<PAGE>
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:
[_] 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-12
PANAMSAT CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the 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 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
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[_] 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
LOGO PANAMSAT
April 17, 1998
To our Stockholders:
On behalf of the Board of Directors, I cordially invite you to attend the
Annual Meeting of Stockholders of PanAmSat Corporation, to be held at 9:30
a.m., local time, on Monday, May 4, 1998, at The St. Regis Hotel, located at 2
East 55th Street, New York, New York. The formal notice and proxy statement
for the Annual Meeting are attached to this letter.
To have your vote recorded, you should sign, date and return your proxy card
in the enclosed envelope as soon as possible, even if you currently plan to
attend the Annual Meeting. By doing so, you will ensure that your shares are
represented and voted at the meeting. If you decide to attend, you can still
vote your shares in person, if you wish.
On behalf of the Board of Directors, I thank you for your cooperation and
look forward to seeing you on May 4.
Very truly yours,
/s/ Frederick A. Landman
Frederick A. Landman
President and Chief Executive
Officer
<PAGE>
-------------------------------
PANAMSAT CORPORATION
ONE PICKWICK PLAZA
GREENWICH, CONNECTICUT 06830
-------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 4, 1998
-------------------------------
To the Stockholders of
PanAmSat Corporation:
Notice is hereby given that the annual meeting of stockholders of PanAmSat
Corporation (the "Company") will be held at The St. Regis Hotel, located at 2
East 55th Street, New York, New York, at 9:30 a.m., local time, on Monday, May
4, 1998, for the following purposes:
1. ELECTION OF DIRECTORS. To elect a total of 9 persons to the Board of
Directors to serve as Directors until the next annual meeting of
stockholders and until their successors are elected and have qualified.
2. RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS. To ratify
the Board of Directors' selection of Deloitte & Touche LLP as the
Company's independent accountants for the fiscal year ending December
31, 1998.
3. APPROVAL OF LONG-TERM STOCK INCENTIVE PLAN. To approve the adoption of
the PanAmSat Corporation Long-Term Stock Incentive Plan established in
1997.
4. APPROVAL OF ANNUAL INCENTIVE PLAN. To approve the adoption of the
PanAmSat Corporation Annual Incentive Plan.
5. APPROVAL OF RESTORATION AND DEFERRED COMPENSATION PLAN. To approve the
adoption of the PanAmSat Corporation Restoration and Deferred
Compensation Plan.
6. OTHER BUSINESS. To consider and act upon such other business as may
properly come before the meeting.
Only stockholders of record at the close of business on March 16, 1998, will
be entitled to notice of the annual meeting and to vote at the annual meeting
and at any adjournments thereof.
By Order of the Board of Directors
James W. Cuminale
Secretary
Dated: April 17, 1998
WHETHER OR NOT YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING IN PERSON,
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS
POSSIBLE. YOU MAY REVOKE YOUR PROXY IF YOU DECIDE TO ATTEND THE ANNUAL MEETING
AND WISH TO VOTE YOUR SHARES IN PERSON.
<PAGE>
PANAMSAT CORPORATION
ONE PICKWICK PLAZA
GREENWICH, CONNECTICUT 06830
(203) 622-6664
----------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 4, 1998
----------------
GENERAL
This proxy statement is furnished to stockholders of PanAmSat Corporation, a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors of the Company (the "Board" or the "Board of
Directors") for use at the Annual Meeting of Stockholders to be held at 9:30
a.m., local time, on Monday, May 4, 1998, at The St. Regis Hotel, located at 2
East 55th Street, New York, New York, and any adjournments thereof (the
"Annual Meeting" or the "Meeting").
Common stockholders of record as of the close of business on March 16, 1998
(the "Record Date") will be entitled to vote at the Meeting or any
adjournments thereof. As of the Record Date, the Company had outstanding
149,148,365 shares of Common Stock, par value $0.01 per share (the "Common
Stock"), each entitled to one vote on all matters to be voted on at the
Meeting. This proxy statement, the accompanying proxy card and the Company's
annual report to stockholders for the fiscal year ended December 31, 1997 are
intended to be mailed on or about April 17, 1998 to each stockholder entitled
to vote at the Meeting.
INFORMATION CONCERNING VOTING OF PROXIES
VOTING AND RECORD DATE
If the enclosed proxy is executed and returned in time and not revoked, all
shares represented thereby will be voted. Each proxy will be voted in
accordance with the stockholder's instructions. If no such instructions are
specified, the proxies will be voted FOR the election of each person nominated
as a director, FOR the ratification of the Board's selection of Deloitte &
Touche LLP ("Deloitte & Touche") as the Company's independent accountants for
the fiscal year ending December 31, 1998, and FOR the approval of each of the
PanAmSat Corporation Long-Term Stock Incentive Plan established in 1997 (the
"Long-Term Stock Incentive Plan"), the PanAmSat Corporation Annual Incentive
Plan (the "Annual Incentive Plan"), and the PanAmSat Corporation Restoration
and Deferred Compensation Plan (the "Restoration and Deferred Compensation
Plan").
Assuming a quorum is present, the affirmative vote by the holders of shares
of Common Stock having a plurality of the votes cast at the Meeting will be
required to elect the directors of the Company. In addition, the affirmative
vote of the holders of shares of Common Stock having at least a majority of
the votes present in person or represented by proxy and entitled to vote at
the Meeting will be required for the ratification of the Board's selection of
Deloitte & Touche as the Company's independent accountants, and the approval
of the Long-Term Stock Incentive Plan, the Annual Incentive Plan and the
Restoration and Deferred Compensation Plan. Abstentions from votes in respect
of proposals other than the election of directors will have the same effect as
votes against such proposals. Votes withheld from a nominee for director will
have no effect in the case of the election of directors. With respect to
proposals for which brokers are prohibited from exercising discretionary
authority for beneficial owners who have not returned a proxy (so-called
"broker non-votes"), such broker non-votes will have no effect on such
proposals. Abstentions and broker non-votes will, however, be counted in the
determination of a quorum.
1
<PAGE>
REVOCATION OF PROXIES
A stockholder giving a proxy may revoke it at any time before it is voted by
delivery to the Company of a subsequently executed proxy or a written notice
of revocation. In addition, returning your completed proxy will not prevent
you from voting in person at the Annual Meeting should you be present and wish
to do so.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors currently consists of ten directors. Messrs. Higgins
and Westerman are not standing for re-election. Pursuant to a stockholder
agreement among Hughes Communications, Inc. ("HCI"), Satellite Company, L.L.C.
("S Company") and the former holders of the Class A Common Stock of PanAmSat
International Systems, Inc. (then operating under its previous name, PanAmSat
Corporation) ("PanAmSat International") prior to the Merger (as defined below)
(the "Class A Holders"), each of HCI, S Company and the Class A Holders have
agreed to take all necessary action, including voting their shares, in order
to cause the Board of Directors of the Company to consist of ten members. For
so long as the Class A Holders and S Company each own at least 4% of the
shares of the Company, they are each entitled to designate one director to the
Board of Directors. HCI is entitled to designate the members of the Board of
Directors not so designated and has agreed that one of its designees shall be
Mr. Landman for so long as he is the Chief Executive Officer of the Company.
Of the current directors and nominee listed below, Ms. Austin and Messrs.
Smith, Dorfman, Hightower, Hoak, Landman, Noski and Wright are the HCI
designees. Mr. Costello is the Class A Holders designee. As of the date
hereof, S Company has not yet indicated whether it will designate a director
and it is not anticipated that it will do so prior to the Annual Meeting.
Accordingly, one directorship will be left vacant at such time, pending any S
Company designation, although HCI may cause this directorship to be filled at
any time in the absence of an S Company designation. Should S Company make a
designation the above parties have agreed to place such designee on the Board
of Directors pursuant to the above-mentioned stockholder agreement.
Unless otherwise directed, proxies in the accompanying form will be voted
FOR the nominees listed below. The Board has no knowledge that any nominee
will or may be unable to serve or will or may withdraw from nomination. Eight
of the following nominees are current directors of the Company whose terms end
at the Annual Meeting. Information concerning nominees for director is set
forth below.
2
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING NOMINEES TO THE
BOARD OF DIRECTORS:
DIRECTORS AND NOMINEE
All of the current members of the Board of Directors were elected in May
1997 in connection with the merger (the "Merger") of PanAmSat International
and the Galaxy Satellite Services division ("Galaxy") of HCI, a wholly-owned
subsidiary of Hughes Electronics Corporation ("Hughes Electronics"). The
following table sets forth information as to a nominee for and continuing
members of the Board of Directors:
<TABLE>
<CAPTION>
NAME AGE
- ---- ---
<S> <C>
Michael T. Smith, Chairman of the Board..................................... 54
Roxanne S. Austin........................................................... 37
Patrick J. Costello......................................................... 41
Steven D. Dorfman........................................................... 62
Dennis F. Hightower......................................................... 56
James M. Hoak............................................................... 54
Frederick A. Landman........................................................ 50
Charles H. Noski............................................................ 45
Joseph R. Wright, Jr........................................................ 59
</TABLE>
MICHAEL T. SMITH is Chairman of the Company. In addition, he is Chairman of
the Board and Chief Executive Officer of Hughes Electronics (a satellite
communications company and a parent corporation and affiliate of the Company),
which positions he has held since October 1997. Mr. Smith was Chairman of
Hughes Aircraft Company ("HAC") from 1992 to October 1997. Mr. Smith is
Chairman of the Aerospace Industries Association (an industry trade
organization) and is a member of the board of directors of the Los Angeles
World Affairs Council (an industry trade organization). He is also a member of
the board of directors of Alliant Techsystems Inc. and American Mobile
Satellite Corporation.
ROXANNE S. AUSTIN is a nominee for director of the Company. She is presently
Senior Vice President and Chief Financial Officer of Hughes Electronics, which
positions she has held since August 1997. She was Senior Vice President,
Treasurer and Controller of Hughes Electronics from December 1996 to July 1997
and was Vice President, Treasurer and Controller of Hughes Electronics from
July 1996 to December 1996. Ms. Austin was Vice President and Controller of
Hughes Electronics from July 1993 to July 1996 and was a partner at Deloitte &
Touche prior thereto.
PATRICK J. COSTELLO is presently a director of the Company. In addition, he
is the Chief Financial Officer of Northway Management Company, LLC (a private
investment company), which position he has held since May 1997. Mr. Costello
was the Chief Financial Officer of PanAmSat International from May 1992 to May
1997 and was elected a director of PanAmSat International in October 1996. Mr.
Costello continued as a transactional consultant of the Company following the
Merger and assisted in the transition following the Merger from May 1997 to
November 1997 during which time he performed such services as requested by the
Chief Executive Officer of the Company.
STEVEN D. DORFMAN is presently a director of the Company. In addition, he is
Vice Chairman of Hughes Electronics and a member of that company's board of
directors and executive committee, which positions he has held since October
1997. Mr. Dorfman was Chairman of the Hughes Telecommunications and Space
Company ("HTS") from April 1993 to December 1997. Mr. Dorfman was President
and Chief Executive Officer of Hughes Space and Communications Company ("HSC")
from 1991 to 1993. Hughes Electronics and HCI are parent corporations and
affiliates of the Company; HTS and HSC are affiliates of the Company. Mr.
Dorfman is a member of the National Academy of Engineering and has served on
many government advisory boards, most recently the Presidential Advisory
Committee on High Performance Computing and Communications. He is also a
member of the board of directors of Raytheon Company and American Mobile
Satellite Corporation. Mr. Dorfman is also a trustee of the Boys and Girls
Club of America.
DENNIS F. HIGHTOWER is presently a director of the Company. In addition, he
is a Professor of Management at the Harvard University Graduate School of
Business Administration, which position he has held since July
3
<PAGE>
1996. He was a senior executive with The Walt Disney Company (a diversified
worldwide entertainment company) from June 1987 to June 1996. He was named
President of Walt Disney Television & Telecommunications (a diversified
worldwide entertainment company) in March 1995. Mr. Hightower was President of
Disney Consumer Products, Europe, Middle East and Africa (a publishing,
character merchandise and children's music company) from June 1987 to February
1995. He is a member of the board of directors of Northwest Airlines
Corporation, Phillips-Van Heusen Corporation, The Price Waterhouse Chairman's
Advisory Council, The TJX Companies, Inc. and the Howard University Board of
Trustees.
JAMES M. HOAK is presently a director of the Company. In addition, he is
Chairman and a Principal of Hoak Capital Corporation (a private equity
investment company), which position he has held since September 1991, and
Chairman of HBW Holdings, Inc. (an investment bank), which position he has
held since July 1996. He served as Chairman of Heritage Media Corporation (a
broadcasting and marketing services firm) from its inception in August 1987 to
its sale in August 1997. Mr. Hoak was Chief Executive Officer of Crown Media,
Inc. (a cable television company) from February 1991 to January 1995. Mr. Hoak
is a member of the board of directors of Dynamex Inc., MidAmerican Energy
Company, Pier 1 Imports, Inc. and Texas Industries, Inc.
FREDERICK A. LANDMAN is presently a director of the Company. In addition, he
is President and Chief Executive Officer of the Company. He was President and
Chief Executive Officer of PanAmSat International from September 1995 to May
1997 and was a director of PanAmSat International from October 1994 to May
1997. Mr. Landman has been associated with the Company, PanAmSat International
or its predecessors since the inception of the PanAmSat business in 1984.
CHARLES H. NOSKI is presently a director of the Company. In addition, he is
President of Hughes Electronics and a member of that company's board of
directors and executive committee, which positions he has held since October
1997. Mr. Noski was Executive Vice President and Chief Financial Officer of
United Technologies Corporation (a manufacturer of aircraft engines and engine
parts, elevators and escalators, heating and air conditioning systems and
automotive systems) from August 1997 to October 1997. He was Vice Chairman and
Chief Financial Officer of Hughes Electronics from September 1996 to October
1997. Mr. Noski was Senior Vice President and Chief Financial Officer of
Hughes Electronics from August 1992 to October 1996. Mr. Noski is a director
of Raytheon Company and the Private Sector Council and is on the board of
directors of the California State University, Northridge Foundation.
JOSEPH R. WRIGHT, JR. is presently a director of the Company. In addition,
he is the Chairman and a director of GRC International, Inc. (a research and
technical support provider to government and private entities), which position
he has held since 1997, Vice Chairman of The Jefferson Group, Inc. (a
consulting and public relations firm), which position he has held since 1996,
Chairman, Chief Executive Officer and a director of AmTec, Inc. (a U.S.
company which develops and finances telecommunications projects in the
People's Republic of China), which positions he has held since 1995, and Co-
Chairman and a director of Baker & Taylor Holdings, Inc. (an international
book and video distribution company), which positions he had held since 1995.
Mr. Wright was Vice Chairman, Executive Vice President and a director of W.R.
Grace & Company (a packaging and specialty chemicals company) from 1989 to
1994. He was Director of the Federal Office of Management and Budget during
the Reagan Administration from 1988 to 1989 and Deputy Director from 1982 to
1988. Mr. Wright serves on the board of directors of Travelers Group and on
the Board of Trustees for Hampton University.
4
<PAGE>
FURTHER INFORMATION CONCERNING
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors directs the management of the business and affairs of
the Company, as provided by Delaware law, and conducts its business through
meetings of the Board and four standing committees: the Independent Directors
Committee, the Audit Committee, the Compensation Committee and the Finance
Committee. In addition, from time to time, special committees may be
established under the direction of the Board when necessary to address
specific issues. The Company has no nominating or similar committee.
COMMITTEES OF THE BOARD--BOARD MEETINGS
The Board of Directors of the Company held five meetings in 1997. Each
director attended 75% or more of the aggregate of (i) all meetings of the
Board held during the period for which he served as a director, and (ii)
meetings of all committees of the Board of which the director was a member,
during the period for which he served during the Company's last fiscal year.
Independent Directors Committee. The Independent Directors Committee is
composed of Mr. Costello, Mr. Hightower, Mr. Hoak and Mr. Wright, none of whom
is an existing or retired employee of the Company or any of its "affiliates"
(as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")). Its functions are to (a) review and recommend
any tender offers by Hughes Electronics or its subsidiaries to acquire in
excess of 81% in the aggregate of outstanding equity interests of the Company
until May 16, 2002, (b) review and recommend any material transaction between
Hughes Electronics or its subsidiaries and the Company, and (c) review an
annual report from the President and the Office of the President of the
Company that describes all transactions and agreements entered into between
the Company and Hughes Electronics or its subsidiaries during the preceding
year and details all other relationships between the companies, and to
determine whether such arrangements were commercially reasonable. The
Independent Directors Committee met twice in 1997 and acted once by unanimous
written consent.
Audit Committee. The Audit Committee is composed of Mr. Higgins, Mr.
Hightower, Mr. Hoak and Mr. Noski, none of whom is an officer or employee of
the Company. It has the powers and responsibilities designated to it by the
Board from time to time. Its functions are to (a) make recommendations
annually concerning the appointment of a firm of independent accountants to
audit the Company's financial statements, (b) review the arrangements for and
scope of the audit by such independent accountants, and (c) consider the
adequacy of the Company's internal accounting controls system and review any
proposed corrective actions. The Audit Committee met three times in 1997.
Compensation Committee. The Compensation Committee is composed of Mr. Smith,
Mr. Wright and Mr. Westerman, each of whom satisfies the "outside director"
requirements of Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"). Its functions are to (a) review, recommend and approve
compensation levels, bonus amounts, stock option grants and benefit plans, (b)
request and review reports from the Company's management on the scope,
competence, performance and motivation of management employees, (c) develop,
review, recommend and approve bonus, stock option and similar incentive plans
or programs and retirement and welfare plans or programs, (d) administer and
interpret bonus, stock option and similar incentive plans, and (e) develop,
review and recommend changes to major benefit programs. The Compensation
Committee met four times in 1997.
Finance Committee. The Finance Committee is composed of Mr. Noski, Mr.
Landman and Mr. Wright. Its functions are to review and act on any debt
financing transactions including loans, commercial paper programs, debt
offerings or other transactions involving the creation of indebtedness. The
Finance Committee did not meet in 1997; however it took action by written
consent once in 1997.
Immediately following the Annual Meeting, the Board of Directors intends to
have Ms. Austin become a member of the Audit Committee, replacing Mr. Higgins;
Mr. Noski become a member of the Compensation Committee, replacing Mr.
Westerman; and Mr. Hoak become a member of the Finance Committee, replacing
Mr. Wright.
5
<PAGE>
DIRECTOR COMPENSATION
Each non-employee director receives an annual fee of $16,000, payable
quarterly, for services as a director plus $1,500 for attendance at each
meeting of the full Board and $1,000 for attendance at each meeting of a
Committee of the Board. Non-employee directors are eligible to participate in
the Long-Term Stock Incentive Plan and commencing in the fourth quarter of
1997, all fees payable after December 5, 1997 were paid in restricted stock of
the Company, rounded-up to the next whole share. In addition, the Company
reimburses the directors for travel expenses incurred in connection with their
duties as directors of the Company. Patrick J. Costello did not receive a
director's fee during the time that he was serving as a transitional
consultant to the Company. Pursuant to current Hughes Electronics policies,
directors who are also employees of Hughes Electronics do not receive
compensation for their services as directors of the Company (but such
directors' travel expenses are reimbursed by the Company).
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is certain information concerning each of the current
executive officers of the Company. Further information concerning Mr. Landman
is presented under the caption "Election of Directors," above.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Frederick A. Landman.. 50 President, Chief Executive Officer and Director
Lourdes Saralegui..... 36 Executive Vice President
Carl A. Brown......... 49 Executive Vice President
Kenneth N. Heintz..... 51 Executive Vice President and Chief Financial Officer
James W. Cuminale..... 45 Senior Vice President, General Counsel and Secretary
Robert A. Bednarek.... 40 Senior Vice President and Chief Technology Officer
</TABLE>
FREDERICK A. LANDMAN has been the President and Chief Executive Officer and
a director of the Company since May 1997. Mr. Landman has been the President
and Chief Executive Officer of PanAmSat International, a subsidiary of the
Company, since September 1995. Prior thereto, Mr. Landman served as President
and Chief Operating Officer of various predecessor companies to PanAmSat
International. Mr. Landman has been associated with the Company, PanAmSat
International or its predecessors since the inception of the PanAmSat business
in 1984. Prior to 1984, Mr. Landman was Executive Vice President of
Galavision, Inc., the pay cable television service of Spanish International
Network, Inc. (now known as Univision) ("Spanish International Network"). As
Executive Vice President of Spanish International Network, Mr. Landman
supervised the successful transition from terrestrial to satellite delivery of
Spanish International Network's television programming. Spanish International
Network was the first U.S. commercial network to utilize satellite
distribution for all of its programming.
LOURDES SARALEGUI has been an Executive Vice President of the Company since
May 1997. She has been an Executive Vice President of PanAmSat International
since October 1994. Prior to becoming an Executive Vice President of the
Company, Ms. Saralegui served as Assistant to the Chairman, Director of
Development Broadcast Transponder Sales and Fixed International Broadcast
Services, and Vice President. Ms. Saralegui has been associated with the
Company, PanAmSat International or its predecessors since the inception of the
PanAmSat business in 1984.
CARL A. BROWN has been an Executive Vice President of the Company since May
1997. He was Senior Vice President of HCI, an affiliate of the Company, from
May 1989 until May 1997. From March 1991 to May 1994, Mr. Brown served as Vice
President of HCI.
KENNETH N. HEINTZ has been Executive Vice President and Chief Financial
Officer of the Company since May 1997. He also has retained his title as a
Corporate Vice President of Hughes Electronics, which position he has held
since September 1994. Mr. Heintz was formerly a partner in the international
accounting firm of Deloitte & Touche, where he was employed from 1967 until
joining Hughes Electronics in September 1994. While at Deloitte & Touche, Mr.
Heintz provided services to Hughes Electronics at various times during the
period from 1974 to 1994.
6
<PAGE>
JAMES W. CUMINALE has been Senior Vice President, General Counsel and
Secretary of the Company since May 1997. He has been Senior Vice President and
General Counsel of PanAmSat International since January 1996 and was General
Counsel of PanAmSat International from March 1995 to December 1995. From 1983
to 1995, Mr. Cuminale was a partner in the law firm of Ivey, Barnum & O'Mara.
As a partner at Ivey, Barnum & O'Mara, Mr. Cuminale provided legal services to
PanAmSat International from 1991 to 1995.
ROBERT A. BEDNAREK has been Senior Vice President and Chief Technology
Officer of the Company since May 1997. He was Senior Vice President,
Engineering and Operations of PanAmSat International from January 1996 through
May 1997. From 1990, the year in which he joined PanAmSat International, to
1995, Mr. Bednarek was a Vice President of PanAmSat International.
Executive officers and other officers are elected or appointed by, and serve
at the pleasure of, the Board of Directors. The Company has entered into an
employment agreement with Mr. Landman and severance agreements with Ms.
