SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
COMSAT CORPORATION
__________________________________________________________________
(Name of Registrant as Specified in Its Charter)
COMSAT CORPORATION
__________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] 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:
__________________________________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
__________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
__________________________________________________________________
(5) Filing fee:
__________________________________________________________________
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COMSAT
CORPORATION
_________________________________________________________________
6560 Rock Spring Drive
Bethesda, MD 20817
Telephone 301 214 3000
Fax 301 214 7100
Telex 197800
April 6, 1994
Dear Shareholder:
The 1994 Annual Meeting of Shareholders will be held at
9:30 a.m. on Friday, May 20, 1994, at COMSAT's new headquarters
building in Bethesda, Maryland. The matters on the meeting
agenda are described on the following pages.
We note with sadness the death of Roscoe Robinson, Jr., in
July 1993. General Robinson had served with distinction as a
COMSAT director for over five years. We miss his gentle and
sagacious counsel in the deliberations of the Board. He was a
strong supporter of the COMSAT-Jefferson Junior High School
Educational Alliance, and in his memory we established the
General Roscoe Robinson college scholarship, an annual four-year
award for a graduate of that District of Columbia junior high
school.
If you are a shareholder of record, we urge that you send in
your proxy promptly for the Annual Meeting whether or not you
plan to attend. Giving your proxy will not affect your right to
vote in person if you attend. If you wish to give a proxy to
someone other than the persons named on the enclosed proxy form,
you may cross out their names and insert the name of some other
person who will be at the meeting. The signed proxy form then
should be given to that person for his or her use at the meeting.
If your shares are held in the name of a broker and you wish to
attend the meeting, you should obtain a letter of identification
from your broker and bring it to the meeting. In order to vote
personally shares held in the name of your broker, you also must
obtain from the broker a proxy issued to you.
A map and directions by car and the Washington Metro to
COMSAT's headquarters in Bethesda appear at the end of the proxy
statement.
Sincerely,
Melvin R. Laird Bruce L. Crockett
Chairman of the Board President and Chief
Executive Officer
YOUR PROXY IS IMPORTANT ... PLEASE VOTE PROMPTLY
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of
COMSAT CORPORATION:
The 1994 Annual Meeting of Shareholders of COMSAT
Corporation will be held in the Charyk Conference Center, COMSAT
Headquarters, 6560 Rock Spring Drive, Bethesda, Maryland, on May
20, 1994, at 9:30 a.m., Eastern Daylight Time, for the following
purposes:
1. election of 12 directors;
2. action on a proposal to amend the 1990 Key Employee Stock
Plan to provide that restricted stock awards under the plan
be awarded as performance-based compensation;
3. appointment of independent public accountants;
4. action on a shareholder proposal to require the reporting of
governmental service during the past five years of certain
of the Corporation's directors, officers and consultants;
and
5. action on such other matters as may properly come before the
meeting or any reconvened session thereof.
The Board of Directors has fixed the close of business on
March 31, 1994, as the record date for the determination of
shareholders entitled to notice of and to vote at the meeting and
at any reconvened session thereof.
Your proxy is important to ensure a quorum at the meeting.
Even if you hold only a few shares, and whether or not you expect
to be present, you are urgently requested to date, sign and mail
the enclosed proxy in the postage-paid envelope that is provided.
The proxy may be revoked by you at any time, and the giving of
your proxy will not affect your right to vote in person if you
attend the meeting.
This notice is given pursuant to direction of the Board of
Directors.
Jerome W. Breslow
Vice President and Secretary
Bethesda, Maryland
April 6, 1994
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COMSAT CORPORATION
6560 Rock Spring Drive
Bethesda, Maryland 20817
Telephone: (301) 214-3000
PROXY STATEMENT
This Proxy Statement is provided by the Board of Directors
of COMSAT Corporation (the Corporation or COMSAT) in connection
with its solicitation of proxies for the 1994 Annual Meeting of
Shareholders. The Proxy Statement is first being mailed on or
about April 6, 1994.
Shareholders of record of the Corporation's Common Stock at
the close of business on March 31, 1994, are entitled to vote at
the meeting in person or by proxy. Each share is entitled to one
vote. Shareholders may cumulate votes in the election of
directors. The number of shares printed on the accompanying
proxy card includes, when applicable, shares held in the
Corporation's INVESTORS Plus Plan (formerly, the Dividend
Reinvestment Plan), Savings and Profit-Sharing Plan, and 1983
Employee Stock Purchase Plan.
If a proxy in the accompanying form is properly executed and
returned, the shares represented by the proxy will be voted as
the shareholder specifies. A shareholder may revoke a proxy at
any time before it is exercised by submitting a written
revocation, submitting a later-dated proxy, or voting in person
at the meeting.
Abstentions and broker non-votes will not be counted for
purposes of determining whether any given proposal has been
approved by the shareholders. Accordingly, abstentions and
broker non-votes will not affect the votes on any of the
proposals, all of which require for approval the affirmative vote
of a majority of the shares represented and entitled to vote at
the meeting.
OWNERSHIP OF COMMON STOCK
As of March 31, 1994, the record date, approximately
40,360,000 shares of Common Stock were outstanding, of which
20,888 were Series II shares (held by communications common
carriers authorized to hold shares by the Federal Communications
Commission) and approximately 40,339,112 were Series I shares
(held by other persons).
To the knowledge of the Corporation, based upon Schedules
13G or 13D filed with the Securities and Exchange Commission (the
SEC), the following persons were the beneficial owners of more
than five percent of the Corporation's Common Stock as of
December 31, 1993.
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
- -------------------- --------------------------------- --------
FMR Corp. Total Shares: 3,787,530 9.4%
82 Devonshire Street Sole Voting Power: 92,700
Boston, Massachusetts Sole Investment Power: 3,772,030
Shared Voting and
Investment Power: 15,500
Provident Investment Total Shares: 2,610,000 6.5%
Counsel Shared Voting Power: 1,961,100
300 North Lake Avenue Shared Investment
Pasadena, California Power: 2,610,000
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Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
- -------------------- --------------------------------- --------
State of Michigan Total Shares: 2,275,490 5.7%
State Treasurer Sole Voting and
Treasury Building Investment Power: 2,275,490
P.O. Box 15128
Lansing, Michigan
The Travelers Inc. Total Shares: 2,240,669 5.6%
65 East 55th Street Sole Voting Power: 713,915
New York, New York Sole Investment Power: 2,075,750
Shared Voting Power: 87,800
Shared Investment Power: 150,679
There are certain limitations on ownership of the
Corporation's Common Stock that are intended to ensure that the
Common Stock is widely held. The Communications Satellite Act of
1962, as amended (the Satellite Act), provides that no
stockholder (other than communications common carriers authorized
to hold shares by the Federal Communications Commission), or any
syndicate or affiliated group of such stockholders, may own more
than 10 percent of the aggregate number of outstanding shares of
Common Stock. The Corporation's Articles of Incorporation
authorize the Board to establish an ownership limitation below
the 10 percent statutory maximum. Pursuant to this authority,
the Board has set the ownership limitation at 10 percent and has
also established a voting limitation of 5 percent pursuant to
which shares owned in excess of the 5 percent limitation, but not
in excess of the 10 percent limitation, may not be voted by the
holder but will be voted pro rata with all other shares of Common
Stock voted on any given matter. The persons listed above have
been advised by the Corporation that their ownership exceeds the
5 percent voting limitation, and that shares held in excess of 5
percent will be voted as described above.
ITEM 1. ELECTION OF DIRECTORS
Board of Directors
As provided in the Satellite Act, the Corporation's Board of
Directors consists of 15 directors, of whom 12 are elected
annually by the shareholders and three are appointed by the
President of the United States, with the advice and consent of
the United States Senate, for terms of three years or until their
successors have been appointed and qualified.
The Board met 10 times in 1993. Attendance of incumbent
directors at Board meetings and at meetings of Board committees
of which they were members in 1993 averaged approximately 91%.
All incumbent directors who were directors in 1993 attended 75%
or more of such meetings.
Voting for Directors
At the meeting 12 directors will be elected to serve until
the 1995 Annual Meeting. As provided in the Satellite Act,
because the Series II shares outstanding at the record date
constituted less than 8 percent of the total outstanding shares,
all shareholders will vote together for the election of
directors.
Subject to the voting limitation of 5 percent described
above, each shareholder may vote the number of shares held by
such shareholder for each of 12 nominees. Alternatively, the
shareholder may cumulate such votes; that is, give one nominee a
number of votes equal to the number of the shareholder's shares
multiplied by 12 or distribute such votes among any number of
nominees not exceeding 12.
The Board of Directors has authorized the management to
solicit proxies in favor of the election of the 12 nominees whose
biographical information begins on page 4. All of these nominees
currently serve as directors. Biographical information for each
of the three Presidentially appointed directors is set forth on
page 6.
