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 7, 1995
Dear Shareholder:
The 1995 Annual Meeting of Shareholders will be held at
9:30 a.m. on Friday, May 19, 1995, at COMSAT's headquarters
building in Bethesda, Maryland. The matters on the meeting
agenda are described on the following pages.
We take this opportunity to note that Frederick B. Dent will
be retiring as a director of the Corporation as of the date of
the Annual Meeting. Mr. Dent has served as a director since 1980
and as Chairman of the Finance Committee of the Board since 1986.
We are grateful to him for his wise counsel during his many years
of devoted service to the Corporation.
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 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,
/s/ Melvin R. Laird /s/ Bruce L. Crockett
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 1995 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
19, 1995, at 9:30 a.m., Eastern Daylight Time, for the following
purposes:
1. election of 12 directors;
2. action on a proposal to adopt the 1995 Key Employee Stock
Plan;
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 30, 1995, 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.
/s/ Warren Y. Zeger
Warren Y. Zeger
Vice President, General Counsel and Secretary
Bethesda, Maryland
April 7, 1995
<PAGE>
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 1995 Annual Meeting of
Shareholders. The Proxy Statement is first being mailed on or
about April 7, 1995.
Shareholders of record of the Corporation's Common Stock at
the close of business on March 30, 1995, 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 Dividend Reinvestment and Share
Purchase Plan, Savings and Profit-Sharing Plan, and Employee
Stock Purchase Plan, and in the Employee Stock Ownership Plan of
COMSAT RSI, Inc., a subsidiary of the Corporation.
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 30, 1995, the record date, approximately
47,127,600 shares of Common Stock were outstanding, of which
20,824 were Series II shares (held by communications common
carriers authorized to hold shares by the Federal Communications
Commission) and approximately 47,106,800 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 person was the beneficial owner of more than
five percent of the Corporation's Common Stock as of December 31,
1994.
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
- ---------------------- ---------------------------------- --------
Wellington Management Total Shares: 2,874,160 6.1%
Company Shared Voting Power: 2,042,460
75 State Street Shared Investment Power: 2,874,160
Boston, Massachusetts
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 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
1
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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 person listed above has
been advised by the Corporation that if its ownership on the
record date exceeds the 5 percent voting limitation, 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 for terms of one year 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 11 times in 1994. All incumbent directors who
were directors in 1994 attended 75% or more of Board meetings and
meetings of Board committees of which they were members in 1994.
Voting for Directors
At the meeting 12 directors will be elected to serve until
the 1996 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 3. All of these
nominees, except Lawrence S. Eagleburger, currently serve as
directors. Biographical information for each of the three
Presidentially appointed directors is set forth on page 5.
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.
2
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NOMINEES FOR ELECTION AS DIRECTORS
LUCY WILSON BENSON, 67, 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 and Logistics Management Institute, a trustee of the
Alfred P. Sloan Foundation and Vice Chairman of the Atlantic
Council of the U.S. 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, 68, 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, 51, 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.,
and a member of the Board of Trustees of the University of
Rochester.
[Picture of Mr. Crockett]
LAWRENCE S. EAGLEBURGER, 65, has been Senior Foreign Policy
Advisor for Baker, Donelson, Bearman & Caldwell, a Washington,
D.C., law firm, since January 1993. He previously served as
United States Secretary of State from December 1992 through
January 1993, Acting Secretary of State from August 1992 to
December 1992, and Deputy Secretary of State from February 1989
to August 1992. He is a director of Dresser Industries, Inc.,
Jefferson Bankshares, Inc., Phillips Petroleum Company,
Stimsonite Corporation, and Universal Leaf Tobacco Corporation.
[Picture of Mr. Eagleburger]
NEAL B. FREEMAN, 54, 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 and Chairman,
Institute on Political Journalism, Georgetown University.
[Picture of Mr. Freeman]
3
<PAGE>
ARTHUR HAUSPURG, 69, 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 of funds of Prudential Securities Inc.
[Picture of Mr. Hauspurg]
MELVIN R. LAIRD, 72, 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, Metropolitan Life Insurance Co., and
Science Applications International Corporation, 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, 58, 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
Parker Hannifin, Inc. and Safeguard Scientifics, Inc. and a
trustee of Consolidated Edison Company of New York, Inc.
[Picture of Dr. Likins]
HOWARD M. LOVE, 64, 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, and 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 and Monsanto Company.
[Picture of Mr. Love]
ROBERT G. SCHWARTZ, 67, is a director or trustee of various
business organizations. He was Chairman of the Board, President
and Chief Executive Officer of Metropolitan Life Insurance Co.
(MetLife) from September 1989 to March 1993 and remains a
director of MetLife. He was Chairman of the Board of MetLife
from February 1983 to September 1989. He has been a COMSAT
director since May 1986. He also is a trustee of Consolidated
Edison Company of New York, Inc. and a director of Lone Star
Industries, Inc., Lowe's Companies, Inc., Mobil Oil Corporation,
Potlatch Corporation, The Reader's Digest Association, Inc. and
CS First Boston, Inc.
[Picture of Mr. Schwartz]
4
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C. J. SILAS, 62, is a director of various business organizations.
He was Chairman and Chief Executive Officer of Phillips Petroleum
Company, an integrated petroleum and chemical company, from May
1985 until his retirement in April 1994. 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, 67, 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 Company, Inc. and Kellogg Company, and a trustee of
National Public Radio, Fashion Institute of Technology and the
Committee for Economic Development.
[Picture of Ms. Wharton]
PRESIDENTIALLY APPOINTED DIRECTORS
RUDY BOSCHWITZ, 64, 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 of HOME VALU, Inc.
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., the Chicago Mercantile Exchange and Sunbelt
Nursery Group Inc. His fixed term expired at the 1994 Annual
Meeting. He continues to serve in accordance with the Satellite
Act pending the appointment and qualification of his successor.
[Picture of Senator Boschwitz]
BARRY M. GOLDWATER, 86, 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, representing the State of
Arizona. 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]
PETER S. KNIGHT, 44, has been a partner of Wunder, Diefenderfer,
Cannon & Thelen, a Washington, D.C., law firm, since July 1991.
He was Chair of the Clinton/Gore Vice Presidential Campaign from
July to November 1992 and Deputy Director for Personnel for the
Clinton/Gore Transition Team in November and December 1992. He
was General Counsel and Secretary of Medicis Pharmaceutical
Corporation from September 1989 to June 1991. He has been a
Presidentially appointed director of COMSAT since September 1994.
He also is a director of Wertheim Schroeder Investment Services
and Whitman Medical Corp. His current term expires at the 1996
Annual Meeting.
[Picture of Mr. Knight]
5
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OTHER INFORMATION CONCERNING DIRECTORS
Committees
As of January 1995, the Board has six 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 S. Knight, 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 1994.
The Committee on Compensation and Management Development
consists of Robert G. Schwartz (Chairman), Neal B. Freeman,
Melvin R. Laird, C. J. Silas and Dolores D. Wharton. The
Committee approves long-term compensation for senior executives;
considers and makes recommendations to the Board with respect to:
programs for human resources development and management
organization and succession; salary and bonus for senior
executives; and compensation matters and policies and employee
benefit and incentive plans; and exercises authority granted to
it to administer such plans. The Committee met 7 times during
1994.
The Entertainment Properties Committee consists of C.J.
