately prior to termination), the Remainder will be paid in biweekly installments over twelve weeks beginning on the three-month anniversary of the termination, but subject to mitigation.
In addition, ifreduction by any amount of compensation then being received by the officer from other employment (including self-employment).
In connection with the restructuring of our corporate office functions as a result of the completion on October 31, 2007 of the Telesat Canada transaction, Mr. Zahler's and Mr. Townsend's employment with the Company ended effective November 30, 2007 and January 4, 2008, respectively. Mr. Zahler received severancesuch benefits consisting of a lump sum payment of $1,667,500 and accelerated vesting of all 30,000 ofprior to his unvested stock options to purchase shares of common stock at $28.441 and related deferred compensation units. Mr. Townsend received severance benefits consisting of a lump sum payment of $688,541 and is entitled to receive additional installment payments over a period of 18 months, commencing July 18, 2008, totaling $1,570,461. The additional severance in the form of installment payments is subject to mitigation from other employment. In addition, Mr. Townsend received accelerated vesting of all 21,250 of his unvested options to purchase shares of common stock at $28.441 and related deferred compensation units and accelerated vesting of all 10,000 of his unvested options to purchase shares of common stock at $27.135. Under their severance arrangements, both Messrs. Zahler and Townsend are also entitled to continued medical and executive life insurance coverage for a period of two years after the end of their employment.
| | | ||||||
| Name | Severance for Termination Without Cause(1) ($) | Estimated Tax Gross Up ($) | ||||||
| Michael B. Targoff(2) | $ | 4,987,499 | $ | 2,400,762 | ||||
| Harvey B. Rein | $ | 782,152 | — | |||||
| Richard P. Mastoloni | $ | 493,920 | — | |||||
| Avi Katz | $ | 535,430 | — | |||||
| C. Patrick DeWitt | $ | 755,240 | — | |||||
| Eric J. Zahler(3) | $ | 1,667,500 | — | |||||
| Richard J. Townsend(4) | $ | 2,259,002 | — | |||||
| Severance for | ||||||||
| Termination | Estimated Tax | |||||||
Without Cause(1) | Gross Up | |||||||
| Name | ($) | ($) | ||||||
| Michael B. Targoff | $ | 4,790,376 | — | |||||
| C. Patrick DeWitt | $ | 1,022,163 | — | |||||
| Harvey B. Rein | $ | 1,243,577 | — | |||||
| Avi Katz | $ | 629,909 | — | |||||
| Richard P. Mastoloni | $ | 662,816 | — | |||||
| (1) | Severance amounts do not include the value of continued medical and life insurance coverage post-termination. The value of such coverage is |
35
| | | ||||||
| Name | Upon Termination Without Cause ($) | Upon Death and Disability ($) | ||||||
| Michael B. Targoff | $ | 2,929,161 | $ | 1,194,777 | ||||
| Harvey B. Rein | $ | 190,625 | — | |||||
| Richard P. Mastoloni | $ | 152,500 | — | |||||
| Avi Katz | $ | 190,625 | — | |||||
| C. Patrick DeWitt | $ | 285,938 | — | |||||
| Eric J. Zahler(1) | $ | 457,500 | — | |||||
| Richard J. Townsend(2) | $ | 395,212 | — | |||||
36
| Upon | Upon Death | Upon | ||||||||||
| Termination | and | Change in | ||||||||||
| Without Cause | Disability | Control | ||||||||||
| Name | ($) | ($) | ($) | |||||||||
| Michael B. Targoff | — | $ | 3,519,102 | $ | 5,531,750 | |||||||
| C. Patrick DeWitt | $ | 175,875 | $ | 522,377 | $ | 1,493,750 | ||||||
| Harvey B. Rein | $ | 246,225 | $ | 177,282 | $ | 525,756 | ||||||
| Avi Katz | $ | 246,225 | $ | 177,282 | $ | 525,756 | ||||||
| Richard P. Mastoloni | $ | 246,225 | $ | 177,282 | $ | 525,756 | ||||||
| | | ||||||
| Name and Address | Amount and Nature of Beneficial Ownership | Percent of Class(1) | ||||||
| Various funds affiliated with | ||||||||
| MHR Fund Management LLC and Mark H. Rachesky, M.D.(2) | 17,815,977 | 57.6 | %(3) | |||||
| 40 West 57th Street, 24th Floor, New York, NY 10019 | ||||||||
| Various funds affiliated with | ||||||||
| Highland Capital Management, L.P. and James Dondero(4) | 1,584,574 | 7.8 | % | |||||
| Two Galleria Tower, 13455 Noel Road, Suite 800, Dallas, TX 75420 | ||||||||
| Solus Alternative Asset Management LP.(5) | 1,575,000 | 7.8 | % | |||||
| 430 Park Avenue, 9th Floor, New York, NY 10022 | ||||||||
| EchoStar Communications Corporation and Charles W. Ergen(6) | 1,401,485 | 6.9 | % | |||||
| 9601 South Meridian Boulevard, Englewood, CO 80112 | ||||||||
| BlackRock, Inc.(7) | 1,374,614 | 6.8 | % | |||||
| 40 East 52nd Street, New York, NY 10022 | ||||||||
| Amount and Nature | Percent | |||||||
| of Beneficial | of | |||||||
| Name and Address | Ownership | Class(1) | ||||||
| Various funds affiliated with | ||||||||
MHR Fund Management LLC and Mark H. Rachesky, M.D.(2) | ||||||||
| 40 West 57th Street, 24th Floor, New York, NY 10019 | 8,144,719 | 39.9 | %(3) | |||||
| Solus Alternative Asset Management LP., Solus GP, LLC and | ||||||||
Christopher Pucillo(4) | ||||||||
| 430 Park Avenue, 9th Floor, New York, NY 10022 | 1,731,106 | 8.5 | % | |||||
BlackRock, Inc.(5) | ||||||||
| 40 East 52nd Street, New York, NY 10022 | 1,605,099 | 7.9 | % | |||||
| Various funds affiliated with | ||||||||
Highland Capital Management, L.P. and James Dondero(6) | ||||||||
| Two Galleria Tower, 13455 Noel Road, Suite 800 | ||||||||
| Dallas, TX 75420 | 1,584,574 | 7.8 | % | |||||
| EchoStar Communications Corporation and | ||||||||
Charles W. Ergen(7) | ||||||||
| 9601 South Meridian Boulevard, Englewood, CO 80112 | 1,401,485 | 6.9 | % | |||||
| (1) | Percent of class refers to percentage of class beneficially owned as the term beneficial ownership is defined in Rule 13d-3 under the Securities Exchange Act of 1934 and is based upon the |
| (2) | Information based on Amendment Number |
Pursuant to an Amended and Restated Securities Purchase Agreement,
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