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
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(Name of Registrant as Specified in Its Charter)
COMSAT CORPORATION
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Filing fee:
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COMSAT
CORPORATION
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6560 Rock Spring Drive
Bethesda, MD 20817
Telephone 301 214 3000
Fax 301 214 7100
Telex 197800
April 12, 1996
Dear Shareholder:
The 1996 Annual Meeting of Shareholders will be held at 9:30 a.m. on
Friday, May 17, 1996, at COMSAT's headquarters building in Bethesda,
Maryland. The matters on the meeting agenda are described on the following
pages.
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 1996 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 17, 1996, at 9:30 a.m., Eastern Daylight
Time, for the following purposes:
1. election of 12 directors;
2. action on a proposal to amend the Non-Employee Directors Stock
Option Plan to (i) authorize the grant of share awards or phantom
stock units, and (ii) provide for the vesting of participants' rights
under the Plan in the event of certain changes in control;
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 28,
1996, 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 12, 1996
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COMSAT CORPORATION
6560 Rock Spring Drive
Bethesda, Maryland 20817
Telephone: (301) 214-3000
PROXY STATEMENT
This Proxy Statement is provided by the Board of Directors of COMSAT
Corporation (the Corporation or COMSAT) in connection with its solicitation
of proxies for the 1996 Annual Meeting of Shareholders. The Proxy Statement
is first being mailed on or about April 12, 1996.
Shareholders of record of the Corporation's common stock, without par
value (Common Stock), at the close of business on March 28, 1996 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, 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 28, 1996, the record date, approximately 47,994,500 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 47,973,700 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) and other
available information as of March 1, 1996, the
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following persons reported beneficial ownership of more than five
percent of the Corporation's Common Stock.
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership * of Class
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Joseph L. Harrosh 4,026,600 8.4%
40900 Grimmer Blvd.
Freemont, CA 94538
Travelers Group, Inc. 3,331,874 7.0%
Smith Barney Holdings Inc.
388 Greenwich Street
New York, NY 10013
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* Mr. Harrosh reported sole voting and sole investment power with
respect to the shares reflected. Travelers Group, Inc. and Smith
Barney Holdings Inc. reported shared voting and investment power with
respect to their shares.
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 which
shares owned in excess of the 5 percent limitation, but not in excess of
the 10 percent limitation, may not be voted by the holder but will be voted
pro rata with all other shares of Common Stock voted on any given matter.
The persons listed above have been advised by the Corporation that if their
respective ownership on the record date exceeds the 5 percent voting
limitation, shares held in excess of 5 percent will be voted as described
above.
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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 9 times in 1995. All incumbent directors, except Barry
M. Goldwater, attended 75% or more of Board meetings and meetings of Board
committees of which they were members in 1995.
Voting for Directors
At the meeting 12 directors will be elected to serve until the 1997
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 is set forth under the caption "Nominees For Election As
Directors." All of these nominees, except Mr. Hurtt, currently serve as
directors. Biographical information for each of the three Presidentially
appointed directors is set forth under the caption "Presidentially
Appointed Directors."
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.
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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.
NOMINEES FOR ELECTION AS DIRECTORS
LUCY WILSON BENSON, 68, 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]
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EDWIN I. COLODNY, 69, 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
Ascent Entertainment Group, Inc., Lockheed Martin 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, 52, 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. He has been
an employee of COMSAT since 1980 and has held various operational and
financial positions. He also is a director of Ascent Entertainment Group,
Inc., ACE Limited and Augat, Inc. and a director or trustee of funds of AIM
Management Group, Inc. He also is 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 has been a COMSAT director since May 1995. He also is a
director of Corning Incorporated, Dresser Industries, Inc., Jefferson
Bankshares, Inc., Phillips Petroleum Company, Stimsonite Corporation and
Universal Corporation.
[Picture of Mr. Eagleburger]
NEAL B. FREEMAN, 55, 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 Chairman of the Institute on Political Journalism, Georgetown
University, and a director of The Ethics and Public Policy Center and the
National Review, Inc.
[Picture of Mr. Freeman]
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ARTHUR HAUSPURG, 70, 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]
CALEB B. HURTT, 64, is a director or trustee of various organizations. He
was President of Martin Marietta Aerospace from 1982 to 1987 and then
President and Chief Operating Officer of Martin Marietta Corporation from
1987 through 1989. He is a director of Lockheed Martin Corporation and is
Vice Chairman of the Board of Trustees of Stevens Institute of Technology.
He also has served as Chairman of the Board of Governors of the Aerospace
Industries Association, as Chairman of the NASA Advisory Council and as
Chairman of the Federal Reserve Bank, Denver Branch.
[Picture of Mr. Hurtt]
PETER W. LIKINS, 59, 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, 65, 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]
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ROBERT G. SCHWARTZ, 68, 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 Ascent Entertainment Group,
Inc., 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]
C. J. SILAS, 63, 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 to April 1994. He
has been a COMSAT director since May 1993. He is Chairman of the Board of
Ascent Entertainment Group, Inc. and a director of The Reader's Digest
Association, Inc. and Halliburton Company.