Saralegui, Mr. Bednarek and Mr. Cuminale. See "Executive Compensation--
Employment Contracts and Termination of Employment and Change-In-Control
Arrangements" below.
7
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information regarding the shares of
Common Stock beneficially owned as of February 13, 1998 by (i) each person who
or entity that, insofar as the Company has been able to ascertain,
beneficially owned as of such date more than 5% of the Company's Common Stock,
(ii) each of the directors of the Company and nominee for director, (iii) the
Company's Chief Executive Officer and the five other most highly compensated
executive officers of the Company for the fiscal year ended December 31, 1997
(the "Named Executive Officers") and (iv) all executive officers and directors
of the Company as a group (15 persons).
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP OF PERCENT OF
NAME OF BENEFICIAL OWNER (1) SHARES OF COMMON STOCK COMMON STOCK
---------------------------- ----------------------- ------------
<S> <C> <C>
General Motors Corporation(2)............. 106,622,807 71.49%
Mary Anselmo(3)(4)(5)..................... 13,667,003 9.16%
Article VII Trust Created Under the Rene
Anselmo Revocable Trust Dated June 10,
1994(3)(4)(5)............................ 12,829,296 8.60%
Grupo Televisa, S.A.(6)................... 11,239,594 7.54%
Michael T. Smith.......................... 300 *
Charles H. Noski(7)....................... 500 *
Frederick A. Landman(3)(4)(8)............. 2,476,683 1.66%
Patrick J. Costello(9).................... 1,277 *
Roxanne S. Austin......................... 0 *
Steven D. Dorfman......................... 2,000 *
John J. Higgins........................... 1,600 *
Ted G. Westerman.......................... 2,000 *
Dennis F. Hightower....................... 1,175 *
James M. Hoak............................. 1,202 *
Joseph R. Wright, Jr...................... 1,202 *
Lourdes Saralegui(3)(4)(10)............... 187,225 *
Carl A. Brown............................. 190 *
Kenneth N. Heintz......................... 0 *
James W. Cuminale......................... 2,281 *
Robert A. Bednarek........................ 1,652 *
All executive officers and directors as a
group (15 persons)(4).................... 2,679,097 1.80%
</TABLE>
- --------
* Less than 1%
(1) For purposes of this table, beneficial ownership of securities is defined
in accordance with the rules of the Securities and Exchange Commission
(the "SEC") and means generally the power to vote or exercise investment
discretion with respect to securities, regardless of any economic
interests therein. Except as otherwise indicated, the beneficial owners
of shares of Common Stock listed above have sole investment and voting
power with respect to such shares, subject to community property laws
where applicable. In addition, for purposes of this table, a person or
group is deemed to have "beneficial ownership" of any shares which such
person has the right to acquire by April 14, 1998. For purposes of
calculating the percentage of outstanding shares held by each person
listed above, any shares which such person has the right to acquire by
April 14, 1998 are deemed to be outstanding, but not for the purpose of
calculating the percentage ownership of any other person.
(2) The address of such entity is 3044 West Grand Boulevard, Detroit,
Michigan 48202-3091. All of such shares are owned of record by HCI, a
wholly-owned subsidiary of Hughes Electronics, which entity is a wholly-
owned subsidiary of General Motors Corporation ("GM").
(3) The address of such entity or person is c/o PanAmSat Corporation, One
Pickwick Plaza, Greenwich, Connecticut 06830.
8
<PAGE>
(4) Mary Anselmo, Reverge Anselmo, Frederick A. Landman and Lourdes Saralegui
are joint trustees under the Article VII Trust, which was created by Rene
Anselmo (the founder and former Chairman of the Board and Chief Executive
Officer of PanAmSat International), and succeeded to all of the stock
owned by Rene Anselmo on the date of his death. A majority of the joint
trustees have power to vote all of the Common Stock held by the Article
VII Trust and Mrs. Anselmo, as joint trustee, has the sole power to
require or prohibit the sale of such shares. Each joint trustee, in his
or her capacity as such, may be deemed to be the beneficial owner of all
the shares of Common Stock that are held by the Article VII Trust, but
each joint trustee other than Mrs. Anselmo disclaims beneficial ownership
of such shares.
(5) Includes 12,829,296 shares owned by the Article VII Trust for which Mrs.
Anselmo is a joint trustee, has sole power to require or prohibit the
sale of, is the principal beneficiary of and for which Mrs. Anselmo
claims beneficial ownership.
(6) The address of such entity is Ave. Vasco de Quiroga #2000, Colonia Santa
Fe, Mexico City, Mexico 01210. All such shares are owned of record by S
Company, which entity is a 100% direct and indirect subsidiary of Grupo
Televisa, S.A.
(7) The shares shown as owned by Mr. Noski are held by the Noski Family
Living Trust for which Mr. Noski is a trustee.
(8) The shares shown as owned by Mr. Landman do not include (i) 12,829,296
shares held for the benefit of the Article VII Trust for which Mr.
Landman is a joint trustee, (ii) 239,337 shares owned by Mr. Landman's
former wife, Pier Landman, (iii) 83,770 shares owned by trusts for the
benefit of Mr. Landman's minor children and (iv) 940,526 shares owned by
the Frederick A. Landman Irrevocable Trust, with respect to all of which
shares Mr. Landman disclaims beneficial ownership. Pier Landman is the
principal lifetime beneficiary of the Frederick A. Landman Irrevocable
Trust, and Mr. Landman's minor children are the remaindermen. Pier
Landman is also the sole trustee of the trusts for the benefit of Mr.
Landman's minor children.
(9) The shares shown as owned by Mr. Costello do not include (i) 940,526
shares held by the Frederick A. Landman Irrevocable Trust for which Mr.
Costello is trustee and (ii) 335,082 shares held by the Raycee Anselmo
Trust for which Mr. Costello is a joint trustee, with respect to all of
which shares Mr. Costello disclaims beneficial ownership.
(10) The shares shown as owned by Ms. Saralegui do not include 12,829,296
shares held for the benefit of the Article VII Trust for which Ms.
Saralegui is a joint trustee, and with respect to which Ms. Saralegui
disclaims beneficial ownership.
9
<PAGE>
The following table sets forth certain information regarding the equity
securities of GM beneficially owned as of February 13, 1998 by (i) each of the
directors of the Company and nominees for director, (ii) the Company's Chief
Executive Officer and the Named Executive Officers, and (iii) all executive
officers and directors of the Company as a group (15 persons).
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP OF
OF SHARES OF GM SHARES OF GM CLASS H
NAME OF BENEFICIAL OWNER(1) COMMON STOCK(2) COMMON STOCK(2)
- --------------------------- -------------------- -----------------------
<S> <C> <C>
Michael T. Smith(3)............... 6,126 395,251
Charles H. Noski(4)............... 2,782 20,538
Frederick A. Landman.............. -- --
Patrick J. Costello............... -- --
Roxanne S. Austin(5).............. 843 92,971
Steven D. Dorfman(6).............. 3,467 123,160
John J. Higgins................... 2,553 57,953
Ted G. Westerman(7)............... 2,606 74,195
Dennis F. Hightower............... -- --
James M. Hoak..................... -- --
Joseph R. Wright, Jr.............. -- --
Lourdes Saralegui................. -- 500
Carl A. Brown(8).................. -- 1,645
Kenneth N. Heintz(9).............. 486 21,512
James W. Cuminale................. -- --
Robert A. Bednarek................ -- --
All executive officers and
directors as a group (15
persons)......................... 18,020 694,754
</TABLE>
- --------
(1) For purposes of this table, beneficial ownership of securities is defined
in accordance with the rules of the SEC and means generally the power to
vote or exercise investment discretion with respect to securities,
regardless of any economic interests therein. Except as otherwise
indicated, the beneficial owners of shares of GM Common Stock or GM Class
H Common Stock ("GMH" or "GMH Common Stock") listed above have sole
investment and voting power with respect to such shares, subject to
community property laws where applicable. In addition, for purposes of
this table, a person or group is deemed to have "beneficial ownership" of
any shares which such person has the right to acquire by April 14, 1998.
For purposes of calculating the percentage of outstanding shares held by
each person listed above, any shares which such person has the right to
acquire by April 14, 1998 are deemed to be outstanding, but not for the
purpose of calculating the percentage ownership of any other person.
(2) No individual director or nominee for director or executive officer
beneficially owns one percent or more of any class of outstanding equity
securities of GM, nor do the directors, nominees and executive officers as
a group beneficially own one percent or more of any class of outstanding
equity securities of GM.
(3) The shares of GMH Common Stock shown as owned by Mr. Smith include (i)
2,577 shares that are held in trust by Bankers Trust Company as trustee
for the Hughes Salaried Employees Thrift and Savings Plan, (ii) 12 shares
that are held in trust under the GM Stock Purchase Program, and (iii)
353,292 shares that are comprised of options exercisable before April 14,
1998 to purchase GMH Common Stock granted pursuant to the Hughes
Electronics Corporation Incentive Compensation Plan and the GM Stock
Incentive Plan.
(4) The shares of GM Common Stock shown as owned by Mr. Noski include 2,782
shares that are held by the Noski Family Living Trust for which Mr. Noski
is a trustee. The shares of GMH Common Stock shown as owned by Mr. Noski
include (i) 1,240 shares that are held in trust pursuant to the Hughes
Electronics Corporation Salaried Employees Thrift and Savings Plan, (ii)
12,822 shares that are held by the Noski Family Living Trust for which Mr.
Noski is a trustee, (iii) 1,326 shares held by the Irrevocable Trust for
the Benefit of Jennifer P. Noski, and with respect to which shares Mr.
Noski disclaims beneficial ownership, and (iv) 1,326 shares held by the
Irrevocable Trust for the Benefit of Michelle A. Noski, and with respect
to which shares Mr. Noski disclaims beneficial ownership.
10
<PAGE>
(5) The shares of GM Common Stock shown as owned by Ms. Austin are held in
trust by the Thomas W. and Roxanne S. Austin Trust, of which Ms. Austin is
a trustee. The shares of GMH Common Stock shown as owned by Ms. Austin
include (i) 3,913 shares that are held in trust by Bankers Trust Company
as trustee for the Hughes Salaried Employees Thrift and Saving Plan, (ii)
4,956 shares that are held in trust by the Thomas W. and Roxanne S. Austin
Trust, and (iii) 84,102 shares comprised of options exercisable before
April 14, 1998 to purchase GMH Common Stock granted pursuant to the Hughes
Electronics Corporation Incentive Compensation Plan.
(6) The shares of GMH Common Stock shown as owned by Mr. Dorfman include (i)
1,257 shares that are held in trust by Bankers Trust Company as trustee
for the Hughes Salaried Employees Thrift and Savings Plan and (ii) 102,189
shares comprised of options exercisable before April 14, 1998 to purchase
GMH Common Stock granted pursuant to the Hughes Electronics Corporation
Incentive Compensation Plan and the GM Stock Incentive Plan.
(7) The shares of GMH Common Stock shown as owned by Mr. Westerman include (i)
6,497 shares that are held in trust by Bankers Trust Company as trustee
for the Hughes Electronics Corporation Salaried Employees Thrift and
Savings Plan and (ii) 49,907 shares comprised of options exercisable
before April 14, 1998 to purchase GMH Common Stock granted pursuant to the
Hughes Electronics Corporation Incentive Compensation Plan and the GM
Stock Incentive Plan.
(8) The shares of GMH Common Stock shown as owned by Mr. Brown are comprised
of options exercisable before April 14, 1998 to purchase GMH Common Stock
granted pursuant of the Hughes Electronics Corporation Incentive
Compensation Plan.
(9) The shares of GMH Common Stock shown as owned by Mr. Heintz include (i)
933 shares that are held in trust by Bankers Trust Company as trustee for
the Hughes Salaried Employees Thrift and Savings Plan and (ii) 17,963
shares comprised of options exercisable before April 14, 1998 to purchase
GMH Common Stock granted pursuant to the Hughes Electronics Corporation
Incentive Compensation Plan.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and holders of more than 10% of any class of the Company's
equity securities registered under the Exchange Act ("10% Holders"), to file
reports of ownership and changes in ownership with the SEC and to furnish the
Company with copies of such reports. Based on the Company's review of such
reports received by it, the Company believes that during the year ended
December 31, 1997, its officers and directors and 10% Holders complied with
all applicable Section 16(a) filing requirements on a timely basis, except for
Mr. Smith who filed his Form 3 initial report approximately two months late,
and Mr. Noski, Mr. Dorfman and Mr. Higgins who each filed one Form 4
approximately three weeks late.
11
<PAGE>
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation earned by the Named Executive Officers for services rendered in
all capacities to the Company for the year ended December 31, 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------------- ----------------------------------
AWARDS PAYOUTS
---------- -------
OTHER SECURITIES LTIP
FISCAL ANNUAL UNDERLYING PAYOUT ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(1) COMPENSATION($) OPTIONS(#) ($) COMPENSATION
- --------------------------- ------ ---------- ------------ --------------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Frederick A. Landman.... 1997 600,000 464,000 -- 93,750 -- 8,589(2)
President and Chief
Executive Officer
Lourdes Saralegui....... 1997 375,000 350,000 -- 31,250 -- 2,417(3)
Executive Vice
President
Carl A. Brown........... 1997 250,000 250,000 -- 31,250 -- 135,938(4)
Executive Vice
President
Kenneth N. Heintz(5).... 1997 280,000 185,000 -- 25,000 36,121(6) 1,010,164(7)
Executive Vice
President and Chief
Financial Officer
James W. Cuminale....... 1997 225,000 115,000 -- 12,500 -- 5,148(8)
Senior Vice President,
General Counsel and
Secretary
Robert A. Bednarek...... 1997 220,000 115,000 -- 12,815 -- 362(8)
Senior Vice President
and Chief Technology
Officer
</TABLE>
- --------
(1) Bonuses for 1997 were paid in February 1998.
(2) This amount represents contributions by the Company to the PanAmSat
Corporation Retirement Savings Plan (the "401(k) Plan") of $4,765 and
contributions to the Restoration and Deferred Compensation Plan of $3,824.
(3) This amount represents contributions by the Company to the Restoration and
Deferred Compensation Plan.
(4) This amount represents moving expenses of $86,706 incurred by Mr. Brown
when he relocated to Connecticut in connection with the Merger, a
reimbursement of the amount of income tax Mr. Brown would have been
required to pay on such moving expenses and related incentive payments of
$47,618 and contributions by the Company to the Restoration and Deferred
Compensation Plan of $1,614.
(5) Pursuant to an agreement between the Company and Hughes Electronics, Mr.
Heintz continues to be employed by Hughes Electronics and is assigned on a
full-time basis to the Company to serve as its Executive Vice President
and Chief Financial Officer. Mr. Heintz participates in the benefits
programs of Hughes Electronics. The Company reimburses Hughes Electronics
for the cost of Mr. Heintz' salary, bonus and benefits, including the
amount contributed by Hughes Electronics into any retirement plan for Mr.
Heintz' benefit as a match against his contributions to such plan.
(6) This amount represents a pro-rated portion of a payout under the Hughes
Electronics Corporation Long-Term Achievement Plan for the performance
period January 1, 1995 through December 31, 1997.
(7) This amount includes (i) $144,164 in moving expenses incurred by Mr.
Heintz when he relocated to Connecticut in connection with the Merger;
(ii) a supplemental relocation allowance of $295,000 relating to a loss on
the sale of Mr. Heintz's residence in California; (iii) a relocation
incentive payment of $100,000;
12
<PAGE>
(iv) a reimbursement of the amount of income tax Mr. Heintz would have been
required to pay on such moving expenses and related supplemental relocation
payments of $434,494; and (v) contributions by Hughes Electronics to the
Hughes Electronics Corporation Salaried Employees Thrift and Savings Plan
of $21,072 and to the Hughes Electronics Corporation Excess Benefit Plan of
$15,434.
(8) This amount represents contributions by the Company to the 401(k) Plan.
The following table sets forth additional information concerning the grants
of stock options to the Named Executive Officers during the fiscal year ended
December 31, 1997. All stock options indicated on the table below were granted
pursuant to the Long-Term Stock Incentive Plan described on page 25.
OPTION GRANTS IN FISCAL YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO GRANT
UNDERLYING EMPLOYEES IN EXERCISE OR DATE
OPTIONS FISCAL BASE PRICE EXPIRATION PRESENT VALUE
NAME GRANTED(1) YEAR ($/SH)(2) DATE ($)(3)
---- ---------- ------------ ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Frederick A. Landman.... 93,750 16.23 29.00 5/16/07 1,571,250
Lourdes Saralegui....... 31,250 5.41 29.00 5/16/07 523,750
Carl A. Brown........... 31,250 5.41 29.00 5/16/07 523,750
Kenneth N. Heintz....... 25,000 4.33 29.00 5/16/07 419,000
17,314 GMH(4) * 31.30 5/01/02 382,985
47,614 GMH(4) * 31.16 5/01/02 1,055,602
James W. Cuminale....... 12,500 2.16 29.00 5/16/07 209,500
Robert A. Bednarek...... 12,815 2.22 29.00 5/16/07 214,779
</TABLE>
- --------
(1) The options will become exercisable in equal annual installments over a
three-year period commencing on May 16, 1998.
(2) The exercise price per share of each option was equal to the fair market
value of the stock on the date of grant.
(3) Grant Date Present Value for PanAmSat options is determined using the
Black-Scholes option pricing model based on the following assumptions: (a)
an expected option term of ten years; (b) a risk-free rate of return of
6.7%; (c) stock price volatility of 30%; and (d) a dividend yield of 0%.
The Grant Date Present Values set forth in the table are only theoretical
values and may not accurately determine present value. The actual value,
if any, to be realized by an optionee will depend on the excess of the
market value of the Common Stock over the exercise price on the date the
option is exercised.
(4) Mr. Heintz was granted options for GMH Common Stock under the Hughes
Electronics Corporation Incentive Compensation Plan. The Grant Date
Present Value is determined using the Black-Scholes option pricing model
based on the following assumptions: (a) an expected option term of seven
years; (b) a risk-free rate of return of 5.87%; (c) stock price volatility
of 32.5%; and (d) a dividend yield of 0%. The Grant Date Present Values
set forth in the table are only theoretical values and may not accurately
determine present value. The actual value, if any, to be realized by an
optionee will depend on the excess of the market value of the Common Stock
over the exercise price on the date the option is exercised.
13
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS OPTIONS AT
ACQUIRED ON AT FY-END (#) FY-END ($)
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#)(1) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- ------------ ------------- --------------------
<S> <C> <C> <C> <C>
Frederick A. Landman.... 0 0 0/93,750 0/1,324,219
Lourdes Saralegui....... 0 0 0/31,250 0/441,406
Carl A. Brown........... 0 0 0/31,250 0/441,406
4,120 GMH 111,463 1,645/1,645 2,477/2,477
Kenneth N. Heintz....... 0 0 0/25,000 0/353,125
12,000 GMH 285,720 6,060/70,987 9,256/381,953
James W. Cuminale....... 0 0 0/12,500 0/176,563
Robert A. Bednarek...... 0 0 0/12,815 0/181,012
</TABLE>
LONG-TERM STOCK INCENTIVE PLAN--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE OR ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF SHARES, OTHER PERIOD UNTIL NON-STOCK PRICE-BASED PLANS
UNITS OR OTHER MATURATION OR ------------------------------------
NAME RIGHTS (#) PAYOUT THRESHOLD (#) TARGET (#) MAXIMUM (#)
---- ----------------- ------------------ ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Frederick A. Landman.... -- -- -- -- --
Lourdes Saralegui....... -- -- -- -- --
Carl A. Brown........... -- -- -- -- --
Kenneth N. Heintz(1).... 2,870 GMH 12/31/99 1,148 2,870 5,023
598 GM 12/31/99 239 598 1,047
James W. Cuminale....... -- -- -- -- --
Robert A. Bednarek...... -- -- -- -- --
</TABLE>
- --------
(1) Performance share awards were granted to Mr. Heintz under the Hughes
Electronics Corporation Long-Term Achievement Plan for the performance
period January 1, 1997 through December 31, 1999. These figures represent
the number of shares of GMH Common Stock and GM Common Stock that will be
awarded upon the attainment by Hughes Electronics of the sales margin and
net asset turnover targets for the performance period January 1, 1997
through December 31, 1997, and revenue growth and relative total
shareholder return targets for the performance period January 1, 1998
through December 31, 1999. The target number of shares will be earned if
100% of the specified targets are achieved and an additional amount will
be paid if the targeted goals are exceeded, but the maximum number of
shares paid will not exceed 175% of the target amount. The threshold
amount will be earned upon the achievement of 80% of the specified
targets.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
PanAmSat Corporation's Severance Pay Plan
The Company's Severance Pay Plan (the "Plan") provides severance pay to
eligible employees upon separation of employment. Each regular full-time
employee of the Company is a participant in the Plan. An employee terminated
for any reason other than for cause (as defined in the Plan) who signs and
delivers to the Company a release of all claims which the employee may have by
reason of the employee's employment with the Company or the termination
thereof shall be eligible to receive severance benefits pursuant to the Plan.
Severance benefits are calculated as follows: (i) one week of salary for every
year of service up to five years, (ii) two weeks salary for every year of
service over five years and (iii) a minimum of four weeks salary and a maximum
of 52 weeks salary for executive employees, a minimum of three weeks salary
and a maximum of 29
14
<PAGE>
weeks salary for exempt employees, and a minimum of two weeks salary and a
maximum of 29 weeks salary for non-exempt employees. The severance benefit is
paid in a lump sum, as soon as practicable after termination, less applicable
deductions and withholdings.
Under the terms of the Plan, the Chief Executive Officer or his designee has
the power to determine all questions arising under the Plan, and any decision
regarding any matter within the discretion of the Chief Executive Officer and
made by him in good faith is binding on all persons. The Company has reserved
the right through its Board of Directors to amend the Plan and to terminate
the Plan at any time without prior notice, provided that the Plan shall not be
terminated with respect to any Terminated Employee (as defined in the Plan) or
amended in a way that is adverse to the interests of any Terminated Employee.
Under the Plan, the Named Executive Officers would receive a minimum of four
weeks salary and a maximum of 52 weeks salary as severance, depending upon
years of service.
Change of Control Involuntary Separation Pay Plan
The Company's Change of Control Involuntary Separation Pay Plan (the "Change
of Control Plan") provides that any person who was a full-time employee of
PanAmSat International prior to the Merger who is terminated for any reason
other than for cause (as defined in the Change of Control Plan) by the
Company, or any such employee who resigns rather than accept continued
employment that is not Comparable Employment after a Material Change (as such
terms are defined in the Change of Control Plan) is entitled to benefits in
addition to those benefits provided under the Company's general Severance Pay
Plan described above. Under the Change of Control Plan, any such employee who
is terminated without cause by the Company or resigns rather than accept
continued employment after the Merger that is not Comparable Employment is
entitled to receive, in addition to the benefits covered by the Company's
general Severance Pay Plan, six months continuation of such employee's: (i)
base salary and annual cash bonus (which would be prorated for such period),
(ii) medical and dental insurance benefits, (iii) long-term disability
insurance benefits and (iv) life and accidental death and dismemberment
insurance benefits. The Change of Control Plan does not apply to any employee
who is otherwise covered by a severance agreement (as described below). The
Change of Control Plan is in effect until April 30, 1998 and will not be
extended thereafter.