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Shares represented by proxies in the accompanying form will
be voted for the 12 stated nominees unless the proxy is otherwise
marked. If any of these nominees becomes unavailable for
election, which is not currently anticipated, shares represented
by proxies in the accompanying form will be voted for a
substitute nominee designated by the proxy holders. The proxy
holders may in their discretion vote the shares cumulatively for
fewer than 12 of the nominees, if necessary or advisable.
Requirements for Nominations
The Corporation's By-laws provide that no vote may be
counted for the election of any person as a director unless (1)
such person was proposed for nomination by written notice signed
by a shareholder and mailed by registered or certified mail to
the Secretary of the Corporation not less than 10 nor more than
50 days before the date of the meeting (or is nominated at the
meeting as a substitute for a candidate who has died or become
incapacitated), and (2) such person has filed with the Secretary
a statement of his or her interests in communications common
carriers in such reasonable detail as the Board of Directors may
require. The form of such statement will be provided by the
Secretary upon written request.
A list of persons whose nominations have been duly proposed
in accordance with the By-laws will be provided to any
shareholder upon written request to the Secretary. Such list,
together with the statement of interests filed by each such
person, also may be inspected by any shareholder (1) at the
office of the Secretary, 6560 Rock Spring Drive, Bethesda,
Maryland 20817, during normal business hours from the date of
this Proxy Statement until the date of the meeting, and (2) at
the place of the meeting during the meeting.
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NOMINEES FOR ELECTION AS DIRECTORS
LUCY WILSON BENSON, 66, has been a director of various business,
educational, and nonprofit organizations since 1980. She was
Under Secretary of State for Security Assistance, Science and
Technology from 1977 to 1980. She has been a COMSAT director
since September 1987. She also is a director of General Re
Corporation, Grumman Corporation and Logistics Management
Institute, a trustee of the Alfred P. Sloan Foundation and Vice
Chairman of the Board of Trustees of Lafayette College. She also
is a director or trustee of funds of the Dreyfus Corporation.
[Picture of Ms. Benson]
EDWIN I. COLODNY, 67, has been counsel to the Washington, D. C.,
law firm of Paul, Hastings, Janofsky and Walker since September
1991. He was Chairman of USAir Group, Inc. and of its
subsidiary, USAir, Inc., a commercial airline company, from 1978
until July 1992 and remains a director of both Corporations. He
was Chief Executive Officer of USAir Group from 1983 to June 1991
and of its subsidiary from 1975 to June 1991. He has been a
COMSAT director since May 1992. He also is a director of Martin
Marietta Corporation and Esterline Technologies Corporation and a
member of the Board of Trustees of the University of Rochester.
[Picture of Mr. Colodny]
BRUCE L. CROCKETT, 50, has been President and Chief Executive
Officer and a director of COMSAT since February 1992. He was
President and Chief Operating Officer of COMSAT from April 1991
to February 1992. From February 1987 to April 1991 he served as
President, COMSAT World Systems Division. He has been an
employee of COMSAT since 1980 and has held various operational
and financial positions including Vice President and Chief
Financial Officer. He also is a director of Augat, Inc., and a
director or trustee of funds of the AIM Management Group, Inc.
[Picture of Mr. Crockett]
FREDERICK B. DENT, 71, has been Chairman of Mayfair Mills, Inc.,
a manufacturer of textiles, since November 1988; he was President
from May 1977 to November 1988. He has been a director of
Mayfair Mills, Inc. since 1977. He was United States Special
Representative for Trade Negotiations from March 1975 to January
1977 and Secretary of Commerce from February 1973 to March 1975.
He has been a COMSAT director since May 1980. He also is a
director of International Paper Company.
[Picture of Mr. Dent]
NEAL B. FREEMAN, 53, has been Chairman and Chief Executive
Officer of The Blackwell Corporation, a television production and
distribution company, since 1981. He was President of Jefferson
Communications, Inc. from 1976 to 1986. He was a Presidentially
appointed COMSAT director from November 1983 to September 1988
and has been an elected director since May 1991. He also is a
director of The Ethics and Public Policy Center.
[Picture of Mr. Freeman]
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ARTHUR HAUSPURG, 68, is a director or trustee of various business
organizations. He was Chairman of the Board and Chief Executive
Officer of Consolidated Edison Company of New York, Inc. from
September 1982 to September 1990 and remains a trustee of that
Corporation. He has been a COMSAT director since July 1987. He
also is a director or trustee of funds of Prudential Securities,
Inc.
[Picture of Mr. Hauspurg]
MELVIN R. LAIRD, 71, has been Chairman of the Board of COMSAT
since February 1992. He also is a director and has been Senior
Counsellor for National and International Affairs of The Reader's
Digest Association, Inc., a publisher of books, magazines and
recordings, since February 1974. He was Counsellor for Domestic
Affairs to the President of the United States from 1973 to 1974;
Secretary of Defense from 1969 to 1973; and a member of the House
of Representatives from Wisconsin from 1953 to 1969. He has been
a COMSAT director since September 1974. He also is a director of
IDS Mutual Fund Group, Martin Marietta Corporation, Metropolitan
Life Insurance Company, NWA (Northwest Airlines) Inc. and Science
Applications International Corp., and a member of the Public
Oversight Board (SEC Practice Section) of the American Institute
of Certified Public Accountants.
[Picture of Mr. Laird]
PETER W. LIKINS, 57, has been President of Lehigh University
since 1982. He was Provost of Columbia University from 1980 to
1982 and Professor and Dean of the Columbia University School of
Engineering and Applied Science from 1976 to 1980. He has been a
COMSAT director since September 1987. He also is a director of
Consolidated Edison Company of New York, Inc., Parker-Hannifin,
Inc. and Safeguard Scientifics, Inc.
[Picture of Dr. Likins]
HOWARD M. LOVE, 63, is a director of various business
organizations, and honorary Chairman of the Board of National
Steel Corporation. He was Chief Executive Officer of National
Intergroup, Inc. from August 1990 to April 1991. He was Chairman
and Chief Executive Officer and a director from April 1981 to
August 1990. He has been a COMSAT director since May 1988. He
also is a director of AEA Investors, BHP Petroleum and Monsanto
Company.
[Picture of Mr. Love]
ROBERT G. SCHWARTZ, 66, is a director of various business
organizations. He was Chairman of the Board, President and Chief
Executive Officer of Metropolitan Life Insurance Company from
September 1989 to March 1993. He was Chairman of the Board from
February 1983 to September 1989. He has been a COMSAT director
since May 1986. He also is a director of Lone Star Industries,
Inc., Lowe's Companies, Inc., Mobil Corporation, Potlatch
Corporation, The Reader's Digest Association, Inc., Consolidated
Edison Company of New York, Inc. and CS First Boston, Inc.
[Picture of Mr. Schwartz]
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C. J. SILAS, 61, has been Chairman and Chief Executive Officer of
Phillips Petroleum Company, an integrated petroleum and chemical
company, since May 1985. He has been a COMSAT director since May
1993. He also is a director of The Reader's Digest Association,
Inc. and Halliburton Company.
[Picture of Mr. Silas]
DOLORES D. WHARTON, 66, is Chairman and Chief Executive Officer
of The Fund for Corporate Initiatives, Inc., a private operating
foundation she founded in 1980, devoted to strengthening the role
of minorities and women in the corporate world. She has been a
COMSAT director since February 1994. She also is a director of
Gannett Co., Inc. and Kellogg Company, and a trustee of National
Public Radio, Massachusetts Institute of Technology, Fashion
Institute of Technology and the Committee for Economic
Development.
[Picture of Ms. Wharton]
PRESIDENTIALLY APPOINTED DIRECTORS
RUDY BOSCHWITZ, 63, has been Chairman of HOME VALU, Inc., a
seller of home improvement materials, since January 1978. He
founded the company in 1963, and was President from that time to
1978. He served in the U.S. Senate from December 1978 to January
1991, representing the State of Minnesota. He has been a
Presidentially appointed COMSAT director since October 1991. He
also is a director of TCF Financial Corp. and the Chicago
Mercantile Exchange. His current term will expire at the 1994
Annual Meeting.
[Picture of Senator Boschwitz]
JAMES B. EDWARDS, 66, has been President of the Medical
University of South Carolina since November 1982. He was
Secretary of Energy from 1981 to 1982 and Governor of South
Carolina from 1975 to 1979. He has been a Presidentially
appointed director of COMSAT since April 1990. He also is a
director of Brendle's Inc., Chemical Waste Management, Inc.,
Encyclopaedia Britannica, Inc., Imo Industries Inc., National
Data Corporation, Phillips Petroleum Company, SCANA Corporation,
and The South Carolina National Corporation and South Carolina
National Bank, subsidiaries of Wachovia Bank. His current term
expired at the 1993 Annual Meeting. He continues to serve in
accordance with the Satellite Act.
[Picture of Dr. Edwards]
BARRY M. GOLDWATER, 85, is a lecturer at Arizona State
University. He served in the U.S. Senate from 1953 to 1965 and
then from 1969 through January 1987. He has been a
Presidentially appointed COMSAT director since October 1989. His
current term will expire at the 1995 Annual Meeting.