Silas (Chairman), Rudy Boschwitz, Neal B. Freeman, Arthur
Hauspurg and Dolores D. Wharton. The Committee considers and
makes recommendations to the Board with respect to: current and
proposed multimedia distribution to the hospitality industry; the
sports and entertainment segments of the business, including
sports franchises owned or operated by the Corporation, film and
television production facilities; 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 was established in
January 1995.
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 9 times during 1994.
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, and
considers, acts upon or makes recommendations to the Board with
respect to 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 1994. 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, Barry M. Goldwater, Peter S.
Knight, 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 the Corporation's responsibilities and
activities under the Satellite Act and the relationships of the
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Corporation with international organizations such as INTELSAT and
Inmarsat 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 2
times during 1994.
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.
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 1994, the
aggregate value of split dollar life insurance premiums paid for
the benefit of all covered directors was $202,135.
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.
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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 1994, options for a total of 52,000 shares of Common
Stock were granted under the Plan to non-employee directors at a
purchase price per share of $26.0625, which was the fair market
value of the Common Stock on the date of grant. In 1994, Mr.
Hauspurg exercised options for 3,000 shares previously granted
under the Plan and realized a net value (market value on exercise
date less exercise price) of $47,812.
Executive compensation is described beginning on page 18.
Compensation Committee Interlocks and Insider Participation
There were no compensation committee interlocks or insider
participation in compensation decisions during 1994.
8
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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 1, 1995, by all directors and nominees, by each of the
executive officers named in the Summary Compensation Table on
page 18, 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........... 144,850(3) 0.3
Lucy Wilson Benson......... 16,800
Rudy Boschwitz............. 10,000(4)
Edwin I. Colodny........... 7,000
Bruce L. Crockett.......... 415,386(5) 0.9
Frederick B. Dent.......... 17,800(6)
Lawrence S. Eagleburger.... 100
C. Thomas Faulders, III.... 119,681(7) 0.3
Neal B. Freeman............ 10,400
Barry M. Goldwater......... 10,000
Arthur Hauspurg............ 9,800
Peter S. Knight............ 1,000
Melvin R. Laird............ 18,000
Peter W. Likins............ 13,850(8)
Howard M. Love............. 13,800(9)
Charles Lyons.............. 112,744(10) 0.2
Ronald J. Mario............ 149,299(11) 0.3
Robert G. Schwartz......... 18,000
C.J. Silas................. 3,000
Dolores D. Wharton......... 1,000
All directors and executive
officers as a group
(26 persons)............... 1,434,048(12) 3.0
____________________
(1) Unless otherwise indicated, each person has sole voting and
investment powers over the shares listed. Each number in
this column has been rounded down to the nearest whole
share. Beneficial ownership includes shares that may be
acquired within 60 days after March 1, 1995, through the
exercise of options as follows: Ms. Alewine, 92,234 shares;
Mrs. Benson, 16,000 shares; Sen. Boschwitz, 6,000 shares;
Mr. Colodny, 6,000 shares; Mr. Crockett, 288,250 shares; Mr.
Dent, 9,000; Mr. Faulders, 90,000 shares; Mr. Freeman,
10,000 shares; Sen. Goldwater, 10,000 shares; Mr. Hauspurg,
6,000 shares; Mr. Laird, 16,000 shares; Dr. Likins, 11,000
shares; Mr. Love, 9,000 shares; Mr. Lyons, 64,000 shares;
Mr. Mario, 99,264 shares; Mr. Schwartz, 16,000 shares; Mr.
Silas, 2,000 shares; and all directors and executive
officers as a group, 914,205 shares.
(2) Except as indicated, no director or executive officer
beneficially owns more than 0.1% of the Common Stock. Each
number in this column has been rounded to the nearest tenth
of a percent.
(3) Includes 42,500 shares which are restricted against transfer
and 187 shares which are held in the Corporation's Savings
and Profit-Sharing Plan as of December 31, 1994.
(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 82,500 shares which are restricted against transfer
and 5,288 shares which are held in the Corporation's Savings
and Profit-Sharing Plan as of December 31, 1994.
(6) Includes 1,000 shares held by Mrs. Dent with respect to
which Mr. Dent disclaims beneficial ownership.
(7) Includes 27,500 shares which are restricted against transfer
and 171 shares which are held in the Corporation's Savings
and Profit-Sharing Plan as of December 31, 1994.
(Footnotes continued on following page)
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(Footnotes continued from previous page)
(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 42,500 shares which are restricted against transfer
and 187 shares which are held in the Corporation's Savings
and Profit-Sharing Plan as of December 31, 1994.
(11) Includes 42,500 shares which are restricted against transfer
and 1,580 shares which are held in the Corporation's Savings
and Profit-Sharing Plan as of December 31, 1994.
(12) Includes 5,500 shares with respect to which beneficial
ownership is disclaimed. Also includes an aggregate of
285,942 shares which are restricted against transfer, which
are held in the Corporation's Savings and Profit-Sharing
Plan as of December 31, 1994, or which are held in the
COMSAT RSI, Inc. Employee Stock Ownership Plan as of
December 31, 1994.
ITEM 2. PROPOSED COMSAT CORPORATION 1995 KEY EMPLOYEE STOCK PLAN
At its meeting held January 20, 1995, the Board of Directors
of the Corporation approved and adopted the COMSAT Corporation
1995 Key Employee Stock Plan (the Plan), which is effective on
that date, subject to approval by the shareholders. The Plan is
intended to replace the 1990 Key Employee Stock Plan (the 1990
Plan), which expires May 19, 1995. Approval of the adoption of
the Plan requires the affirmative vote of a majority of the
outstanding shares of the Common Stock represented and entitled
to vote at the meeting.
The purpose of the Plan is to promote the interests of the
Corporation by affording its key employees an incentive, by means
of an opportunity to acquire the Corporation's Common Stock, to
remain in the employ of the Corporation and to exert their
maximum efforts on its behalf. The following is a summary of the
principal provisions of the Plan.
Shares Covered. The Plan authorizes the granting of
options, which may be either non-statutory options or "incentive
stock options" (as defined in the Internal Revenue Code of 1986,
as amended (the Code)), stock appreciation rights (SARs),
restricted stock units (RSUs) and restricted stock awards (RSAs)
with respect to no more than 5,000,000 shares of the
Corporation's Common Stock in the aggregate, subject to
adjustment as described below. No more than 1,665,000 of the
shares may be covered by RSUs and RSAs. Any SAR or RSU, or any
portion thereof, which is payable in cash is not counted against
the various share limits on grants.
The shares of Common Stock covered by the Plan may be either
treasury shares or authorized but unissued shares. Shares
covered by options that expire unexercised (without having been
surrendered upon the exercise of SARs, whether settled in cash or
Common Stock) and shares covered by any RSUs and RSAs that are
forfeited may be used again for new grants under the Plan. In
addition, shares tendered in payment of the purchase price of
shares purchased pursuant to the exercise of options may be used
for grants under the Plan.
There is no maximum number of shares that can be allocated
to one employee in any grant of non-statutory options, SARs, RSUs
or RSAs, except as described below with respect to performance-
based awards. However, the aggregate fair market value of the
shares with respect to which options intended to be incentive
stock options are exercisable for the first time by an employee
in any calendar year may not exceed $100,000, or such other
amount as the Code provides.
Administration. The Committee on Compensation and
Management Development of the Board of Directors of the
Corporation (the Committee) administers the Plan.
Eligibility. The Committee selects the employees to
participate in the Plan from among the key employees of the
Corporation and its subsidiary corporations (Subsidiaries) and
determines the number of shares covered by stock options, SARs,
RSUs and RSAs to be granted to each employee to fulfill the
purpose of the Plan. Directors who are not employees of the
Corporation are not eligible to participate in the Plan.