Severance Pay Program
The Company has an executive severance pay program which covers
approximately 50 senior officers and key employees ("Covered Executives"),
including the Named Executive Officers (whose agreements are described
separately below). The program consists of individual severance agreements
(the "Severance Agreements") for the Covered Executives. The Severance
Agreements, which were entered into by PanAmSat International and the
individual employees in May 1996, became binding upon and enforceable against
the Company pursuant to the Merger.
Termination payments to the Covered Executives under the Severance
Agreements would be triggered if, within two years following a Material Change
(as defined in the Severance Agreements), (i) such person's employment is
terminated without cause, (ii) such person's responsibilities are materially
reduced, (iii) such person's responsibilities are changed such that they are
inconsistent with such person's former responsibilities, (iv) such person's
employment location is moved more than 35 miles from such person's current
employment location, unless such person is moved to New York City from the
Company's Greenwich, Connecticut offices, or (v) the Company reduces or fails
to pay such person any base salary, bonus or other amount payable when due.
The Merger constituted a Material Change under the terms of the Severance
Agreements.
The Severance Agreements provide that termination payments would be
triggered if the Covered Executive does not receive an annual base salary,
paid at a monthly rate at least equal to twelve times the highest monthly base
salary paid during the period between the initial public disclosure of the
Material Change and the month in which the Material Change occurred.
Thereafter, base salaries are required to be reviewed at intervals no less
frequent than customary for such Covered Executive prior to the Material
Change. Once a Material Change
15
<PAGE>
occurs, base salaries may not be reduced after any increase during the term of
the Severance Agreements. Termination payments would also be due in the event
the Covered Executive did not receive an unconditional bonus for each year
employed with the Company in an amount not less than the higher of the annual
bonus awarded for the fiscal year preceding the fiscal year of the Material
Change and the annual bonus awarded for the fiscal year in which the Material
Change occurred.
The termination payments payable to a Covered Executive under the terms of
the Severance Agreement are determined by multiplying the Covered Executive's
base salary and any applicable bonus by 1.5. Covered Executives would also be
entitled to continuation of certain employee welfare benefits until the
earlier of 18 months after termination or the obtaining of similar benefits
from a subsequent employer.
Each of the Severance Agreements is for a period of three years and will
terminate on May 1, 1999, provided that obligations and benefits arising prior
to such termination shall continue until fully satisfied.
The Severance Agreements restrict the ability of the Covered Executives to
compete with the Company for twelve months following termination of employment
with the Company.
Employment Agreement with Frederick A. Landman
The Company has an employment agreement with Frederick A. Landman (the
"Landman Employment Agreement"). Under the Landman Employment Agreement, Mr.
Landman serves as the Company's President and Chief Executive Officer and as a
director of the Company devoting his full business attention, skill and energy
to the business of the Company. The Landman Employment Agreement is in effect
until May 16, 2000.
Under the Landman Employment Agreement, Mr. Landman's base salary, which was
$600,000 in 1997, is reviewed on an annual basis by the Board of Directors and
may be adjusted upward, in the Board's discretion, to reflect his performance
and the scope and success of the Company. Mr. Landman may also receive
incentive bonuses on an annual basis, based on meeting set financial
performance criteria with respect to growth, cash flow and other financial
criteria for the Company. The annual bonus is based on a target dollar amount
which was $400,000 in 1997. To the extent that the Company exceeds the
financial and business goals by up to 25%, the Board of Directors will
increase the target dollar amount by 50% and if the Company fails to meet the
financial and business goals by no more than 20%, the Board of Directors may
reduce the target dollar amount to an amount no lower than 80% of such target
dollar amount. If more than two of the financial and business goals are missed
by more than 20%, the Company shall not be required to pay any bonus award.
Pursuant to the Landman Employment Agreement, Mr. Landman was also granted an
option to purchase 93,750 shares of Common Stock of the Company with one-third
of this option vesting on May 16, 1998; one-third vesting on May 16, 1999; and
one-third vesting on May 16, 2000, if Mr. Landman is still employed with the
Company on each of such dates. Mr. Landman is also eligible for additional
stock options as may be granted to executive employees of the Company from
time to time.
The Landman Employment Agreement terminates upon Mr. Landman's death,
disability or resignation. If the Landman Employment Agreement is terminated
as a result of Mr. Landman's death or disability, the Company will pay Mr.
Landman, or his estate, his base salary and any benefits for twelve months
from the date of termination of employment. The Landman Employment Agreement
is also subject to termination at the discretion of the Board of Directors. If
the Board of Directors elects to terminate the Landman Employment Agreement
for a reason other than a material breach by Mr. Landman, he will be entitled
to a termination payment amounting to three years of salary and applicable
bonuses as defined therein. Mr. Landman is also entitled to such termination
payment if he resigns before November 15, 1998 for any reason or if he resigns
for "good cause" thereafter. Mr. Landman and his dependents would also be
entitled to participate, until the earlier of three years after termination or
his obtaining similar benefits from a subsequent employer, in all employee
welfare benefit plans and to receive or participate in all other benefit
arrangements, policies or practices of the Company to which and in which
active executive employees are or shall be entitled to receive or participate
in other than qualified pension or profit sharing plans in which he would not
legally be entitled to participate.
16
<PAGE>
In the event that a termination payment or any other amount payable to Mr.
Landman under the Landman Employment Agreement should become subject to the
excise tax imposed under Section 4999 of the Code or any other similar tax or
assessment, the Company will pay Mr. Landman the amount necessary to fully
reimburse him for the taxes. Additionally, Mr. Landman is entitled to
reimbursement by the Company for attorneys' fees or any other costs necessary
to enforce or defend his rights under the Landman Employment Agreement.
The Landman Employment Agreement contains a covenant not to compete with the
Company for a period of three years after the termination of Mr. Landman's
employment. Mr. Landman also agrees, pursuant to the Landman Employment
Agreement, not to disclose at any time any confidential information obtained
by him while employed with the Company.
Severance Agreements with Named Executive Officers
The Company has an agreement with Lourdes Saralegui, Executive Vice
President of the Company (the "Saralegui Severance Agreement"). The Saralegui
Severance Agreement is for a period of three years and will terminate on May
1, 1999, provided that obligations and benefits arising prior to such
termination shall continue until fully satisfied. Termination payments under
the Saralegui Severance Agreement would be triggered if, within two years
following a Material Change (as defined therein), (i) Ms. Saralegui terminates
her services to the Company for any reason or (ii) the Company terminates her
services for any reason. The Merger constituted a Material Change under the
terms of the Saralegui Severance Agreement. As a result, if prior to May 16,
1999, Ms. Saralegui chooses to terminate her services or if the Company
terminates her services, Ms. Saralegui is entitled to a termination payment in
an amount equal to three years of base salary plus applicable bonuses as
defined in the Saralegui Severance Agreement. Ms. Saralegui and her dependents
would be entitled to participate, until the earlier of three years after
termination or her obtaining similar benefits from a subsequent employer, in
all employee welfare benefit plans and to receive or participate in all other
benefit arrangements, policies or practices to which and in which active
executive employees of the Company shall become entitled to receive or
participate in.
In the event that a termination payment or any other amount payable to Ms.
Saralegui under the Saralegui Severance Agreement should become subject to the
excise tax imposed under Section 4999 of the Code or any other similar tax or
assessment, the Company will pay Ms. Saralegui the amount necessary to fully
reimburse her for such taxes. Additionally, Ms. Saralegui is entitled to
reimbursement from the Company for attorneys' fees or any other costs
necessary to enforce or defend her rights under the Saralegui Severance
Agreement.
The Saralegui Severance Agreement contains a covenant not to compete with
the Company for a period of 18 months after the termination of Ms. Saralegui's
employment, which restricts her from becoming employed by or rendering
personal services to any corporation, firm, or other entity which directly
competes with the Company.
The Company has agreements (the "Executive Severance Agreements") with
Robert A. Bednarek, Senior Vice President and Chief Technology Officer of the
Company and James W. Cuminale, Senior Vice President, General Counsel and
Secretary of the Company (each of Messrs. Bednarek and Cuminale are
hereinafter referred to as a "covered officer"). The Executive Severance
Agreements are for a period of three years and will terminate on May 1, 1999,
provided that obligations and benefits arising prior to such termination shall
continue until fully satisfied.
Termination payments under the Executive Severance Agreements would be
triggered if (i) the covered officer terminates his services with the Company
during the thirty day period following the one year anniversary of a Material
Change (as defined therein), (ii) the Company terminates the covered officer
for any reason other than for cause (as defined therein) within two years
following a Material Change, (iii) the Company fails to continue the covered
officer in the same executive position and does not cure this failure within
ten days of notice of the failure, for two years following a Material Change,
and (iv) if the Company reduces or fails to pay or award when due any amount
of the base salary, bonus or other amounts payable, or reduces or fails to
provide
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them with any benefits to which the covered officer is entitled. The Merger
constituted a Material Change under the terms of the Executive Severance
Agreements. As a result, if a termination payment is required, the covered
officer would be entitled to a termination payment in an amount equal to three
years of base salary plus applicable bonuses as defined in the Executive
Severance Agreements. The covered officer and his dependents would be entitled
to participate, until the earlier of two years after termination or his
obtaining similar benefits from a subsequent employer, in all employee welfare
benefit plans and to receive or participate in all other benefit arrangements,
policies or practices to which and in which active executive employees of the
Company shall become entitled to receive or participate in.
The Executive Severance Agreements provide that termination payments would
be triggered if such covered officer does not receive an annual base salary,
paid at a monthly rate at least equal to twelve times the highest monthly base
salary paid during the period between the initial public disclosure of the
Material Change and the month in which the Material Change occurred.
Thereafter, the covered officer's base salary is required to be reviewed at
intervals no less frequent than customary for such officer prior to the
Material Change. Once a Material Change occurs, the base salary may not be
reduced after any such increase during the term of the Executive Severance
Agreements. Termination payments would also be due in the event such covered
officer did not receive an unconditional bonus for each year employed with the
Company in an amount not less than the higher of the annual bonus awarded for
the fiscal year preceding the fiscal year of the Material Change and the
annual bonus awarded for the fiscal year in which the Material Change
occurred.
In the event that a termination payment or any other amount payable to a
covered officer under the Executive Severance Agreements should become subject
to the excise tax imposed under Section 4999 of the Code or any other similar
tax or assessment, the Company will pay the covered officer the amount
necessary to fully reimburse him for such taxes. Additionally, the covered
officer is entitled to reimbursement from the Company for attorneys' fees or
any other costs necessary to enforce or defend his rights under the Executive
Severance Agreements.
The Executive Severance Agreements contain a covenant not to compete with
the Company for a period of 18 months after the termination of the covered
officer's employment, which restricts the covered officer from becoming
employed by or rendering personal services to any corporation, firm, or other
entity which directly competes with the Company.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The compensation of senior executives at the Company is determined by the
Compensation Committee (the "Committee") of the PanAmSat Corporation Board of
Directors. The Committee is a standing committee of the Board of Directors
that was formed in May 1997 in connection with the merger (the "Merger") of
PanAmSat International, Systems, Inc. (then operating under its previous name,
PanAmSat Corporation) ("PanAmSat International") and the Galaxy Satellite
Services division ("Galaxy") of Hughes Communications, Inc. ("HCI"). The
Committee is comprised entirely of non-employee Directors and met four times
in 1997. No member of the Committee is eligible to participate in any of the
compensation plans or programs it administers, except that independent
directors may participate in the Company's Long-Term Stock Incentive Plan.
Further, there are no interlocks between the members of the Committee and any
executive.
In 1997, the Company's executive officers were: Frederick A. Landman--Chief
Executive Officer and President; Lourdes Saralegui--Executive Vice President;
Carl A. Brown--Executive Vice President; Kenneth N. Heintz--Executive Vice
President and Chief Financial Officer; Robert A. Bednarek--Senior Vice
President and Chief Technology Officer; and James W. Cuminale--Senior Vice
President, General Counsel and Secretary. The above named individuals are the
Company's Named Executive Officers for 1997.
Compensation Philosophy
The Company's executive compensation program is premised on the belief that
the interests of executives should be closely aligned with those of the
Company's stockholders. Based on this philosophy, a meaningful
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portion of each executive's total compensation is placed at-risk and linked to
the accomplishment of specific results which will lead to the creation of
value for the Company's stockholders in both the short and long-term. Under
this pay-for-performance orientation: (1) executives are motivated to improve
the overall performance and profitability of the Company, as well as the
business sector to which each is assigned, and rewarded only when specific,
measurable results have been achieved; (2) accountability is further
encouraged through the adjustment of salaries and incentive awards on the
basis of each executive's individual performance and contribution; (3) long-
term incentive awards are paid in the form of options to acquire Common Stock
of the Company to further reinforce the linkage of executives' interests with
those of stockholders; and (4) a highly competitive level of compensation can
be earned in years of strong performance to ensure the Company attracts and
retains the leadership talent needed to successfully maintain and grow its
businesses; conversely, in years of below average performance, an executive's
compensation is below competitive benchmarks.
Compensation Deductibility Policy--To the extent that it is practicable and
consistent with the Company's executive compensation philosophy, the Committee
intends to comply with Section 162(m) of the Internal Revenue Code (and any
regulations promulgated thereunder) to preserve the deductibility of
compensation in excess of $1 million per taxable year to each of the Named
Executive Officers. If compliance with the Section 162(m) rules conflicts with
the compensation philosophy or is deemed not to be in the best interest of
stockholders, the Committee will abide by the compensation philosophy,
regardless of the tax impact of such actions.
Compensation Plans
The Company's current incentive plans were adopted by the Board of Directors
in May 1997. In connection with the adoption of each of the plans, the Company
carried out a detailed review of every aspect of its proposed executive
compensation structure, including a survey of several global communications
companies, including General Instrument Corp., DSC Communications Corp., U.S.
Cellular Corp. and Comsat Corporation. To assist in this review process, the
Company engaged the services of an outside consulting firm. The formal
incentive plans are subject to appropriate stockholder approval.
In January 1998, the Board of Directors met in executive session to review
the Company's performance and the performance of the Chief Executive Officer
and other Named Executive Officers. The Committee advised the Board with
respect to all compensation determinations for these executives.
As discussed below, aside from benefits (which are available to employees
generally), an executive's total compensation package is comprised of three
components: (1) base salary; (2) annual incentives; and (3) stock options.
Base Salary--In connection with the incentive program review, base salaries
for the Company's executives are targeted to be at the median of the salaries
paid to comparable positions at the survey group mentioned above. The base
salaries of individual executives can and do vary from this salary benchmark.
Following a detailed review of the scope of each executive's responsibilities
relative to comparable positions at survey group companies and a review of
each executive's individual performance, the Committee approved the initial
salaries for the Named Executive Officers. In the case of Named Executive
Officers who are former officers of PanAmSat International, base salary was
equal the base salaries that they received at PanAmSat International. The
initial salaries are set forth in the Summary Compensation table on page 12.
The Committee believes that it is in the Company's stockholders' best
interests to ensure continuity in the Company's senior executives. On May 15,
1997, the Company entered into an agreement with Mr. Landman related to his
employment as well as his retirement and severance benefits. This agreement is
more fully discussed commencing on page 16. Also in connection with the
Merger, the Company assumed PanAmSat International's obligations under
employee separation agreements with Ms. Saralegui, Mr. Bednarek, and Mr.
Cuminale. These agreements are more fully discussed commencing on page 17.
Aside from these agreements, the Company has no contractual or other
arrangements with these executive officers. On April 7, 1997, the
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Company entered into an agreement with Hughes Electronics Corporation ("Hughes
Electronics") and Mr. Heintz regarding the terms of an assignment of Mr.
Heintz' services from Hughes Electronics to the Company. This agreement is
more fully discussed on page 12.
Annual Incentives and Total Cash Compensation--Annual incentives for all
executive officers were granted under the PanAmSat Corporation Annual
Incentive Plan. In view of their corporate-wide responsibility, the annual
incentive award opportunity for the Named Executive Officers for 1997 was
based exclusively on the Company's overall performance. In addition, Mr.
Cuminale and Mr. Bednarek received additional bonuses in the amount of $28,000
each. In connection with incentive review program, the Committee targeted
total cash compensation (base salary plus annual bonus) at between the 60th
and 75th percentile of the survey group.
In addition to establishing a targeted performance level, the Committee also
identifies threshold or minimum performance levels which must be achieved
before awards are granted and a maximum beyond which no additional amounts
will be paid. The size of final awards granted is scaled to the actual level
of performance achieved. In establishing this payout range, the Committee
assesses the relative degree of performance necessary to achieve the target
objective and reviews past and projected budgeted performance levels and
external marketplace conditions. For 1997, the Committee assigned weights to
the following factors: gross sales--30%; earnings before interest, taxes,
depreciation and amortization ("EBITDA")--40%; backlog of new contracts (net
of lost business)--25%; and merger transition--5%.
In 1997, the Committee set aggressive financial targets. The payment of an
award under the Annual Incentive Plan was triggered by the achievement of
predetermined levels of gross sales, EBITDA and backlog derived from the
Company's budget and business plan for the year. The Committee used its
discretion in setting the specific financial targets. The Committee
established individual award targets for each Named Executive Officer in line
with the Company's compensation philosophy. For maximum performance individual
awards for these executives would have paid 150% of target. Earnings
performance falling within the ranges for minimum, target, and maximum
individual awards are prorated accordingly.
After reviewing the Company's overall operating performance, the Committee
determined 1997 annual incentive awards on the basis of the specific
performance measures previously established by the Committee. As a result, and
after an individual evaluation of the Named Executive Officer, incentive award
payouts for each such Named Executive Officer were approved on a basis above
target but below maximum payout levels.
Awards for the Named Executive Officers were paid in cash in February 1998.
Stock Options--Stock options are granted under the provisions of the Long-
Term Stock Incentive Plan which is subject to approval by the Company's
stockholders and more fully discussed commencing on page 25. Stock options are
granted to reinforce the importance of improving stockholder value over the
long-term and to encourage and facilitate executive stock ownership. Stock
options are granted at 100% of the fair market value of the stock on the date
of grant to ensure the executives can only be rewarded for appreciation in the
price of the Common Stock of the Company when the Company's stockholders are
similarly benefited.
Option grant levels have been patterned after industry-competitive long-term
incentive compensation practices. These grants were positioned at a level
which, in conjunction with their target awards, was intended to place the
executives at the 75th percentile of the long-term incentives granted to
comparable positions at the survey companies.
Other Considerations with Respect to the Chief Executive Officer's
Compensation
In accordance with the employment agreement between the Company and Mr.
Landman, the annual compensation for the Company's Chief Executive Officer and
President was set by the Compensation Committee with the goal of maintaining
Mr. Landman's base salary and target annual incentive award at the same levels
that were available to him at PanAmSat International prior to the Merger. In
awarding annual awards to the Chief
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Executive Officer and President under the Annual Incentive Plan ("AIP") for
1997, the Compensation Committee evaluated Mr. Landman's performance and
reviewed the AIP metrics for 1997 which had been established for the Company.
With respect to an AIP award for 1997, the Committee awarded Mr. Landman the
sum of $464,000. Such awards to Mr. Landman under the AIP were also in
accordance with the above-mentioned agreement. Long-term compensation in the
form of stock options was awarded on a basis similar to those described above
for the other executives of the Company.
Compensation Committee
The following directors were members of the Compensation Committee through
October 9, 1997 and determined the 1997 salaries and incentive bonus targets
for the Chief Executive Officer and the other executive officers
Ted G. Westerman, Chairman
Charles H. Noski
Joseph R. Wright, Jr.
The following directors have been members of the Compensation Committee
since October 9, 1997 and determined the final payment of incentive bonus for
1997 as well as 1997 stock option grants for the Chief Executive Officer and
the other executive officers.
Ted G. Westerman, Chairman
Michael T. Smith
Joseph R. Wright, Jr.
April 9, 1998
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no compensation committee interlocks between any of the members of
the Compensation Committee during 1997 and any other entity. Messrs. Smith,
Noski, Dorfman, Higgins and Westerman are executive officers of Hughes
Electronics, a parent corporation and an affiliate of the Company under the
rules and regulations of the SEC. Mr. Westerman and Mr. Smith are currently
members of the Compensation Committee and Mr. Noski was a member of the
Compensation Committee during the last fiscal year. During the last fiscal
year Hughes Electronics and certain of its subsidiaries engaged in certain
transactions with the Company which are described in "Certain Transactions",
below.
CERTAIN TRANSACTIONS
RELATIONSHIP WITH HUGHES ELECTRONICS AND AGREEMENTS WITH HUGHES ELECTRONICS
ENTITIES. Hughes Electronics beneficially owns, indirectly, 106,622,807 shares
of the Company's Common Stock representing 71.49% of the outstanding shares of
Common Stock of the Company as of February 13, 1998. Hughes Electronics and
its subsidiaries are affiliates of the Company as defined under SEC rules and
regulations. In addition to those agreements described below, Hughes
Electronics provides certain administrative services to the Company, including
the provision of certain advisory and audit services, and the participation of
the Company or its employees in certain discount programs, such as a business
travel discount program and an automobile purchase discount program. The
Company believes that each of the transactions described below were entered
into on commercially reasonable terms and that the administrative intercompany
arrangements were provided on at least the same terms that the Company could
have obtained from a disinterested third party or resulted in a cost savings
to the Company. The figures provided below with respect to payments made or
received in 1997 reflect those payments made after May 16, 1997, the effective
date of the Merger, and do not include payments to and from Galaxy prior to
the Merger when Galaxy was a division of HCI.
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--SATELLITE PROCUREMENT AGREEMENTS. The Company is a party to agreements
with HSC for the construction of various satellites. Prior to the Merger, the
Company entered into agreements for the construction and delivery of Galaxy X
and Galaxy XI, both currently scheduled to be launched in 1998. In addition,
under the agreements entered into between the Company and HSC prior to the
Merger, the Company agreed to pay approximately 20% of the total cost of the
PAS-2, PAS-3, PAS-4 and PAS-5 satellites in the form of incentive payments to
be paid to HSC over a 15-year period after the construction and launch of such
satellites. In 1997, the Company paid approximately $5.8 million in incentive
payments under these contracts.