[Picture of Senator Goldwater]
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OTHER INFORMATION CONCERNING DIRECTORS
Committees
The Board has five standing committees, described below.
The Committee on Audit, Corporate Responsibility and Ethics
consists of Lucy Wilson Benson (Chairman), Rudy Boschwitz, Edwin
I. Colodny, Frederick B. Dent, Neal B. Freeman, Arthur Hauspurg,
Peter W. Likins and Howard M. Love. The Committee makes
recommendations to the Board concerning the selection of
independent public accountants; reviews with the independent
accountants the scope of their audit; reviews the financial
statements with the independent accountants; reviews with the
independent accountants and the Corporation's management and
internal auditors the Corporation's accounting and audit
practices and procedures, its internal controls and its
compliance with laws and regulations; and reviews the
Corporation's policies regarding community and governmental
relations, conflicts of interest, business conduct, ethics and
other social, political and public matters, and the
administration of such policies. The Committee met 3 times
during 1993.
The Committee on Compensation and Management Development
consists of Robert G. Schwartz (Chairman), James B. Edwards, Neal
B. Freeman, Melvin R. Laird and Dolores D. Wharton. The
Committee considers and makes recommendations to the Board with
respect to programs for human resources development and
management organization and succession; approves changes in
senior executive compensation; considers and makes
recommendations to the Board with respect to compensation matters
and policies and employee benefit and incentive plans; and
exercises authority granted to it to administer such plans. The
Committee met 5 times during 1993.
The Finance Committee consists of Frederick B. Dent
(Chairman), Edwin I. Colodny, Bruce L. Crockett, Arthur Hauspurg,
Melvin R. Laird, Robert G. Schwartz and C.J. Silas. The
Committee considers and makes recommendations to the Board with
respect to the financial affairs of the Corporation, including
matters relating to capital structure and requirements, financial
performance, dividend policy, capital and expense budgets and
significant capital commitments, and such other matters as may be
referred to it by the Board, the Chairman of the Board or the
Chief Executive Officer. The Committee met 5 times during 1993.
The Nominating Committee consists of Melvin R. Laird
(Chairman), Frederick B. Dent and Robert G. Schwartz. The
Committee recommends to the Board qualified candidates for
election as directors and as Chairman of the Board. The
Committee met 6 times during 1993. It will consider candidates
recommended by shareholders, if the recommendations are submitted
in writing to the Secretary of the Corporation.
The Committee on Research and International Matters consists
of Peter W. Likins (Chairman), Lucy Wilson Benson, Rudy
Boschwitz, Bruce L. Crockett, James B. Edwards, Barry M.
Goldwater, Howard M. Love and Dolores D. Wharton. The Committee
considers and makes recommendations to the Board with respect to:
the research and development programs of the Corporation and the
relationship of such programs to the business of the Corporation;
matters relating to (i) the Corporation's international
responsibilities and activities under the Satellite Act, (ii) the
International Telecommunications Satellite Organization, (iii)
the International Maritime Satellite Organization, and (iv) the
relationships of the Corporation with other international bodies
or with foreign governments or entities; and such other matters
as may be referred to it by the Board, the Chairman of the Board
or the Chief Executive Officer. The Committee met 3 times during
1993.
Directors Compensation
Except as noted below, a director who is not an employee of
the Corporation receives: a quarterly retainer of $5,375; a fee
of $1,000 per meeting for attending each Board meeting, Board
committee meeting or meeting held pursuant to a special
assignment; and, if he or she chairs a Board committee, an
additional fee of $750 quarterly. Mr. Laird is compensated
solely on an annual basis as Chairman of the Board in the amount
of $225,000 per year. Mr. Crockett is not compensated separately
for service as a director.
Under the Directors and Executives Deferred Compensation
Plan, a non-employee director may elect to defer all or part of
his or her retainers and fees. Amounts deferred are credited
with interest and are paid out after the director's retirement
from the Board, in a lump sum or in up to 15 annual installments
beginning not later than at age 73. In the case of death, the
accumulated deferrals are paid to the director's beneficiary.
In 1991, each then-current director participating in the
Plan was given an election to receive his or her account balance
as of March 31, 1991, together with interest accumulated on such
balance to a date in the year 2000 (to the extent that such
amounts were not previously distributed), in a lump sum in the
year 2000 if he or she is then an active director or a retiree
receiving installment payments. The payment would be made to the
beneficiary of a deceased electing director if such beneficiary
is then receiving such installment payments. The lump sum
payment will be offset against the amounts otherwise payable to
the director or beneficiary under the Plan.
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In 1992, the Plan was amended to provide an additional lump
sum payment election for the additional amounts deferred under
the Plan from April 1, 1991, through March 31, 1992, together
with interest accumulated on such amounts to a date in the year
2001, with payment of the lump sum to be made in the year 2001.
A retirement plan for directors adopted in 1982 remains in
effect for directors who commenced service before 1984. This
plan provides for an annual benefit of $12,000, beginning at the
later of age 72 or the director's retirement from the Board, and
payable for the number of years equal to the director's years
(including partial years) of Board service through 1983. In
1991, each then-current director covered by the plan was given an
election to receive a lump sum payment on a date in the year 2000
if he or she survives until that date. The lump sum payment will
be equal to the present value on such date of the remaining
retirement benefits payable to the director under the plan. The
payment would be made to the beneficiary of a deceased electing
director if such beneficiary is then receiving survivor benefits
under the plan.
Under the Split Dollar Insurance Plan, the Corporation
provides to non-employee directors, through split dollar life
insurance policies, a death benefit equal to $50,000 for each
year or partial year of his or her Board service until the
benefit reaches $200,000, and then increased for each such
director (except Presidential appointees) by 5.5% for each
additional year of Board service to age 72. Such coverage
continues after retirement from the Board. For 1993, the
aggregate value of split dollar life insurance premiums paid for
the benefit of all covered directors was $254,596.
Under the Non-Employee Directors Stock Option Plan, the
Corporation grants annually in March to each non-employee
director, who was also serving on the date of the Annual Meeting
of Shareholders for the prior year, an option to purchase shares
of Common Stock. For options granted before March 16, 1990, each
option is for 2,000 shares, the exercise price per share is the
fair market value of a share of Common Stock on the date of
grant, and the option expires 10 years from the date of grant.
For options granted on or after March 16, 1990, and before March
19, 1993, each option is for 2,000 shares, the exercise price per
share is 50% of the fair market value on the date of grant, and
the option expires 15 years from the date of grant. For options
granted on or after March 19, 1993, each option is for 4,000
shares, the exercise price per share is the fair market value of
a share of Common Stock on the date of grant, and the option
expires 15 years from the date of grant. All data related to
shares of Common Stock, options to purchase shares of Common
Stock and share prices prior to June 1, 1993, have been adjusted
to reflect the two-for-one split in the Corporation's Common
Stock effective June 1, 1993.
For options granted before March 19, 1993, each option
becomes exercisable for 1,000 shares one year after the date of
grant and for the remaining 1,000 shares two years after the date
of grant. For options granted on or after March 19, 1993, each
option becomes exercisable for 2,000 shares one year after the
date of grant and for the remaining 2,000 shares two years after
the date of grant. If the director's service on the Board
terminates by reason of retirement at age 72, expiration of a
term as a Presidentially appointed director, failure to stand for
election with the Board's consent or resignation with the Board's
consent, the option becomes fully exercisable and continues in
force for the duration of its term. If such service terminates
for any other reason except death, the option terminates
immediately. If the director dies at any time before the option
terminates, the option becomes fully exercisable and continues in
force for one year after the date of death.
In 1993, options for a total of 56,000 shares of Common
Stock were granted under the Plan to non-employee directors at a
purchase price per share of $27.0313 which was the fair market
value of the Common Stock on the date of grant. In 1993, no non-
employee directors exercised options.
Executive compensation is described beginning on page 16.
Compensation Committee Interlocks and Insider Participation
There were no compensation committee interlocks or insider
participation in compensation decisions during 1993.
Robert G. Schwartz, Chairman of the Committee on
Compensation and Management Development of the Board of Directors
of the Corporation, was Chairman of the Board, President and
Chief Executive Officer of Metropolitan Life Insurance Company
(MetLife) until March 31, 1993. At the beginning of 1993,
MetLife owned $100,000,000 in aggregate principal amount of the
Corporation's 9.55% five-year notes due April 1994 and
$21,000,000 in aggregate principal amount of the Corporation's
8.95% ten-year notes due 2001. In January 1993, the Corporation
repurchased from MetLife and canceled $30,000,000 in aggregate
principal amount of the 9.55% notes.
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COMMON STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the
beneficial ownership of the Corporation's Common Stock as of
March 14, 1994, by all directors and nominees, by each of the
executive officers named in the Summary Compensation Table on
page 16, and by all directors and executive officers as a group.
Under rules of the SEC, beneficial ownership includes any shares
over which an individual has sole or shared voting power or
investment power, and also any shares that the individual has the
right to acquire within 60 days through the exercise of any stock
option or other right.