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Duration. Any grant of an option, SAR, RSU or RSA under the
Plan must be made no later than May 19, 2000.
Adjustments. If there is a change in the number or kind of
outstanding shares of the Corporation's stock by reason of a
stock dividend, stock split, recapitalization, merger,
consolidation, combination or other similar event, or a
distribution to shareholders of the Corporation's Common Stock
other than a cash dividend, or a grant of substitute options
pursuant to the Plan, the Committee may make such adjustments as
it deems necessary or equitable in the number and kind of shares
subject to the Plan, number and kind of shares under options,
SARs, RSUs and RSAs then outstanding, purchase price for shares
of Common Stock covered by options, and other relevant provisions
of the Plan.
Nontransferability. Options, SARs, RSUs, and RSAs are
assignable and transferable by the Plan participant only to the
extent permitted by the rules promulgated by the Securities and
Exchange Commission or, in the case of incentive stock options,
by Section 422 of the Code.
Terms of Options. The Committee has the discretion to
determine the time or times when options are granted and the
number of shares of Common Stock subject to each option. The
purchase price for each share of stock subject to an option may
not be less than the fair market value of the Common Stock on the
date the option is granted. Fair market value is the average of
the highest and lowest selling prices of Common Stock as reported
under New York Stock Exchange-Composite Transactions on the date
on which the option was granted (or, if there were no sales of
Common Stock on that date, then on the next preceding date on
which there were sales).
Except as otherwise determined by the Committee, no option
may be exercised to any extent before six months from the date of
grant. The Committee in its discretion may determine the
provisions of the options granted under the Plan, including
installment exercise terms for an option under which the option
may be exercised in a series of cumulative installments; rules
limiting the frequency of exercise of options or the minimum
number of shares that may be exercised at any one time; the form
of consideration, including cash, shares of Common Stock or any
combination thereof, which may be accepted in payment of the
purchase price of shares purchased pursuant to the exercise of an
option; special rules regarding exercise in the case of
retirement, death, disability, or other termination of
employment; and any other rules or conditions as it considers
appropriate regarding the exercise of options granted under the
Plan.
The Committee determines the term of each option granted,
but no option may be exercised after the expiration of 10 years
from the date it is granted, except that the term of an option
other than an incentive stock option may extend up to 11 years
from the date the option is granted if the participant dies
within the 10th year following the date of grant.
Options may be granted under the Plan on such terms and
conditions as the Committee considers appropriate, which may
differ from those provided in the Plan, where such options are
granted in substitution for stock options held by employees of
other companies who concurrently become employees of the
Corporation or a Subsidiary as the result of a merger or
consolidation of the other company with, or the acquisition of
the property or stock of the other company by, the Corporation or
a Subsidiary.
Terms of SARs. The Committee may grant SARs, which may be
freestanding SARs or SARs related to options or portions of
options granted to participants under the Plan. Each SAR is
subject to such terms and conditions as the Committee may
determine, including terms and conditions regarding the exercise
price for each share of Common Stock subject to such SAR,
provided that in the case of an SAR related to an option or
portion thereof, such terms and conditions may not be less
restrictive than the terms and conditions of the related option.
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The participant may exercise an SAR or portion thereof, and
is thereupon entitled to receive payment of an amount equal to
the aggregate appreciation in value of the shares covered by the
SAR or portion thereof exercised, as measured by the difference
between the exercise price of such shares and their fair market
value on the date of exercise. Such payment may be made in cash,
in shares of Common Stock valued at fair market value as of the
date of exercise, or in any combination thereof, as the Committee
in its discretion determines.
Terms of RSUs. The Committee may grant employees RSUs, each
equivalent in value to a share of Common Stock. Vesting of the
RSUs requires that the employee remain employed by the
Corporation or a Subsidiary for a period prescribed by the
Committee for each grant, which period cannot be less than one
year.
Upon the conclusion of the period prescribed by the
Committee, the employee is entitled to receive payment of an
amount equal to the aggregate fair market value of the shares of
Common Stock covered by the RSU on the date of expiration. The
payment may be made in cash, in shares of Common Stock equal to
the number of RSUs with respect to which the payment is made, or
in any combination of cash and shares, as the Committee
determines. In addition, during the period prescribed by the
Committee, the employee is entitled to receive payment of an
amount equal to each cash dividend the Corporation would have
paid to that employee if he or she had been the owner of the
shares of Common Stock covered by the RSUs on the record date for
payment of each such dividend. However, except as otherwise
determined by the Committee, if the employee's employment with
the Corporation or any Subsidiary terminates prior to the end of
the period prescribed by the Committee, the employee's RSUs
terminate concurrently and the employee is not entitled to any
further payments under the Plan.
Terms of RSAs. The Committee may grant employees RSAs of
shares of Common Stock. These employees generally have the
rights and privileges of a shareholder of the Corporation with
respect to such shares, including the right to vote the shares
and to receive dividends. The shares are, however, subject to
forfeiture and may not be transferred, assigned, pledged or
otherwise encumbered until the end of a period of time to be
determined by the Committee, which cannot be less than one year,
or the occurrence of events before the end of such period as the
Committee may determine. Forfeiture may be waived by the
Committee in its sole discretion.
Performance-Based Awards. The Committee may determine that,
in addition to the provisions described above, a grant of RSUs or
RSAs may be subject to performance goals, the terms and
conditions of which must be stated in the written instrument
evidencing the RSU or RSA. No more than 50,000 performance-based
RSUs or RSAs may be granted to any individual in any given year.
The Committee administers this provision and the other provisions
of the Plan so as to comply with the requirements of Section
162(m) of the Code to ensure the Federal tax deductibility under
that section of compensation paid to the Corporation's key
employees pursuant to performance-based RSUs and RSAs.
The Committee determines the performance measures, the
appropriate weighting for each performance measure (where more
than one such measure applies), the specific targets applicable
to those measures and whether the target for each performance
measure is subject to full or partial satisfaction, and the
performance period for each RSU and RSA grant. In no event may
the performance period be less than one year. The performance
measures must include one or more of the following: improvements
in revenues, earnings per share, profit before taxes,
price/equity ratio, net income or operating income; return on
shareholder equity; return on net assets; or stock price
performance. At the end of the performance period applicable to
each grant of RSUs or RSAs subject to these performance goals,
the Committee must certify whether the applicable performance
measures have been achieved. The participant will forfeit the
shares of Common Stock covered by the RSUs or RSAs to the extent
that the applicable performance measures have not been achieved.
For RSAs, the participant must immediately transfer the forfeited
shares back to the Corporation without payment by the
Corporation.
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Where RSUs are performance-based, the Committee may
determine that the dividend equivalents otherwise payable to a
participant during the applicable performance period will instead
be accrued and paid to the participant at the end of the
performance period to the extent that the applicable performance
measures have been achieved.
Termination and Amendments. The Board may terminate the
Plan or amend the Plan or any outstanding options, SARs, RSUs or
RSAs at any time. Except as provided under "Adjustments" above,
no amendment may, without the approval of the shareholders of the
Corporation: (i) increase the maximum number of shares of Common
Stock for which options, SARs, RSUs, or RSAs may be granted under
the Plan; (ii) except to the extent required or permitted in the
case of substitute options, reduce the price at which options may
be granted below the fair market value provided for under
"Options" above; (iii) reduce the option price of outstanding
options; (iv) extend the period during which options, SARs, RSUs
or RSAs may be granted; (v) except to the extent permitted or
required in the case of substitute options, extend the period
during which an outstanding option may be exercised beyond the
maximum period provided for under "Options" above; (vi)
materially increase in any other way the benefits accruing to
participants; or (vii) change the class of persons eligible to be
participants.