The Company is a party to an agreement dated as of August 15, 1997 with HSC
for the construction and delivery of the PAS-1R and PAS-9 satellites. On March
9, 1998 the Company and HSC entered into an agreement for the construction and
delivery of the PAS-6B satellite. The agreements require, among other things,
that the Company make payments representing approximately 85% of the total
cost of the satellites during the period of their construction, delivery and
launch support, with the remaining costs to be paid in the form of incentive
payments over the life of the satellites. The Company did not make any
payments under these agreements in 1997.
--LAUNCH SERVICES. On August 29, 1996, the Company entered into a contract
with Hughes Space and Communications International, Inc. ("HSCI") whereby HSCI
agreed to provide the Company with launch services for three satellites, to be
performed by third-party launch providers under contract with HSCI. Pursuant
to such agreement, the Galaxy VIII(i) satellite was launched using an Atlas
IIAS launch vehicle in December 1997. The two remaining launches will be
provided using one Delta III launch vehicle and one Sea Launch launch vehicle.
The Company did not make any payments under this contract in 1997.
--SATELLITE SERVICES. The Company is party to agreements with Hughes
Electronics and certain of its subsidiaries and affiliates (together, the "'HE
Entities") pursuant to which it provides satellite capacity, telemetry,
tracking and control services and other related services to the HE Entities,
including HSC, Hughes Network Systems, Inc., Galaxy Latin America LLC and
DirecTV, Inc. ("DirecTV"). In 1997, the Company received payments aggregating
approximately $47.8 million from the HE Entities.
--LOAN AGREEMENTS. In connection with the Merger, the Company obtained a
term loan in the amount of $1.725 billion from Hughes Electronics (the "Term
Loan"), originally maturing in 2000. At the closing of the Term Loan, the
Company paid Hughes Electronics a fee equal to 1% of the principal amount of
the Term Loan. During 1997, the Company made $82 million in interest payments
under the Term Loan. In December 1997, in connection with the refinancing of
PanAmSat International's existing indebtedness, the Company also modified the
terms of its indebtedness with Hughes Electronics so that (i) maturity of the
borrowings was extended to June 24, 2003, (ii) mandatory principal payments
were eliminated (however, prepayments of principal are permitted under certain
circumstances depending upon the level of cash flow from operations), and
(iii) the interest rate on the debt was adjusted to be a floating rate equal
to that of the Company under a prior bank loan agreement. The Term Loan also
became subordinated to the bank loans.
The Company estimates that, in the aggregate, in 1998 the transactions
described above will result in the payment of approximately $357.7 million by
the Company to the HE Entities and in the payment of approximately $117.7
million by the HE Entities to the Company.
AGREEMENTS WITH TELEVISA ENTITIES. Grupo Televisa, S.A. ("Televisa")
beneficially owns, indirectly, 11,239,594 shares of the Company's Common Stock
representing 7.5% of the outstanding shares of Common Stock of the Company as
of February 13, 1998.
Prior to the Merger, PanAmSat International entered into various satellite
lease agreements with Televisa and its affiliates for satellite capacity on
the European beam of PAS-3 and PAS-1. The Company and Televisa are also
parties to certain agreements pursuant to which the Company has agreed to be
the service provider to certain direct-to-home ("DTH") joint ventures in Latin
America in which Televisa is a participant. Televisa and its joint venture
partners have agreed to proportionally guarantee the payment of 100% of the
transponder fees
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for the DTH joint ventures. The agreements provide for minimum payments over
their respective terms of between $1.2 billion and $1.3 billion. In 1997, the
Company received aggregate payments of approximately $20 million and, in 1998,
the Company expects to receive aggregate payments of approximately $41
million, under its agreements with Televisa.
In May of 1997, in a transaction that was separate from but related to the
Merger, the Company redeemed 7.5 million shares of its Common Stock that were
received by affiliates of Televisa in their capacities as PanAmSat
International stockholders, for $225 million in cash. These proceeds were used
by such Televisa affiliates to acquire the Company's rights to equity
interests in the Latin America JVs and in certain DTH businesses on the
Iberian Peninsula.
OTHER AGREEMENTS. On February 28, 1997, the Company extended a loan to Mr.
Carl A. Brown, an Executive Vice President of the Company, to assist him in
his relocation from California to Connecticut. The loan was in the principal
amount of $92,250 and bore interest at a rate of 5.7%. Mr. Brown fully repaid
the principal amount plus accrued interest, a total of $94,224, in July 1997.
On April 4, 1997, the Company extended a loan to Mr. Kenneth N. Heintz,
Executive Vice President and Chief Financial Officer of the Company, to assist
him in his relocation from California to Connecticut. The loan was in the
principal amount of $128,500 and bore interest at a rate of 5.7%. Mr. Heintz
fully repaid the principal amount plus accrued interest, a total of $130,125,
in June 1997.
Pursuant to a severance agreement with PanAmSat International, Patrick J.
Costello received a termination payment of $975,000 following the Merger. Mr.
Costello also receives the continuation of all employee welfare benefit plans
for the earlier of two years from the Merger or his obtaining similar benefits
from a subsequent employer. Mr. Costello's termination payment may be subject
to an excise tax imposed under Section 4999 of the Code, and if it is, the
Company would have an obligation to pay Mr. Costello the amount necessary to
reimburse him for such excise tax. From May 16, 1997, the effective date of
the Merger, until November 15, 1997, the effective termination date of Mr.
Costello's employment, Mr. Costello continued as a consultant to the Company
assisting in the transition following the Merger and performing other services
as requested by the Chief Executive Officer, for which he was paid the sum of
$110,576. The agreement contains a covenant not to compete with the Company
which prohibits Mr. Costello from becoming employed by or rendering personal
services to any corporation, firm or other entity which directly competes with
the Company until September 21, 1998.
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PERFORMANCE GRAPH FOR PANAMSAT CORPORATION
CUMULATIVE TOTAL RETURNS
VALUE OF $100 INVESTED ON MAY 16, 1997
LINE GRAPH
Nasdaq Composite Satelite Technology Index
SPOT Index
May 16, 1997 100.00 100.00 100.00
December 31, 1997 144.96 129.20 103.90
The historical stock price performance of the Common Stock shown on the
Performance Graph set forth above is not necessarily indicative of future price
performance.
The Satellite Technology Index is a capitalization-weighted index of 30
leading stocks in the satellite and space sector. It is published by Barclays
Capital, the investment banking division of Barclays Bank, PLC.
The Report of the Compensation Committee on Executive Compensation and the
Performance Graph shall not be deemed "soliciting material" or to be "filed"
with the SEC or subject to Regulation 14A or 14C of the Regulations of the SEC
under the Exchange Act, or to the liabilities of Section 18 of the Exchange
Act.
PROPOSAL 2
RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
The Board has selected the accounting firm of Deloitte & Touche to audit the
Company's financial statements for, and otherwise act as the Company's
independent accountants with respect to, the fiscal year ending December 31,
1998. In accordance with the Board's resolution, its selection of Deloitte &
Touche as the Company's independent accountants for the current fiscal year is
being presented to stockholders for ratification at the Annual Meeting. The
Company knows of no direct or material indirect financial interest of Deloitte
& Touche in the Company or any connection of that firm with the Company in the
capacity of promoter, underwriter, voting trustee, officer or employee.
Therefore, the Board intends to introduce at the forthcoming Annual Meeting the
following resolution:
"RESOLVED, that Deloitte & Touche LLP be and they are hereby
elected independent accountants for the Company for the year
1998."
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Members of Deloitte & Touche will be present at the Meeting, will have an
opportunity to make a statement if they so desire and will be available to
respond to appropriate questions
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE AS THE INDEPENDENT ACCOUNTANTS OF THE COMPANY
FOR THE 1998 FISCAL YEAR.
PROPOSAL 3
APPROVAL OF THE LONG-TERM STOCK INCENTIVE PLAN
The Board has adopted the PanAmSat Corporation Long-Term Stock Incentive
Plan (the "Long-Term Stock Incentive Plan"), subject to the approval of the
stockholders, to provide for the granting to executive officers, other
employees, leased employees, directors and independent contractors of awards
of stock options, stock appreciation rights, restricted stock, performance
awards, other stock-based awards or any combination of the above. Under the
Long-Term Stock Incentive Plan, awards may be made covering up to 7,456,140
shares of Common Stock but not more than 2,000,000 shares may be awarded to
any individual. These amounts are subject to adjustment for stock splits,
stock dividends and similar events. In addition, certain awards may be made
payable in cash. The complete text of the Long-Term Stock Incentive Plan is
set forth in Exhibit A to this Proxy Statement, and stockholders are urged to
review it together with the following information, which is qualified in its
entirety by reference to Exhibit A.
The Company has relied primarily on stock options to provide its personnel
with long-term incentives. The Board of Directors believes that corporations
with which the Company and its subsidiaries compete for talented executives
and skilled managers are increasingly turning to long-term performance and
stock-based incentive compensation in addition to stock options as a means of
securing and retaining outstanding employees and providing them with an
incentive to increase their efforts on their employers' behalf. As a result,
the Board has decided that the Company should have increased flexibility in
the area of incentive compensation. Such flexibility would be obtained through
a plan that permits the grant of stock options, stock appreciation rights,
restricted stock, performance units and performance shares, or a combination
of the foregoing. The Board believes that the Long-Term Stock Incentive Plan
will aid the Company and its subsidiaries in securing employees of outstanding
ability by making it possible to offer them increased incentives, which may
include a proprietary interest in the Company, to join or continue in the
service of the Company or its subsidiaries and to increase their efforts for
its welfare. Accordingly, the Board has adopted the Long-Term Stock Incentive
Plan and recommends its approval by stockholders.
SUMMARY OF THE LONG-TERM STOCK INCENTIVE PLAN
ADMINISTRATION. The Long-Term Stock Incentive Plan is administered by the
Compensation Committee. Shares available under the Long-Term Stock Incentive
Plan can be allocated among the various types of awards and among the
participants as the Compensation Committee deems appropriate. Only the Board,
however, may grant options to directors who are not employees of the Company.
Awards may be granted for such terms as the Compensation Committee may
determine, except that the term of an incentive stock option ("ISO") may not
exceed ten years from its date of grant. No awards outstanding on the
termination date of the Long-Term Stock Incentive Plan shall be affected or
impaired by such termination. Awards are not transferable, except by will and
the laws of descent and distribution, unless otherwise permitted by the
Compensation Committee. The Compensation Committee has broad authority to set
the terms and conditions of individual agreements with participants, other
than with respect to the participants' exercise rights upon termination of
employment (or services, in the case of a non-employee award recipient) by
reason of death, disability, retirement, termination by the Company without
"cause" and upon termination for any other reason and the exercise rights of
participants who are subject to Section 16 of the Exchange Act, which are
expressly limited in the Long-Term Stock Incentive Plan. See "Exercisability
of Awards" below.
EXERCISABILITY OF AWARDS. Upon the death or disability of a recipient of an
award under the Long-Term Stock Incentive Plan during the recipient's
employment (or performance of services in the case of a non-
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employee) the recipient may exercise any award which is otherwise exercisable
on the date of death or disability within one year of termination due to death
or disability. In the case of death, the award may be exercised by the
recipient's estate or by a person who acquires the right to exercise the award
by death of the recipient. In the case of disability, the award may be
exercised by the recipient or, if the recipient is incapacitated, by a
guardian or legal representative. If the employment (or the performance of
services, in the case of a non-employee) of an award recipient terminates by
reason of retirement or by reason of termination by the Company without
"cause" (as defined in the Long-Term Stock Incentive Plan), the recipient may
exercise any award which was exercisable on the date of termination of
employment (or services, in the case of a non-employee) within three months of
such a termination. Upon termination of the employment (or services, in the
case of a non-employee) of an award recipient for any other reason, any award
granted to the individual will terminate. No award recipient who is subject to
Section 16(a) of the Exchange Act may exercise an award prior to the day after
the expiration of six months from its date of grant or, in the case of
performance units or performance shares, the date that a final determination
has been made that the award is payable (unless the award had been approved by
both the Committee and the Board prior to its grant). Any award granted which
is not exercised within the permissible time following termination of
employment (or services in the case of non-employees) will terminate.
METHOD OF PAYMENT FOR STOCK OPTIONS. Upon exercise of any option granted
under the Long-Term Stock Incentive Plan, the optionee must pay to the
Company, in full, the exercise price for such shares set by the Compensation
Committee on the date of grant and any applicable withholding taxes either in
cash, previously-owned Common Stock or a combination of cash and previously-
owned Common Stock. In addition, each option agreement must permit the
optionee to pay the exercise price through a cashless exercise program
established by the Company or the Compensation Committee with a broker.
TYPES OF AWARDS. As indicated above, several types of stock-related grants
are available under the Long-Term Stock Incentive Plan. A summary of these
grants is set forth below:
--STOCK OPTIONS. The Long-Term Stock Incentive Plan authorizes the
Compensation Committee to grant options to purchase Common Stock at an
exercise price (the "option price") equal to the fair market value of the
Common Stock (110% of the fair market value in the case of ISOs granted to
ten (10%) percent shareholders of Common Stock). Options may be granted
either as ISOs or nonqualified options. The principal difference between
ISOs and nonqualified options is their tax treatment. See "Federal Income
Tax Consequences," below.
--ALTERNATE APPRECIATION RIGHTS. The Long-Term Stock Incentive Plan
authorizes the Compensation Committee to grant alternate appreciation
rights in conjunction with the grant of options, whether ISOs or
nonqualified options. An alternate appreciation right will permit the
optionee to be paid the appreciation on the shares underlying the option in
lieu of exercising the option. Upon exercise of an alternate appreciation
right, the participant will receive an amount, payable in Common Stock,
equal to the difference between the fair market value of the Common Stock
as of the exercise date and the exercise price of the option related to the
alternate appreciation right.
--RESTRICTED STOCK. The Long-Term Stock Incentive Plan authorizes the
Compensation Committee to grant restricted stock to individuals with such
restrictions as the Compensation Committee may designate.
--PERFORMANCE UNITS. The Long-Term Stock Incentive Plan authorizes the
Compensation Committee to grant performance units to individuals based on
performance criteria established by the Compensation Committee.
--PERFORMANCE SHARES. The Long-Term Stock Incentive Plan authorizes the
Compensation Committee to grant performance shares to individuals based on
performance criteria established by the Compensation Committee.
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AMENDMENT AND DISCONTINUANCE. The Long-Term Stock Incentive Plan may be
amended, altered or discontinued by the Board, but no amendment, alteration or
discontinuance may be made which would (i) impair the rights of a participant
under an award previously granted to him, without the participant's consent,
except such an amendment made to comply with changes in law or stock exchange
rules, (ii) increase the maximum number of shares of Common Stock which may be
issued under the Long-Term Stock Incentive Plan (other than increases
resulting from "Changes in Capitalization" described below), (iii) extend the
period during which any award may be granted or exercised, or (iv) extend the
term of the Long-Term Stock Incentive Plan, without stockholder approval.
CHANGES IN CAPITALIZATION. The Long-Term Stock Incentive Plan provides that,
in the event of any change in the outstanding Common Stock by reason of a
stock dividend or distribution, recapitalization, merger, consolidation,
split-up, combination, exchange of shares or the like, the Compensation
Committee may appropriately adjust the number of shares of Common Stock which
may be issued under the Long-Term Stock Incentive Plan, the maximum number of
shares in respect of which options or other awards may be granted to any
individual during its term, the number of shares of Common Stock subject to
options previously granted, the exercise price of options previously granted,
and any and all other matters deemed appropriate by the Compensation
Committee.
FEDERAL INCOME TAX CONSEQUENCES. The following discussion is intended only
as a brief summary of the federal income tax rules relevant to stock options,
alternate appreciation rights, restricted stock, performance units and
performance shares. The laws governing tax aspects of awards are highly
technical and are subject to change.
--NONQUALIFIED OPTIONS AND ALTERNATE APPRECIATION RIGHTS. Upon the grant of
a nonqualified option (with or without an alternate appreciation right), the
optionee will not recognize any taxable income and the Company will not be
entitled to a deduction. Upon the exercise of such an option or an alternate
appreciation right, the excess of the fair market value of the shares acquired
on the exercise of the option over the option price (the "spread"), or the
consideration paid to the optionee upon exercise of the alternate appreciation
right, will constitute compensation taxable to the optionee as ordinary
income. In determining the amount of the spread or the amount of consideration
paid to the optionee, the fair market value of the stock on the date of
exercise is used, except that in the case of an optionee subject to the six
month short-swing profit recovery provisions of Section 16(b) of the Exchange
Act (generally executive officers and directors of the Company), such ordinary
income will not be realized until the end of such period, if any, during which
a sale of such shares could subject the optionee to suit under Section 16(b),
and will be measured by the fair market value of the stock at that time,
unless such optionee elects under Section 83(b) of the Code to realize
ordinary income at the time of exercise, measured by the fair market value of
the stock at that time. The precise application of the foregoing deferral of
income rule under applicable rules adopted by the SEC under Section 16 of the
Exchange Act is not entirely clear. It appears likely, however, that
realization of income will no longer be deferred, at least unless the optionee
has other matching purchases of stock during the six-month period prior to the
exercise of the option, and perhaps not even then. The Company, in computing
its federal income tax, will generally be entitled to a deduction in an amount
equal to the compensation taxable to the optionee.
--INCENTIVE STOCK OPTIONS. An optionee who is granted an ISO would not
recognize taxable income either on the date of grant or on the date of its
timely exercise, although the exercise of an ISO would be an item of tax
preference income potentially subject to the alternative minimum tax. Upon
disposition of the Common Stock acquired upon exercise of an ISO, capital gain
or loss would be recognized in an amount equal to the difference between the
sale price and the option exercise price, provided the optionee has not
disposed of the Common Stock within two years of the date of grant and within
one year from the date of exercise. When a optionee exercises an ISO, the
Company would not generally be entitled to a tax deduction. However, if the
optionee disposes of stock acquired through exercise of such an option before
meeting the required holding period, the optionee must generally recognize
ordinary income in the amount of the difference between the option exercise
price and the fair market value of the Common Stock on the date of exercise,
and the Company would be entitled to a deduction equal to the amount of
ordinary income recognized by the participant. If the holder of an ISO
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<PAGE>
pays the exercise price, in full or in part, with previously acquired shares
of Common Stock, no capital gain or loss is recognized upon the surrender of
such shares.
--RESTRICTED STOCK, PERFORMANCE UNITS AND PERFORMANCE SHARES. The federal
income taxation of individuals who are awarded restricted stock, performance
units or performance shares will depend upon the restrictions and limitations
imposed on such awards by the Compensation Committee. During any periods that
the awards are subject to substantial limitations or restrictions (for
example, restricted shares which are awarded subject to a substantial risk of
forfeiture), the individual receiving the award will not be subject to current
federal income taxation. Concomitantly, during the period when the awards are
subject to substantial limitations or restrictions, the Company will not be
entitled to a compensation deduction. However, because the specific
limitations and restrictions applicable to these awards are determined solely
by the Compensation Committee and are not specified in the terms of the Long-
Term Stock Incentive Plan, no specific discussion of their federal income tax
consequences is possible. Please see the New Plan Benefits Table on page 32.
RESOLUTION CONSTITUTING PROPOSAL 3
The resolution to approve the Long-Term Stock Incentive Plan is as follows:
"RESOLVED, that as conditionally adopted by the Board of
Directors, the PanAmSat Corporation Long-Term Stock Incentive
Plan submitted to this Annual Meeting be and it is hereby
approved."
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF THE LONG-
TERM STOCK INCENTIVE PLAN.
PROPOSAL 4
APPROVAL OF THE ANNUAL INCENTIVE PLAN
The Board has adopted the PanAmSat Corporation Annual Incentive Plan (the
"Annual Incentive Plan"), subject to the approval of the stockholders, to
provide a reward and incentive to employees in managerial, staff or technical
capacities who have contributed in the then-current fiscal year and, in the
future, are likely to contribute to the success of the Company, and to enhance
the Company's ability to attract and retain outstanding employees to serve in
such capacities. The complete text of the Annual Incentive Plan is set forth
in Exhibit B to this Proxy Statement, and stockholders are urged to review it
together with the following information, which is qualified in its entirety by
reference to Exhibit B.
SUMMARY OF THE ANNUAL INCENTIVE PLAN
The Company established the Annual Incentive Plan, effective as of January
1, 1997, subject to approval by the Company's stockholders. The Annual
Incentive Plan is intended to satisfy specific requirements of Section 162(m)
of the Code with respect to the payment of performance-based awards. The
Annual Incentive Plan provides for the payment to eligible participants of
annual incentive cash awards. The "plan year" is the Company's fiscal year,
running from January 1 to December 31.
To be eligible to participate in the Annual Incentive Plan, an individual
must be: (i) an employee of the Company, (ii) recommended by the Chief
Executive Officer of the Company and (iii) considered and approved by the
Compensation Committee for participation in the Annual Incentive Plan.
The Annual Incentive Plan provides a target bonus for all participants that
is tied to pre-established corporate financial performance measures and goals
designed to promote stockholder value creation. Performance measures which are
not readily quantifiable may be considered in the computation of an Annual
Incentive Plan award, but only to reduce such an award. The performance period
with respect to which awards
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may be payable under the Annual Incentive Plan is generally the plan year,
provided that the Compensation Committee has authority and discretion to
designate different performance periods under the Annual Incentive Plan.
Within the first ninety days of each plan year, the Compensation Committee
approves or establishes in writing one or more performance goals or measures,
a specific target objective or objectives with respect to such performance
goals or measures, and an objective formula or method for compiling the amount
of incentive compensation payable to each participant under the Annual
Incentive Plan if the goals are attained.
As soon as practicable after the end of the plan year, the Compensation
Committee certifies in writing the extent to which participants have achieved
the performance goals and standards for the plan year, including the specific
target objectives and the satisfaction of any other material terms of the
incentive awards, and the Compensation Committee calculates the amount of each
participant's incentive award for the relevant period.
Approved incentive awards are payable by the Company in cash to each
participant, or to his or her estate in the case of death, as soon as
practicable after the end of each performance period and after the
Compensation Committee has certified in writing that the specified goals were
achieved.
An incentive award that would be payable but for the fact that the
participant was not employed by the Company on the last day of the performance
period is prorated, or not paid, in accordance with rules and regulations
adopted by the Compensation Committee for the administration of the Annual
Incentive Plan. In the event that a participant's employment with the Company
terminates voluntarily or for cause, no portion of any target award will be
paid. If termination is involuntary or on account of death, disability, or
retirement, a pro rata award is paid within a reasonable period of time after
the end of the fiscal year in which the termination occurs.
The maximum amount of compensation payable under the Annual Incentive Plan
during any performance period is $1 million for any participant in the Annual
Incentive Plan. Please see the New Plan Benefits Table on page 32.
RESOLUTION CONSTITUTING PROPOSAL 4
The resolution to approve the Annual Incentive Plan is as follows:
"RESOLVED, that as conditionally adopted by the Board of
Directors, the PanAmSat Corporation Annual Incentive Plan
submitted to this Annual Meeting be and it is hereby
approved."