Amount and Nature of Percent of
Name Beneficial Ownership (1) Common Stock (2)
- ---- ------------------------ ----------------
Betty C. Alewine.......... 94,876(3) 0.2
Lucy Wilson Benson........ 12,800
Rudy Boschwitz............ 6,000(4)
Edwin I. Colodny.......... 3,000
Bruce L. Crockett......... 282,152(5) 0.7
Frederick B. Dent......... 13,800(6)
James B. Edwards.......... 6,000
C. Thomas Faulders, III... 56,097(7) 0.1
Neal B. Freeman........... 6,400
Barry M. Goldwater........ 6,000
Arthur Hauspurg........... 5,800
Melvin R. Laird........... 14,000
Peter W. Likins........... 9,850(8)
Howard M. Love............ 9,800(9)
Charles Lyons............. 64,567(3) 0.1
Ronald J. Mario........... 99,691(3) 0.2
Robert G. Schwartz........ 14,000
C.J. Silas................ 1,000
Dolores D. Wharton........ 1,000
All directors and executive
officers as a group
(26 persons) 844,776(10) 2.0
____________________
(1) Unless otherwise indicated, each person has sole voting and
investment powers over the shares listed. Each number in
the table has been rounded down to the nearest whole share.
Beneficial ownership includes shares that may be acquired
within 60 days after March 14, 1994, through the exercise of
options as follows: Ms. Alewine, 52,234 shares; Mrs.
Benson, 12,000 shares; Sen. Boschwitz, 2,000 shares; Mr.
Colodny, 2,000 shares; Mr. Crockett, 184,250 shares; Mr.
Dent, 5,000 shares; Dr. Edwards, 6,000 shares; Mr. Faulders,
35,000 shares; Mr. Freeman, 6,000 shares; Sen. Goldwater,
6,000 shares; Mr. Hauspurg, 5,000 shares; Mr. Laird, 12,000
shares; Dr. Likins, 7,000 shares; Mr. Love, 5,000 shares;
Mr. Lyons, 24,000 shares; Mr. Mario, 59,264 shares; Mr.
Schwartz, 12,000 shares; and all directors and executive
officers as a group, 534,155 shares.
(2) Except as indicated, no director or executive officer
beneficially owns more than 0.1% of the Common Stock.
(3) Includes 40,000 shares which are restricted against
transfer.
(4) Includes 2,000 shares held by Mrs. Boschwitz with respect to
which Sen. Boschwitz disclaims beneficial ownership.
(5) Includes 2,400 shares held by Mrs. Crockett with respect to
which Mr. Crockett disclaims beneficial ownership. Also
includes 72,500 shares which are restricted against transfer
and 4,758 shares which are held in the Corporation's Savings
and Profit-Sharing Plan as of December 31, 1993.
(6) Includes 1,000 shares held by Mrs. Dent with respect to
which Mr. Dent disclaims beneficial ownership.
(7) Includes 20,000 shares which are restricted against
transfer.
(8) Includes 2,850 shares over which Dr. Likins shares voting
power and investment power with Mrs. Likins.
(9) Includes 2,000 shares held in a trust over which Mr. Love
has no voting power and shared investment power.
(10) Includes 6,328 shares with respect to which beneficial
ownership is disclaimed. Also includes an aggregate of
237,258 shares which are restricted against transfer or
which are held in the Corporation's Savings and Profit-
Sharing Plan as of December 31, 1993.
Page 12
<PAGE>
ITEM 2. PROPOSED AMENDMENT TO 1990 KEY EMPLOYEE STOCK PLAN
The COMSAT Corporation 1990 Key Employee Stock Plan (the
Plan) was adopted by the Board of Directors and approved by the
shareholders in 1990. Under the Plan, incentive stock options
(as defined in the Internal Revenue Code of 1986, as amended (the
Code)), non-statutory stock options, stock appreciation rights
(SARs), restricted stock units (RSUs) and restricted stock awards
(RSAs) may be granted to such employees and in such amounts as
determined by the Board's Committee on Compensation and
Management Development (the Committee).
As amended by the Board and approved by the shareholders in
1993, the Plan provides that grants may be made with respect to
up to 4,800,000 shares of Common Stock in the aggregate. As of
March 1, 1994, the aggregate grants made since the Plan was
adopted have used 3,842,420 of the shares authorized for grants
under the Plan.
At its meeting held on February 18, 1994, the Board of
Directors approved an amendment to the Plan that is subject to
the approval of the shareholders. The amendment provides that,
effective January 1, 1994, RSAs are to be awarded as performance-
based compensation and establishes the applicable performance
measures for such awards, including one or more of the following:
improvements in revenues, earnings per share, profit before
taxes, net income or operating income; return on shareholder
equity; return on net assets; and stock price performance. The
Committee will have the authority to determine the performance
measures, the specific targets applicable to those measures and
the performance period for each RSA grant. The amendment
provides that no more than 50,000 RSA's may be granted to any
individual in any given year. This amendment is intended to
ensure the Federal tax deductibility under Section 162(m) of the
Code of compensation paid to the Corporation's executive officers
pursuant to RSAs. The amendment is being submitted for
shareholder approval to comply with the requirements of Section
162(m).
During the performance period, the recipient of an RSA is
not the record holder of the shares of Common Stock underlying
the RSA and thus is not entitled to vote the shares or receive
dividends paid on the shares. However, the Committee may provide
that dividend equivalents will accrue during the performance
period and be paid at the end of the period if the performance
measures are achieved. At the end of the performance period, the
Committee must certify that the performance measures have been
achieved. Once this certification is made, the recipient will
become the record owner of the shares and will be entitled to
vote the shares and receive all dividends paid on the shares.
However, the shares will then be subject to a vesting period
determined by the Committee, during which the shares may not be
sold or transferred unless the Committee determines otherwise.
If a recipient voluntarily resigns or is discharged for cause
before the end of the vesting period, he or she forfeits any
unvested shares. Such forfeiture may be waived by the Committee
in its sole discretion.
The directors recommend a vote FOR this proposal. Proxies
solicited by the management will be so voted unless shareholders
specify a contrary choice in their proxies. For approval, the
proposal requires the affirmative vote of a majority of the
shares represented and entitled to be voted at the meeting.
Page 13
<PAGE>
The following table shows the dollar value and number of
options, RSAs and RSUs awarded to the following persons to date
in 1994: (i) each of the Chief Executive Officer and the other
four most highly compensated executive officers of the
Corporation (the Named Executive Officers); (ii) all executive
officers as a group; and (iii) all other employees as a group.
NEW PLAN BENEFITS
1990 Key Employee Stock
Plan Awards
_______________________________________
Stock Award Number
Name and Position Type Dollar Value* of Units
_________________ ___________ _____________ ________
Bruce L. Crockett Options $ 27.625 200,000
President & Chief RSAs 1,017,500 37,000
Executive Officer RSUs 121,550 4,420
Betty C. Alewine, Options 27.625 80,000
President, COMSAT RSAs 508,750 18,500
World Systems RSUs 54,038 1,965
C. Thomas Faulders, III, Options 27.625 80,000
Vice President & Chief RSAs 508,750 18,500
Financial Officer RSUs 40,563 1,475
Charles Lyons, Options 27.625 80,000
President, COMSAT RSAs 508,750 18,500
Video Enterprises, Inc. RSUs 54,038 1,965
Ronald J. Mario, Options 27.625 80,000
President, COMSAT RSAs 508,750 18,500
Mobile Communications RSUs 54,038 1,965
All Executive Options 27.625 700,000
Officers RSAs 4,257,625 155,000
RSUs 443,438 16,125
All Other Employees Options 27.625 318,500
RSAs 1,856,250 67,500
RSUs 1,555,538 56,565
________________
*Dollar Value:
Options = Fair market value per share on date of award.
RSAs = Number of units X fair market value per share on date of
award.
RSUs = Number of units X fair market value per share on date of
award.
Page 14
<PAGE>
COMMITTEE ON COMPENSATION AND MANAGEMENT DEVELOPMENT
REPORT ON EXECUTIVE COMPENSATION
The Committee on Compensation and Management Development of
the Board of Directors of the Corporation has provided the
following report on executive compensation. With respect to the
compensation discussed in this report, the Committee consisted of
the four individuals named below who signed this report, together
with Roscoe Robinson, Jr., who until his death in July 1993 also
served on the Committee. All of these individuals are or were
independent outside directors of the Corporation. Therefore, no
executive officer of the Corporation serves on the Committee. In
addition, no executive officer of the Corporation serves as a
director or member of a compensation committee of any company
that has an executive officer who also serves as a COMSAT
director or a member of the Committee; i.e., there are no
compensation committee interlocks.
In January 1993, the Board approved a major change in the
approach to executive pay. The hallmark of this new executive
compensation philosophy is to subject executive compensation to
increased risk and performance incentives, and to align more
closely the interests of management and shareholders. This
philosophy has two main components: (1) annual compensation,
consisting of salary plus bonuses awarded under the Corporation's
Annual Incentive Plan; and (2) long-term compensation, consisting
primarily of stock-based incentives. The Board has delegated to
the Committee the responsibility for (1) making recommendations
on executive officers' annual compensation to the Board, which
has final decision-making authority; and (2) making final
decisions on executive officers' long-term compensation.
