<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
[ ] Confidential for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
Loral Space & Communications Ltd.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
[LORAL logo]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AND PROXY STATEMENT
MAY 16, 2000
------------------------
The Annual Meeting of Shareholders of Loral Space & Communications Ltd.
("Loral" or the "Company") will be held in the Grand Salon, The Essex House, 160
Central Park South, New York, New York 10019, at 1:30 P.M., on Tuesday, May 16,
2000 for the purpose of:
1. Electing to the Board three Class I directors whose terms have
expired;
2. Acting upon a proposal to ratify the appointment of Deloitte &
Touche LLP as independent auditors for the year ending December
31, 2000; and
3. Transacting any other business which may properly come before the
meeting.
The Board of Directors has fixed the close of business on March 31, 2000
as the date for determining shareholders of record entitled to receive notice
of, and to vote at, the Annual Meeting.
All shareholders are cordially invited to attend. Those who do not
expect to be present are requested to date, sign and mail the enclosed proxy as
promptly as possible in the enclosed postage prepaid envelope.
This Proxy Statement and accompanying proxy will be first mailed to you
and to other shareholders of record on or about April 14, 2000.
By Order of the Board of Directors
/s/ BERNARD L. SCHWARTZ
BERNARD L. SCHWARTZ
Chairman of the Board of Directors
April 13, 2000
<PAGE> 3
QUESTIONS & ANSWERS
WHY DID I RECEIVE THIS
PROXY? We have sent you this Notice of Annual Meeting and
Proxy Statement and proxy card because our Board of
Directors is soliciting your proxy to vote at our
Annual Meeting of Shareholders on May 16, 2000 (the
"Annual Meeting"). This Proxy Statement contains
information about the items being voted on at the
Annual Meeting and information about us.
WHAT IS A PROXY? A proxy is a person you appoint to vote on your
behalf. We are soliciting proxies so that all shares
of our common stock may be voted at the Annual
Meeting.
WHO IS ENTITLED TO VOTE? You may vote if you owned common stock as of the
close of business on March 31, 2000. On March 31,
2000, there were 295,442,287 shares of our common
stock, par value $.01 per share, outstanding and
entitled to vote at the Annual Meeting.
WHAT AM I VOTING ON? You will be voting on the following:
- To elect three Class I Directors;
- To ratify Deloitte & Touche LLP as our independent
auditors; and
- To transact any other business which may properly
come before the Annual Meeting.
HOW DO I VOTE? All shareholders may vote by mail. To vote by mail,
please sign, date and mail the enclosed proxy card in
the postage prepaid envelope provided.
If you hold your shares in the name of a bank or
broker, you may be able to vote by telephone or over
the Internet. Please follow the directions on your
proxy card.
If you are planning to attend the Annual Meeting and
wish to vote your shares in person, we will give you
a ballot. If your shares are held in the name of your
broker, bank or other nominee, you need to bring an
account statement or letter from the nominee
indicating that you were the beneficial owner of the
shares on March 31, 2000, the record date for voting.
EVEN IF YOU PLAN TO BE PRESENT AT THE MEETING, WE
ENCOURAGE YOU TO VOTE YOUR SHARES BY PROXY.
HOW MANY VOTES DO I
HAVE? Each share of our common stock that you own entitles
you to one vote.
BY COMPLETING AND
RETURNING THE PROXY
CARD,
WHO AM I DESIGNATING AS
MY
PROXY? You will be designating Bernard L. Schwartz, our
Chairman of the Board and Chief Executive Officer,
Eric J. Zahler, our President and Chief Operating
Officer, and Robert B. Hodes, a member of our Board
of Directors, as your proxies.
HOW WILL MY PROXY VOTE
MY
SHARES? Your proxy, when properly executed, will be voted
according to the instructions you have indicated.
WHAT IF I RETURN MY
PROXY
BUT DO NOT MARK IT TO
SHOW
HOW I AM VOTING? If no direction is indicated, your proxy will be
voted "FOR" the election of all Class I nominees to
the Board of Directors and "FOR" proposal 2.
CAN I CHANGE MY VOTE
AFTER
I RETURN MY PROXY CARD? You can change your vote by revoking your proxy at
any time before it is exercised in one of three ways:
- Notify our Corporate Secretary in writing before
the Annual Meeting that you are revoking your
proxy;
- Submit another proxy with a later date; or
- Vote in person at the Annual Meeting.
2
<PAGE> 4
WHAT DOES IT MEAN IF I
RECEIVE MORE THAN ONE
PROXY
CARD? It means you have multiple accounts at the transfer
agent and/or with banks and stock brokers. Please
vote all of your shares.
WHAT CONSTITUTES A
QUORUM? The presence of the holders of a majority of the
shares entitled to vote at the Annual Meeting
constitutes a quorum. Presence may be in person or by
proxy. Therefore, you will be considered part of the
quorum if you return a signed and dated proxy card,
if you vote by telephone or Internet or if you attend
the Annual Meeting.
Abstentions and broker "non-votes" are counted as
"shares present" at the meeting for purposes of
determining whether a quorum exists but will not be
voted for election of directors or on other
proposals. Because abstentions and broker "non-votes"
are not treated as shares voted, they would have no
impact on proposals 1 and 2.
WHAT VOTE IS REQUIRED IN
ORDER TO APPROVE EACH
PROPOSAL? ELECTION OF DIRECTORS: The election of the three
Class I nominees requires the affirmative vote of a
majority of the shares cast at the Annual Meeting.
Persons designated as proxies reserve full discretion
to cast their votes for other persons in the
unanticipated event that any of such nominees is
unable or declines to serve. If you do not want to
vote your shares for a particular nominee, you may
indicate that in the space provided on the proxy card
or withhold authority as prompted during telephone or
Internet voting.
RATIFICATION OF INDEPENDENT AUDITORS: Ratification of
Deloitte & Touche LLP as our independent auditors
requires the affirmative vote of a majority of the
shares cast at the Annual Meeting. If the
shareholders do not ratify the appointment of
Deloitte & Touche LLP, the appointment will be
reconsidered by our Board of Directors.