Federal Income Tax Consequences. With respect to non-
statutory options, SARs and RSUs, the employee would generally
realize ordinary income in the year the option is exercised, or
the SAR or RSU is paid. The amount of income would be equal, in
the case of non-statutory options, to the difference between the
option price and the fair market value of the stock on the
exercise date and, in the case of SARs and RSUs, to the amount of
cash or the fair market value of the stock received by the
employee. The Corporation would receive an equivalent deduction.
If the employee later sells the stock, any further gain would be
capital gain.
With respect to incentive stock options, in general, no
income to an employee results for Federal income tax purposes
upon either the granting or the exercise of an option under the
Plan. If the employee later sells the acquired stock at least
two years after the date the option is granted and at least one
year after the transfer of the acquired stock to the employee,
the employee would realize capital gain equal to the difference
between the option price and the proceeds of the sale. If the
employee's gain is taxed as capital gain, the Corporation would
not be allowed a business expense deduction. If the employee
disposes of the acquired stock before the end of the required
holding periods, the employee would realize ordinary income in
the year of disposition equal to the lesser of: (i) the
difference between the option price and the fair market value of
the stock on the exercise date; or (ii) if the disposition is a
taxable sale or exchange, the amount of gain realized. In this
event, the Corporation would receive an equivalent deduction.
With respect to RSAs, the employee would generally realize
ordinary income in the year the shares of Common Stock covered by
the award become non-forfeitable and fully transferable, in an
amount equal to the fair market value of the shares on the date
they become non-forfeitable and fully transferable. The
Corporation would receive an equivalent deduction. If the
employee later sells the stock, any further gain would be capital
gain.
Grants Made. It is currently estimated that the eligible
group to receive grants of options, SARs, RSUs and RSAs consists
of approximately 200 persons. The following table shows the
dollar value and number of options and RSAs awarded to the
following persons in January 1995: (i) each of the Chief
Executive Officer and the four other most highly compensated
executive officers of the Corporation; (ii) all executive
officers as a group; and (iii) all other employees as a group.
All such grants are subject to the approval of the Plan by the
shareholders.
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NEW PLAN BENEFITS
1995 Key Employee Stock
Plan Awards
_______________________________________
Number
Stock Award Dollar Value of Units
Name and Position Type (1) (2)
_________________ ___________ _____________ ________
Bruce L. Crockett, Options $ 19.3125 130,000
President & Chief RSAs $ 393,750 20,000
Executive Officer
Betty C. Alewine, Options 19.3125 55,000
President, COMSAT RSAs 147,656 7,500
International
Communications
C. Thomas Faulders, III, Options 19.3125 55,000
Vice President & Chief RSAs 147,656 7,500
Financial Officer
Charles Lyons, Options 19.3125 55,000
President, COMSAT RSAs 147,656 7,500
Video Enterprises, Inc.
Ronald J. Mario, Options 19.3125 60,000
President, COMSAT RSAs 147,656 7,500
Mobile Communications
All Executive Options 19.3125 490,000
Officers RSAs 1,466,719 74,500
All Other Employees Options 19.3125 0
RSAs 315,000 16,000
_______________
(1) Dollar Value:
Options = Fair market value per share on date of award.
RSAs = Number of units multiplied by the fair market value
per share on date of award.
(2) In January 1995, the Corporation awarded employees other
than executive officers 390,650 options valued at $19.3125
per share and 27,600 RSUs valued at $543,375 under the 1990
Plan.
The Board of Directors recommends 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 vote at the
meeting.
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 the 1994 compensation of the 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). With respect to the compensation discussed in this
report, the Committee consisted of the four individuals named
below who signed this report. All of these individuals are
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.
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Compensation Philosophy
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. The hallmark of this 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 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.
There are two groups of competitive companies that are used
in the executive compensation analysis. The first group is the
companies that make up the Peer Group Index in the Performance
Graph on page 22. This group of companies is used to compare
executive compensation strategy and practices. However, since
the Peer Group companies are much larger than COMSAT, another
group of companies in the telecommunications and entertainment
industries whose revenues are more comparable to the
Corporation's are reviewed to benchmark competitive compensation
levels.
Annual Compensation
Total annual compensation - base salary and bonus - for
executive officers is targeted at the 75th percentile of the
competitive companies. A salary cap has been established for
each executive officer 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. Because total annual compensation levels
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, the portion
of total annual 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 annual compensation to take account of
changes in the competitive market.
The reason for this approach is to put more of each
executive officer's total compensation at risk, thus producing
greater incentive to perform. In January 1993, Mr. Crockett
recommended to the Committee that his base salary be frozen at
$350,000 through 1995 with the difference between this salary and
the salary cap for his position placed at risk under the
performance-driven annual bonus process. In addition, Mr.
Crockett 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, with any additional compensation that he might
receive to be awarded in the form of long-term compensation. The
Committee approved these recommendations. As a result, a greater
portion of Mr. Crockett's compensation is at risk in the long-
term compensation program where the ultimate value realized is
dependent on the Corporation's stock price in the future.
An outside consultant was selected to do analyses of
competitive compensation for the position of Chief Executive
Officer of the Corporation with base salary positioned at the
50th percentile and total annual compensation positioned at the
75th percentile for comparable positions in the competitive
companies. The Committee used this data in determining Mr.
Crockett's bonus for 1994 in light of the performance of the
Corporation as well as Mr. Crockett's individual performance.
Under Mr. Crockett's leadership, the Corporation enhanced its
strategic plan for the next five years by clearly defining an
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international communications and entertainment strategy. COMSAT
enhanced its capability to compete in the global communications
systems integration business by acquiring Radiation Systems, Inc.
(RSi) and began the process of integrating it into the
Corporation. The Corporation also pursued other key initiatives
in international communications, including participation in
Inmarsat-P and the proposed privatization of INTELSAT and
Inmarsat. Further, COMSAT continued implementing its
entertainment strategy with the acquisition of Beacon
Communications Corp., a motion picture production company, and
the development of a viable plan for building a multi-media
entertainment center in Denver. Taking these factors into
account, as well as the Corporation's Profit Before Tax
performance for 1994, the Committee recommended to the Board a
total 1994 bonus award of $475,000, of which $350,000 would be
paid in cash with the balance being paid in phantom stock and
thus placed at risk under the long-term compensation plan in
accordance with the executive compensation philosophy. The Board
approved the Committee's recommendation.
The bonus opportunities for executive officers other than
Mr. Crockett for 1994 were based on the 75th percentile of total
annual compensation for comparable positions in the competitive
companies. The Committee determined target award percentages of
base salary for each position. A portion of each target award
was tied to various performance measures based on corporate,
business unit and individual performance criteria. The corporate
and business unit performance criteria were based on the
achievement of one or more financial measures (e.g., Profit
Before Taxes, Revenue, Return on Net Assets) as compared to
planned performance. 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 results. The Committee
recommended a bonus award for each executive officer, in
consultation with senior management, based on the targets
established by the Committee and the performance measures noted
above. The Board had final approval authority for these awards.
Long-Term Compensation
Long-term compensation is an integral element of the
Corporation's executive compensation philosophy because the
Corporation believes that stock ownership by senior management
and stock-based performance-compensation arrangements enhance
shareholder value. The Corporation's long-term compensation
strategy includes a blend of stock compensation. Performance-
based restricted stock awards serve as a retention device and
provide a performance orientation, while stock options provide a
strong tie to shareholder interests.