The Corporation's executive compensation philosophy is
designed to provide competitive levels of compensation that
integrate pay with the Corporation's annual and long-term
performance goals, reward above-average corporate performance,
recognize individual initiative and achievement, and assist the
Corporation in attracting and retaining highly qualified
executive officers. Total cash compensation levels (salary plus
bonus) for executive officers are targeted to be at the 75th
percentile of competitive companies based on recommendations
developed by independent compensation consultants retained on
behalf of the Committee by the Corporation. The competitive
companies selected for this purpose, as well as for other
purposes discussed below in this report, include the companies
that make up the Peer Group Index in the Performance Graph on
page 20, other companies in the telecommunications industry and
companies whose revenues are comparable to the Corporation's.
With respect to long-term compensation, the Corporation believes
that stock ownership by senior management and stock-based
performance-compensation arrangements enhance shareholder value.
This report discusses the annual and long-term compensation
components of the Corporation's executive compensation philosophy
as applied in 1993 to executive officers of the Corporation,
including Mr. Crockett, the Chief Executive Officer, and the
other four most highly compensated executive officers of the
Corporation (the Named Executive Officers). This report also
discusses other compensation plans for executive officers that
have been adopted as a means of attracting and retaining high
caliber executive talent.
Annual Compensation
Pursuant to the new compensation philosophy adopted in 1993,
salary ranges for executive officers, which previously were based
on the 75th percentile of base salary for comparable positions in
competitive companies, have been eliminated. Instead, a salary
cap has been established for each position based on the 50th
percentile of base salary for similar positions in the
competitive companies. The salary cap is adjusted as changes in
the 50th percentile occur in the marketplace. If an executive's
base salary reaches the cap, both the executive's base salary and
the salary cap are frozen for three years. The salary cap is
again subject to adjustment at the end of the three-year period
based on changes in the 50th percentile of base salary during
this period, at which time the executive's base salary may be
increased if the cap is increased. Total cash compensation -
base salary and bonus - will continue to be based on the 75th
percentile for comparable positions in the competitive companies.
Each year that an executive's base salary is frozen by the salary
cap,
Page 15
<PAGE>
the portion of total cash compensation that may be awarded as a
bonus may increase. The amount of any bonus increase will be
determined by the Board based on the salary cap and adjustments
to the 75th percentile of total cash compensation to take account
of changes in the competitive market.
The reason for this change is important. More of each
executive officer's total compensation will be at risk, producing
more incentive to perform. In January 1993, the salary of each
of the Named Executive Officers was increased to a level at or
below the salary cap established for his or her position. Mr.
Crockett's salary was increased to $350,000, an 11.1% increase.
Since this amount was below the new salary cap of approximately
$415,000 for his position, he would be eligible for salary
increases until the cap is reached. Notwithstanding this, Mr.
Crockett on his own initiative recommended to the Committee that
his base salary be frozen at the $350,000 level for 1993 through
1995, with the difference being at risk under the performance-
driven annual bonus process. The Committee approved this
recommendation.
Consistent with this approach, Mr. Crockett's bonus for 1993
was then determined on the basis of several factors. First,
under his leadership, the Corporation in 1993 continued to
achieve the longer-term financial goals Mr. Crockett established
for the Corporation when he became President by bettering its
performance on each of these goals. These goals include growth
in revenue, improvement in earnings, improvements in return on
equity and return on assets, and reduction of home office
expenses as a percentage of revenues. Second, the Committee took
into account the fact that COMSAT's stock price increased and
reached an all-time high for the second year in a row, and
concluded that this continuing enhancement of shareholder value
was primarily attributable to the factors noted above as well as
the high caliber management team assembled by Mr. Crockett to
carry out the Corporation's strategic plan for the future.
Finally, the Committee considered the competitiveness of Mr.
Crockett's total cash compensation package. Outside consultants
were selected to do analyses of total cash compensation based on
the 75th percentile for comparable positions in the competitive
companies. These consultants arrived at a 75th percentile target
level for Mr. Crockett's total cash compensation. In
consideration of the foregoing factors, the Committee proposed a
total 1993 bonus award for Mr. Crockett of $490,000. Mr.
Crockett on his own initiative recommended to the Committee that
the cash portion of his bonus be no higher than $400,000 for the
same period that his salary is frozen, and that any additional
compensation that might be awarded during this period be in the
form of long-term compensation. This aligns Mr. Crockett's
compensation more closely with shareholder interests and puts
more of his total compensation at risk since the amount of long-
term compensation ultimately realized is dependent on the
Corporation's stock price in the future. In view of the
foregoing, the Committee considered Mr. Crockett's recommendation
and recommended to the Board that the cash portion of Mr.
Crockett's bonus be no higher than $400,000 for 1993 through 1995
and that any additional compensation be awarded in the form of
long-term compensation, and further recommended a total 1993
bonus award of $490,000 consisting of a $400,000 cash payment and
$90,000 in long-term compensation in the form of restricted stock
units (RSUs). The Board approved the Committee's recommendation.
The bonus opportunities for executive officers other than
Mr. Crockett for 1993 were based on the 75th percentile of total
cash compensation for comparable positions in the competitive
companies. The Board determined target award percentages of base
salary for each position. The Board tied a portion of each
target award to various performance measures based on corporate,
business unit and individual performance criteria. The corporate
and business unit performance criteria were based on actual
profit before tax (PBT) as compared to PBT reflected in the
appropriate corporate or business unit budget for the year. The
individual-performance component was based on Mr. Crockett's
evaluation of each individual executive officer's achievement of
established performance goals for the year. The actual award
increased or decreased in relation to the target award, depending
on the actual PBT results. The Committee recommended a bonus
award for each executive officer, in consultation with senior
management, based on the targets established by the Board and the
performance measures noted above. The Board had final approval
authority for these awards.
Long-Term Compensation
Long-term compensation consists of non-qualified stock
options, restricted stock awards (RSAs) and restricted stock
units (RSUs) awarded by the Committee under the Corporation's
1990 Key Employee Stock
Page 16
<PAGE>
Plan. These stock-based awards for executive officers are
consistent with ranges in the competitive companies which were
developed by an independent compensation consulting firm, and
which were reviewed and accepted by the Committee. The stock-
based awards made in January 1993, which are discussed below,
reflect the two-for-one split in the Corporation's stock
effective June 1, 1993.
A significant change of the new executive compensation
philosophy is that a greater portion of executive compensation is
represented by stock options. This approach is designed to align
executive compensation more closely with shareholder interests.
Moreover, beginning in 1993, 50% discounted stock options were
eliminated and replaced with options priced at 100% of fair
market value -- a change which reinforces several of the goals of
the new executive compensation philosophy by tying the value of
the options to the creation of long-term shareholder value.
These stock options have a 15-year life and vest 1, 2 and 3 years
after grant at the rate of 25%, 25% and 50%, respectively. In
January 1993, Mr. Crockett was awarded 200,000 such stock
options, and each of the other Named Executive Officers received
80,000 such stock options.
These stock option awards were determined on the basis of
two factors. First, the Committee established target award
guidelines for each executive officer based on a percentage of
that officer's base salary. Second, the Committee approved the
actual awards based on these guidelines and performance
recommendations made for each individual executive officer. The
recommendations for each executive officer other than Mr.
Crockett were made to the Committee by Mr. Crockett based on his
evaluation of each officer's performance for 1992. The
recommendation for Mr. Crockett was made to the Committee based
on the competitive ranges developed by the independent consulting
firm. In some cases, including Mr. Crockett's, the stock option
award for an individual executive officer exceeded the guidelines
due to the officer's performance.
RSAs are restricted shares of COMSAT stock which vest over a
period of years determined by the Committee. RSAs are granted to
executive officers and key employees as a retention device based
on the vesting schedule established by the Committee for each
grant. Each year that the Committee makes an award of RSAs to an
individual, it takes into account the vesting schedule and
guidelines for determining the size of awards in view of the
retention purposes of the award. Prior to 1993, RSAs vested 3, 4
and 5 years after grant at the rate of 25%, 25% and 50%,
respectively. For 1993, RSAs vest 4, 5 and 6 years after grant
at the rate of 20%, 40% and 40%, respectively. This change was
made to improve the retention capabilities of the RSAs. In
January 1993, Mr. Crockett received 40,000 RSAs, and each of the
other Named Executive Officers received 20,000 RSAs. The number
of RSAs granted to Mr. Crockett was in recognition of his
position as CEO and his performance in that position, and was
designed to put more of his total compensation at risk in the
form of long-term compensation. The number of RSAs granted to
each of the other Named Executive Officers was determined by
dividing a multiple of each officer's salary by the fair market
value per share of the Corporation's stock.
RSUs are equivalent in value to shares of COMSAT stock and
vest at the end of a period of years determined by the Committee.