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF THE ANNUAL
INCENTIVE PLAN.
PROPOSAL 5
APPROVAL OF THE RESTORATION AND DEFERRED COMPENSATION PLAN
The Board has adopted the PanAmSat Corporation Restoration and Deferred
Compensation Plan (the "Restoration and Deferred Compensation Plan"), subject
to the approval of the stockholders, to allow senior managerial employees to
defer current federal income taxation on amounts that would otherwise be
currently taxable to them. A portion of the Restoration and Deferred
Compensation Plan is intended to permit these individuals to defer, in
conjunction with the PanAmSat Corporation Retirement Savings Plan (the "401(k)
Plan"), the same aggregate maximum percentage of their total annual
compensation as the Company's employees who are not subject to any of the
contribution limitations imposed on the 401(k) Plan by certain provisions of
the Code. The complete text of the Restoration and Deferred Compensation Plan
is set forth in Exhibit C to this Proxy Statement, and stockholders are urged
to review it together with the following information, which is qualified in
its entirety by reference to Exhibit C.
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SUMMARY OF THE RESTORATION AND DEFERRED COMPENSATION PLAN
ELIGIBILITY. The Company established the Restoration and Deferred
Compensation Plan, effective as of January 1, 1997, for the benefit of a
select group of management and highly compensated employees. To participate in
the Restoration and Deferred Compensation Plan, an employee must have been
selected by the Compensation Committee and recommended for such participation
by the President and Chief Executive Officer of the Company. The Restoration
and Deferred Compensation Plan is administered by the Compensation Committee,
which is responsible for interpreting, enforcing and administering its terms.
RESTORATION FEATURE. If a participant has elected to make the maximum
deferral election under the 401(k) Plan which is permitted under the Code and
the terms of the 401(k) Plan, he or she may elect to defer an additional
amount under the "restoration" portion of the Restoration and Deferred
Compensation Plan. This amount will be up to 16% (for both plans in the
aggregate) of his or her total base salary and bonus, without regard to the
$160,000 limit (in 1998) on annual compensation which may be taken into
account under the 401(k) Plan, the $30,000 limit (in 1998) on annual additions
to the accounts of a participant under the 401(k) Plan and the $10,000 per
year limit (in 1998) on a participant's elective deferrals under the 401(k)
Plan. The Restoration and Deferred Compensation Plan also provides for a
dollar-for-dollar employer matching credit with respect to these deferrals,
capped (for both this plan and the 401(k) Plan in the aggregate) at 4% of the
participant's annual base salary and bonus. These matching credits are fully
"vested" (i.e., they are nonforfeitable obligations of the Company). The
deferral period for amounts attributable to the restoration feature that are
eligible for employer matching credits will be until termination of
employment, unless one of the "in service" distribution options described
under "Plan Distributions," below, is elected. The deferral period for any
amounts attributable to the restoration feature which are not eligible for
employer matching credits will generally be the period selected by the
participant (e.g., 5 years, 10 years, retirement age).
DEFERRED COMPENSATION FEATURE. Under the terms of the Restoration and
Deferred Compensation Plan, participants are also eligible to defer receipt of
up to 50% of base salary and up to 80% of their bonuses in excess of a
specified dollar amount (which may be zero). The deferral period will
generally be the period selected by the participant with each deferral
election (e.g., 5 years, 10 years, retirement age). These deferral amounts are
also fully vested.
DISCRETIONARY COMPANY CREDITS. The Restoration and Deferred Compensation
Plan also provides for discretionary credits which may be made by the Company,
in its sole discretion, to the account balances of participants. The deferral
period for amounts attributable to these discretionary credits will be until
termination of employment, unless one of the "in service" distribution options
described under "Plan Distributions," below, is elected. The vesting of these
credits and any "earnings" attributable to them will be determined in the sole
discretion of the Company.
INTEREST RATE CREDITS ON ACCOUNTS. All deferrals and employer matching
credits will be credited periodically in accordance with rates set, from time
to time, by the Compensation Committee, in its sole discretion. In no event
will deferrals and matching credits be credited with an interest rate of less
than 100% of Moody's Corporate Bond Index rate.
PLAN DISTRIBUTIONS. The Restoration and Deferred Compensation Plan permits
in-service withdrawals of vested amounts to be made at any time for any
reason. If such a withdrawal is made, however, 10% of the amount withdrawn is
forfeited and the participant is not permitted to make future deferrals for
the remainder of that "plan year" (generally, the calendar year) and the
subsequent plan year. The 10% early withdrawal penalty does not apply in the
case of a hardship withdrawal based on sudden and unforeseen financial
emergencies, although the same cessation of deferral rules apply as for
withdrawals not attributable to financial emergencies.
Generally, in the case of retirement, death or disability prior to
retirement, or any other termination of employment a payment equal to 50% of
the participant's vested account balance is made to the participant (or to the
participant's beneficiary) in a lump sum as soon as administratively
practicable. The remaining portion of the vested account balance is then
distributed in a single sum as soon as administratively practicable after the
January 1 immediately following the first distribution.
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The Restoration and Deferred Compensation Plan does not permit payments to
be made to any participant in any year which would cause the Company to lose a
deduction under Section 162(m) of the Code. Instead, such amounts are delayed
until the loss of deduction would not be triggered.
UNFUNDED STATUS; NON-TRANSFERABILITY OF BENEFITS. The Restoration and
Deferred Compensation Plan is an unfunded plan. The Company, however, may
establish a grantor trust to which it may contribute amounts in respect of the
deferrals and credits under the Restoration and Deferred Compensation Plan. If
such a trust is established, the assets of the trust will be subject to the
claims of creditors if the Company becomes insolvent.
The Restoration and Deferred Compensation Plan prohibits participants from
voluntarily assigning or transferring in any way in advance of actual receipt,
rights under the Restoration and Deferred Compensation Plan. Likewise, no part
of the amounts payable to participants under the Restoration and Deferred
Compensation Plan are transferable by operation of law.
RESOLUTION CONSTITUTING PROPOSAL 5
The resolution to approve the Restoration and Deferred Compensation Plan is
as follows:
"RESOLVED, that as conditionally adopted by the Board of
Directors, the PanAmSat Corporation Restoration and Deferred
Compensation Plan submitted to this Annual Meeting be and it
is hereby approved."
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF THE
RESTORATION AND DEFERRED COMPENSATION PLAN.
The following table shows actual awards that were granted under the Long-
Term Stock Incentive Plan and the Annual Incentive Plan and actual amounts
contributed to the Restoration and Deferred Compensation Plan as such plans
are currently in effect during the 1997 fiscal year (i) on behalf of Mr.
Landman, Ms. Saralegui, Mr. Brown, Mr. Heintz, Mr. Cuminale and Mr. Bednarek
(the six executive officers named in the table on page 12, (ii) on behalf of
all current executive officers of the Company as a group, (iii) on behalf of
all current non-executive directors as a group, and (iv) on behalf of all
employees of the Company (including all current officers who are not executive
officers) as a group. Future awards under the Long-Term Stock Incentive Plan,
the Annual Incentive Plan or future contributions to the Deferred Compensation
Plan are not determinable at this time. The Company does not believe that the
amount of awards granted or contributions made in 1997 would have been
different if the Long-Term Stock Incentive Plan, the Annual Incentive Plan and
the Restoration and Deferred Compensation Plan had been approved by the
stockholders at the time such grants and contributions were made.
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NEW PLAN BENEFITS TABLE
<TABLE>
<CAPTION>
RESTORATION AND DEFERRED
LONG-TERM STOCK INCENTIVE PLAN ANNUAL INCENTIVE PLAN COMPENSATION PLAN
------------------------------------ --------------------- ------------------------
NAME AND POSITION DOLLAR VALUE ($)(1) NUMBER OF SHARES DOLLAR VALUE ($) DOLLAR VALUE($)
- ----------------- ------------------- ---------------- --------------------- ------------------------
<S> <C> <C> <C> <C>
Frederick A. Landman.... 1,571,250 93,750 464,000 3,824
Lourdes Saralegui....... 523,750 31,250 350,000 2,417
Carl A. Brown........... 523,750 31,250 250,000 1,614
Kenneth N. Heintz....... 419,000 25,000 185,000 0
James W. Cuminale....... 209,500 12,500 87,000 0
Robert A. Bednarek...... 214,779 12,815 87,000 0
Executive Group......... 3,462,029 206,565 1,423,000 7,856
Non-Executive Director
Group.................. 32,180 758 0 0
Non-Executive Officer
Employee Group......... 6,206,228 370,300 3,172,814 2,171
</TABLE>
- --------
(1) Other than with respect to restricted shares issued to the Non-Executive
Director Group under the Long-Term Stock Incentive Plan, the Dollar Value
for PanAmSat options is determined using the Black-Scholes option pricing
model based on the following assumptions: (a) an expected option term of
ten years; (b) a risk-free rate of return of 6.7%; (c) stock price
volatility of 30%; and (d) a dividend yield of 0%. The Dollar Values set
forth in the table are only theoretical values and may not accurately
determine present value. The actual value, if any, to be realized by an
optionee will depend on the excess of the market value of the Common Stock
over the exercise price on the date the option is exercised. The Dollar
Value of the restricted shares granted to the Non-Executive Director Group
is the fair market value of such restricted shares on the date of grant.
MISCELLANEOUS
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K AS FILED WITH THE SEC FOR
ITS LAST FISCAL YEAR, INCLUDING ANY FINANCIAL STATEMENTS AND FINANCIAL
STATEMENT SCHEDULES THERETO, WILL BE MADE AVAILABLE TO STOCKHOLDERS WITHOUT
CHARGE UPON WRITTEN REQUEST TO JAMES W. CUMINALE, ESQ., SENIOR VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY, PANAMSAT CORPORATION, ONE PICKWICK PLAZA,
GREENWICH, CONNECTICUT 06830. THE COMPANY WILL FURNISH ANY EXHIBITS TO FORM
10-K TO EACH STOCKHOLDER REQUESTING THEM UPON PAYMENT OF A FEE OF $.10 PER
PAGE TO COVER THEIR COST.
The cost of soliciting proxies will be paid by the Company. The Company has
also arranged for reimbursement of brokerage houses, nominees, custodians and
fiduciaries for the forwarding of proxy materials to the beneficial owners of
shares held of record. Proxies may also be solicited by directors, officers
and employees of the Company, but such persons will not be specially
compensated for such services.
SUBMISSION OF STOCKHOLDER PROPOSALS AND NOMINATIONS
The Company's Bylaws contain procedures for stockholder nomination of
directors and for other stockholder proposals to be presented before annual
stockholder meetings. The Bylaws provide that any record owner of stock
entitled to be voted generally in the election of directors may nominate one
or more persons for election as a director at a stockholders' meeting only if
written notice is given to the Secretary of the Company of the intent to make
such nomination. The notice must be given not later than the close of business
on the 60th day nor earlier than the close of business on the 90th day prior
to the first anniversary of the preceding year's annual meeting; provided,
however, that in the event that the date of the annual meeting is more than
thirty (30) days before or more than sixty (60) days after such anniversary
date, notice by the stockholder to be timely must be so delivered not earlier
than the close of business on the 90th day prior to such annual meeting and
not later
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than the close of business on the later of the 60th day prior to such annual
meeting or the 10th day following the day on which public announcement of the
date of such meeting is first made by the Company. In no event shall the
public announcement of an adjournment of an annual meeting commence a new time
period for the giving of a stockholder's notice as described above. Such
stockholder's notice shall set forth: (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a director all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors in an election contest, or
is otherwise required, in each case pursuant to Regulation 14A under the
Exchange Act and Rule 14a-11 thereunder (including such person's written
consent to being named in the proxy statement as nominee and to serving as a
director if elected); (b) as to any other business that the stockholder
proposes to bring before the meeting, a brief description of the business
desired to be brought before the meeting, the reasons for conducting such
business at the meeting and any material interest in such business of such
stockholder and the beneficial owner, if any, on whose behalf the proposal is
made; and (c) as to the stockholder giving the notice and the beneficial
owner, if any, on whose behalf the nomination or proposal is made (i) the name
and address of such stockholder, as they appear on the Company's books, and of
such beneficial owner, (ii) the class and number of shares of the Company
which are owned beneficially and of record by such stockholder and such
beneficial owner, and (iii) whether the proponent intends or is part of a
group which intends to solicit proxies from other stockholders in support of
such proposal or nomination.
Notwithstanding the foregoing provisions, stockholders wishing to have a
proposal included in the Company's proxy statement shall comply with the
applicable requirements of the Exchange Act, and the rules and regulations
thereunder and shall have the rights provided by Rule 14a-8 under such Act. In
order to be eligible under Rule 14a-8 for inclusion in the Company's proxy
statement and accompanying proxy at the next annual meeting of stockholders
currently scheduled to be held on May 18, 1999, stockholder proposals must be
received by the Company on or before December 18, 1998.
A copy of the Bylaw provisions described above is available upon written
request to James W. Cuminale, Esq., Senior Vice President, General Counsel and
Secretary, PanAmSat Corporation, One Pickwick Plaza, Greenwich, Connecticut
06830. The person presiding at the meeting is authorized to determine if a
proposed matter is properly before the meeting or if a nomination is properly
made.
OTHER MATTERS
The Board knows of no matters other than those listed in the attached Notice
of Annual Meeting which are likely to be brought before the Meeting. However,
if any other matter properly comes before the Meeting, the persons named on
the enclosed proxy card will vote the proxy in accordance with their best
judgment on such matter.
By Order of the Board of Directors
James W. Cuminale
Secretary
April 17, 1998
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EXHIBIT A
PANAMSAT CORPORATION
LONG-TERM STOCK INCENTIVE PLAN
ESTABLISHED IN 1997
(AS AMENDED AND RESTATED ON APRIL 9, 1998)
ARTICLE I
GENERAL
1.01. PURPOSE.
The purposes of this Long-Term Stock Incentive Plan Established in 1997 (the
"Plan") are to: (1) closely associate the interests of the employees,
directors and independent contractors of PanAmSat Corporation and its
subsidiaries (collectively referred to as the "Company") with the shareholders
by reinforcing the relationship between participants' rewards and shareholder
gains; (2) provide employees, directors, leased employees and independent
contractors with an equity ownership in the Company commensurate with Company
performance, as reflected in increased shareholder value; (3) maintain
competitive compensation levels; and (4) provide an incentive to management
for continuous employment with the Company.
1.02. DEFINITIONS.
For the purpose of this Plan the following definitions shall apply:
(a) "Cause" means: (1) the intentional and continuing refusal of a
Recipient to perform the duties or services for which the Recipient is
compensated by the Company, (2) the Recipient is convicted of, pleads
guilty to, or pleads no contest to, any criminal offense which, in the good
faith determination of the Committee, will result, or has resulted, in
material pecuniary harm to the Company or material harm to the reputation
of the Company or (3) the Recipient engages in an illegal or fraudulent act
or acts which, in the good faith determination of the Committee, will
result or has resulted, in material pecuniary harm to the Company or
material harm to the reputation of the Company.
(b) "Disability" means any time during which the Recipient is unable
substantially to discharge the responsibilities for which he is employed
or, if not an employee, to render the services for which the individual
receives compensation from the Company by reason of physical illness or
incapacity, whether arising out of sickness, accident or otherwise, and
must be evidenced by the written determination of a qualified medical
doctor acceptable to the Committee and the award Recipient (or in the event
of the Recipient's incapacity to designate a doctor, the Recipient's legal
representative), which determination shall specify the date on which the
Disability commenced and that it has continued uninterrupted for at least
180 days.
(c) "Fair Market Value" as of any date and in respect of any share of
Common Stock means the last trading price on such date or on the next
business day, if such date is not a business day, of a share of Common
Stock as reported by NASDAQ or the principal national securities exchange
on which such shares are listed or admitted to trading provided that, if
shares of Common Stock shall not have been traded on the NASDAQ or another
principal national exchange for more than 10 days immediately preceding
such date or if deemed appropriate by the Committee for any other reason,
the fair market value of shares of Common Stock shall be as determined by
the Committee in such other manner as it may deem appropriate. In no event
shall the fair market value of any share of Common Stock be less than its
par value.
(d) "Option" means a Nonqualified Stock Option or Incentive Stock Option.
(e) "Option Price" means the purchase price per share of Common Stock
deliverable upon the exercise of a Nonqualified Stock Option or Incentive
Stock Option.
(f) "Recipient" means any individual described in Section 1.04 hereof who
has been granted an award of any type described in Section 1.05 hereof.
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1.03. ADMINISTRATION.
(a) The Plan shall be administered by a committee of the Board of Directors
of the Company (the "Committee") consisting of at least two persons. From and
after the date (the "Registration Date") that the Company has a class of
equity securities registered pursuant to Section 12 of the Securities and
Exchange Act of 1934, as amended (the "Act"), each such person shall be an
"outside director" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code").
(b) Subject to the terms of the Plan, including, without limitation, Section
1.07 hereof, the Committee shall have the authority in its sole discretion and
from time to time to:
(i) designate the employees or classes of employees and other service
providers, including directors and independent contractors to participate
in the Plan from among the class(es) specified in 1.04;
(ii) grant awards provided in the Plan in such form and amount as the
Committee shall determine;
(iii) impose such limitations, restrictions and conditions upon any such
award as the Committee shall deem appropriate (other than with respect to a
Recipient's exercise rights expressly set forth in the Plan);
(iv) interpret the Plan, adopt, amend and rescind rules and regulations
relating to the Plan, and make all other determinations and take all other
action necessary or advisable for the implementation and administration of
the Plan; and
(v) delegate to individuals or entities such duties in the administration
of the Plan as the Committee deems appropriate, except (x) with respect to
the matters which under Section 162(m) of the Code and Treasury Regulation
Section 1.162-27(e) are required to be determined or established by the
Committee to qualify awards under the Plan as qualified performance-based
compensation and (y) with regard to awards to Insiders, as defined in
Section 1.07(a) hereof, and any other aspect relating to such awards.
(c) No member of the Committee or the Board of Directors of the Company
shall be liable for any action, failure to act, determination or
interpretation made in good faith with respect to the Plan or any transaction
hereunder, except for liability arising from his or her own willful
misfeasance, gross negligence or reckless disregard of his or her duties. The
Company hereby agrees to indemnify each member of the Committee and the Board
of Directors of the Company for all costs and expenses and, to the extent
permitted by applicable law, any liability incurred in connection with
defending against, responding to, negotiation for the settlement of or
otherwise dealing with any claim, cause of action or dispute of any kind
arising in connection with any actions in administering this Plan or in
authorizing or denying authorization to any transaction hereunder.
1.04. ELIGIBILITY FOR PARTICIPATION.
Participants in the Plan shall be selected by the Committee from among the
executive officers, other employees, directors, leased employees and
independent contractors of the Company who have the capability of making a
substantial contribution to the success of the Company. In making this
selection and in determining the form and amount of awards, the Committee may
consider any factors it deems relevant, including without limitation the
individual's functions, responsibilities, value of services to the Company and
past and potential contributions to the Company's profitability and sound
growth.
1.05. TYPES OF AWARDS UNDER PLAN.
Awards under the Plan may be in the form of any one or more of the
following:
(i) Nonqualified Stock Options, as described in Article II;
(ii) Incentive Stock Options, as described in Article III;
(iii) Alternate Appreciation Rights, as described in Article IV;
(iv) restricted stock, on such terms as the Committee may decide;
(v) performance units, on such terms as the Committee may decide; and
(vi) performance shares, on such terms as the Committee may decide.
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1.06. AGGREGATE LIMITATION ON AWARDS.
(a) Shares of stock which may be issued under the Plan shall be authorized
and unissued or treasury shares of common stock of the Company, par value of
$.01 per share ("Common Stock"). The maximum number of shares of Common Stock
which may be issued under the Plan shall be 7,456,140 shares. The maximum
number of shares of Common Stock which may be issued to any Recipient under
the Plan shall be 2,000,000.
(b) Any shares of Common Stock subject to a Nonqualified Stock Option or
Incentive Stock Option which for any reason is terminated, unexercised or
expires shall again be available for issuance under the Plan.
(c) During the period that any awards remain outstanding under the Plan, the
Committee may make good faith adjustments with respect to the number of shares
of Common Stock attributable to such awards for purposes of calculating the
maximum number of shares of Common Stock available for the granting of future
awards under the Plan.
1.07. SPECIAL LIMITATIONS APPLICABLE TO CERTAIN AWARDS.
(a) Awards to Section 16 Recipients: Notwithstanding any other provision of
this Plan to the contrary, no award granted under this Plan to a person who is
subject to Section 16 of the Act (i.e., an "Insider") shall vest or be
exercisable earlier than the day after the expiration of six (6) months from
(a) its date of grant or (b) in the case of an award of performance units or
performance shares, the date that a final determination has been made that the
award is payable, unless prior to the time of grant such award was approved by
both the Committee and the Board of Directors of the Company.
(b) Awards to Non-Employee Directors: Notwithstanding any other provision of
this Plan to the contrary, no award may be granted to a director who is not an
employee of the Company unless such award is granted by the Company's full
Board of Directors.
1.08. EFFECT OF DEATH, DISABILITY, RETIREMENT OR OTHER TERMINATIONS OF
EMPLOYMENT ON RECIPIENTS.
(a) Death or Disability of a Recipient: Upon the death or Disability of the
Recipient during his employment with the Company (or, in the case of a non-
employee, his performance of services for the Company), the Recipient may
exercise any award which was exercisable on the date of death or Disability
within one year of the termination due to death or Disability. After such one-
year period, the award shall terminate. In the case of death, the award may be
exercised by the Recipient's estate or by a person who acquires the right to
exercise such award by bequest or inheritance or by reason of the death of the
Recipient. In the case of Disability, the award may be exercised by the
Recipient (or, if the participant is not capable, by his guardian or legal
representative).
(b) Retirement of a Recipient or Termination of a Recipient Without Cause:
Upon the termination of the employment of the Recipient by reason of
retirement (or, in the case of a non-employee, upon the termination of
services by reason of retirement) or upon the termination of the employment
(or, in the case of a non-employee, the termination of services) of the
Recipient by the Company without Cause, the Recipient may exercise any award
which was exercisable on the date of termination of employment (or, in the
case of a non-employee, the termination of services) within three months from
the date of such termination of employment (or, in the case of a non-employee,
the termination of services). After such three-month period, the award shall
terminate.
(c) Termination for Other Reasons: Except as provided in paragraphs (a) and
(b) above, upon the termination of the employment (or, in the case of a non-
employee, termination of services) of the Recipient, all awards granted to the
Recipient shall terminate.
1.09. EFFECTIVE DATE AND TERM OF PLAN.
(a) The Plan shall become effective on the date it is adopted by the
Committee, subject only to approval by the Board of Directors of the Company
and the affirmative vote of the holders of a majority of the Common Stock.