Long-term compensation for 1994 consisted 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 Plan. These stock-based
awards for executive officers are consistent with ranges in the
Peer Group competitive companies which were developed by an
independent compensation consulting firm, and which were reviewed
and accepted by the Committee.
An important feature of the executive compensation
philosophy is that a significant portion of executive
compensation is represented by stock options granted at fair
market value. These stock options have a 10-year life and vest
1, 2 and 3 years after grant at the rate of 25%, 25% and 50%,
respectively. In January 1994, 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 1993. The
recommendation for Mr. Crockett was made to the Committee based
on the competitive ranges developed by the independent consulting
16
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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. 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
Committee. This change is intended to ensure the Federal tax
deductibility under Section 162(m) of the Internal Revenue Code
of compensation paid to the Corporation's executive officers
pursuant to RSAs. The percent of the award earned is based on
the level of achievement of the performance objectives over the
performance period established by the Committee. The RSAs earned
then become subject to vesting over an additional 1, 2 and 3
years at the rate of 20%, 40% and 40%, respectively. The
Corporation intends to preserve the tax deductibility under
Section 162(m) of all compensation paid to its executive
officers.
In January 1994, Mr. Crockett received 37,000 RSAs, and each
of the other Named Executive Officers received 18,500 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. Each of the other 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.
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 1994 in lieu of a
portion of the bonuses awarded to such officers under the Annual
Incentive Plan. 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 $30,000 of cash
bonus that otherwise would have been paid to him. As with all
RSU grants made to employees in 1994, these RSUs vest after 3
years. In keeping with the Corporation's executive compensation
philosophy, these actions serve as a retention device and also
put more of each Named Executive Officer's total compensation at
risk since the amount ultimately realized is dependent on the
Corporation's stock price at the end of the 3-year vesting
period.
Committee on Compensation and Management Development
Robert G. Schwartz, Chairman
Neal B. Freeman
Melvin R. Laird
Dolores D. Wharton
17
<PAGE>
EXECUTIVE COMPENSATION
The following table shows the compensation received by the
Chief Executive Officer and the other four most highly
compensated executive officers of the Corporation (the Named
Executive Officers) for the three fiscal years ended December 31,
1994. The table shows the amounts received by each Named
Executive Officer for all three fiscal years, whether or not such
Named Executive Officer was the Chief Executive Officer or an
executive officer of the Corporation for each of those three
fiscal years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
_______________________________ ______________________
Other Restricted Securities All
Annual Stock Underlying Other
Name and Principal Salary Bonus Compensation Award(s) Options Compensation
Position Year ($) ($) ($)(3) ($)(4) (#) ($)(5)
________________________ ____ ________ ________ ____________ __________ __________ ____________
<S> <C> <C> <C> <C> <C> <C> <C>
Bruce L. Crockett, 1994 $350,000 $350,000 $28,930 $1,139,050 200,000 $140,215
President & Chief 1993 350,000 400,000 3,759 1,119,148 200,000 116,783
Executive Officer 1992 319,423 240,000 3,285 285,537 42,850 93,571
Betty C. Alewine, 1994 210,000 190,000 387 562,788 80,000 31,221
President, COMSAT 1993 200,000 180,000 697 552,079 80,000 25,777
International 1992 178,462 120,000 518 419,073 634 21,961
Communications
C. Thomas Faulders, III, 1994 200,000 140,000 1,254 549,313 80,000 24,745
Vice President & Chief 1993 200,000 130,000 14,945 522,862 80,000 24,576
Financial Officer(1) 1992 160,808 110,000 3,272 0 30,000 52,999
Charles Lyons, 1994 210,000 190,000 992 562,788 80,000 38,803
President, COMSAT 1993 200,000 180,000 4,340 552,079 80,000 32,136
Video Enterprises, 1992 178,846 130,000 1,246 388,750 0 9,535
Inc.(2)
Ronald J. Mario, 1994 210,000 130,000 3,350 562,788 80,000 58,029
President, COMSAT 1993 200,000 155,000 1,100 552,079 80,000 45,594
Mobile Communications 1992 178,462 120,000 903 434,234 864 42,159
</TABLE>
_______________
(1) Mr. Faulders became an executive officer when he joined the
Corporation as Vice President and Chief Financial Officer in
February 1992.
(2) Mr. Lyons became an executive officer when he became
President, COMSAT Video Enterprises, Inc. in February 1992.
(3) Other Annual Compensation shown for 1992, 1993 and 1994 does
not include perquisites and other personal benefits because
the aggregate amount of such compensation does not exceed
the lesser of (i) $50,000 or (ii) 10 percent of individual
combined salary and bonus for the Named Executive Officer in
each year.
(4) Includes restricted stock awards (RSAs) and restricted stock
units (RSUs). Dividends are paid on RSAs granted in 1992
and 1993. For performance-based RSAs granted in 1994,
dividend equivalents are paid with respect to the
performance period, and dividends will be paid during the
subsequent vesting period on shares earned under the
applicable performance measures. 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, 1994, are as follows:
Number of Value as of
RSAs/RSUs 12/31/94
_________ ___________
Mr. Crockett......... 122,660 $2,299,875
Ms. Alewine.......... 63,755 1,195,406
Mr. Faulders......... 40,555 760,406
Mr. Lyons............ 62,195 1,166,156
Mr. Mario............ 64,535 1,210,031
(Footnotes continued on following page)
18
<PAGE>
(5) All Other Compensation for 1994 includes the following
elements: (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
Corporation's 401(k) 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....... $16,912 $7,673 $86,350 $29,280
Ms. Alewine........ 8,792 7,500 5,292 9,637
Mr. Faulders....... 626 6,375 4,169 13,575
Mr. Lyons.......... 5,028 7,448 10,559 15,768
Mr. Mario.......... 578 6,282 35,918 15,251
Option Grants
The following table sets forth information on options
granted to the Named Executive Officers in 1994.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
___________________________________________________________
Number of
Securities % of Total
Underlying Options Options Exercise
Granted Granted to Price Expiration Grant Date
Name (#)(1) Empl in FY(2) ($/Sh) Date Present Value(3)
____ ___________________ _______________ _________ ___________ ________________
<S> <C> <C> <C> <C> <C>
Bruce L. Crockett........ 200,000 13.38% $27.6250 01/21/04 $1,796,804
Betty C. Alewine......... 80,000 5.35% 27.6250 01/21/04 718,722
C. Thomas Faulders, III.. 80,000 5.35% 27.6250 01/21/04 718,722
Charles Lyons............ 80,000 5.35% 27.6250 01/21/04 718,722
Ronald J. Mario.......... 80,000 5.35% 27.6250 01/21/04 718,722
</TABLE>
_______________
(1) Options granted on January 21, 1994. The options will vest
as follows: 25% on January 21, 1995; another 25% on January
21, 1996; and the remaining 50% on January 21, 1997.
(2) The total number of options granted to employees in 1994 was
1,494,440.
(3) The Corporation used the Black-Scholes option pricing model
to determine grant date present values using the following
assumptions: a dividend yield of 3.27%; stock price
volatility of 0.28; a 10-year option term; a risk-free rate
of return of 7.84%; a retention discount of 3.0%; and the
vesting schedule described in footnote 1 above. The
Corporation's use of this model is in accordance with SEC
rules; however, the actual value of an option realized will
be measured by the difference between the stock price and
the exercise price on the date the option is exercised.