HOW WILL VOTING ON ANY
OTHER BUSINESS BE
CONDUCTED? We do not know of any business or proposals to be
considered at our Annual Meeting other than the items
described in this Proxy Statement. If any other
business is proposed and we decide to permit it to be
presented at the Annual Meeting, the signed proxies
received from our shareholders give the persons
voting the proxies the authority to vote on the
matter according to their best judgment.
WHO WILL COUNT THE
VOTES? The Bank of New York will act as the inspector of
election and will tabulate the votes.
WHO PAYS TO PREPARE,
MAIL
AND SOLICIT THE PROXIES? We will pay all of the costs of soliciting these
proxies. We will ask banks, brokers and other
nominees and fiduciaries to forward the proxy
materials to the beneficial owners of our common
stock and to obtain the authority of executed
proxies. We will reimburse them for their reasonable
expenses. We have also retained W.F. Doring & Co.,
Inc. to solicit proxies on our behalf and will pay
them a fee, not to exceed $7,500, for such services.
HOW DO I SUBMIT A
SHAREHOLDER PROPOSAL FOR
NEXT YEAR'S ANNUAL
MEETING? Proposals for inclusion in our 2001 Proxy Statement
must be submitted by shareholders and received by us
no later than December 14, 2000. In addition,
according to our bye-laws, shareholder proposals
intended to be presented at the 2001 Annual Meeting
must be received by us no later than April 4, 2001
but no earlier than March 7, 2001. All proposals must
be submitted in writing and sent to our principal
executive offices, located c/o Loral SpaceCom
Corporation at 600 Third Avenue, New York, New York
10016, Attention: Secretary. Your proposal must
comply with the proxy rules of the Securities and
Exchange Commission and the requirements of Bermuda
law.
3
<PAGE> 5
PROPOSAL #1: ELECTION OF DIRECTORS
The Company has three classes of directors serving staggered three-year terms,
each class consisting of three directors. The terms of the Class I, II and III
directors expire on the date of the Annual Meeting in 2000, 2001 and 2002,
respectively.
Shareholders will elect three Class I directors at the Annual Meeting. Of the
directors named below, Messrs. Howard Gittis, Gershon Kekst and Arthur L. Simon
are the nominees to serve as Class I directors. Each director will serve for a
period of three years, until their respective successors are duly elected, until
a qualified successor director has been elected, or until he resigns or is
removed by the Board. ELECTION OF EACH OF THE CLASS I NOMINEES WILL REQUIRE THE
AFFIRMATIVE VOTE IN PERSON OR BY PROXY OF A MAJORITY OF THE VOTES CAST AT THE
ANNUAL MEETING. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH
DIRECTOR NOMINEE.
The following are brief biographical sketches for each of our directors and
nominees:
<TABLE>
<C> <S>
BERNARD L.
SCHWARTZ
Age: 74
Director Since: 1996
Class: Class III
Business Mr. Schwartz is Chairman of the Board of Directors and Chief
Experience: Executive Officer of the Company. In addition, he is
Chairman of the Board of Directors and Chief Executive
Officer of Globalstar Telecommunications Limited and K&F
Industries, Inc. and Chief Executive Officer and Chairman of
the General Partners' Committee of Globalstar, L.P. Prior to
April 1996, Mr. Schwartz was Chairman of the Board of
Directors and Chief Executive Officer of Loral Corporation.
Other First Data Corp., Reliance Group Holdings, Inc. and certain
Directorships: of its subsidiaries, Loral CyberStar, Inc. and Satelites
Mexicanos, S.A. de C.V. Trustee of Mount Sinai -- NYU
Medical Center and Health System and Thirteen/WNET
Educational Broadcasting Corporation.
HOWARD GITTIS
Age: 66
Director Since: 1996
Class: Class I Nominee
Business Mr. Gittis is Director, Vice Chairman and Chief
Experience: Administrative Officer of MacAndrews & Forbes Holdings Inc.
and its various affiliates.
Other Golden State Bancorp Inc., Golden State Holdings Inc., Jones
Directorships: Apparel Group, Inc., M & F Worldwide Corp., Panavision Inc.,
Revlon Consumer Products Corporation, Revlon, Inc., Sunbeam
Corporation and U.S. Dermatologics, Inc.
ROBERT B. HODES
Age: 74
Director Since: 1996
Class: Class II
Business Mr. Hodes is counsel to Willkie Farr & Gallagher, a law firm
Experience: in New York, N.Y. and, until 1996, was a partner in and
co-chairman of that firm.
Other Globalstar Telecommunications Limited, K&F Industries, Inc.,
Directorships: LCH Investments N.V., Mueller Industries, Inc., Restructured
Capital Holdings, Ltd., R.V.I. Guaranty Ltd. and W.R.
Berkley Corporation.
</TABLE>
4
<PAGE> 6
<TABLE>
<C> <S>
GERSHON KEKST
Age: 65
Director Since: 1996
Class: Class I Nominee
Business Mr. Kekst is President of Kekst and Company Incorporated,
Experience: corporate and financial communications consultants in New
York, N.Y.
CHARLES LAZARUS
Age: 76
Director Since: 1996
Class: Class II
Business Mr. Lazarus is Chairman Emeritus of Toys "R" Us, Inc.
Experience:
MALVIN A. RUDERMAN
Age: 73
Director Since: 1996
Class: Class III
Business Dr. Ruderman is the Centennial Professor of Physics at
Experience: Columbia University in New York, N.Y.
E. DONALD SHAPIRO
Age: 68
Director Since: 1996
Class: Class III
Business Professor Shapiro has been The Joseph Solomon Distinguished
Experience: Professor of Law at New York Law School since 1983 and was
previously Dean/ Professor of Law (1973-1983).
Other Frequency Electronics, Inc., Kranzco Realty Trust, United
Directorships: Industrial Corporation and Vasomedical, Inc.
ARTHUR L. SIMON
Age: 68
Director Since: 1996
Class: Class I Nominee
Business Mr. Simon is an independent consultant. Previously, he was a
Experience: partner at Coopers & Lybrand L.L.P., Certified Public
Accountants, from 1968 to 1994.
DANIEL YANKELOVICH
Age: 75
Director Since: 1996
Class: Class II
Business Mr. Yankelovich is Chairman of DYG, Inc., a market, consumer
Experience: and opinion research firm in New York, N.Y. He is also
Chairman of Leadership Learning Network, Inc., a consulting
firm based in San Diego, CA.