RSUs are granted to key employees as a retention device and also
were granted to certain executive officers in 1993 in lieu of a
portion of the bonuses awarded to such officers under the Annual
Incentive Plan. In January 1993, the Committee awarded 4,050
RSUs to Mr. Crockett in lieu of $70,000 of cash bonus that
otherwise would have been paid to him for 1992. Similar actions
were taken regarding the 1992 bonuses of the other Named
Executive Officers: three received 1,730 RSUs in lieu of $30,000
of cash bonus that otherwise would have been paid to each of
them, and one received 580 RSUs in lieu of $10,000 of cash bonus
that otherwise would have been paid to him. As with all RSU
grants made to employees in 1993, these RSUs vest after 3 years.
In keeping with the new executive compensation philosophy, these
actions serve as a retention device and also put more of each
Named Executive Officer's total compensation at risk since the
amount ultimately realized is solely dependent on the
Corporation's stock price at the end of the 3-year vesting
period. The actual number of RSUs awarded to each of the Named
Executive Officers was determined by (1) calculating the amount
that each would have derived if the deferred portion of his or
her 1992 bonus represented by the RSUs had been invested under
the Corporation's Deferred
Page 17
<PAGE>
Compensation Plan during the RSU vesting period, (2) subtracting
from this amount the RSU dividend equivalents to be paid during
the vesting period at the current dividend rate, and (3) dividing
the difference by the fair market value per share of the
Corporation's stock. This approach was adopted so as not to
penalize the Named Executive Officers for having received RSUs in
lieu of cash for part of their bonuses; if cash had been awarded
instead of RSUs, this cash bonus could have been invested in the
Deferred Compensation Plan.
In January 1994, the Committee awarded stock options, RSAs
and RSUs to each of the Named Executive Officers. Mr. Crockett
was awarded 200,000 stock options, and each of the other Named
Executive Officers was awarded 80,000 stock options. These stock
options have the same vesting schedule as the 1993 stock options
but their term has been shortened from 15 to 10 years.
Each of the Named Executive Officers was awarded
approximately the same dollar value of RSAs in 1994 as in 1993,
based on the fair market value per share of the Corporation's
stock at the time of each grant. In January 1994, Mr. Crockett
received 37,000 RSAs, and each of the other Named Executive
Officers received 18,500 RSAs. Beginning with the 1994 RSA
grants, the vesting of RSAs is subject not only to a length of
service requirement as with prior grants but also to the
achievement of objective performance-based criteria which have
been approved by the Board and are being submitted to the
shareholders for approval at the Annual Meeting. This change is
intended to ensure the tax deductibility under Section 162(m) of
the Code of compensation paid to the Corporation's executive
officers pursuant to RSAs. See Item 2 set forth on page 10. The
Corporation intends to preserve the tax deductibility under
Section 162(m) of all compensation paid to its executive
officers.
As described above, in January 1994 the Committee awarded
4,420 RSUs to Mr. Crockett in lieu of $90,000 of cash bonus that
otherwise would have been paid to him for 1993. Similar actions
were taken regarding the 1993 bonuses of the other Named
Executive Officers: three received 1,965 RSUs in lieu of $40,000
of cash bonus that otherwise would have been paid to each of
them; and one received 1,475 RSUs in lieu of $30,000 of cash
bonus that otherwise would have been paid to him. The actual
number of RSUs awarded to each of the Named Executive Officers in
1994 was determined by the same formula used for the 1993 awards
discussed above. As with the 1993 RSU awards, the 1994 RSU
awards vest after 3 years.
Other Compensation Plans
Over the past several years, the Board has approved various
other executive compensation plans in order to attract and retain
highly qualified senior executives. The Insurance and Retirement
Plan for Executives, a supplemental retirement plan for executive
officers selected by the Board, is described on pages 18 and 19.
The Split Dollar Insurance Plan provides supplemental death
benefits for executive officers selected by the Board.
Compensation data for the Named Executive Officers with respect
to this plan is reported in the Summary Compensation Table on
page 16. The Directors and Executives Deferred Compensation Plan
allows executive officers selected by the Board to defer a
portion of their annual salary and bonus. Amounts deferred under
the plan earn interest at an above-market rate which varies from
year to year based on a published bond index. For amounts
deferred after January 1994, the interest rate will be the
Corporation's "cost of capital" for each year. This change was
made to align the interest rate paid under the plan more closely
with the cost of funds employed in the Corporation's business,
which will have the effect of reducing the rate paid under the
plan on post-January 1994 deferrals. This plan was adopted as a
vehicle to provide long-term retention of executives, since the
above-market component of the interest earned is significantly
reduced if the executive terminates employment with the
Corporation for reasons other than retirement, death or
disability. The above-market interest for the Named Executive
Officers with respect to this plan is also reported in the
Summary Compensation Table on page 16.
Committee on Compensation and Management Development
Robert G. Schwartz, Chairman
James B. Edwards
Neal B. Freeman
Melvin R. Laird
Page 18
<PAGE>
EXECUTIVE COMPENSATION
The following table shows the compensation received by the
Chief Executive Officer and the other four most highly
compensated executive officers of the Corporation (the Named
Executive Officers) for the three fiscal years ended December 31,
1993. The table shows the amounts received by each Named
Executive Officer for all three fiscal years, whether or not such
Named Executive Officer was the Chief Executive Officer or an
executive officer of the Corporation for each of those three
fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
_______________________________ ______________________
Other Restricted Securities All
Annual Stock Underlying Other
Name and Principal Salary Bonus Compensation Award(s) Options Compensation
Position(1) Year ($) ($) ($)(2) ($)(3) (#) ($)(2)(4)
________________________ ____ ________ ________ ____________ __________ __________ ____________
<S> <C> <C> <C> <C> <C> <C> <C>
Bruce L. Crockett, 1993 $350,000 $400,000 $ 3,759 $1,119,148 200,000 $116,783
President & Chief 1992 319,423 240,000 3,285 285,537 42,850 93,571
Executive Officer 1991 261,347 150,000 -- 426,049 0 --
Betty C. Alewine, 1993 200,000 180,000 697 552,079 80,000 25,777
President, COMSAT 1992 178,462 120,000 518 419,073 634 21,961
World Systems 1991 151,923 80,000 -- 23,875 12,000 --
C. Thomas Faulders, III, 1993 200,000 130,000 14,945 522,862 80,000 24,576
Vice President & Chief 1992 160,808 110,000 3,272 0 30,000 52,999
Financial Officer 1991 -- -- -- -- -- --
Charles Lyons, 1993 200,000 180,000 4,340 552,079 80,000 32,136
President, COMSAT 1992 178,846 130,000 1,246 388,750 0 9,535
Video Enterprises, Inc. 1991 127,885 65,000 -- 0 4,000 --
Ronald J. Mario, 1993 200,000 155,000 1,100 552,079 80,000 45,594
President, COMSAT 1992 178,462 120,000 903 434,234 864 42,159
Mobile Communications 1991 153,135 80,000 -- 23,875 12,000 --
</TABLE>
_______________
(1) Mr. Crockett has been President and Chief Executive Officer
since February 1992. He was President and Chief Operating
Officer from April 1991 to February 1992 and was President,
World Systems Division prior to that. Ms. Alewine has been
President, COMSAT World Systems and an executive officer
since May 1991. Prior to that, she was Vice President and
General Manager, INTELSAT Satellite Systems. Mr. Faulders
has been Vice President and Chief Financial Officer since
May 1993. He was Vice President, Chief Financial Officer
and Treasurer from June 1992 to May 1993. He joined the
Corporation in February 1992 as Vice President and Chief
Financial Officer. Mr. Lyons has been President, COMSAT
Video Enterprises, Inc. (CVE) and an executive officer of
the Corporation since February 1992. He joined the
Corporation in October 1990 as Vice President and General
Manager, CVE. Mr. Mario has been President, COMSAT Mobile
Communications (CMC) and an executive officer since May
1991. He was Vice President and General Manager, CMC prior
to that.
(2) Under the SEC's transition rules on executive compensation
disclosure, amounts of Other Annual Compensation and All
Other Compensation for the Corporation's 1991 fiscal year
are not shown in the table. Other Annual Compensation shown
for 1992 and 1993 does not include perquisites and other
personal benefits because the aggregate amount of such
compensation for each of the Named Executive Officers in
each year did not exceed the lesser of (i) $50,000 or (ii)
10 percent of the combined salary and bonus for the Named
Executive Officer in each year.