19
<PAGE>
Option Exercises and Fiscal Year-End Values
The following table sets forth information on (1) options
exercised by the Named Executive Officers in 1994, and (2) the
number and value of their unexercised options as of December 31,
1994.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1994, AND 12/31/94 OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Options at 12/31/94 Options at 12/31/94
___________________________ ___________________________
Shares
Underlying
Option Value
Exercised Realized Exercisable Unexercisable Exercisable Unexercisable
Name (#) ($) (#) (#) ($) ($)
____ __________ ________ ____________ ______________ ____________ _______________
<S> <C> <C> <C> <C> <C> <C>
Bruce L. Crockett........ 16,000 $197,499 168,250 370,000 $613,025 $180,624
Betty C. Alewine......... -0- -0- 52,234 140,000 275,742 -0-
C. Thomas Faulders, III.. -0- -0- 35,000 155,000 130,313 130,313
Charles Lyons............ -0- -0- 24,000 140,000 51,125 -0-
Ronald J. Mario.......... -0- -0- 59,264 140,000 289,796 -0-
</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 1994 is $118,800.
<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.................... $ 26,205 $ 36,660 $ 44,019 $ 52,925 $ 57,707
150,000.................... 40,680 56,175 68,494 82,400 89,682
200,000.................... 54,995 75,529 92,808 111,715 118,800
250,000.................... 69,305 94,879 117,118 118,800 118,800
300,000.................... 83,615 114,230 118,800 118,800 118,800
350,000.................... 97,925 118,800 118,800 118,800 118,800
</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, 1994, are: 14
for Mr. Crockett; 8 for Ms. Alewine; 2 for Mr. Faulders; 4 for
Mr. Lyons; and 9 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 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.
20
<PAGE>
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, benefits are 50% vested
after five years of service and then vest an additional 10% per
year over the following five years of service, provided that the
sum of the participant's age and years of service equals 60.
The annual benefits payable upon retirement at age 65 based
upon the 48 consecutive months of highest compensation as of
December 31, 1994, for each of the Named Executive Officers are:
$372,497 for Mr. Crockett; $155,665 for Ms. Alewine; $151,865 for
Mr. Lyons; and $152,079 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 was not a participant
in the Plan as of December 31, 1994.
21
<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, 1990, and ending on December 31,
1994.
Comparison of Five-Year Cumulative Total Return Among
COMSAT, S&P 500 Index & Peer Group Index
(Assumes $100 Invested on December 31, 1989 & 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 Viacom).
Viacom has replaced Paramount Communications, which was merged
into Viacom in 1994. The five-year cumulative total return of
the Peer Group Index has been restated to reflect this change.
22
<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, 1995. The Board of Directors has
recommended the appointment of Deloitte & Touche as such
independent public accountants; they acted in such capacity for
fiscal year 1994. 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."
"Last year the owners of 2,476,978 shares, representing
approximately 8.1% of shares voting, voted FOR this proposal."
"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
impropriety. 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.
23
<PAGE>
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. The same proposal was defeated at the
1994 Annual Meeting of Shareholders by shareholders representing
approximately 91.9% of the shares voted at the meeting.
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.
OTHER MATTERS
At April 7, 1995, 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 1996 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 8, 1995.
This proxy statement is provided by direction of the Board
of Directors.
/s/ Warren Y. Zeger
Warren Y. Zeger
Vice President, General Counsel and Secretary
April 7, 1995
_________________________________________________________________
A copy of the Corporation's Annual Report to the Securities
and Exchange Commission for 1994 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.
24
<PAGE>
THIS PAGE LEFT INTENTIONALLY BLANK
<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. The COMSAT garage will be open for shareholders'
parking on the first level (P1).
[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>
[PROXY CARD - FRONT]
COMSAT CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 19, 1995
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Bruce L. Crockett, Arthur
Hauspurg and Robert G. Schwartz, 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 19, 1995, 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, Lawrence S. Eagleburger, 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.
COMSAT Corporation
P.O. Box 11141
New York, NY 10203-0141
<PAGE>
[PROXY CARD - BACK]
_________________________________________________________________
[ ]
Directors recommend a vote FOR Proposals 1 through 3 and AGAINST Proposal 4.
_______________________________________ ___________________________________
1. Election of all directors 2. Adoption of 1995 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 proposal
of the exception(s) in the space relating to past government
provided. service of directors, officers
and consultants
For [ ] Against [ ] Abstain [ ]
___________________________________
Change of address and/or comments
mark here [ ]
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________________________________________________, 1995
SIGNED____________________________________________________
____________________________________________________
Please sign, date and return this Please mark votes
card promptly in the enclosed as in this example: [X]
envelope.
<PAGE>
Appendix to
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
of COMSAT Corporation
1. Pages 3 through 5 of the Proxy Statement: Pictures of
COMSAT's directors are described narratively.
2. Page 22 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>
COMSAT CORPORATION
1995 KEY EMPLOYEE STOCK PLAN
1. Purpose. The purpose of this plan ("Plan") is to
promote the interests of COMSAT Corporation ("Corporation") by
affording its key employees an incentive, by means of an
opportunity to acquire the Corporation's common stock without par
value ("Common Stock"), to remain in the employ of the
Corporation and to exert their maximum efforts in its behalf.
2. Administration. The Plan shall be administered by the
Committee on Compensation and Management Development
("Committee") of the Board of Directors of the Corporation
("Board"). In addition to its duties with respect to the Plan
stated elsewhere in the Plan, the Committee shall have full
authority, consistently with the Plan, to interpret the Plan, to
promulgate such rules and regulations with respect to the Plan as
it deems desirable and to make all other determinations necessary
or desirable for the administration of the Plan. All decisions,
determinations and interpretations of the Committee shall be
binding upon all persons.
3. Shares Subject to the Plan. The aggregate number of
shares of Common Stock which may be covered by stock options
("Options"), stock appreciation rights ("SARs"), restricted
stock units ("Restricted Stock Units") and restricted stock
awards ("Restricted Stock Awards") granted pursuant to the Plan
is 5,000,000 shares, subject to adjustment under Section 10. No
1
<PAGE>
more than 1,665,000 of the shares may be covered by Restricted
Stock Units and Restricted Stock Awards. Shares which may be
delivered on exercise or settlement of Options, SARs, Restricted
Stock Units or Restricted Stock Awards may be previously issued
shares reacquired by the Corporation or authorized but unissued
shares. Shares covered by Restricted Stock Units and Restricted
Stock Awards that are forfeited and shares covered by Options
that expire unexercised (without having been surrendered upon the
exercise of SARs, whether settled in cash or Common Stock) shall
again be available for grant under the Plan. Shares tendered in
payment of the purchase price of shares purchased pursuant to the
exercise of Options also shall be available for grant under the
Plan. Any SAR or Restricted Stock Unit, or any portion thereof,
which is payable in cash shall not be counted against the various
share limits on grants set forth in this Section 3.
4. Eligibility. The Committee shall from time to time in
its discretion select the employees to whom Options, SARs,
Restricted Stock Units and Restricted Stock Awards shall be
granted ("Participants") from among the key employees of the
Corporation and its subsidiary corporations ("Subsidiaries").
5. Options.
(a) The Committee shall in its discretion determine the
time or times when Options shall be granted and the number of
shares of Common Stock to be subject to each Option. In the case
2
<PAGE>
of incentive stock options, as defined in Section 422 of the
Code, the aggregate fair market value (determined as of the date
the Options are granted) of the stock with respect to which such
Options are exercisable for the first time by any Participant
during any calendar year (under all stock option plans of the
Corporation and its Subsidiaries) shall not exceed $100,000, or
such other amount as may be provided by Section 422 of the Code.