Other Director Emeritus of Arkla, Inc., CBS, Inc., Meredith
Directorships: Corporation and U S West, Inc.
</TABLE>
Directors are paid a fixed fee of $25,000 per year. Non-employee directors are
also paid $6,000 for personal attendance at each meeting. Audit Committee
members are paid $2,000 per year and $1,000 per meeting. Compensation and Stock
Option Committee members are paid $500 per year.
On December 16, 1999, Messrs. Gittis, Hodes, Kekst, Lazarus, Ruderman, Shapiro,
Simon and Yankelovich each received options to purchase 40,000 shares of our
common stock at an exercise price of $16.00 per share.
5
<PAGE> 7
The Company provides certain life insurance and medical benefits to
certain-non-employee directors. For 1999, the cost of the life insurance
benefits was $13,565 for Mr. Gittis, $14,553 for Mr. Kekst, $14,223 for Mr.
Ruderman, $15,000 for Mr. Shapiro and $14,170 for Mr. Yankelovich, and the cost
of life insurance and medical benefits was $33,539 for Mr. Hodes.
The Company has purchased insurance from the Reliance Insurance Company
("Reliance") insuring the Company against obligations it might incur as a result
of its indemnification of officers and directors for certain liabilities they
might incur, and insuring such officers and directors for additional liabilities
against which they might not be indemnified by the Company. The insurance
commenced in April 1998 and costs approximately $551,250 for 36 months of
coverage. Pursuant to Bermuda law, the Company has entered into indemnity
agreements with its directors and executive officers. These indemnity agreements
are intended to provide the full indemnity protection authorized by Bermuda law.
6
<PAGE> 8
PROPOSAL #2: INDEPENDENT AUDITORS
Shareholders will act upon a proposal to ratify the appointment of Deloitte &
Touche LLP as the independent auditors of the Company. IF THE SHAREHOLDERS, BY
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES REPRESENTED IN
PERSON OR BY PROXY AND VOTING AT THE MEETING DO NOT RATIFY THE APPOINTMENT OF
DELOITTE & TOUCHE LLP, THE APPOINTMENT OF THE INDEPENDENT AUDITORS WILL BE
RECONSIDERED BY THE BOARD. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR THIS PROPOSAL.
BACKGROUND
The Board of Directors has appointed Deloitte & Touche LLP, certified public
accountants, as the independent auditors of the Company for the fiscal year
ending December 31, 2000. Deloitte & Touche LLP has advised the Company that it
has no direct or indirect financial interest in the Company or any of its
subsidiaries, and that it has had, during the last three years, no connection
with the Company or any of its subsidiaries other than as independent auditors
and related activities.
FINANCIAL STATEMENTS AND REPORTS
The financial statements of the Company for the year ended December 31, 1999,
and reports of the auditors will be presented at the Annual Meeting. Deloitte &
Touche LLP will have a representative present at the meeting who will have an
opportunity to make a statement if he or she so desires and to respond to
appropriate questions.
SERVICES
During 1999, Deloitte & Touche LLP provided services consisting of the audit of
the annual consolidated financial statements of the Company and certain of its
affiliates, consultations with respect to the quarterly financial statements,
reports and registration statements filed by the Company and its affiliates with
the Securities and Exchange Commission and other pertinent matters. Deloitte &
Touche LLP also provided certain consulting services to the Company and its
affiliates in 1999.
OTHER ACTION AT MEETING AND VOTING OF PROXIES
Management does not know of any matters to come before the Annual Meeting other
than those set forth in this Proxy Statement. However, the enclosed proxy
confers discretionary authority upon the proxy holders named in the proxy card
to vote and act in accordance with their best judgment with regard to any other
matters which should come before the meeting or any adjournment thereof.
7
<PAGE> 9
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors met eight times during 1999. All directors attended at
least 75% of the meetings of the Board.
The Board of Directors has standing audit, compensation and stock option and
executive committees. The following shows the membership and functions of the
various committees:
<TABLE>
<C> <S>
AUDIT COMMITTEE
Members: Robert B. Hodes, Malvin A. Ruderman, E. Donald Shapiro,
Arthur L. Simon
Number of Meetings in 1999: 4
Functions: Pursuant to its charter, reviews and acts or reports to the
Board of Directors with respect to various auditing and
accounting matters, including the selection of Loral's
independent auditors, the accounting and financial practices
and controls of the Company, audit scope and procedures,
audit findings and recommendations, internal audit functions
and plans, and financial statement disclosure.
COMPENSATION AND STOCK OPTION COMMITTEE
Members: E. Donald Shapiro, Arthur L. Simon
Number of Meetings in 1999: 1
Functions: Reviews and provides recommendations to the Board of
Directors regarding executive compensation matters and is
responsible for the administration of Loral's Stock Option
Plan.
EXECUTIVE COMMITTEE
Members: Bernard L. Schwartz, Robert B. Hodes, Gershon Kekst
Number of Meetings in 1999: 1
Functions: The Executive Committee, between meetings of the Board of
Directors, exercises all powers and authority of the Board
of Directors in the management of Loral's business affairs
that may be lawfully delegated.
</TABLE>
8
<PAGE> 10
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The goals of the compensation program established by the Compensation and Stock
Option Committee (the "Committee") are to align compensation with business
objectives and corporate performance and to enable the Company and its
subsidiaries (collectively, the "Loral Group") to attract, retain and reward
executive officers who contribute to the long-term success of the Loral Group
and thereby create value for shareholders. In order to attain these goals, the
Committee's compensation policies link compensation to corporate performance.
The principal components of the Committee's compensation program are annual cash
compensation consisting of base salary and an annual incentive bonus, as well as
long-term incentive compensation using stock options. In determining the amount
and form of executive compensation, the Committee has considered the competitive
market for senior executives, the executive's role in achieving the business
objectives of the Loral Group and the overall performance of the Loral Group.
The type and amount of discretionary compensation granted is based upon the
subjective judgment of the Committee and Chief Executive Officer ("CEO"),
respectively; nevertheless, in the exercise of their discretion, the Committee
and CEO consider a number of objective criteria which are discussed below in the
context of the components of compensation to which they apply.