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(b) No awards shall be made under the Plan after the tenth anniversary of
the effective date of the Plan described in (a) above; provided, however, that
the Plan and all awards made under the Plan prior to such date shall remain in
effect until such awards have been satisfied or terminated in accordance with
the Plan and the terms of such awards.
ARTICLE II
NONQUALIFIED STOCK OPTIONS
2.01. AWARD OF NONQUALIFIED STOCK OPTIONS.
The Committee may from time to time, and subject to the provisions of the
Plan and such other terms and conditions as the Committee may prescribe, grant
to any participant in the Plan one or more options to purchase for cash or
shares of Common Stock the number of shares of Common Stock ("Nonqualified
Stock Options") allotted by the Committee. The date a Nonqualified Stock
Option is granted shall mean the date selected by the Committee as of which
the Committee allots a specific number of shares to a participant pursuant to
the Plan.
2.02. NONQUALIFIED STOCK OPTION AGREEMENTS.
The grant of a Nonqualified Stock Option shall be pursuant to a written
Nonqualified Stock Option Agreement, executed by the Company and identifying
the holder of a Nonqualified Stock Option (the "optionee"), in such form as
the Committee may from time to time determine.
2.03. NONQUALIFIED STOCK OPTION PRICE.
The Option Price per share of Common Stock deliverable upon the exercise of
a Nonqualified Stock Option shall be 100% of the Fair Market Value of a share
of Common Stock on the date the Nonqualified Stock Option is granted.
2.04. MANNER OF PAYMENT.
Each Nonqualified Stock Option Agreement shall set forth the procedure
governing the exercise of the Nonqualified Stock Option granted thereunder,
and shall provide that, upon such exercise in respect of any shares of Common
Stock subject thereto, the optionee shall pay to the Company, in full, the
Option price for such shares and the applicable withholding taxes with (a)
cash, (b) previously owned Common Stock or (c) a combination of cash and
previously owned Common Stock. In addition, each Nonqualified Stock Option
Agreement shall permit the optionee to pay the Option Price and any related
withholding taxes through a cashless exercise program established by the
Company or the Committee with a broker.
2.05. MANNER OF DELIVERY AND OPTIONEE RIGHTS.
As soon as practicable after receipt of payment and applicable withholding
taxes in connection with the exercise of a Nonqualified Stock Option, the
Company shall deliver to the optionee a certificate or certificates for shares
of Common Stock. The optionee shall become a shareholder of the Company with
respect to Common Stock represented by share certificates so issued and as
such shall be fully entitled to receive dividends, to vote and to exercise all
other rights of a shareholder.
2.06. EFFECT OF EXERCISE.
The exercise of any Nonqualified Stock Option shall cancel that number of
related Alternate Rights, if any, which is equal to the number of shares of
Common Stock purchased pursuant to said Option.
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ARTICLE III
INCENTIVE STOCK OPTIONS
3.01. AWARD OF INCENTIVE STOCK OPTIONS.
The Committee may from time to time and subject to the provisions of the
Plan and such other terms and conditions as the Committee may prescribe, grant
to any Plan participant who is an employee meeting the requirements of Section
422 of the Internal Revenue Code one or more Incentive Stock Options (intended
to qualify as such under the provisions of section 422 of the Code ("Incentive
Stock Options")) to purchase for cash or shares of Common Stock the number of
shares of Common Stock allotted by the Committee. The date an Incentive Stock
Option is granted shall mean the date selected by the Committee as of which
the Committee allots a specific number of shares to a participant pursuant to
the Plan.
3.02. INCENTIVE STOCK OPTION AGREEMENTS.
The grant of an Incentive Stock Option shall be pursuant to a written
Incentive Stock Option Agreement, executed by the Company and identifying the
holder of an Incentive Stock Option (the "optionee"), in such form as the
Committee may from time to time determine.
3.03. INCENTIVE STOCK OPTION PRICE.
The Option Price per share of Common Stock deliverable upon the exercise of
an Incentive Stock Option shall be 100% (110% in the case of a 10%
shareholder, as provided by Section 422(b)(6) of the Code (a "Ten Percent
Stockholder")) of the Fair Market Value of a share of Common Stock on the date
the Incentive Stock Option is granted.
3.04. MAXIMUM AMOUNT OF INCENTIVE STOCK OPTION GRANT.
To the extent that the aggregate Fair Market Value (determined on the date
the Option is granted) of Common Stock subject to an Incentive Stock Option
granted to an optionee by the Committee (or by the Company or any of its
parent or subsidiary corporations under any other plans) which are exercisable
for the first time during any calendar year exceeds $100,000, the portion of
the Incentive Stock Option exceeding this $100,000 limitation shall be treated
as a Nonqualified Stock Option.
3.05. APPLICABILITY OF STOCK OPTIONS SECTIONS.
Sections 2.04, Manner of Payment; 2.05, Manner of Delivery and Optionee
Rights; and 2.06, Effect of Exercise, applicable to Nonqualified Stock
Options, shall apply mutatis mutandis to Incentive Stock Options. Said
Sections are incorporated by reference in this Article III as if fully set
forth herein and as if the word "Incentive" were substituted for the word
"Nonqualified."
ARTICLE IV
ALTERNATE APPRECIATION RIGHTS
4.01. AWARD OF ALTERNATE RIGHTS.
Concurrently with the award of any Nonqualified Stock Option or Incentive
Stock Option to purchase one or more shares of Common Stock, the Committee
may, subject to the provisions of the Plan and such other terms and conditions
as the Committee may prescribe, award to the optionee with respect to each
share of Common Stock, a related alternate appreciation right ("Alternate
Right"), permitting the optionee to be paid the appreciation on the shares
underlying the Option in lieu of exercising the Option.
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4.02. ALTERNATE RIGHTS AGREEMENT.
Alternate Rights shall be pursuant to written agreements in such form as the
Committee may from time to time determine.
4.03. EXERCISE.
An optionee who has been granted Alternate Rights may, from time to time, in
lieu of the exercise of an equal number of Options, elect to exercise one or
more Alternate Rights and thereby become entitled to receive from the Company
payment, in Common Stock (and cash, in the case of fractional shares), for the
number of shares of Common Stock determined pursuant to Sections 4.04 and
4.05. Unless otherwise set forth herein, Alternate Rights shall be exercisable
only to the same extent and subject to the same conditions as the Options
related thereto are exercisable, as provided in this Plan. The Committee may,
in its discretion, prescribe additional conditions to the exercise of any
Alternate Rights.
4.04. AMOUNT OF PAYMENT.
The amount of payment to which an optionee shall be entitled upon the
exercise of each Alternate Right shall be equal to 100% of the amount, if any,
by which the Fair Market Value of a share or shares of Common Stock related to
said Alternate Right on the exercise date exceeds the Option price related to
said Alternate Right.
4.05. FORM OF PAYMENT.
The number of shares (and fractional shares) to be paid shall be determined
by dividing the amount of payment determined pursuant to Section 4.04 by the
Fair Market Value of a share of Common Stock on the exercise date of such
Alternate Rights. As soon as practicable after exercise and payment to the
Company of applicable withholding taxes, the Company shall deliver to the
optionee a certificate or certificates for such shares of Common Stock.
ARTICLE V
MISCELLANEOUS
5.01. GENERAL RESTRICTION.
Each award under the Plan shall be subject to the requirement that, if at
any time the Committee shall determine that (i) the listing, registration or
qualification of the shares of Common Stock subject or related thereto upon
any securities exchange or under any state or Federal law, or (ii) the consent
or approval of any government regulatory body, or (iii) an agreement by the
grantee of an award with respect to the disposition of shares of Common Stock,
is necessary or desirable as a condition of, or in connection with, the
granting of such award or the issue or purchase of shares of Common Stock
thereunder, the Committee may elect, in its sole discretion, not to consummate
the award in whole or in part unless such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee.
5.02. NON-ASSIGNABILITY.
No award under the Plan shall be assignable or transferable by the Recipient
thereof, except by will or by the laws of descent and distribution, unless the
Committee shall elect to permit such an assignment or transfer in its sole
discretion. During the life of the Recipient, such award shall be exercisable
only by such person or by such person's guardian or legal representative.
5.03. WITHHOLDING TAXES.
Whenever the Company proposes or is required to issue or transfer shares of
Common Stock or other property under the Plan, the Company shall require the
grantee to remit to the Company an amount sufficient to satisfy any Federal,
state and/or local withholding tax requirements relating to such issue or
transfer prior to the delivery of any certificate or certificates for such
shares or such other property. Alternatively, in the discretion of the
Committee, the Company may issue or transfer such shares of Common Stock net
of the number of shares sufficient to satisfy the withholding tax
requirements. For withholding tax purposes, the shares of Common Stock shall
be valued on the date the withholding obligation is incurred.
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5.04. RIGHT TO TERMINATE EMPLOYMENT.
Nothing in the Plan or in any agreement entered into pursuant to the Plan
shall: (i) confer upon any participant the right to continue in the employment
of the Company (ii) affect any right which the Company may have to terminate
the employment of such participant, or (iii) in the case of a service
provider, confer on them the right to continue to provide services to the
Company.
5.05. NON-UNIFORM DETERMINATIONS.
The determinations by the Committee and the Board of Directors of the
Company under the Plan (including without limitation determinations of the
persons to receive awards, the form, amount and timing of such awards, the
terms and provisions of such awards and the agreements evidencing same) need
not be uniform and may be made by it selectively among persons who receive, or
are eligible to receive, awards under the Plan, whether or not such persons
are similarly situated.
5.06. RIGHTS AS A SHAREHOLDER.
The Recipient shall have no rights as a shareholder with respect thereto
unless and until certificates for shares of Common Stock are issued to him.
5.07. LEAVES OF ABSENCE.
Subject to the terms of the Plan, the Committee shall be entitled to make
such rules, regulations and determinations as it deems appropriate under the
Plan in respect of any leave of absence taken by the Recipient of any award.
Without limiting the generality of the foregoing, the Committee shall be
entitled to determine (i) whether or not any such leave of absence shall
constitute a termination of employment, or the termination of an arrangement
to provide services, within the meaning of the Plan and (ii) the impact, if
any, of any such leave of absence on awards under the Plan theretofore made to
any Recipient who takes such leave of absence.
5.08. NEWLY ELIGIBLE PARTICIPANTS.
Subject to the terms of the Plan, the Committee shall be entitled to make
such rules, regulations, determinations and awards as it deems appropriate in
respect of any employee, director or service provider who becomes eligible to
participate in the Plan or any portion thereof after the commencement of an
award or incentive period.
5.09. ADJUSTMENTS.
In any event of any change in the outstanding Common Stock by reason of a
stock dividend or distribution, recapitalization, merger, consolidation,
split-up, combination, exchange of shares or the like, the Committee may
appropriately adjust the number of shares of Common Stock which may be issued
under the Plan, the maximum number of shares in respect of which options or
other awards may be granted to any individual during the term of the Plan, the
number of shares of Common Stock subject to Options theretofore granted under
the Plan, the Option price of Options theretofore granted under the Plan, and
any and all other matters deemed appropriate by the Committee.
5.10. AMENDMENT OF THE PLAN.
(a) The Board of Directors of the Company may, without further action by the
shareholders and without receiving further consideration from the
participants, amend this Plan or condition or modify awards under this Plan in
response to changes in securities or other laws or rules, regulations or
regulatory interpretations thereof applicable to this Plan or to comply with
stock exchange rules or requirements.
(b) The Board of Directors of the Company may at any time and from time to
time terminate or modify or amend the Plan in any respect, except that, from
and after the Registration Date, the Committee may not
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(i) increase the maximum number of shares of Common Stock which may be issued
under the Plan (other than increases pursuant to Section 5.09), (ii) extend
the period during which any award may be granted or exercised, or (iii) extend
the term of the Plan, without shareholder approval. The termination or any
modification or amendment of the Plan shall not, without the consent of a
participant, adversely affect his or her rights under an award previously
granted to him or her.
ARTICLE VI
NON-EXCLUSIVITY OF THE PLAN
The adoption of the Plan by the Board of Directors of the Company shall not
be construed as amending, modifying or rescinding any previously approved
incentive arrangement or as creating any limitations on the power of the Board
of Directors of the Company to adopt such other incentive arrangements as it
may deem desirable, including, without limitation, the granting of stock
options otherwise than under the Plan, and such arrangements may be either
applicable generally or only in specific cases.
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EXHIBIT B
PANAMSAT CORPORATION
ANNUAL INCENTIVE PLAN
EFFECTIVE JANUARY 1, 1997, AS AMENDED
SECTION 1: PURPOSE OF THE PLAN
The purposes of the PanAmSat Corporation Annual Incentive Plan (Plan) are
(1) to motivate and reward a greater degree of excellence and teamwork among
the employees of PanAmSat, Inc. (PanAmSat) by providing incentive compensation
award opportunities, (2) to provide attractive and competitive total cash
compensation opportunities for exceptional corporate, organizational unit, and
individual performance, (3) to reinforce the communication of PanAmSat's
mission, objectives and goals, and (4) to enhance PanAmSat's ability to
attract, retain, and motivate the highest caliber employees.
The purposes of the Plan shall be carried out by the payment to eligible
participants of annual incentive cash awards, subject to the terms and
conditions of the Plan and (with certain limitations described below) the
discretion of the Compensation Committee of the Board of Directors
(Committee).
The Plan also is intended to secure the full deductibility of incentive
awards payable to the Company's Chief Executive Officer (CEO) and four highest
compensated executive officers whose compensation is required to be reported
in the Company's proxy statement (Covered Employees). All compensation payable
under this Plan is intended to be deductible by PanAmSat under the Internal
Revenue Code of 1986, as amended (Code).
SECTION 2: EFFECTIVE DATE, TERM, AND PLAN YEAR
The Plan, as adopted by the Board of Directors (Board), is subject to the
approval of the shareholders. If approved by the shareholders, it will
continue in effect (as amended from time to time) until December 31, 2001.
The Plan Year shall be the Company's fiscal year, running from January 1 to
December 31.
The performance period with respect to which awards may be payable under the
Plan shall generally be the Plan Year, provided that the Committee shall have
the authority and discretion to designate different performance periods under
the Plan.
SECTION 3: ADMINISTRATION
The Committee shall have full power and authority to administer and
interpret the provisions of the Plan and to adopt such rules, regulations,
agreements, guidelines, and instruments for the administration of the Plan and
for the conduct of its business as the Committee deems advisable. This
includes, without limitation, the authority to determine all matters relating
to awards made under the Plan, including selection of award recipients and the
terms, conditions, limitations, and restrictions applicable to any award.
Except with respect to the matters which under (S)162(m) of the Code and
Treasury Regulation (S)1.162-27(e) are required to be determined or
established by the Committee to qualify awards under the Plan as qualified
performance-based compensation, the Committee shall have the power to delegate
to any officer or employee of the Company the authority to administer and
interpret the procedural aspects of the Plan, subject to the Plan's terms,
including adopting and enforcing rules to decide procedural and administrative
issues.
The Committee shall consist of two or more directors of the Company, all of
whom shall be persons who qualify as "outside directors" as defined in
(S)162(m) of the Code. The Committee may rely on opinions, reports or
statements of officers or employees of the Company and of Company counsel
(inside or retained), public accountants, and other professional or expert
advisors.
The Committee reserves the right to amend or terminate the Plan in whole or
in part at any time, including without limitation the terms of the performance
criteria specified in the Plan, subject to ratification by the Board. Unless
otherwise prohibited by applicable law, any amendment required to conform the
Plan to the requirements of (S)162(m) of the Code may be made by the Committee
in its sole discretion. No amendment may be made to the class of individuals
who are eligible to participate in the Plan, or the maximum bonus payable to
any participant.
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No member of the Committee shall be liable for any action taken or omitted
to be taken or for any determination made by him or her in good faith with
respect to the Plan, and the Company shall indemnify and hold harmless each
member of the Committee against any cost, expense, or liability arising out of
any act or omission in connection with the administration or interpretation of
the Plan, unless arising out of such person's own fraud or bad faith.
The place of administration of the Plan shall be the State of Connecticut,
and the validity, construction, interpretation, administration, and effect of
the Plan and the rules, regulations, and rights relating to the Plan shall be
determined in accordance with the laws of the State of Connecticut.
SECTION 4: ELIGIBILITY
An individual shall be eligible to be a participant in the Plan if he or she
satisfies the following criteria:
. There exists a legal and bona fide relationship of employer and
employee between PanAmSat and the individual, and
. The individual is recommended by the CEO, and considered and approved
by the Committee for participation in the Plan, or is included in the Plan
under Administrative Guidelines adopted by the Committee.
The determination of eligibility and participation in the Plan shall be made
annually. Eligibility for or participation in the Plan in any given year shall
not entitle any employee to be eligible for or to participate in the Plan in
any other year.
SECTION 5: PERFORMANCE CRITERIA AND EVALUATION
The Plan provides a target bonus for all participants that is tied to pre-
established corporate financial performance measures and goals designed to
promote shareholder value creation. Performance measures and goals may
include, without limitation, one or more of the performance measures listed
below, as defined by the Committee. Multiple performance measures may be used
on an alternative or cumulative basis for awards. Performance measures and
their relative weight may vary by employee group.
Within the first ninety (90) days of each Plan Year (except the initial Plan
Year), the Committee will approve or establish in writing one or more
performance goals or measures, a specific target objective or objectives with
respect to such performance goals or measures, and an objective formula or
method for computing the amount of incentive compensation payable to each
participant under the Plan if the goals are attained. For any performance
cycle that is less than 12 months, the performance measures and objectives
will be established before 25% of the relevant performance period has elapsed.
The maximum amount of compensation payable during any performance period is $1
million for any participant in the plan.
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Performance measures shall include any of the following:
<TABLE>
<CAPTION>
GROUP A GROUP B
------- -------
<S> <C> <C>
. Earnings before inter- . Cash value added . Expense management
est,
taxes, depreciation,
and
amortization
. Return on investment . Economic value added . Customer satisfaction
. Return on net assets . Earnings before interest and taxes . Quality
. Return on invested . Profit before taxes . Human resources management
capital
. Return on equity . Net operating profit after taxes . Merger Transition
. Backlog--value of . Profit margin
leases
under contract before
operation
. Cash-flow return on . Revenue growth
investment
</TABLE>
Applicable measures (and goals with respect to each measure) for each
performance period will be established by the Committee within 90 days after
the beginning of the Plan Year (except for the initial Plan Year). The
performance measures in Group B may be used only to reduce the amount of
compensation that may be paid under this Plan.
Measurement of all performance goals, measures, and awards shall be
objectively determinable, although the Committee may exercise its discretion
in making awards under this Plan to the extent that such discretion does not
cause PanAmSat, under Section 162(m) of the Code, to lose the right to deduct
all of the compensation paid under the Plan.
SECTION 6: DETERMINATION OF INCENTIVE AWARDS
As soon as practicable after the end of the Plan Year, the Committee shall
certify in writing the extent to which the Company and the participants have
achieved the performance goals and standards for the Plan year, including the
specific target objective(s) and the satisfaction of any other material terms
of the incentive awards, and the Committee shall calculate the amount of each
participant's incentive award for the relevant period.
The Committee shall have no discretion to increase the amount of any
participant's incentive award as so determined, but may reduce the amount of
or completely eliminate such incentive award if it determines in its absolute
and sole discretion that such a reduction or elimination is appropriate in
order to reflect the participant's performance or unanticipated factors.
SECTION 7: PAYMENT OF AWARDS
Approved incentive awards shall be payable by the Company in cash to each
participant, or to his or her estate in the case of death, as soon as
practicable after the end of each performance period and after the Committee
has certified in writing that the specified performance goals were achieved.
An incentive award that would be payable but for the fact that the
participant was not employed by the Company on the last day of the performance
period shall be prorated, or not paid, in accordance with rules and
regulations adopted by the Committee for the administration of the Plan except
that if: (a) a participant's employment with the Company terminates
voluntarily (other than retirement) or for cause prior to the last day of the
performance period, no portion of any target award will be paid; or (b)
termination in the performance period is involuntary or on account of death,
disability, or retirement, a pro rata award shall be paid within a reasonable
period of time after the end of the fiscal year in which the termination
occurs.
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If it is determined that a portion of any award under this Plan would not be
deductible by the Company on account of Section 162(m) of the Code, if paid
when it would otherwise become payable, payment of the nondeductible portion
of the award shall be deferred until the first year(s) in which the payment
will be deductible by the Company.
SECTION 8: MISCELLANEOUS
Unsecured Obligation--A participant shall have no interest in any fund or
specified asset of the Company. No trust fund shall be created in connection
with the Plan or any award, and there shall be no required funding of amounts
that may become payable under the Plan. Any amounts that are or may be set
aside under the provisions of this Plan shall continue for all purposes to be
part of the general assets of the Company, and no person or entity other than
the Company shall, by virtue of the provisions of this Plan, have any interest
in such assets. No right to receive payments from the Company pursuant to this
Plan shall be greater than the right of any unsecured creditor of the Company.
Non-assignability--No right or interest in the Plan or to an award is
assignable, transferable, or subject to any lien or encumbrance, either
directly or indirectly, by operation of law or otherwise, including levy,
garnishment, attachment, pledge, or bankruptcy.
No Right to Continued Employment--Participation in the Plan does not
guarantee or create any right to continued employment by the Company and the
Company reserves the right to dismiss any participant at any time.
Participation in any one performance cycle does not guarantee participation in
any other performance cycle.
Tax Withholding--All awards to be paid under the Plan shall be subject to
all applicable withholding taxes, including federal and state income taxes and
employment taxes. The Company will withhold such taxes in accordance with
applicable tax regulations.
Binding on Successors--The obligations of the Company under this Plan shall
be binding upon any organization that shall succeed to all or substantially
all of the Company's assets; the term "Company" whenever used in this Plan
shall mean and include such organization after the succession.
Change-in-Control--In the event that the Company has a change-in-control, as
that term is defined below, all participants in the Plan shall be entitled to
receive a pro rata incentive award, calculated by multiplying the target
incentive amount for each participant by a fraction, the numerator of which is
the number of days in the performance period that preceded the change-in-
control and the denominator of which is 365.