(3) Includes restricted stock awards (RSAs) and restricted stock
units (RSUs). Dividends are paid on RSAs and dividend
equivalents are paid on RSUs. The number and value of the
aggregate restricted stock holdings of each of the Named
Executive Officers as of December 31, 1993, are as follows:
Page 19
<PAGE>
Number of Value as of
RSAs/RSUs 12/31/93
_________ ___________
Mr. Crockett......... 94,430 $2,844,704
Ms. Alewine.......... 45,290 1,364,361
Mr. Faulders......... 20,580 619,973
Mr. Lyons............ 41,730 1,257,116
Mr. Mario............ 46,070 1,387,859
(4) All Other Compensation for 1993 includes the following
elements shown in the table to this footnote below: (i)
unused credits under the Corporation's cafeteria plan that
were paid in cash to the Named Executive Officers; (ii)
contributions by the Corporation to the Savings and Profit-
Sharing Plan on behalf of the Named Executive Officers;
(iii) above-market interest accrued for the Named Executive
Officers under the Corporation's Deferred Compensation Plan;
and (iv) split dollar life insurance premiums for the Named
Executive Officers. The split dollar premiums shown include
(i) the value of the premiums paid by the Corporation with
respect to the term life insurance portion of the policy for
each Named Executive Officer, determined under the P.S. 58
table published by the Internal Revenue Service, and (ii)
the value of the benefit to each Named Executive Officer of
the remainder of the premiums paid by the Corporation,
determined by calculating the present value of the
cumulative interest payments that would be made based on the
assumption that the premiums were loaned to each Named
Executive Officer at an interest rate of 7.5% until the
Named Executive Officer reaches the normal retirement age of
65, at which time the policy splits and the premiums are
refunded to the Corporation.
Above-
Unused 401(k) Plan Market Split Dollar
Credits Contributions Interest Premiums
_______ _____________ ________ ____________
Mr. Crockett....... $16,218 $7,900 $62,516 $30,150
Ms. Alewine........ 4,065 7,506 4,441 9,765
Mr. Faulders....... 1,464 7,671 1,650 13,791
Mr. Lyons.......... 4,640 7,658 3,874 15,964
Mr. Mario.......... 1,399 5,079 23,377 15,740
Option Grants
The following table sets forth information on options
granted to the Named Executive Officers in 1993.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
___________________________________________________________
Number of
Securities % of Total
Underlying Options Options Exercise
Granted Granted to Price Expiration Grant Date
Name (#)(1) Empl in FY(2) ($/Sh) Date Present Value(3)
____ _________________ _____________ ________ __________ ________________
<S> <C> <C> <C> <C> <C>
Bruce L. Crockett........ 200,000 21.11% $25.4063 01/15/08 $1,735,844
Betty C. Alewine......... 80,000 8.45% 25.4063 01/15/08 694,337
C. Thomas Faulders, III.. 80,000 8.45% 25.4063 01/15/08 694,337
Charles Lyons............ 80,000 8.45% 25.4063 01/15/08 694,337
Ronald J. Mario.......... 80,000 8.45% 25.4063 01/15/08 694,337
</TABLE>
_______________
(1) Options granted on January 15, 1993. The options will vest
as follows: 25% on January 15, 1994; another 25% on January
15, 1995; and the remaining 50% on January 15, 1996.
(2) The total number of shares covered by options granted to
employees in 1993 was 947,300.
(3) The Corporation used the Black-Scholes option pricing model
to determine grant date present values using the following
assumptions: a dividend yield of 3.0%; stock price
volatility of 0.23; a 15 year option term; a risk-free rate
of return of 8.0%; a retention discount of 3.0%; and the
vesting schedule described in footnote 1 above. The
Corporation's use of this model is in accordance with SEC
rules, however, the actual value of an option realized will
be measured by the difference between the stock price and
the exercise price on the date the option is exercised.
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<PAGE>
Option Exercises and Fiscal Year-End Values
The following table sets forth information on (1) options
exercised by the Named Executive Officers in 1993, and (2) the
number and value of their unexercised options as of December 31,
1993.
AGGREGATED OPTION EXERCISES IN 1993, AND 12/31/93 OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Options at 12/31/93 Options at 12/31/93
___________________________ ___________________________
Shares
Underlying
Option Value
Exercised Realized Exercisable Unexercisable Exercisable Unexercisable
Name (#) ($) (#) (#) ($) ($)
____ _________ ________ ___________ _____________ ____________ ______________
<S> <C> <C> <C> <C> <C> <C>
Bruce L. Crockett........ 3,600 $30,992 124,250 230,000 $2,027,556 $1,555,926
Betty C. Alewine......... -0- -0- 26,234 86,000 497,466 522,433
C. Thomas Faulders, III.. -0- -0- 7,500 102,500 150,469 828,902
Charles Lyons............ -0- -0- 2,000 82,000 48,312 425,808
Ronald J. Mario.......... -0- -0- 33,264 86,000 591,487 522,433
</TABLE>
Pension Plans
The following table shows the estimated annual benefits
payable upon retirement under the Corporation's Retirement Plan
to persons in the salary and years-of-service classifications
specified. The Code limits the annual benefits payable under the
Retirement Plan. Under this limitation, the maximum annual
benefit for 1993 is $115,641.
<TABLE>
<CAPTION>
Estimated Annual Benefits Payable Upon Retirement
________________________________________________________________
Years of Service
________________________________________________________________
Average Annual Salary 15 20 25 30 35
_____________________ ________ ________ ________ ________ ________
<S> <C> <C> <C> <C> <C>
$100,000.................... $ 26,527 $ 35,943 $ 44,360 $ 53,276 $ 57,026
150,000.................... 41,177 55,094 69,010 82,926 88,551
200,000.................... 55,830 74,744 93,660 112,579 115,641
250,000.................... 69,160 93,077 115,641 115,641 115,641
300,000.................... 79,160 108,077 115,641 115,641 115,641
350,000.................... 89,160 115,641 115,641 115,641 115,641
</TABLE>
The compensation covered by the Retirement Plan includes
only base salary. Benefits are determined on a straight life
annuity basis under a formula based on length of service and
average annual base salary for the highest five consecutive years
during the final 10 years of employment. Prior to 1989, benefits
were offset by a portion of each participant's estimated Social
Security benefits. Beginning in 1989, each participant accrues a
benefit at a specified percentage of salary up to the Social
Security wage base, and at a higher percentage of salary above
the Social Security wage base. The years of credited service for
the Named Executive Officers as of December 31, 1993, are: 13
for Mr. Crockett; 7 for Ms. Alewine; 1 for Mr. Faulders; 3 for
Mr. Lyons; and 8 for Mr. Mario.
The Corporation also maintains the Insurance and Retirement
Plan for Executives, which covers those executive officers and
other key employees who are designated by the Board of Directors
to participate. The Plan provides an annuity for life equal to
60% (70% for the Chief Executive Officer) of the participant's
average annual compensation (salary and incentive compensation)
during the 48 consecutive months of
Page 21
<PAGE>
highest compensation (or during all consecutive months of
employment if the participant has been employed less than 48
months), offset by pension benefits payable under the Retirement
Plan, the qualified retirement plans of former employers, Social
Security, and government and military pensions.
Payment begins upon the participant's normal retirement at
age 65. A participant may retire as early as age 55 (but only
with the Board's consent if before age 62) and receive an annuity
reduced by 3% for each year payment begins before age 62. For
employees who became participants in the Plan before January 1,
1993, benefits vest ratably over the first five years of the
participant's service. For employees who become participants in
the plan on or after January 1, 1993, after the sum of the
participant's age and years of service equals 60, with a minimum
of five years of service required, benefits are 50% vested and
then vest an additional 10% per year over the following five
years of service.
The annual benefits payable upon retirement at age 65 based
upon the 48 consecutive months of highest compensation (38
consecutive months for Mr. Lyons) as of December 31, 1993, for
each of the Named Executive Officers are: $274,871 for Mr.
Crockett; $120,274 for Ms. Alewine; $126,032 for Mr. Lyons; and
$122,004 for Mr. Mario. Mr. Crockett, Ms. Alewine and Mr. Mario
are each 100% vested in the Plan; Mr. Lyons will not begin
vesting until 2002. Mr. Faulders is not a participant in the
Plan.
Page 22
<PAGE>
PERFORMANCE GRAPH
The following line graph compares the cumulative total
shareholder return for the Corporation's Common Stock with the
cumulative total return of the S&P 500 Stock Index and a Peer
Group Index constructed by the Corporation for the five fiscal
years beginning on January 1, 1989, and ending on December 31,
1993.
Comparison of Five-Year Cumulative Total Return Among
COMSAT, S&P 500 Index & Peer Group Index
(Assumes $100 Invested on December 31, 1988 & Dividends
Reinvested)
[Performance Graph filed supplementally on Form SE.]
* Peer Group consists of three S&P Industry Groups:
Telecommunications (Long-Distance) (AT&T, MCI and Sprint);
Telephone Companies (Ameritech, Bell Atlantic, BellSouth, GTE,
NYNEX, Pacific Telesis, Southwestern Bell and US West); and
Entertainment (Walt Disney, King World Productions and Paramount
Communications).
Page 23
<PAGE>
ITEM 3. APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The shareholders will vote at the meeting to appoint
independent public accountants to audit and certify to the
shareholders the financial statements of the Corporation for the
fiscal year ending December 31, 1994. The Board of Directors has
recommended the appointment of Deloitte & Touche as such
independent public accountants; they acted in such capacity for
fiscal year 1993. Representatives of Deloitte & Touche will be
present at the meeting to respond to appropriate questions and to
make a statement if they desire to do so.