The Committee believes that its compensation policies, which have been
instrumental in attracting and retaining highly qualified and dedicated
personnel, will be an important factor in the growth and success of the Loral
Group.
SECTION 162(M) OF THE CODE
The Company's Stock Option Plan, which was adopted by the Company's Board of
Directors and approved by the Company's then sole shareholder on March 13, 1996,
has been designed to comply with the requirements for "performance-based
compensation" under Internal Revenue Code Section 162(m). The Committee,
however, does not have a policy precluding the payment of nondeductible
compensation.
CEO COMPENSATION
The Company's CEO, Bernard L. Schwartz, is paid pursuant to a long-term
employment contract. This contract provides for a minimum annual base salary, to
be increased each year by the percentage change in the Consumer Price Index,
plus such other annual increases as the Board of Directors or the Committee may
grant from time to time. Effective March 1, 1998, the Committee set Mr.
Schwartz's annual base salary at $1.6 million in recognition of Mr. Schwartz's
leadership in guiding the Loral Group and to bring his compensation in line with
that of CEOs of other comparable companies. Effective April 24, 1999, Mr.
Schwartz's annual base salary increased to $1,625,800 in accordance with his
contractual formula. The Committee sets annual incentive compensation for Mr.
Schwartz by assessing a number of factors, including his individual effort,
performance and contribution toward achieving the business plan and growth
objectives of the Loral Group. The Committee, at Mr. Schwartz's request, has
deferred consideration of his bonus payment for 1999.
COMPENSATION FOR OTHER EXECUTIVE OFFICERS
Base salaries for the named executive officers in this Proxy Statement ("NEOs")
other than Mr. Schwartz and other executive officers have been set at
competitive levels by the CEO in consultation with the Committee, giving due
regard to individual performance and time in position. Incentive compensation
for NEOs other than Mr. Schwartz and other executive officers is set by the CEO,
in consultation with the Committee, based on factors similar to those used for
establishing incentive compensation for the CEO. Incentive compensation for
corporate officers with line responsibility for division operations is generally
tied to performance targets for the businesses under their authority. These
performance targets are set as part of the annual budgeting process for the
Company and its subsidiaries. Bonus compensation for 1999 has been awarded in
accordance with these factors.
9
<PAGE> 11
LONG-TERM COMPENSATION
It is the Committee's belief that shareholders' interests are best served by
encouraging key employees of the Loral Group to develop ownership interests in
the Company. To that end, the Committee primarily relies upon fair market value
employee stock options granted in accordance with the provisions of the Stock
Option Plan. During 1999, 3,799,100 options were granted to employees under the
Stock Option Plan, of which 890,000 were granted to NEOs.
The report of the Committee shall not be deemed incorporated by reference by any
general statements incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent it shall be specifically incorporated and shall not
otherwise be deemed filed under such acts.
MEMBERS OF THE COMPENSATION AND STOCK OPTION
COMMITTEE
E. Donald Shapiro
Arthur L. Simon
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
None of the members of the Compensation and Stock Option Committee are present
or former officers or employees of the Company and its subsidiaries.
10
<PAGE> 12
EXECUTIVE COMPENSATION
The Company has entered into a management agreement with Loral SpaceCom
Corporation ("Loral SpaceCom") pursuant to which Loral SpaceCom provides certain
services to the Company. In accordance with this agreement, compensation for the
NEOs and other executive officers and employees of the Company is paid by Loral
SpaceCom. The following table summarizes the compensation paid to the NEOs.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(A) BONUS(B) COMPENSATION STOCK OPTIONS(C) COMPENSATION(D)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bernard L. Schwartz 1999 $1,617,786 -- -- 300,000 $419,735
Chairman of the Board 1998 $1,498,017 $600,000 -- 312,500 $463,919
of Directors and Chief 1997 $ 978,225 $500,000 -- -- $630,479
Executive Officer
- ------------------------------------------------------------------------------------------------------------------------------
Eric J. Zahler 1999 $ 524,038 $600,000 -- 150,000 $ 11,076
President and 1998 $ 500,000 $350,000 -- 125,000 $ 11,076
Chief Operating Officer(e) 1997 $ 275,000 $350,000 -- -- $ 11,016
- ------------------------------------------------------------------------------------------------------------------------------
Michael P. DeBlasio 1999 $ 750,000 $550,000 -- 125,000 $ 19,725
First Senior Vice 1998 $ 750,000 $500,000 -- 156,300 $ 19,898
President 1997 $ 500,000 $500,000 -- -- $ 21,701
- ------------------------------------------------------------------------------------------------------------------------------
Nicholas C. Moren 1999 $ 460,577 $400,000 -- 125,000 $ 12,636
Senior Vice President 1998 $ 450,000 $350,000 -- 125,000 $ 12,636
and Treasurer 1997 $ 250,000 $350,000 -- -- $ 12,576
- ------------------------------------------------------------------------------------------------------------------------------
Richard J. Townsend 1999 $ 362,404 $400,000 -- 125,000 $ 11,780
Senior Vice President and 1998 $ 88,846 $ 50,000 -- 116,500 $ 240
Chief Financial Officer 1997 -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Gregory J. Clark 1999 $1,011,154 $500,000 $182,834(g) 65,000(h) $154,027
(Former President and 1998 $1,053,462 $500,000 $900,184 600,000 $143,063
Chief Operating Officer)(f) 1997 -- -- -- -- --
</TABLE>
(a) For 1998 and 1999, amount reflects the actual salary for Dr. Clark earned
during the period of employment, not the annual base salary of $1,100,000.
For 1998 for Mr. Townsend, amount reflects the actual salary earned during
the period of October 1, 1998 to December 31, 1998, not the annual base
salary of $350,000.
(b) The Compensation Committee, at Mr. Schwartz's request, has deferred
consideration of his bonus payment for 1999.
(c) Does not reflect a grant by Loral to Dr. Clark during 1998 of stock options
to acquire 20,000 shares of common stock owned by Loral of Globalstar
Telecommunications Limited ("GTL"). These options are exercisable at $12.875
per share, of which 5,000 options are vested and are exercisable through
January 2010. Pursuant to Dr. Clark's separation agreement with the Company,
vesting on the remaining 15,000 shares was accelerated but such options may
be exercised only during the period of January 1, 2004 to December 31, 2007.