A "Change of Control of the Company" shall be deemed to have occurred if any
of the following has occurred:
A. Individuals who, as of the date hereof, constitute the entire Board of
Directors of the Company ("Incumbent Directors") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election, by the Company's shareholders, was
approved by a vote of at least a majority of the then Incumbent Directors,
also shall be an Incumbent Director;
B. The shareholders of the Company shall approve (i) any merger,
consolidation or recapitalization of the Company or any sale, lease, or
other transfer (in one transaction or a series of transactions contemplated
or arranged by any party as a single plan) of all or substantially all of
the assets of the Company (each of the foregoing being an "Acquisition
Transaction") where the shareholders of the Company immediately prior to
such Acquisition Transaction would not immediately after such Acquisition
Transaction beneficially own, directly or indirectly, shares representing
in the aggregate more than 80 percent of (a) the then outstanding common
stock of the corporation surviving or resulting from such merger,
consolidation or recapitalization or acquiring such assets of the Company,
as the case may be (the "Surviving Corporation"), (or of its ultimate
parent corporation, if any), and (b) the Combined Voting Power (as defined
below) of the then outstanding Voting Securities (as defined below) of the
Surviving Corporation (or of its ultimate parent corporation, if any), or
(ii) any plan or proposal for the liquidation or dissolution of the
Company; or
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C. Any Person (as defined below) shall become the beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of securities of the Company representing in the aggregate 20
percent or more of the then outstanding shares of common stock of the
Company ("Common Shares"); provided, however, that notwithstanding the
foregoing, a Change of Control of the Company shall not be deemed to have
occurred for purposes of this Subparagraph C solely as the result of:
(1) An acquisition of securities by the Company which, by reducing the
number of Common Shares or other Voting Securities outstanding, increases
(i) the proportionate number of Common Shares beneficially owned by any
Person to 20 percent or more of the Common Shares then outstanding;
(2) An acquisition of securities directly from the Company except that
this paragraph shall not apply to any conversion of a security that was
not acquired directly from the Company.
Definition of Terms--Each term or phrase used in the Plan that is not
defined in the Plan shall have the same meaning as under the PanAmSat
Corporation Long-Term Stock Incentive Plan Established in 1997.
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EXHIBIT C
PANAMSAT CORPORATION
RESTORATION AND DEFERRED COMPENSATION PLAN
EFFECTIVE JANUARY 1, 1997, AS AMENDED
PURPOSE
The purpose of this Plan is to provide specified benefits to a select group
of management and highly compensated Employees who contribute materially to
the continued growth, development and future business success of PanAmSat
Corporation, a Delaware corporation, and its subsidiaries, if any, that
sponsor this Plan. This Plan shall be unfunded for tax purposes and for
purposes of Title I of ERISA.
ARTICLE 1
DEFINITIONS
For purposes of this Plan, unless otherwise clearly apparent from the
context, the following phrases or terms shall have the following indicated
meanings:
1.1 "Account Balance" shall mean, with respect to a Participant, a credit
on the records of the Employer equal to the sum of (i) the Deferral Account
balance, (ii) the vested Company Contribution Account balance and (iii) the
vested Company Matching Account balance. The Account Balance, and each
other specified account balance, shall be a bookkeeping entry only and
shall be utilized solely as a device for the measurement and determination
of the amounts to be paid to a Participant, or his or her designated
Beneficiary, pursuant to this Plan.
1.2 "Annual Bonus" shall mean any compensation, in addition to Base
Annual Salary relating to services performed during any calendar year,
whether or not paid in such calendar year or included on the Federal Income
Tax Form W-2 for such calendar year, payable to a Participant as an
Employee under any Employer's annual bonus and annual or long term cash
incentive plans, excluding stock options, and excluding compensation
provided under the PanAmSat Corporation Annual Incentive Plan, and the
PanAmSat Corporation Long Term Stock Incentive Plan Established in 1997.
1.3 "Annual Company Contribution Amount" shall mean, for any one Plan
Year, the amount determined in accordance with Section 3.6.
1.4 "Annual Company Matching Amount" for any one Plan Year shall be the
amount determined in accordance with Section 3.7.
1.5 "Annual Deferral Amount" shall mean that portion of a Participant's
Base Annual Salary and Annual Bonus that a Participant elects to have, and
is deferred, in accordance with Article 3, for any one Plan Year. In the
event of a Participant's Retirement, Disability (if deferrals cease in
accordance with Article 6), death or a Termination of Employment prior to
the end of a Plan Year, such year's Annual Deferral Amount shall be the
actual amount withheld prior to such event.
1.6 "Base Annual Salary" shall mean the annual cash compensation relating
to services performed during any calendar year, whether or not paid in such
calendar year or included on the Federal Income Tax Form W-2 for such
calendar year, excluding bonuses, commissions, overtime, fringe benefits,
stock options, relocation expenses, incentive payments, non-monetary
awards, directors fees and other fees, automobile and other allowances paid
to a Participant for employment services rendered (whether or not such
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allowances are included in the Employee's gross income). Base Annual Salary
shall be calculated before reduction for compensation voluntarily deferred
or contributed by the Participant pursuant to all qualified or non-
qualified plans of any Employer and shall be calculated to include amounts
not otherwise included in the Participant's gross income under Code
Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by
any Employer; provided, however, that all such amounts will be included in
compensation only to the extent that, had there been no such plan, the
amount would have been payable in cash to the Employee.
1.7 "Beneficiary" shall mean one or more persons, trusts, estates or
other entities, designated in accordance with Article 7, that are entitled
to receive benefits under this Plan upon the death of a Participant.
1.8 "Beneficiary Designation Form" shall mean the form established from
time to time by the Committee that a Participant completes, signs and
returns to the Committee to designate one or more Beneficiaries.
1.9 "Board" shall mean the board of directors of the Company.
1.10 "Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time.
1.11 "Committee" shall mean the Compensation Committee of the Company.
1.12 "Company" shall mean PanAmSat Corporation, a Delaware corporation,
and any successor to all or substantially all of the Company's assets or
business or stock.
1.13 "Company Contribution Account" shall mean (i) the sum of the
Participant's Annual Company Contribution Amounts, plus (ii) amounts
credited in accordance with all the applicable crediting provisions of this
Plan that relate to the Participant's Company Contribution Account, less
all distributions made to the Participant or his or her Beneficiary
pursuant to this Plan that relate to the Participant's Company Contribution
Account.
1.14 "Company Matching Account" shall mean (i) the sum of all of a
Participant's Annual Company Matching Amounts, plus (ii) amounts credited
in accordance with all the applicable crediting provisions of this Plan
that relate to the Participant's Company Matching Account, less all
distributions made to the Participant or his or her Beneficiary pursuant to
this Plan that relate to the Participant's Company Matching Account.
1.15 "Deduction Limitation" shall mean the following described limitation
on a benefit that may otherwise be distributable pursuant to the provisions
of this Plan. Except as otherwise provided, this limitation shall be
applied to all distributions that are "subject to the Deduction Limitation"
under this Plan. If an Employer determines in good faith that there is a
reasonable likelihood that any compensation paid to a Participant for a
taxable year of the Employer would not be deductible by the Employer solely
by reason of the limitation under Code Section 162(m), then to the extent
deemed necessary by the Employer to ensure that the entire amount of any
distribution to the Participant pursuant to this Plan is deductible, the
Employer may defer all or any portion of a distribution under this Plan.
Any amounts deferred pursuant to this limitation shall continue to be
credited/debited with additional amounts in accordance with Section 3.9
below, even if such amount is being paid out in installments. The amounts
so deferred and amounts credited thereon shall be distributed to the
Participant or his or her Beneficiary (in the event of the Participant's
death) at the earliest possible date, as determined by the Employer in good
faith, on which the deductibility of compensation paid or payable to the
Participant for the taxable year of the Employer during which the
distribution is made will not be limited by Section 162(m).
1.16 "Deferral Account" shall mean (i) the sum of all of a Participant's
Annual Deferral Amounts, plus (ii) amounts credited in accordance with all
the applicable crediting provisions of this Plan that relate
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to the Participant's Deferral Account, less all distributions made to the
Participant or his or her Beneficiary pursuant to this Plan that relate to
his or her Deferral Account.
1.17 "Disability" shall mean any time during which the Participant is
unable substantially to discharge the responsibilities for which he or she
is employed by reason of physical illness or incapacity, whether arising
out of sickness, accident or otherwise, and must be evidenced by the
written determination of a qualified medical doctor acceptable to the
Committee and the Participant (or in the event of the Participant's
incapacity to designate a doctor, the Participant's legal representative),
which determination shall specify the date on which the Disability
commenced and that it has continued uninterrupted for at least 180 days.
1.18 "Election Form" shall mean the form established from time to time by
the Committee that a Participant completes, signs and returns to the
Committee to make an election under the Plan.
1.19 "Employee" shall mean a person who is an employee of any Employer.
1.20 "Employer(s)" shall mean the Company and/or any of its subsidiaries
(now in existence or hereafter formed or acquired) that have been selected
by the Board to participate in the Plan and have adopted the Plan as a
sponsor.
1.21 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as it may be amended from time to time.
1.22 "401(k) Plan" shall mean the PanAmSat Corporation Retirement Savings
Plan, as it may be amended or restated from time to time.
1.23 "Participant" shall mean any Employee (i) who is selected to
participate in the Plan, (ii) who elects to participate in the Plan, (iii)
who signs a Plan Agreement, an Election Form and a Beneficiary Designation
Form (all of which may be incorporated into a single form as prescribed by
the Committee), (iv) whose signed Plan Agreement, Election Form and
Beneficiary Designation Form are accepted by the Committee, (v) who
commences participation in the Plan, and (vi) whose Plan Agreement has not
terminated.
1.24 "Plan" shall mean the Company's Restoration and Deferred
Compensation Plan, which shall be evidenced by this instrument and by each
Plan Agreement, as they may be amended from time to time.
1.25 "Plan Agreement" shall mean a written agreement, as may be amended
from time to time, which is entered into by and between an Employer and a
Participant. Each Plan Agreement executed by a Participant and the
Participant's Employer shall provide for the entire benefit to which such
Participant is entitled under the Plan; should there be more than one Plan
Agreement, the Plan Agreement bearing the latest date of acceptance by the
Employer shall supersede all previous Plan Agreements in their entirety and
shall govern such entitlement. The terms of any Plan Agreement may be
different for any Participant, and any Plan Agreement may provide
additional benefits not set forth in the Plan or limit the benefits
otherwise provided under the Plan; provided, however, that any such
additional benefits or benefit limitations must be agreed to by both the
Employer and the Participant.
1.26 "Plan Year" shall, except for the first Plan Year, mean a period
beginning on January 1 of each calendar year and continuing through
December 31 of such calendar year.
1.27 "Retirement," "Retire(s)" or "Retired" shall mean, with respect to
an Employee, severance from employment from all Employers for any reason
other than a leave of absence, death or Disability on or after attainment
of age 55 and completion of 6 Years of Service.
1.28 "Termination Benefit" shall mean the benefit set forth in Section
5.1.
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1.29 "Termination of Employment" shall mean the severing of employment
with all Employers for any reason, including Retirement, Disability, and
death.
1.30 "Trust" shall mean one or more trusts which may be established
pursuant to Article 12.
1.31 "Unforeseeable Financial Emergency" shall mean an unanticipated
emergency that is caused by an event beyond the control of the Participant
that would result in severe financial hardship to the Participant resulting
from (i) a sudden and unexpected illness or accident of the Participant or
a dependent of the Participant, (ii) a loss of the Participant's property
due to casualty, or (iii) such other extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Participant, all as determined in the sole discretion of the Committee.
1.32 "Years of Service" shall mean the total number of full years of
service for which a Participant is credited for vesting purposes under the
401(k) Plan, including years prior to the effective date of this Plan.
ARTICLE 2
SELECTION, ENROLLMENT, ELIGIBILITY
2.1 Selection. Participation in the Plan shall be limited to a select group
of management and highly compensated Employees of the Employers, as determined
by the Committee. From that group, the Committee, after recommendation of such
Employees to the Committee by the President and Chief Executive Officer of the
Company, shall select, in its sole discretion, Employees to participate in the
Plan.
2.2 Enrollment Requirements. As a condition to participation, each selected
Employee shall complete, execute and return to the Committee an Election Form,
a Plan Agreement and any additional forms deemed necessary by the Committee,
all within 30 days after he or she is selected to participate in the Plan. In
addition, the Committee shall establish from time to time such other
enrollment requirements as it determines in its sole discretion are necessary.
2.3 Eligibility; Commencement of Participation. Provided an Employee
selected to participate in the Plan has met all enrollment requirements set
forth in this Plan and required by the Committee, including returning all
required documents to the Committee within the specified time period, that
Employee shall commence participation in the Plan on the day the Employee
completes all enrollment requirements. If an Employee fails to meet all such
requirements within the period required, in accordance with Section 2.2, that
Employee shall not be eligible to participate in the Plan until the first day
of the Plan Year following the delivery to and acceptance by the Committee of
the required documents.
2.4 Termination of Participation and/or Deferrals. If the Committee
determines that a Participant shall no longer be permitted to participate, the
Committee shall have the right, in its sole discretion, to (i) terminate any
deferral election the Participant has made for the remainder of the Plan Year
in which the Participant's membership status changes, (ii) prevent the
Participant from making future deferral elections and/or (iii) immediately
distribute the Participant's then vested Account Balance as a Termination
Benefit and terminate the Participant's participation in the Plan.
ARTICLE 3
DEFERRAL COMMITMENTS/COMPANY MATCHING/CREDITINQ/TAXES
3.1 Restoration Deferrals. For each Plan Year in which a Participant has
elected to defer the maximum amount which is permissible under the terms of
the 401(k) Plan and the Code, such Participant may elect to defer an
additional Restoration Deferral Amount, in a whole percentage of at least 1%,
of Base Annual Salary and/or Base Annual Bonus; provided, however, that the
total amounts deferred by the Participant pursuant to
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this Section 3.1 may not exceed 16% of the sum of his or her Base Annual
Salary and Annual Bonus prior to giving effect to the deferral elections under
this Section 3.1 and the 401(k) Plan. Subject to the elections available under
Article 4, the deferral period for all Restoration Deferral Amounts which are
eligible for an Annual Company Matching Amount under Section 3.7 hereof shall
be until Termination of Employment, unless otherwise expressly set forth in
the Plan Agreement. Subject to the elections available under Article 4, the
deferral period for any Restoration Deferral Amounts which are not eligible
for an Annual Company Matching Amount under Section 3.7 hereof shall be the
period expressly set forth in the Plan Agreement and/or Election Form.
3.2 Minimum Non-Restoration Deferrals. For each Plan Year, a Participant may
elect to defer, as his or her Annual Deferral Amount, Base Annual Salary in a
whole percentage of at least 5% or in a stated dollar amount not less than
$5,000, and Annual Bonus in a whole percentage of at least 5% or a stated
dollar amount not less than $5,000; provided, however, that with respect to
the first Plan Year, i.e., the 1997 calendar year, such minimums shall be 1%
or a stated dollar amount not less than $1,000, rather than 5% and $5,000
respectively. If an election is made for less than stated minimum percentage
or dollar amount, or if no election is made, the amount deferred shall be
zero. Subject to the elections available under Article 4, the deferral period
for all Non-Restoration Deferrals shall be the period expressly set forth in
the Plan Agreement and/or Election Form.
3.3 Maximum Non-Restoration Deferrals.
(a) Base Annual Salary and Annual Bonus. For each Plan Year, a Participant
may elect to defer, in increments of the minimum percentages or dollar amounts
stated above, Base Annual Salary and Annual Bonus up to the following maximum
percentages for each deferral elected:
<TABLE>
<CAPTION>
MAXIMUM
DEFERRAL AMOUNT
-------- -------
<S> <C>
Base Annual Salary................................................ 50%
Annual Bonus...................................................... 80%
</TABLE>
A Participant's election to defer Annual Bonus may specify that no deferral
shall be made with respect to the amount of such Participant's Annual Bonus up
to a dollar amount specified by the Participant, and that a specified
percentage (up to 100%) shall be deferred to the extent that the Annual Bonus
exceeds such specified dollar amount.
(b) Notwithstanding the foregoing, if a Participant first becomes a
Participant after the first day of a Plan Year, (i) the maximum Annual
Deferral Amount, with respect to Base Annual Salary shall be limited to the
amount of compensation not yet earned by the Participant as of the date the
Participant submits a Plan Agreement and Election Form to the Committee for
acceptance, and (ii) no deferral of the Annual Bonus for such Plan Year shall
be permitted unless the Participant enrolls on a timely basis (as determined
under Section 2.2) by submitting a Plan Agreement and Election Form to the
Committee for acceptance on or before June 30 of such Plan Year.
Notwithstanding the foregoing, solely with respect to the 1997 Plan Year, an
enrollment election shall be deemed timely filed if it is filed on or prior to
October 30, 1997.
3.4 Election to Defer; Effect of Election Form.
(a) First Plan Year. In connection with a Participant's commencement of
participation in the Plan, the Participant shall make an irrevocable deferral
election for the Plan Year in which the Participant commences participation in
the Plan, along with such other elections as the Committee deems necessary or
desirable under the Plan. For these elections to be valid, the Election Form
must be completed and signed by the Participant, timely delivered to the
Committee (in accordance with Section 2.2 above) and accepted by the
Committee.
(b) Subsequent Plan Years. For each succeeding Plan Year, an irrevocable
deferral election for that Plan Year, and such other elections as the
Committee deems necessary or desirable under the Plan, shall be made by
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timely delivering a new completed and signed election form to the Committee,
in accordance with its rules and procedures (in accordance with Section 2.2
above) and accepted by the Committee. If no such Election Form is timely
delivered for a Plan Year, then the Participant shall be deemed elected an
Annual Deferral Amount of zero.
(c) Cancellation of Election. Notwithstanding subsections (a) and (b), a
Participant may cancel his or her Election Form at any time during the Plan
Year. If such cancellation is delivered to the Committee on or before June 30
of a Plan Year, then deferrals from the Participant's Base Salary shall cease
as soon as administratively feasible following the delivery of the
cancellation, and no deferral of the Participant's Annual Bonus for such Plan
Year shall be made. If such cancellation is delivered to the Committee on or
after July 1 of a Plan Year, then deferrals from the Participant's Base Salary
shall cease as soon as administratively feasible following the delivery of the
cancellation, but deferral of the Participant's Annual Bonus for such Plan
Year shall be made as set forth in the Participant's Election Form
notwithstanding the cancellation. If a Participant cancels his or her Election
Form, then the Participant shall not be entitled to complete a new Election
Form for the Plan Year in which such cancellation occurred or the immediate
subsequent Plan Year. Accordingly, no further deferral shall be allowed for
the Plan Year in which such cancellation occurred, and no deferral shall be
allowed for the immediately subsequent Plan Year.
3.5 Withholding of Annual Deferral Amounts. For each Plan Year, the Base
Annual Salary portion of the Annual Deferral Amount shall be withheld from
each regularly scheduled Base Annual Salary payroll in equal amounts, as
adjusted from time to time for increases and decreases in Base Annual Salary.
The Annual Bonus portion of the Annual Deferral Amount shall be withheld at
the time the Annual Bonus is or otherwise would be paid to the Participant,
whether or not this occurs during the Plan Year itself.
3.6 Annual Company Contribution Amount. For each Plan Year, an Employer, in
its sole discretion, may, but is not required to, credit any amount it desires
to any Participant's Company Contribution Account under this Plan, which
amount shall be for that Participant the Annual Company Contribution Amount
for that Plan Year. The amount so credited to a Participant may be smaller or
larger than the amount credited to any other Participant, and the amount
credited to any Participant for a Plan Year may be zero, even though one or
more other Participants receive an Annual Company Contribution Amount for that
Plan Year. The Annual Company Contribution Amount, if any, shall be credited
as of the day selected by the Committee, in its sole discretion. The Committee
may announce a separate vesting schedule or other separate rules concerning
vesting to be applicable to the Annual Company Contribution Amount for any
Plan Year or Plan Years; the announcement of such separate vesting schedule or
rules shall be made on or prior to the date the Annual Company Contribution
Amount for a Plan Year is announced. Subject to the elections available under
Article 4, the deferral period for all Annual Company Contribution Amounts
shall be until Termination of Employment, unless otherwise expressly set forth
in the Plan Agreement.
3.7 Annual Company Matching Amount. A Participant's Annual Company Matching
Amount for any Plan Year shall be equal to 100% of the Participant's
Restoration Deferral Amount for such Plan Year; provided, however, that the
sum of such Annual Company Matching Amount and any Employer matching
contributions under the 401(k) Plan may not exceed an amount equal to 4% of
the sum of the Participant's Base Annual Salary and Annual Bonus. The Annual
Company Matching Amount shall be credited from time to time during the Plan
Year as of the dates the related amounts deferred are withheld from
compensation. Subject to the elections available under Article 4, the deferral
period for all Annual Company Matching Amounts shall be until Termination of
Employment, unless otherwise expressly set forth in the Plan Agreement.
3.8 Vesting. A Participant shall at all times be 100% vested in his or her
Deferral Account, Company Matching Contribution Account and Company
Contribution Account, except as set forth in any announcement under Section
3.6 with respect to an Annual Company Contribution Amount.
3.9 Crediting/Debiting of Account Balances. In accordance with, and subject
to, the rules and procedures that are established from time to time by the
Committee, in its sole discretion, amounts shall be credited to a
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Participant's Account Balance, at rates set from time to time in the sole
discretion of the Committee. Notwithstanding the foregoing, in no event shall
the rate credited to a Participant's Account Balance be less than 100% of
Moody's Corporate Bond Index Rate, determined as of the first business day of
the Plan Year. Without limiting the foregoing, a Participant's Account Balance
shall at all times be a bookkeeping entry only and shall not represent any
investment made on his or her behalf by the Company or the Trust (if any); the
Participant shall at all times remain an unsecured creditor of the Company.
3.10 FICA and Other Taxes.
(a) Annual Deferral Amounts. For each Plan Year in which an Annual Deferral
Amount is being withheld from a Participant, the Participant's Employer(s)
shall withhold from that portion of the Participant's Base Annual Salary and
Bonus that is not being deferred, in a manner determined by the Employer(s),
the Participant's share of FICA and other employment taxes on such Annual
Deferral Amount. If necessary, the Committee may reduce the Annual Deferral
Amount in order to comply with this Section 3.10.
(b) Company Matching Amounts. For each Plan Year in which a Participant is
credited with an Annual Company Matching Amount, the Participant's Employer(s)
shall withhold from the Participant's Base Annual Salary and/or Bonus that is
not deferred, in a manner determined by the Employer(s), the Participant's
share of FICA and other employment taxes. If necessary, the Committee may
reduce the Participant's Company Matching Account in order to comply with this
Section 3.10.
3.11 Taxation of Distributions. The Participant's Employer(s), or the
trustee of the Trust, if any, shall withhold from any payments made to a
Participant under this Plan all federal, state and local income, employment
and other taxes required to be withheld by the Employer(s), or the trustee of
the Trust, if any, in connection with such payments, in amounts and in a
manner to be determined in the sole discretion of the Employer(s) and the
trustee of the Trust, if any.