Options may be granted under the Plan on such terms and
conditions as the Committee considers appropriate, which may
differ from those provided in the Plan, where such Options are
granted in substitution for stock options held by employees of
other companies who concurrently become employees of the
Corporation or a Subsidiary as the result of a merger or
consolidation of the employing company with, or the acquisition
of the property or stock of the employing company by, the
Corporation or a Subsidiary.
(b) Each Option shall be for such term as the Committee
shall determine, but not more than 10 years from the date it is
granted, except that the term of an Option other than an
incentive stock option may extend up to 11 years from the date
the Option is granted if the Participant dies within the 10th
year following the date of grant.
(c) The purchase price for each share of Common Stock
subject to an Option shall be no less than the fair market value
of the Common Stock on the date the Option is granted. For this
purpose as well as other purposes under the Plan, fair market
3
<PAGE>
value shall be deemed to be the average of the highest and lowest
selling prices of Common Stock as reported under New York Stock
Exchange-Composite Transactions on the date on which the Option
was granted or, if there were no sales of Common Stock on that
date, then on the next preceding date on which there were sales.
(d) Exercise of an Option shall be by written notice in
the form and manner determined by the Committee. Except as
otherwise determined by the Committee, no Option may be exercised
to any extent before six months from the date of grant. The
Committee in its discretion may (1) determine installment
exercise terms for an Option under which it may be exercised in a
series of cumulative installments, (2) prescribe rules limiting
the frequency of exercise of Options or the minimum number of
shares that may be exercised at any one time, (3) determine the
form of consideration (including cash, shares of Common Stock or
any combination thereof) which may be accepted in payment of the
purchase price of shares purchased pursuant to the exercise of an
Option, and (4) prescribe such other rules or conditions as it
considers appropriate regarding the exercise of Options granted
under the Plan.
(e) In the case of incentive stock options, the
instruments evidencing such Options shall provide that if, within
two years from the date of grant of the Option or within one year
after the transfer of shares of Common Stock to the Participant
on exercise of the Option, the Participant makes a disposition
(as defined in Section 424(c) of the Code) of any shares of such
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Common Stock, the Participant shall notify the Corporation of
such disposition in the manner and within the time as the
Committee in its discretion shall determine. The Committee may
direct that a legend restricting transfer in the absence of
appropriate notification be affixed to any stock certificates
representing Common Stock transferred under the Plan.
(f) Each Option shall be evidenced by a written
instrument which shall state such terms and conditions which are
not inconsistent with the provisions of the Plan as the Committee
in its sole discretion shall determine and approve, including
terms and conditions regarding the exercise of Options upon
termination of employment.
6. Stock Appreciation Rights. The Committee may from time
to time grant SARs, which may be free standing SARs or SARs related
to Options or portions of Options granted to Participants under
the Plan. Each SAR shall be evidenced by a written instrument
and shall be subject to such terms and conditions as the
Committee may determine, including terms and conditions regarding
the exercise price for each share of Common Stock subject to such
SAR, provided that in the case of an SAR related to an Option or
portion thereof, such terms and conditions may not be less
restrictive than the terms and conditions of the related Option.
The Participant may exercise an SAR or portion thereof, and
thereupon shall be entitled to receive payment of an amount equal
to the aggregate appreciation in value of the shares covered by
the SAR or portion thereof exercised, as measured by the
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difference between the exercise price of such shares and their
fair market value on the date of exercise. Such payment may be
made in cash, in shares of Common Stock valued at fair market
value as of the date of exercise, or in any combination thereof,
as the Committee in its discretion shall determine. Upon the
exercise of an SAR related to an Option or portion thereof, the
Participant shall surrender the right to exercise the related
Option or portion thereof.
7. Restricted Stock Units.
(a) 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 determine, grant Restricted Stock Units under
the Plan. Each grant of Restricted Stock Units shall be
evidenced by a written instrument which shall state the number of
Restricted Stock Units covered by the grant and the terms and
conditions which the Committee shall have determined with respect
to such grant. Each Restricted Stock Unit shall be equivalent in
value to a share of Common Stock.
(b) Vesting of each grant of Restricted Stock Units
shall require the Participant to remain in the employment of the
Corporation or a Subsidiary for a prescribed period ("Restriction
Period"). The Committee shall determine the Restriction Period
or Periods which shall apply to the shares of Common Stock
covered by each grant of Restricted Stock Units, provided that in
no case shall the Restriction Period be less than one year.
Except as otherwise determined by the Committee, all Restricted
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Stock Units granted to a Participant under the Plan shall
terminate upon termination of the Participant's employment with
the Corporation or any of its Subsidiaries before the end of the
Restriction Period or Periods applicable to such Restricted Stock
Units, and in such event the Participant shall not be entitled to
receive any payment with respect to those Restricted Stock Units,
except as provided in paragraph (d).
(c) Upon expiration of the Restriction Period or
Periods applicable to each grant of Restricted Stock Units, the
Participant shall, without payment on his part, be entitled to
receive payment in an amount equal to the aggregate fair market
value of the shares of Common Stock covered by such grant on the
date of expiration. Such payment may be made in cash, in shares
of Common Stock equal to the number of Restricted Stock Units
with respect to which such payment is made, or in any combination
thereof, as the Committee in its discretion shall determine.
(d) A Participant whose Restricted Stock Units have not
previously terminated shall be entitled to receive payment in an
amount equal to each cash dividend the Corporation would have
paid to such Participant during the term of those Restricted
Stock Units as if the Participant had been the owner of record of
the shares of Common Stock covered by such Restricted Stock Units
on the record date for the payment of such dividend. Payment of
each such dividend equivalent shall be made on the payment date
of the cash dividend with respect to which it is made, or as soon
as practicable thereafter.
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8. Restricted Stock Awards.
(a) 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 determine, grant Restricted Stock Awards under
the Plan. Each Restricted Stock Award shall be evidenced by a
written instrument which shall state the number of shares of
Common Stock covered by the award and the terms and conditions
which the Committee shall have determined with respect to such
award. Upon the grant of each Restricted Stock Award, a
certificate representing the shares of Common Stock covered by
the award shall be registered in the name of the Participant and
shall be delivered to the Participant without payment on his
part. The Participant shall generally have the rights and
privileges of a shareholder of the Corporation with respect to
such shares, including the right to vote and to receive
dividends, subject to the restrictions specified in paragraphs
(b) and (c).
(b) The Committee shall determine a period of time
("Limitation Period") which shall apply to the shares of Common
Stock transferred to a Participant with respect to each
Restricted Stock Award, provided that in no event shall the
Limitation Period be less than one year. Except as otherwise
determined by the Committee, during the Limitation Period
applicable with respect to each Restricted Stock Award, the
Participant may not sell, transfer, assign, pledge or otherwise
encumber or dispose of the shares of Common Stock covered by such
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Restricted Stock Award. The Committee in its discretion may
prescribe conditions for the incremental lapse of the preceding
restrictions during the Limitation Period, and for the lapse or
termination of such restrictions upon the occurrence of certain
events before the expiration of the Limitation Period. The
Committee in its discretion also may shorten or terminate
the Limitation Period or waive any conditions for the lapse or
termination of the restrictions with respect to all or any
portion of the shares of Common Stock covered by the Restricted
Stock Award. The certificate representing the shares of Common
Stock distributed with respect to each Restricted Stock Award
made under the Plan shall be affixed with a legend setting forth
the restrictions applicable to the transfer of such shares. The
restrictions applicable to a Restricted Stock Award shall lapse
and a certificate for the number of shares of Common Stock with
respect to which the restrictions have lapsed shall be delivered
to the Participant free of all such restrictions upon the
earliest of the following: (1) the expiration of the Limitation
Period applicable to the Restricted Stock Award, (2) the
occurrence of an event prescribed by the Committee which results
in the lapse of the restrictions, or (3) such other time as the
Committee may determine.