Includes a restricted stock option grant in 1998 to Mr. Townsend to acquire
16,500 shares of Loral common stock at an exercise price of $.01, which vests
in one-third increments. Upon exercise, dividends, if any, paid with respect
to such restricted stock will be retained by the Company until vesting.
Does not include grants made in August 1999 by GTL to Messrs. Zahler,
DeBlasio, Moren, Townsend and Clark of stock options to acquire 30,000,
30,000, 30,000, 30,000 and 40,000 shares of GTL common stock, respectively,
at an exercise price of $24.0625 per share. Also, does not include the June
1999 grant by GTL to Mr. Townsend of stock options to acquire 20,000 shares
of GTL common stock at an exercise price of $17.1563 per share or a December
1999 grant by GTL to Mr. Zahler of stock options to acquire 50,000 shares of
GTL common stock at an exercise price of $20.7813 per share. These options
are exercisable over a five-year period as follows: 25% on each of the
second, third, fourth and fifth anniversary from the date of grant.
(d) For 1999, includes annual Board of Directors fee in the amount of $25,000 to
Mr. Schwartz and Company matching contributions to the Savings Plan for all
of the NEOS in the amount of $5,760 and the value of supplemental life
insurance premiums in the amount of $388,975, $5,316, $13,965, $6,876,
$6,020 and $148,267 for Messrs. Schwartz, Zahler, DeBlasio, Moren, Townsend
and Clark, respectively.
(e) Mr. Zahler became President and Chief Operating Officer in February 2000.
Prior to that, he was Executive Vice President since November 1999, and
Senior Vice President, General Counsel and Secretary since February 1998.
(f) Dr. Clark terminated his employment with Loral effective December 1, 1999.
(g) In 1999, Dr. Clark received relocation expenses of $88,258 and a tax
equalization payment on relocation of $94,576.
(h) Under the terms of Dr. Clark's separation agreement with the Company, the
option to acquire 65,000 shares granted in 1999 was cancelled on November 1,
1999. Of the options to acquire 600,000 shares granted in 1998, 300,000 of
such options which were vested at the time of Dr. Clark's separation remain
exercisable through January 2008.
11
<PAGE> 13
OPTION GRANTS TABLE
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE GRANT DATE
NAME GRANTED(A) FISCAL YEAR (PER SHARE) EXPIRATION DATE PRESENT VALUE(B)
<S> <C> <C> <C> <C> <C>
Bernard L. Schwartz 100,000 2.63% $17.3125 04/26/2009 $ 977,500
200,000 5.26% $16.0000 12/16/2009 $1,806,800
Eric J. Zahler 50,000 1.32% $17.3125 04/26/2009 $ 488,750
100,000 2.63% $16.0000 12/16/2009 $ 903,400
Michael P. DeBlasio 50,000 1.32% $17.3125 04/26/2009 $ 488,750
75,000 1.97% $16.0000 12/16/2009 $ 677,550
Nicholas C. Moren 50,000 1.32% $17.3125 04/26/2009 $ 488,750
75,000 1.97% $16.0000 12/16/2009 $ 677,550
Richard J. Townsend 50,000 1.32% $17.3125 04/26/2009 $ 488,750
75,000 1.97% $16.0000 12/16/2009 $ 677,550
Gregory J. Clark(c) 65,000 1.71% $17.3125 -- --
</TABLE>
(a) Except with respect to Mr. Schwartz, whose options are exercisable
immediately, exercisability vests in twenty percent increments over a
five-year period on the first through fifth anniversary of the date of
grant.
(b) The Black-Scholes model of option valuation was used to determine grant date
present value. The Company does not advocate or necessarily agree that the
Black-Scholes model can properly determine the value of an option. The
present value calculation is based on a ten-year option term, a risk-free
interest rate assumption of 6.25%, stock price volatility of 30% over a
ten-year period and a dividend rate of $0 per share. However, there were no
adjustments made for non-transferability or risk of forfeiture. The actual
value realized, if any, will depend on the amount by which the stock price
at the time of exercise exceeds the exercise price. There is no assurance
that the amount estimated by the Black-Scholes model will be realized.
(c) On April 26, 1999, Dr. Clark was granted an option to acquire 65,000 shares
of Loral common stock at $17.3125 per share. Under the terms of Dr. Clark's
separation agreement with the Company, this stock option grant was cancelled
on November 1, 1999.
OPTION EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION EXERCISES IN 1999 AND
YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT FISCAL
OPTIONS AT FISCAL YEAR-END YEAR END(A)
NUMBER OF
SHARES
ACQUIRED ON REALIZED
NAME EXERCISE VALUE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Bernard L. Schwartz -- -- 1,812,500 0 $19,613,281 0
Eric J. Zahler -- -- 325,000 450,000 $ 4,197,813 $4,160,000
Michael P. DeBlasio -- -- 351,260 570,040 $ 4,487,686 $5,664,183
Nicholas C. Moren -- -- 325,000 425,000 $ 4,197,813 $3,952,188
Richard J. Townsend -- -- 36,500 205,000 $ 617,241 $1,838,438
Gregory J. Clark -- -- 300,000 0 $ 3,778,125 0
</TABLE>
(a) Market value of underlying securities at year-end, minus the exercise price.
12
<PAGE> 14
EMPLOYMENT AND OTHER COMPENSATION ARRANGEMENTS
Mr. Schwartz is compensated pursuant to an employment agreement with Loral
SpaceCom, which expires on April 5, 2001. This agreement provides for a minimum
annual base salary, to be increased each year by the percentage change in a
specified consumer price index, plus such other annual increases as the Board of
Directors or the Committee may grant from time to time. Effective March 1, 1998,
the Committee set Mr. Schwartz's annual base salary at $1.6 million in
recognition of Mr. Schwartz's leadership in guiding the Company and to bring his
compensation in line with that of CEOs of other comparable companies.
Pursuant to the agreement, if Mr. Schwartz is removed as Chairman of the Board
of Directors or as Chief Executive Officer other than for cause, or if his
duties, authorities or responsibilities are diminished, or if there is a change
of control (as defined to encompass the Company becoming a subsidiary of another
company, the acquisition of 35% or more of the voting securities of the Company
by a particular stockholder or group, or a change in 35% of the Company's
directors at the insistence of the shareholder group), Mr. Schwartz may elect to
terminate the agreement. In any such event, or upon his death or disability, Mr.