The directors recommend a vote FOR the appointment of
Deloitte & Touche as independent public accountants. Proxies
solicited by the management will be so voted unless shareholders
specify a contrary choice in their proxies. For approval, the
proposal requires the affirmative vote of a majority of the
shares represented and entitled to vote at the meeting.
ITEM 4. SHAREHOLDER PROPOSAL
Mrs. Evelyn Y. Davis, Watergate Office Building,
2600 Virginia Avenue, N.W., Suite 215, Washington, D.C. 20037,
owner of 200 shares of Common Stock of the Corporation, has given
notice that she will introduce the following resolution at the
meeting:
RESOLVED: "That the stockholders of COMSAT assembled in
Annual Meeting in person and by proxy hereby request the Board of
Directors to have the Company furnish the stockholders each year
with a list of people employed by the Corporation with the rank
of Vice President or above, or as a consultant, or as a lobbyist,
or as legal counsel or investment banker or director, who, in the
previous five years have served in any governmental capacity,
whether Federal, City or State, or as a staff member of any
CONGRESSIONAL COMMITTEE or regulatory agency, and to disclose to
the stockholders whether such person was engaged in any matter
which had a direct bearing on the business of the Corporation
and/or its subsidiaries, provided that information directly
affecting the competitive position of the Corporation may be
omitted."
REASONS: "Full disclosure on these matters is essential at
COMSAT because of its many dealings with Federal and State
agencies, and because of pending issues forthcoming in Congress
and/or State and Regulatory Agencies."
"If you AGREE, please mark your proxy FOR this resolution."
The directors oppose this proposal.
The directors believe that existing laws and regulations
regarding the conduct of former government employees in their
relationships with government agencies and the disclosure
required by those laws provide ample safeguards against conflicts
of interest. In addition, under the rules of the SEC the
Corporation must disclose the past five years business experience
of each director and executive officer in the Corporation's Proxy
Statement or Annual Report on Form 10-K. In this regard, the
proposal is unnecessary.
The proposal would require the management to inquire into
the backgrounds of a large group of people, including not only
the directors, executive officers, and other senior officers, but
the large staffs of the several firms that serve the Corporation
and provide legal counsel, consulting services, and investment
banking advice. The burdens entailed are not offset by
compensating benefits.
It is recommended that the shareholders vote AGAINST this
proposal. Proxies solicited by the management will be so voted
unless shareholders specify a contrary choice in their proxies.
For approval, the proposal requires the affirmative vote of a
majority of the shares represented and entitled to be voted at
the meeting.
Page 24
<PAGE>
OTHER MATTERS
At April 6, 1994, the management knew of no other matters to
be presented for action at the meeting. If any other matter is
properly introduced, the persons named in the accompanying form
of proxy will vote the shares represented by the proxies
according to their judgment.
The Corporation will bear all costs of the proxy
solicitation. In addition to the solicitation by mail, the
Corporation's directors, officers and employees, without
additional compensation, may solicit proxies by telephone,
personal contact or other means. The Corporation also has
retained D. F. King & Co., Inc., of New York, N.Y., to assist in
the solicitation, at a cost of $6,500. The Corporation will
reimburse brokers and other persons holding shares in their
names, or in the names of nominees, for their expenses in
forwarding proxy materials to the beneficial owners.
Shareholders wishing to submit proposals for consideration
at the 1995 Annual Meeting should submit them in writing to the
Secretary, COMSAT Corporation, 6560 Rock Spring Drive, Bethesda,
Maryland 20817, to be received no later than December 3, 1994.
This proxy statement is provided by direction of the Board
of Directors.
Jerome W. Breslow
Vice President and Secretary
April 6, 1994
_________________________________________________________________
A copy of the Corporation's Annual Report to the Securities
and Exchange Commission for 1993 on Form 10-K, with a list of the
exhibits, will be sent without charge to any shareholder of
record or beneficial owner of shares of the Corporation's Common
Stock upon receipt of a written request addressed to:
Shareholder Services, COMSAT Corporation, 6560 Rock Spring Drive,
Bethesda, Maryland 20817. Any exhibit will be provided upon
payment of the reasonable cost of providing such exhibit.
Page 25
<PAGE>
DIRECTIONS TO THE COMSAT BUILDING
6560 ROCK SPRING DRIVE - BETHESDA, MARYLAND
The COMSAT Building at Rock Spring Plaza in Bethesda,
Maryland, is located on the corner of Rock Spring Drive and
Fernwood Road. For shareholders who wish to use public
transportation, take the Red Line of the Washington Metro to the
Grosvenor Station. Take the #47 RIDE-ON bus, operated by
Montgomery County Transit, to Rock Spring Plaza. It departs
every half hour beginning at approximately 6:30 a.m., and the
trip takes 10 minutes.
Set forth below is a map and instructions on how to get
there by car.
[Map filed supplementally on Form SE.]
From Frederick/I-270 South:
___________________________
Take I-270 East toward Silver Spring. Exit at Old Georgetown
Road and turn right. At the second light turn right on Democracy
Boulevard. At the second light turn right on Fernwood Road.
Just beyond the first light turn right onto the driveway that
leads to the COMSAT garage entrance.
From Silver Spring/I-495 West:
______________________________
Take I-495 West to Exit 36 (Old Georgetown Road). Turn right on
Old Georgetown Road (toward Rockville). At third light turn left
on Democracy Boulevard. At second light turn right on Fernwood
Road. Just beyond the first light turn right onto the driveway
that leads to the COMSAT garage entrance.
From Northern Virginia/I-495 North:
___________________________________
Take I-495 North to I-270 North. Take the first exit off of I-
270 Spur (Democracy Boulevard East). At first intersection light
turn left on Fernwood Road. Just beyond the first light turn
right onto the driveway that leads to the COMSAT garage entrance.
Page 26
<PAGE>
[PROXY CARD - FRONT]
COMSAT CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 20, 1994
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Melvin R. Laird, Bruce L.
Crockett and Arthur Hauspurg, and each or any of them (with power
of substitution), proxies for the undersigned to represent and to
vote, as designated on the reverse side hereof, all shares of
Common Stock of COMSAT Corporation which the undersigned would be
entitled to vote if personally present at the Annual Meeting of
its shareholders to be held on May 20, 1994, and at any
reconvened session thereof, subject to any directions indicated
on the reverse side of this card. If no directions are given,
this proxy will be voted FOR Proposals 1 through 3 and AGAINST
Proposal 4.
Your vote for the election of Directors may be indicated on
the reverse. Nominees are: Lucy Wilson Benson, Edwin I.
Colodny, Bruce L. Crockett, Frederick B. Dent, Neal B. Freeman,
Arthur Hauspurg, Melvin R. Laird, Peter W. Likins, Howard M.
Love, Robert G. Schwartz, C.J. Silas and Dolores D. Wharton.
This proxy is continued on the reverse side. Please sign
and return promptly in the envelope provided. No postage is
required if mailed in the United States. If you attend the
Meeting and vote in person, the proxy will not be used.
Continued and to be signed and dated on reverse side.
_________________________________________________________________
Page 27
<PAGE>
[PROXY CARD - BACK]
_________________________________________________________________
[ ]
Directors recommend a vote FOR Proposals 1 through 3 and AGAINST Proposal 4.
_______________________________________ __________________________________
1. Election of all directors 2. Amendment of 1990 Key Employee
Stock Plan
For [ ] Withhold [ ] Exceptions* [ ]
For [ ] Against [ ] Abstain [ ]
*Exceptions___________________________ __________________________________
______________________________________
______________________________________ __________________________________
3. Appointment of independent
To vote your shares for all director accountants
nominees, mark the "For" box on Item
1. To withhold voting for all For [ ] Against [ ] Abstain [ ]
nominees, mark the "Withhold" box. _________________________________
If you do not wish your shares voted
"For" a particular nominee, mark the _________________________________
"Exceptions" box and enter the name(s) 4. Action on a shareholder
of the exception(s) in the space proposal relating to past
provided. government service of
directors, officers and
consultants
For [ ] Against [ ] Abstain [ ]
_________________________________
PROXY DEPARTMENT
NEW YORK, N.Y. 10203-0141
Please sign exactly as name or names appear on this proxy.
If stock is held jointly, each holder should sign. If
signing as attorney, trustee, executor, administrator,
custodian, guardian or corporate officer, please give full
title.
DATED________________________________________________, 1994
SIGNED___________________________________________________
___________________________________________________
Please sign, date and return this Please mark votes
card promptly in the enclosed as in this example: [X]
envelope.
Page 28
<PAGE>
Appendix to
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
of COMSAT Corporation
1. Pages 4 through 6 of the Proxy Statement: Pictures of
COMSAT's directors are described narratively.
2. Page 20 of the Proxy Statement: the Performance Graph
required by Item 402(l) of Regulation S-K is being filed
supplementally on Form SE.
3. Back cover of the Proxy Statement: the map included in
"Directions to the COMSAT Building" is being filed
supplementally on Form SE.
Page 29
<PAGE>