ARTICLE 4
UNFORESEEABLE FINANCIAL EMERGENCIES; WITHDRAWAL ELECTION
4.1 Withdrawal Payout/Suspensions for Unforeseeable Financial
Emergencies. If the Participant experiences an Unforeseeable Financial
Emergency, the Participant may petition the Committee to (i) suspend any
deferrals required to be made by a Participant and/or (ii) receive a partial
or full payout from the Plan. The payout shall not exceed the lesser of the
Participant's Account Balance, calculated as if such Participant were
receiving a Termination Benefit, or the amount reasonably needed to satisfy
the Unforeseeable Financial Emergency. If, subject to the sole discretion of
the Committee, the petition for a suspension and/or payout is approved,
suspension shall take effect upon the date of approval and any payout shall be
made in a lump sum within 90 days of the date of approval. If a Participant's
petition under this section is approved, then the Participant shall not be
entitled to complete a new Election Form for the Plan Year in which the payout
to the Participant occurs or the immediate subsequent Plan Year. Accordingly,
no further deferral shall be allowed for the Plan Year in which such payout
occurred, and no deferral shall be allowed for the immediately subsequent Plan
Year. The payment of any amount under this Section 4.1 shall not be subject to
the Deduction Limitation.
4.2 Early Withdrawal. A Participant (or, after a Participant's death, his or
her Beneficiary) may elect, at any time, to withdraw any or all of his or her
Account Balance (other than amounts attributable to that portion of the
Restoration Deferrals described in Section 3.1 which are eligible for an
Annual Company Matching Amount), calculated as if there had occurred a
Termination of Employment as of the day of the election, less a withdrawal
penalty equal to 10% of such amount (the net amount shall be referred to as
the "Withdrawal Amount"). This election can be made at any time, before or
after Retirement, Disability, death or Termination of Employment, and whether
or not the Participant (or Beneficiary) is in the process of being paid
pursuant to an installment payment schedule. If made before Retirement,
Disability or death, a Participant's Withdrawal Amount shall be
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his or her Account Balance (or the applicable portion thereof) calculated as
if there had occurred a Termination of Employment as of the day of the
election. The Participant (or his or her Beneficiary) shall make this election
by giving the Committee advance written notice of the election in a form
determined from time to time by the Committee. The Participant (or his or her
Beneficiary) shall be paid the Withdrawal Amount within 90 days of his or her
election. Once the Withdrawal Amount is paid, then deferrals from the
Participant's Base Salary shall cease as soon as administratively feasible.
The Participant shall not be entitled to complete a new Election Form for the
Plan Year in which such withdrawal occurs, or the immediate subsequent Plan
Year. Accordingly, no further deferral shall be allowed for the Plan Year in
which such withdrawal occurred, and no deferral shall be allowed for the
immediately subsequent Plan Year. The payment of any amount under this Section
4.2 shall be subject to the Deduction Limitation.
ARTICLE 5
TERMINATION BENEFIT; LAYOFF BENEFIT
5.1 Termination Benefit. Subject to the Deduction Limitation, the
Participant shall receive a Termination Benefit, which shall be equal to the
Participant's vested Account Balance if a Participant experiences a
Termination of Employment.
5.2 Payment of Termination Benefit. The Termination Benefit shall be paid in
two installments. The first such installment shall be in an amount equal to
50% of the Participant's vested Account Balance at the time of his Termination
of Employment and shall be paid as soon as practicable to the Participant or
to his or her Beneficiary if the Participant is not then living. The second
installment shall be an amount equal to the remaining vested portion of the
Participant's Account Balance and shall be paid to the Participant (or to the
Participant's Beneficiary, if the Participant is not then living) as soon as
administratively practicable after the January 1 immediately following the
Participant's Termination of Employment. Any payment made shall be subject to
the Deduction Limitation.
ARTICLE 6
DISABILITY WAIVER
6.1 Waiver of Deferral. A Participant who is determined by the Committee to
be suffering from a Disability shall be excused from fulfilling that portion
of the Annual Deferral Amount commitment that would otherwise have been
withheld from a Participant's Base Annual Salary and Annual Bonus for the Plan
Year during which the Participant first suffers a Disability. During the
period of Disability, the Participant shall not be allowed to make any
additional deferral elections, but will continue to be considered a
Participant for all other purposes of this Plan.
6.2 Return to Work. If a Participant returns to employment with an Employer,
after a Disability ceases, the Participant may elect to defer an Annual
Deferral Amount for the next Plan Year following his or her return to
employment provided he or she continues to be eligible to participate in the
Plan.
ARTICLE 7
BENEFICIARY DESIGNATION
7.1 Beneficiary. Each Participant shall have the right, at any time, to
designate his or her Beneficiary(ies) (both primary as well as contingent) to
receive any benefits payable under the Plan to a Beneficiary upon the death of
a Participant. The Beneficiary designated under this Plan may be the same as
or different from the Beneficiary designation under any other plan of an
Employer in which the Participant participates.
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7.2 Beneficiary Designation; Change. A Participant shall designate his or
her Beneficiary by completing and signing the Beneficiary Designation Form,
and returning it to the Committee or its designated agent. A Participant shall
have the right to change a Beneficiary by completing, signing and otherwise
complying with the terms of the Beneficiary Designation Form and the
Committee's rules and procedures, as in effect from time to time. Upon the
acceptance by the Committee of a new Beneficiary Designation Form, all
Beneficiary designations previously filed shall be canceled. The Committee
shall rely on the last Beneficiary Designation Form filed by the Participant
and accepted by the Committee prior to his or her death.
7.3 Acknowledgment. No designation or change in designation of a Beneficiary
shall be effective until received and acknowledged in writing by the Committee
or its designated agent.
7.4 No Beneficiary Designation. If a Participant fails to designate a
Beneficiary as provided in Sections 7.1, 7.2 and 7.3 above or, if all
designated Beneficiaries predecease the Participant or die prior to complete
distribution of the Participant's benefits, then the Participant's designated
Beneficiary shall be deemed to be his or her surviving spouse. If the
Participant has no surviving spouse, the benefits remaining under the Plan to
be paid to a Beneficiary shall be payable to the executor or personal
representative of the Participant's estate.
7.5 Doubt as to Beneficiary. If the Committee has any doubt as to the proper
Beneficiary to receive payments pursuant to this Plan, the Committee shall
have the right, exercisable in its discretion, to cause the Participant's
Employer to withhold such payments until this matter is resolved to the
Committee's satisfaction.
7.6 Discharge of Obligations. The payment of benefits under the Plan to a
Beneficiary shall fully and completely discharge all Employers and the
Committee from all further obligations under this Plan with respect to the
Participant, and that Participant's Plan Agreement shall terminate upon such
full payment of benefits.
ARTICLE 8
LEAVE OF ABSENCE
8.1 Paid Leave of Absence. If a Participant is authorized by the
Participant's Employer for any reason to take a paid leave of absence from the
employment of the Employer, the Participant shall continue to be considered
employed by the Employer and the Annual Deferral Amount shall continue to be
withheld during such paid leave of absence in accordance with Section 3.4.
8.2 Unpaid Leave of Absence. If a Participant is authorized by the
Participant's Employer for any reason to take an unpaid leave of absence from
the employment of the Employer, the Participant shall continue to be
considered employed by the Employer and the Participant shall be excused from
making deferrals until the earlier of the date the leave of absence expires or
the Participant returns to a paid employment status. Upon such expiration or
return, deferrals shall resume for the remaining portion of the Plan Year in
which the expiration or return occurs, based on the deferral election, if any,
made for that Plan Year. If no election was made for that Plan Year, no
deferral shall be withheld.
ARTICLE 9
TERMINATION, AMENDMENT OR MODIFICATION
9.1 Termination. Although each Employer anticipates that it will continue
the Plan for an indefinite period of time, there is no guarantee that any
Employer will continue the Plan or will not terminate the Plan at any time in
the future. Accordingly, except as otherwise provided in this Section 9.1,
each Employer reserves the right to discontinue its sponsorship of the Plan
and/or to terminate the Plan at any time with respect to any or all of its
participating Employees by action of its board of directors. Upon the
termination of the Plan with respect to any Employer, the Plan Agreements of
the affected Participants who are employed by that Employer shall terminate
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and their vested Account Balances, determined as if they had experienced a
Termination of Employment on the date of Plan termination. The termination of
the Plan shall not adversely affect any Participant or Beneficiary who has
become entitled to the payment of any benefits under the Plan as of the date
of termination; provided, however, that the Employer shall have the right to
accelerate installment payments without a premium or prepayment penalty by
paying the Account Balance in a lump sum.
9.2 Amendment. Except as otherwise provided in this Section 9.2, the Company
may, at any time, amend or modify the Plan in whole or in part by the action
of the Board; provided, however, that no amendment or modification shall be
effective to decrease or restrict the value of a Participant's Account Balance
in existence at the time the amendment or modification is made, calculated as
if the Participant had experienced Termination of Employment as of the
effective date of the amendment or modification. The amendment or modification
of the Plan shall not affect any Participant or Beneficiary who has become
entitled to the payment of benefits under the Plan as of the date of the
amendment or modification; provided, however, that the Employer shall have the
right to accelerate installment payments by paying the vested Account Balance
in a lump sum.
9.3 Plan Agreement. Despite the provisions of Sections 9.1 and 9.2, if a
Participant's Plan Agreement contains benefits or limitations that are not in
this Plan document, the Employer may only amend or terminate such provisions
with the consent of the Participant.
9.4 Effect of Payment. The full payment of the benefit under Articles 4 or 5
of the Plan shall completely discharge all obligations to a Participant and
his or her designated Beneficiaries under this Plan and the Participant's Plan
Agreement shall terminate.
ARTICLE 10
ADMINISTRATION
10.1 Committee Duties. This Plan shall be administered by the Company's
Compensation Committee. Members of the Committee may be Participants under
this Plan. The Committee shall also have the discretion and authority to (i)
make, amend, interpret, and enforce all appropriate rules and regulations for
the administration of this Plan and (ii) decide or resolve any and all
questions including interpretations of this Plan and eligibility for benefits
hereunder, as may arise in connection with the Plan. Any individual serving on
the Committee who is a Participant shall not vote or act on any matter
relating solely to himself or herself. When making a determination or
calculation, the Committee shall be entitled to rely on information furnished
by a Participant or the Company.
10.2 Delegation. In the administration of this Plan, the Committee may, from
time to time, employ agents (who may be Participants) and delegate to them
such duties as it sees fit (including exercise, on behalf of the Committee,
and decision, including discretionary decisions, reserved to the Committee
under this Plan or under law) and may from time to time consult with counsel
who may be counsel to any Employer. Unless the Committee provides otherwise,
persons to whom duties have been delegated may themselves delegate such duties
to other persons.
10.3 Binding Effect of Decisions. The decision or action of the Committee
with respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the rules and
regulations promulgated hereunder shall be final and conclusive and binding
upon all persons having any interest in the Plan.
10.4 Indemnity of Committee. All Employers shall indemnify and hold harmless
the members of the Committee, and any Employee to whom the duties of the
Committee may be delegated, against any and all claims, losses, damages,
expenses or liabilities arising from any action or failure to act with respect
to this Plan, except in the case of willful misconduct by the Committee or any
of its members or any such Employee.
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10.5 Employer Information. To enable the Committee to perform its functions,
each Employer shall supply full and timely information to the Committee on all
matters relating to the compensation of its Participants, the date and
circumstances of the Termination of Employment of its Participants, and such
other pertinent information as the Committee may reasonably require.
ARTICLE 11
OTHER BENEFITS AND AGREEMENTS
The benefits provided for a Participant and Participant's Beneficiary under
the Plan are in addition to any other benefits available to such Participant
under any other plan or program for employees of the Participant's Employer.
The Plan shall supplement and shall not supersede, modify or amend any other
such plan or program except as may otherwise be expressly provided.
ARTICLE 12
TRUST
12.1 Establishment of Trust. The Company may establish a Trust, and each
Employer may at least annually transfer over to the Trust such assets as the
Employer determines, in its sole discretion, are necessary to provide, on a
present value basis, for its respective future liabilities created with
respect to the Annual Deferral Amounts, Annual Company Contribution Amounts,
and Company Matching Amounts for such Employer's Participants for all periods
prior to the transfer, as well as any debits and credits to the Participants'
Account Balances for all periods prior to the transfer, taking into
consideration the value of the assets in the trust at the time of the
transfer.
12.2 Interrelationship of the Plan and the Trust. The provisions of the Plan
and the Plan Agreement shall govern the rights of a Participant to receive
distributions pursuant to the Plan. The provisions of the Trust shall govern
the rights of the Employers, Participants and the creditors of the Employers
to the assets transferred to the Trust. Each Employer shall at all times
remain liable to carry out its obligations under the Plan.
12.3 Distributions From the Trust. Each Employer's obligations under the
Plan may be satisfied with Trust assets distributed pursuant to the terms of
the Trust, and any such distribution shall reduce the Employer's obligations
under this Plan.
12.4 Investment of Trust Assets. The trustee of the Trust, if any, shall be
authorized, upon written instructions received from the Committee or
investment manager appointed by the Committee, to invest and reinvest the
assets of the Trust in accordance with the applicable Trust Agreement,
including the disposition of stock and reinvestment of the proceeds in one or
more investment vehicles designated by the Committee.
ARTICLE 13
MISCELLANEOUS
13.1 Status of Plan. The Plan is intended to be a plan that is not qualified
within the meaning of Code Section 401(a) and that "is unfunded and is
maintained by an employer primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees"
within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1). The Plan
shall be administered and interpreted to the extent possible in a manner
consistent with that intent.
13.2 Unsecured General Creditor. Participants and their Beneficiaries,
heirs, successors and assigns shall have no legal or equitable rights,
interests or claims in any property or assets of an Employer. For purposes of
the payment of benefits under this Plan, any and all of an Employer's assets
shall be, and remain, the general,
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unpledged unrestricted assets of the Employer. An Employer's obligation under
the Plan shall be merely that of an unfunded and unsecured promise to pay
money in the future.
13.3 Employer's Liability. An Employer's liability for the payment of
benefits shall be defined only by the Plan and the Plan Agreement, as entered
into between the Employer and a Participant. An Employer shall have no
obligation to a Participant under the Plan except as expressly provided in the
Plan and his or her Plan Agreement.
13.4 Nonassignability. Neither a Participant nor any other person shall have
any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or
otherwise encumber, transfer, hypothecate, alienate or convey in advance of
actual receipt, the amounts, if any, payable hereunder, or any part thereof,
which are, and all rights to which are expressly declared to be, unassignable
and nontransferable. No part of the amounts payable shall, prior to actual
payment, be subject to seizure, attachment, garnishment or sequestration for
the payment of any debts, judgments, alimony or separate maintenance owed by a
Participant or any other person, be transferable by operation of law in the
event of a Participant's or any other person's bankruptcy or insolvency.
13.5 Not a Contract of Employment. The terms and conditions of this Plan
shall not be deemed to constitute a contract of employment between any
Employer and the Participant. Such employment is hereby acknowledged to be an
"at will" employment relationship that can be terminated at any time for any
reason, or no reason, with or without cause, and with or without notice,
unless expressly provided in a written employment agreement. Nothing in this
Plan shall be deemed to give a Participant the right to be retained in the
service of any Employer, either as an Employee or to interfere with the right
of any Employer to discipline or discharge the Participant at any time.
13.6 Furnishing Information. A Participant or his or her Beneficiary will
cooperate with the Committee by furnishing any and all information requested
by the Committee and take such other actions as may be requested in order to
facilitate the administration of the Plan and the payments of benefits
hereunder, including but not limited to taking such physical examinations as
the Committee may deem necessary. Failure to cooperate in good faith by a
Participant or his or her Beneficiary shall absolve the Company of any and all
liability to such Participant or Beneficiary with respect to the Plan.
13.7 Terms. Whenever any words are used herein in the masculine, they shall
be construed as though they were in the feminine in all cases where they would
so apply; and whenever any words are used herein in the singular or in the
plural, they shall be construed as though they were used in the plural or the
singular, as the case may be, in all cases where they would so apply.
13.8 Captions. The captions of the articles, sections and paragraphs of this
Plan are for convenience only and shall not control or affect the meaning or
construction of any of its provisions.
13.9 Governing Law. The provisions of this Plan shall be construed and
interpreted according to federal law, except to the extent that federal law is
not preempted, this Plan shall be construed and interpreted according to the
laws of the State of Connecticut without regard to its conflicts of laws
principles.
13.10 Notice. Any notice or filing required or permitted to be given to the
Committee under this Plan shall be sufficient if in writing and hand-
delivered, or sent by registered or certified mail, to the address below:
Compensation Committee
PanAmSat Corporation
One Pickwick Plaza
Greenwich, CT 06830
Such notice shall be deemed given as of the date of delivery or, if delivery
is made by mail, as of the date shown on the postmark on the receipt for
registration or certification.
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Any notice or filing required or permitted to be given to a Participant
under this Plan shall be sufficient if in writing and hand-delivered, or sent
by mail, to the last known address of the Participant.
13.11 Successors. The provisions of this Plan shall bind and inure to the
benefit of the Participant's Employer and its successors and assigns and the
Participant and the Participant's designated Beneficiaries.
13.12 Validity. In case any provision of this Plan shall be illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as if
such illegal or invalid provision had never been inserted herein.
13.13 Incompetent. If the Committee determines in its discretion that a
benefit under this Plan is to be paid to a minor, a person declared
incompetent or to a person incapable of handling the disposition of that
person's property, the Committee may direct payment of such benefit to the
guardian, legal representative or person having the care and custody of such
minor, incompetent or incapable person. The Committee may require proof of
minority, incompetence, incapacity or guardianship, as it may deem appropriate
prior to distribution of the benefit. Any payment of a benefit shall be a
payment for the account of the Participant and the Participant's Beneficiary,
as the case may be, and shall be a complete discharge of any liability under
the Plan for such payment amount.
13.14 Court Order. The Committee is authorized to make any payments directed
by court order in any action in which the Plan or the Committee has been named
as a party. In addition, if a court determines that a spouse or former spouse
of a Participant has an interest in the Participant's benefits under the Plan
in connection with a property settlement or otherwise, the Committee, in its
sole discretion, shall have the right, notwithstanding any election made by a
Participant, to immediately distribute the spouse's or former spouse's
interest in the Participant's benefits under the Plan to that spouse or former
spouse.
13.15 Distribution in the Event of Taxation.
(a) In General. If, for any reason, all or any portion of a Participant's
benefits under this Plan becomes taxable to the Participant prior to receipt,
a Participant may petition the Committee for a distribution of that portion of
his or her benefit that has become taxable. Upon the grant of such a petition,
which grant shall not be unreasonably withheld, a Participant's Employer shall
distribute to the Participant immediately available funds in an amount equal
to the taxable portion of his or her benefit (which amount shall not exceed a
Participant's unpaid Account Balance under the Plan). If the petition is
granted, the tax liability distribution shall be made in a lump sum within 90
days of the date when the Participant's petition is granted. Such a
distribution shall affect and reduce the benefits to be paid under this Plan.
(b) Trust. If the Trust, if any, terminates and benefits are distributed
from the Trust to a Participant in accordance with such termination, the
Participant's benefits under this Plan shall be reduced to the extent of such
distributions.
13.16 Insurance. The Employers, on their own behalf or on behalf of the
trustee of the Trust, if any, and, in their sole discretion, may apply for and
procure insurance on the life of the Participant, in such amounts and in such
forms as the Trust may choose. The Employers or the trustee of the Trust, if
any, as the case may be, shall be the sole owner and beneficiary of any such
insurance. The Participant shall have no interest whatsoever in any such
policy or policies, and at the request of the Employers shall submit to
medical examinations and supply such information and execute such documents as
may be required by the insurance company or companies to whom the Employers
have applied for insurance. If a Participant fails or refuses to comply with
the preceding sentence, he or she shall cease to be a participant hereunder
and shall immediately forfeit his or her entire Company Contributions Account
and Company Matching Account; provided, however, that Participants who submit
to such medical examinations and otherwise supply information reasonably
requested but are denied insurance coverage shall not forfeit any Account
Balances nor cease Plan participation.
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1396-PS-98
<PAGE>
PANAMSAT CORPORATION 1998 ANNUAL
MEETING OF
STOCKHOLDERS
THE ST. REGIS HOTEL
2 EAST 55TH STREET
NEW YORK, NEW YORK
MONDAY, MAY 4, 1998
9:30 A.M.
DETACH HERE
PROXY
PanAmSat Corporation
PROXY/VOTING INSTRUCTION CARD
Proxy Solicited on Behalf of the Board of Directors of PanAmSat Corporation for
the Annual Meeting on May 4, 1998
The undersigned hereby constitutes and appoints James W. Cuminale
and Kenneth N. Heintz and each of them, true and lawful agents and proxies with
full power of substitution in each, to represent and to vote, as designated
below, all of the shares of common stock of PanAmSat Corporation held of record
by the undersigned on March 16, 1998, at the Annual Meeting of Stockholders to
be held at The St. Regis Hotel at 2 East 55th Street in New York, New York, on
Monday, May 4, 1998, at 9:30 a.m. (local time) and at any adjournments thereof,
on all matters coming before said meeting. IF NO DIRECTION AS TO THE MANNER OF
VOTING THE PROXY IS MADE, THE PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS.
You are encouraged to specify your choices by marking the
appropriate boxes (SEE REVERSE SIDE) but you need not mark any boxes if you wish
to vote in accordance with the Board of Directors' recommendations. However, the
Proxies cannot vote your shares unless you SIGN AND RETURN THIS CARD.
-------------------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
<PAGE>
Your vote is important to us!
Please follow these steps to ensure that your proxy is properly
executed and returned in time to be counted:
1. Mark your vote for Proposals 1 through 5 in one of the three boxes
to the right of each Proposal.
2. Sign below in the space provided, exactly as your name appears on
the form. Joint owners should each sign. Also enter the date.
3. Tear off at perforation and mail the completed card with
signature(s) in the enclosed reply envelope to:
PanAmSat Corporation
Proxy Services
Boston EquiServe
P.O. Box 9381
Boston, MA 02205-9381
DETACH HERE
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY
YOU. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR EACH OF THE
PROPOSALS. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
____________________________________________________________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE PROPOSALS.
____________________________________________________________________________
FOR WITHHOLD
ALL FROM ALL
NOMINEES NOMINEES
1. Election of Directors [_] [_]
Nominees: Ms. Austin, and Messrs. Smith,
Costello, Dorfman, Hightower, Hoak,
Landman, Noski and Wright
[_] FOR, EXCEPT individual nominee(s)
whose name(s) is written below:_________
FOR AGAINST ABSTAIN
2. Elect Deloitte & Touche LLP independent [_] [_] [_]
accountants for 1998.
3. To approve the adoption of the PanAmSat [_] [_] [_]
Corporation Long-Term Stock Incentive Plan
established in 1997.
4. To approve the adoption of the PanAmSat [_] [_] [_]
Corporation Annual Incentive Plan.
5. To approve the adoption of the PanAmSat [_] [_] [_]
Corporation Restoration and Deferred
Compensation Plan.
MARK HERE FOR [_]
ADDRESS CHANGE
AND NOTE AT LEFT
SIGNATURE: Date: SIGNATURE: Date:
____________ ________ ___________ ____________