Schwartz will be entitled to receive a lump sum payment discounted at 9% per
annum, in an amount equal to his base salary as adjusted for defined Consumer
Price Index changes for the remainder of the term, an amount of incentive bonus
equal to the highest received by Mr. Schwartz in any of the prior three years,
times the number of years (including partial fiscal years) remaining during the
term, and an amount calculated to approximate the annual compensation elements
reflected in the difference between fair market value and exercise price of
stock options granted to Mr. Schwartz. All such sums are further increased to
offset any tax due by Mr. Schwartz under the excise tax and related provisions
of Section 4999 of the Internal Revenue Code.
Loral SpaceCom has established Supplemental Life Insurance Programs for certain
key employees including the NEOs. For Messrs. Schwartz, Zahler, DeBlasio, Moren
and Townsend, the Plans are funded with "split-dollar" or "universal" life
insurance policies in the face amounts of $20,500,000, $500,000, $1,060,000,
$500,000 and $500,000, respectively. In the event of death of the covered
executive under the "split-dollar" policies, Loral SpaceCom will be entitled to
receive an amount not less than Loral SpaceCom's cumulative contributions. If
any of the officers covered under the "split-dollar" program terminates his
employment prior to the time that Loral SpaceCom's contributions equal the cash
value of the insurance policy, he will be responsible for repayment of the
remainder of Loral SpaceCom's contribution to the extent cash becomes available
in the policy. Such officers contribute to the payment for this program. Messrs.
Schwartz and DeBlasio are covered under the "split-dollar" program.
In connection with Dr. Clark's retirement as President and Chief Operating
Officer of the Company as of December 1, 1999, the Company entered into a
separation agreement with Dr. Clark providing for the following benefits: (i)
eligibility to receive a bonus for fiscal 1999 as determined in the sole
discretion of the Company, the amount of which was $500,000; (ii) the continued
exercisability of all 300,000 vested Loral stock options through January 20,
2008 at an exercise price of $11.71875 per share and 5,000 vested options to
acquire shares of common stock owned by Loral of Globalstar Telecommunications
Limited through January 20, 2010 at an exercise price of $12.875 per share;
(iii) immediate vesting of options to acquire 15,000 shares of common stock
owned by Loral of Globalstar Telecommunications Limited at an exercise price of
$12.875 per share, which options may be exercised in the period starting January
1, 2004 to and including December 31, 2007; (iv) immediate vesting of options to
acquire 40,000 shares of common stock of Globalstar Telecommunications Limited
at an exercise price of $24.0625 per share, which options may be exercised in
the period starting January 1, 2004 to and including December 31, 2007; (v)
continued medical, prescription, dental, long-term disability and accidental
death insurance coverage through November 30, 2001; and (vi) maintenance of Dr.
Clark's $7,000,000 split dollar life insurance policy through July 31, 2000. In
addition, the Company entered into a two-year consulting agreement with Dr.
Clark pursuant to which Dr. Clark would provide consulting services to the
Company as requested for quarterly payments of $137,500.
13
<PAGE> 15
PENSION PLAN
Loral SpaceCom has adopted a defined benefit pension plan and trust (the
"Pension Plan") that is qualified under Section 401(a) of the Code. The Pension
Plan provides retirement benefits for eligible employees of Loral SpaceCom and
Loral SpaceCom's operating affiliates, including executive officers. The benefit
formula for the period ending December 31, 1996 will generally provide an annual
benefit equal to the greater of (A) or (B), where (A) equals (i) 1.2% of
compensation up to the Social Security Wage Base and 1.45% of compensation in
excess of the Social Security Wage Base for each year prior to the calendar year
in which a participant completes 15 years of employment, plus (ii) 1.5% of
compensation up to the Social Security Wage Base and 1.75% of compensation in
excess of the Social Security Wage Base for the calendar year in which the
participant has completed 15 years of employment and for each year thereafter;
and (B) equals (i) 1.2% of average annual compensation paid during 1992-1996 up
to the 1996 Social Security Wage Base and 1.45% of average annual compensation
paid during 1992-1996 in excess of the 1996 Social Security Wage Base for each
year prior to the calendar year in which a participant completes 15 years of
employment, plus (ii) 1.5% of average annual compensation paid during 1992-1996
up to the 1996 Social Security Wage Base and 1.75% of average annual
compensation paid during 1992-1996 in excess of the 1996 Social Security Wage
Base for the calendar year in which the participant has completed 15 years of
employment and for each year thereafter. The benefit for periods subsequent to
December 31, 1996 will be based on (A) above. Executive officers also
participate in a supplemental executive retirement plan (the "SERP") which
provides supplemental retirement benefits due to certain reductions in
retirement benefits under the Pension Plan that are caused by various
limitations imposed by the Internal Revenue Code. Compensation used in
determining benefits under the Pension Plan and SERP includes salary and bonus.
Effective April 1, 1997, under the minimum distribution rules prescribed by the
Code, Mr. Schwartz began receiving an annual benefit under the Pension Plan and
SERP of $2,165,700, determined on a joint and 50% survivor basis. The estimated
annual benefit under the Pension Plan and SERP is $291,000 for Mr. Zahler,
$518,000 for Mr. DeBlasio, $223,000 for Mr. Moren and $97,000 for Mr. Townsend.
Dr. Clark will not be entitled to any benefit under the Pension Plan. This
projected benefit has been computed assuming that (i) employment with Loral
SpaceCom will be continued until normal retirement, (ii) current levels of
creditable compensation and the Social Security Wage Base will continue without
increases or adjustments throughout the remainder of the computation period and
(iii) payments will be made on a life annuity basis.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
We believe that during 1999 all reports for our executive officers and directors
and the beneficial owners of more than 10% of our common stock that were
required to be filed under Section 16(a) of the Securities Exchange Act of 1934
were timely filed, except: (1) one report was not timely filed by Gershon Kekst
to report sales of common stock and (2) one report was not timely filed by
Stephen L. Jackson to report a gift of common stock.