(c) The shares of Common Stock covered by a Restricted
Stock Award shall be forfeited by the Participant upon
termination of the Participant's employment with the Corporation
or any of its subsidiaries before the occurrence of any of the
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events described in the last sentence of paragraph (b). The
Participant shall thereupon immediately transfer the shares back
to the Corporation without payment by the Corporation.
9. Performance-Based Awards.
(a) Notwithstanding the provisions of Sections 7 and 8,
the Committee in its discretion may determine that Restricted
Stock Units or Restricted Stock Awards shall be subject to
performance goals in addition to the provisions of Sections 7 and
8. The terms and conditions of such performance goals shall be
determined by the Committee pursuant to the provisions of this
Section 9 and shall be stated in the written instrument
evidencing the Restricted Stock Unit or Restricted Stock Award
grant. No more than 50,000 shares of Common Stock may be covered
by performance-based Restricted Stock Units or Restricted Stock
Awards granted to any Participant in any given year.
(b) The Committee shall determine a period of time
("Performance Period") which shall apply to the shares of Common
Stock covered by each grant of performance-based Restricted Stock
Units or Restricted Stock Awards, provided that in no event shall
the Performance Period be less than one year. The Committee
shall determine the performance measures and specific targets
applicable thereto which shall apply during the Performance
Period. The performance measures shall include one or more of
the following: improvements in revenues, earnings per share,
profit before taxes, price/equity ratio, net income or operating
income; return on shareholder equity; return on net assets; or
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stock price performance. If the Committee shall establish more
than one performance measure, the Committee shall determine the
appropriate weighting for each performance measure. The
Committee also shall determine whether the target established for
each applicable performance measure is subject to full or partial
satisfaction.
(c) In the case of a Restricted Stock Unit grant
subject to the provisions of this Section 9, the Committee may
determine that the dividend equivalents otherwise payable to a
Participant during the Performance Period shall instead be
accrued and paid to the Participant at the end of the Performance
Period to the extent that the applicable performance measures
have been achieved.
(d) At the end of the Performance Period applicable to
each grant of Restricted Stock Units or Restricted Stock Awards
subject to the provisions of this Section 9, the Committee shall
certify whether the applicable performance measures have been
achieved. The shares of Common Stock covered by the Restricted
Stock Units or Restricted Stock Awards shall be forfeited by the
Participant to the extent that the applicable performance
measures have not been achieved. In the case of a Restricted
Stock Award, the Participant shall thereupon immediately transfer
the forfeited shares back to the Corporation without payment by
the Corporation.
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(e) Except as otherwise provided in this Section 9,
each Restricted Stock Unit or Restricted Stock Award grant
subject to the provisions of this Section 9 shall be governed by
the provisions of Section 7 or 8, whichever is applicable. The
Committee shall administer this Section 9 and the other
provisions of the Plan in such a manner as to comply with the
requirements of Section 162(m) of the Code.
10. Adjustment Upon Changes in Capitalization. If there is
a change in the number or kind of outstanding shares of the
Corporation's stock by reason of a stock dividend, stock split,
recapitalization, merger, consolidation, combination or other
similar event, or if there is a distribution to shareholders of
the Corporation's Common Stock other than a cash dividend,
appropriate adjustments shall be made by the Committee to the
number and kind of shares subject to the Plan; the number and
kind of shares under Options, SARs, Restricted Stock Units and
Restricted Stock Awards then outstanding; the maximum number of
shares available for Options, SARs, Restricted Stock Units and
Restricted Stock Awards; the purchase price for shares of Common
Stock covered by Options; and other relevant provisions, to the
extent that the Committee, in its sole discretion, determines
that such change makes such adjustments necessary or equitable.
Similar adjustments may also be made by the Committee in its
discretion if substitute Options are granted pursuant to Section
5(a).
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11. Nontransferability. Options, SARs, Restricted Stock
Units and Restricted Stock Awards shall be assignable and
transferable by the Participant only to the extent permitted by
applicable rules promulgated by the Securities and Exchange
Commission or, in the case of incentive stock options, by Section
422 of the Code. During the Participant's lifetime, Options,
SARs, Restricted Stock Units and Restricted Stock Awards shall
only be exercisable by or payable to the Participant or his or her
guardian.
12. Laws and Regulations. The Plan, the grant and exercise
of Options, SARs, Restricted Stock Units and Restricted Stock
Awards, and the obligation of the Corporation to sell or deliver
shares of Common Stock under the Plan shall be subject to all
applicable laws, regulations and rules.
13. No Employment Rights. Nothing in the Plan shall confer
upon any employee of the Corporation or a Subsidiary any right to
continued employment, or interfere with the right of the
Corporation or a Subsidiary to terminate his or her employment at
any time.
14. Tax Withholding. Any payment to or settlement with a
Participant in cash or Common Stock pursuant to any provision of
the Plan shall be subject to withholding of income tax, FICA tax
or other taxes to the extent the Corporation or a Subsidiary is
required to make such withholding.
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15. Termination; Amendments.
(a) The Board may at any time terminate the Plan.
Unless the Plan shall previously have been terminated by the
Board, it shall terminate on May 19, 2000. No Option, SAR,
Restricted Stock Unit or Restricted Stock Award may be granted
after such termination.
(b) The Board may at any time or times amend the Plan
or amend any outstanding Options, SARs, Restricted Stock Units or
Restricted Stock Awards for the purpose of satisfying the
requirements of any changes in applicable laws or regulations or
for any other purpose which at the time may be permitted by law,
provided that no amendment of any outstanding Options, SARs,
Restricted Stock Units or Restricted Stock Awards shall contain
terms or conditions inconsistent with the provisions of the Plan
as determined by the Committee.
(c) Except as provided in Section 10, no such amendment
shall, without the approval of the shareholders of the
Corporation: (i) increase the maximum number of shares of Common
Stock for which Options, SARs, Restricted Stock Units or
Restricted Stock Awards may be granted under the Plan; (ii)
except to the extent required or permitted under Section 5(a) in
the case of substitute Options, reduce the price at which Options
may be granted below the price provided for in Section 5(c);
(iii) reduce the Option price of outstanding Options; (iv) extend
the period during which Options, SARs, Restricted Stock Units or
Restricted Stock Awards may be granted; (v) except to the extent
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permitted or required under Section 5(a) in the case of
substitute Options, extend the period during which an outstanding
Option may be exercised beyond the maximum period provided for in
Section 5(b); (vi) materially increase in any other way the
benefits accruing to Participants; or (vii) change the class of
persons eligible to be Participants.
16. Effective Date. The Plan shall become effective upon
approval by the Board; provided, however, that the Plan shall be
submitted to the shareholders of the Corporation for approval,
and if not approved by the shareholders within one year from the
date of approval by the Board shall be of no force and effect.
Options, SARs, Restricted Stock Units and Restricted Stock Awards
granted by the Committee before approval of the Plan by the
shareholders shall be granted subject to such approval and shall
not be exercisable or payable before such approval.