14
<PAGE> 16
COMMON STOCK OWNERSHIP
The following table shows, based upon filings made with the Company, certain
information concerning persons who may be deemed beneficial owners of 5% or more
of the outstanding shares of our common stock because they possessed or shared
voting or investing power with respect to the shares of our common stock:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP CLASS(1)
<S> <C> <C>
Lockheed Martin Investments Inc. 45,896,978(2) 15.5%
6801 Rockledge Drive
Bethesda, Maryland 20817
AXA Financial, Inc. 26,809,904(3) 9.1%
(formerly known as The Equitable Companies Incorporated)
1290 Avenue of the Americas
New York, New York 10104
</TABLE>
(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 number of shares of our common
stock outstanding as of March 31, 2000.
(2) In February 2000, Loral and Lockheed Martin Corporation filed certain
notices under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 in
connection with Lockheed Martin's plan to convert its 45,896,978 shares of
Loral's Series A Convertible Preferred Stock into an equal number of shares
of Loral common stock. The waiting period expired on March 5, 2000 and, on
March 31, 2000, Lockheed Martin converted all of the Series A Convertible
Preferred Stock to common stock.
(3) A Schedule 13G filed by AXA Financial Inc. and certain of its affiliated
persons ("AXA") with the Securities and Exchange Commission on February 14,
2000 reported that, as of December 31, 1999, AXA beneficially owned
26,809,904 shares of our common stock. Of such shares, AXA reported sole
voting power over 1,574,041 shares, shared voting power over 24,848,773
shares, sole investment power over 26,670,364 shares and shared investment
power over 84,139 shares.
15
<PAGE> 17
The following table presents the number of shares of our common stock
beneficially owned by the directors and nominees, the NEOs and all directors,
nominees, NEOs and all other executive officers as a group as of March 31, 2000
(except as otherwise indicated). Individuals have sole voting and investment
power over the stock unless otherwise indicated in the footnotes.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF INDIVIDUAL BENEFICIAL OWNERSHIP(1)(2) CLASS
<S> <C> <C>
Bernard L. Schwartz 4,751,628(3) 1.6%
Gregory J. Clark 300,579(4) *
Michael P. DeBlasio 635,037(5) *
Howard Gittis 17,260(6) *
Robert B. Hodes 31,260(6) *
Gershon Kekst 31,260(6) *
Charles Lazarus 31,260(6) *
Nicholas C. Moren 538,024(7) *
Malvin A. Ruderman 43,260(6) *
E. Donald Shapiro 41,260(8) *
Arthur L. Simon 21,260(9) *
Richard J. Townsend 47,140(10) *
Daniel Yankelovich 46,260(6) *
Eric J. Zahler 547,597(11) *
ALL DIRECTORS, NOMINEES, NEOS AND OTHER EXECUTIVE OFFICERS
AS A GROUP (27 PERSONS) 8,058,764(12) 2.7%
</TABLE>
* Represents holdings of less than one percent.
(1) Includes shares which, as of March 31, 2000, may be acquired within sixty
days pursuant to the exercise of options (which shares are treated as
outstanding for the purposes of determining beneficial ownership and
computing the percentage set forth) and shares held for the benefit of
named executive directors as of March 31, 2000 in the Loral Savings Plan
(the "Savings Plan).
(2) Except as noted, all shares are owned directly with sole investment and
voting power.
(3) Includes 160,000 shares held by Mr. Schwartz's wife, 1,812,500 shares
exercisable under the Stock Option Plan and 870 shares held in the Savings
Plan.
(4) The information for Dr. Clark is as of December 31, 1999. Includes 300,000
shares exercisable under the Stock Option Plan and 579 shares held in the
Savings Plan.
(5) Includes 546,260 shares exercisable under the Stock Option Plan and 8,777
shares held in the Savings Plan.
(6) Includes 11,260 shares exercisable under the Stock Option Plan.
(7) Includes 455,000 shares exercisable under the Stock Option Plan and 2,624
shares held in the Savings Plan.
(8) Includes 3,000 shares owned by Mr. Shapiro's wife and 11,260 shares
exercisable under the Stock Option Plan.
(9) Includes 5,750 shares held in Mr. Simon's IRA account, 250 in his wife's
IRA account and 11,260 shares exercisable under the Stock Option Plan.
(10) Includes 30,000 shares exercisable under the Stock Option Plan, 640 shares
held in the Savings Plan and 16,500 shares under a restricted stock option
grant.
(11) Includes 455,000 shares exercisable under the Stock Option Plan and 11,397
shares held in the Savings Plan.
(12) Includes 4,484,508 shares exercisable under the Stock Option Plan, 60,335
shares held in the Savings Plan and 16,500 shares under a restricted stock
option grant.
16
<PAGE> 18
STOCK PERFORMANCE GRAPH
The graph below compares the monthly change in cumulative total return of the
Company's common stock with the cumulative total return of the Standard & Poor's
500 Composite Stock Index and SATIN, the Barclays Satellite & Space Index, from
January 8, 1996 through March 15, 2000, assuming an investment of $100 in the
Company's common stock and each index. On January 7, 1996, Loral Corporation
entered into a Merger Agreement with Lockheed Martin pursuant to which Loral
Corporation agreed to merge (the "Merger") with a subsidiary of Lockheed Martin
Corporation and Loral Corporation stockholders would receive in the merger $38
in cash and one share of common stock of the Company (the "Distribution"). "When
issued" trading in the Company's common stock commenced on April 15, 1996, and
the Distribution and Merger were completed on April 23, 1996. The share price
for the Company's common stock in the graph below for the period from January 8,
1996, the day after the announcement of the Merger, through April 15, 1996, the
day on which "when issued" trading commenced, represents the value of a share of
common stock of the Company inherent in the value of the common stock of Loral
Corporation as represented by the share price of Loral Corporation common stock
for each period less $38, the fixed portion of the merger consideration.
The graph below shall not be deemed incorporated by reference by any general
statements incorporating by reference this proxy statement into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of 1934, except
to the extent it shall be specifically incorporated and shall not otherwise be
deemed filed under such acts.
COMPARISON OF CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
LORAL SATIN S&P 500
----- ----- -------
<S> <C> <C> <C>
08-Jan-96 100.00 100.00 100.00
30-Jun-96 212.00 115.00 109.00
31-Dec-96 283.00 110.00 120.00
30-Jun-97 231.00 107.00 143.00
31-Dec-97 330.00 116.00 157.00
30-Jun-98 435.00 132.00 183.00
31-Dec-98 274.00 128.00 199.00
30-Jun-99 277.00 205.00 222.00
31-Dec-99 374.00 550.00 238.00
15-Mar-00 178.00 729.00 225.00
</TABLE>
17
<PAGE> 19
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In February 2000, Loral and Lockheed Martin entered into an agreement pursuant
to which Lockheed Martin agreed that it will not sell any of the Company's
Series A Convertible Preferred Stock or the Loral common stock into which such
preferred stock is convertible before May 19, 2000. Loral has in turn agreed to
use its best efforts to cause a registration statement relating to the common
stock issuable upon conversion of the Series A Convertible Preferred Stock to be
effective on or before May 19, 2000 and to maintain its effectiveness for at
least twelve months thereafter. Loral has also agreed that it will refrain from
selling equity securities in the public markets for its own account until the
sixth month anniversary of the effective date of such registration statement. In
March 2000, Loral and Lockheed Martin entered into an amended shareholders
agreement which, among other things, formalized the arrangements described
above. On March 31, 2000, Lockheed Martin converted all of the Series A
Convertible Preferred Stock to common stock.
In connection with contract performance, Loral subsidiaries provided services to
and acquired services from Lockheed Martin for the year ended December 31, 1999.
For 1999, revenues for services sold were $399,000, the cost of services
purchased was $151,053,000, and such subsidiaries' net payable to Lockheed
Martin at December 31, 1999 was $59,580,000.
Globalstar has entered into an agreement with a subsidiary of Lockheed Martin
for the development and delivery of two satellite operations control centers and
33 telemetry and command units for the Globalstar system. The fixed contract
price is approximately $37.8 million and is substantially complete as of
December 31, 1999. Globalstar owns all intellectual property produced under this
contract.
Globalstar currently leases approximately 159,200 square feet of office space
from Lockheed Martin at a cost of approximately $300,000 per month. The lease
with respect to 106,200 square feet expires in December 2008 (with an option to
extend for two additional five-year periods). The second lease expires in
January 2001 (with an option to extend for an additional year).
On December 15, 1995, Globalstar entered into a credit agreement providing for a
$250 million credit facility. Following the consummation of the merger between
Loral Corporation and a subsidiary of Lockheed Martin, Lockheed Martin
guaranteed $206.3 million of Globalstar's obligation under the credit agreement,
and Space Systems/Loral, Inc., a Loral subsidiary, and certain other Globalstar
strategic partners guaranteed $11.7 million and $32 million, respectively, of
Globalstar's obligation. In addition, Loral has agreed to indemnify Lockheed
Martin for liability in excess of $150 million under Lockheed Martin's
guarantee.
In January 1999, Loral purchased $150 million face amount of convertible
preferred stock of Globalstar Telecommunications Limited at a total purchase
price of approximately $145.9 million. The purchase price paid by Loral was the
same as the price offered by Globalstar Telecommunications Limited to the
initial purchasers of the offering.
Bernard L. Schwartz, Chairman and CEO of the Company, is a 50% owner of K&F
Industries, Inc. ("K&F"). Prior to a recapitalization of K&F in 1997, the
Company was a 22.5% owner of K&F and, pursuant to its management agreement with
the Company, Loral SpaceCom had from time to time granted options to purchase
shares of the Company's common stock to employees of K&F. K&F reimburses Loral
SpaceCom for the interest cost on the funds it would have had to pay to Loral
SpaceCom had it purchased the Loral shares underlying the options granted at the
applicable exercise prices.
Robert B. Hodes, a Director and a member of the Audit and Executive Committees,
is counsel to the law firm of Willkie Farr & Gallagher, which acts as general
counsel to the Company.
For the year ended December 31, 1999, the Company paid fees and disbursements in
the amount of approximately $350,000 for corporate communications consultations
to Kekst and Company Incorporated, of which company Gershon Kekst, a Director
and member of the Executive Committee, is President and the principal
stockholder. Kekst and Company continues to render such services to the Company.
18
<PAGE> 20
LORAL SPACE & COMMUNICATIONS LTD.
PROXY - ANNUAL MEETING OF SHAREHOLDERS, MAY 16, 2000
BERNARD L. SCHWARTZ, ERIC J. ZAHLER and ROBERT B. HODES, and each of them,
are hereby appointed the proxies of the undersigned, with full power of
substitution on behalf of the undersigned to vote, as designated below, all
the shares of the undersigned at the Annual Meeting of Shareholders of LORAL
SPACE & COMMUNICATIONS LTD., to be held in the Grand Salon, The Essex House,
160 Central Park South, New York, New York, at 1:30 P.M., on Tuesday, May 16,
2000 and at all adjournments thereof.
The Board of Directors Recommends a Vote FOR the Following Proposals:
1. ELECTION OF THREE CLASS I DIRECTORS - Nominees: Class I: H. Gittis, G.
Kekst, A. Simon
/ / VOTE FOR all nominees listed below
/ / WITHHOLD AUTHORITY to vote for all nominees listed below
/ / EXCEPTIONS *
( Instruction: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided
below.)
*Exceptions:_________________________________________________________________
2. Acting upon a proposal to ratify the appointment of Deloitte & Touche LLP
as independent auditors for the year ending December 31, 2000.
FOR / / AGAINST / / ABSTAIN / /
3. In their discretion, upon such other matters as may properly come before
the meeting.
FOR / / AGAINST / / ABSTAIN / /
(Continued on reverse side)
<PAGE> 21
PROXY
(Continued from other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS INDICATED, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF NOMINEES LISTED HEREON AND FOR PROPOSALS 2 AND
3.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby acknowledges
receipt of the Notice of Annual Meeting
and accompanying Proxy Statement.
Dated:___________________________, 2000
__________________________________
__________________________________
(Signature of Shareholder)
(Please sign exactly as name or names
appear hereon. When signing as an
attorney, executor, administrator,
trustee or guardian, please give your
full title as such; if by a corporation,
by an authorized officer; if by a
partnership, in partnership name by an
authorized person. For joint owners, all
co-owners must sign.)
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY IN THE ENVELOPE PROVIDED.