[Picture of Mr. Silas]
DOLORES D. WHARTON, 68, 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 trustee of the Committee for Economic Development and a director
of Gannett Company, Inc., Kellogg Company and Capital Bank & Trust Company.
[Picture of Ms. Wharton]
PRESIDENTIALLY APPOINTED DIRECTORS
BARRY M. GOLDWATER, 87, 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 expired at the 1995 Annual Meeting. He has been renominated to another
term and continues to serve in accordance with the Satellite Act.
[Picture of Senator Goldwater]
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PETER S. KNIGHT, 45, 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 COMSAT director 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, and he has been
renominated to another term.
[Picture of Mr. Knight]
CHARLES T. MANATT, 59, is the senior partner of Manatt, Phelps & Phillips,
a Washington, D.C., and Los Angeles law firm which he founded in 1965. He
was Chairman of the Democratic National Committee from 1981 through 1985.
He has been a Presidentially appointed COMSAT director since May 1995. He
also is a director of the Federal Express Corporation and ICN
Pharmaceuticals, Inc. His current term expires at the 1997 Annual Meeting.
[Picture of Mr. Manatt]
OTHER INFORMATION CONCERNING DIRECTORS
Committees
The Board currently has six standing committees, described below.
The Committee on Audit, Corporate Responsibility and Ethics consists
of Lucy Wilson Benson (Chairman), Edwin I. Colodny, Lawrence S.
Eagleburger, Peter W. Likins, Howard M. Love and Charles T. Manatt. 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 1995.
The Committee on Compensation and Management Development consists of
Edwin I. Colodny (Chairman), Neal B. Freeman, Robert G. Schwartz, C. J.
Silas and Dolores D. Wharton. The Committee
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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 6 times during 1995.
The Entertainment Properties Committee consists of C. J. Silas
(Chairman), Lucy Wilson Benson, Neal B. Freeman, Arthur Hauspurg, Peter S.
Knight and Dolores D. Wharton. The Committee considers and makes
recommendations to the Board with respect to the Corporation's ownership
interest in Ascent Entertainment Group, Inc. (Ascent), including matters
pertaining to current and proposed multimedia distribution to the
hospitality industry, the sports franchises owned or operated by Ascent,
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. At December 31, 1995, the Corporation owned 80.67% of
Ascent's outstanding common stock. The Committee met 4 times during 1995.
The Finance Committee consists of Robert G. Schwartz (Chairman), Bruce
L. Crockett, Arthur Hauspurg, Melvin R. Laird and Howard M. Love. 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 7 times during
1995.
The Nominating Committee consists of Melvin R. Laird (Chairman),
Arthur Hauspurg 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 4
times during 1995. 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, Lawrence S. Eagleburger, Barry M.
Goldwater, Peter S. Knight and Charles T. Manatt. 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
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Act and the relationships of the 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 1995.
Directors Compensation
Except as noted below, a director who was not an employee of the
Corporation in 1995 received: 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.
If the shareholders approve the amendment to the Non- Employee
Directors Stock Option Plan discussed under the caption "Item 2. Proposed
Amendments to Non-Employee Directors Stock Option Plan," beginning in 1996,
in lieu of the current annual cash retainer of $21,500 paid in quarterly
installments, continuing directors would receive an annual cash retainer of
$10,000 and 600 shares of the Corporation's Common Stock payable at the
first meeting of the Board of Directors after each Annual Meeting of
Shareholders.
Under the Directors and Executives Deferred Compensation Plan, a
non-employee director may elect to defer all or part of his or her cash
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 participating director 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 Directors and Executives Deferred Compensation Plan was
amended to provide an additional lump sum payment election for the
additional amounts deferred under the plan from
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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 1995, the aggregate value of split dollar
life insurance premiums paid for the benefit of all covered directors was
$249,765.
Under the Non-Employee Directors Stock Option Plan, the Corporation
grants annually in March to each non-employee director, who was also
serving on the date of the Annual Meeting of Shareholders for the prior
year, an option to purchase shares of Common Stock. For options granted
before March 16, 1990, each option is for 2,000 shares, the exercise price
per share is the fair market value of a share of Common Stock on the date
of grant, and the option expires 10 years from the date of grant. For
options granted on or after March 16, 1990, and before March 19, 1993, each
option is for 2,000 shares, the exercise price per share is 50% of the fair
market value on the date of grant, and the option expires 15 years from the
date of grant. For options granted on or after March 19, 1993, each option
is for 4,000 shares, the exercise price per share is the fair market value
of a share of Common Stock on the date of grant, and the option expires 15
years from the date of grant. All data related to shares of Common Stock,
options to purchase shares of Common Stock and share prices prior to June
1, 1993 have been adjusted to reflect the two-for-one split in the
Corporation's Common Stock effective June 1, 1993.
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All options granted before March 19, 1993 under the Non- Employee
Directors Stock Option Plan are currently exercisable. 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.
Under plan amendments subject to shareholder approval at the Annual
Meeting, which are discussed under the caption "Item 2. Proposed Amendments
to Non-Employee Directors Stock Option Plan," the option also would become
fully exercisable and continue in force for the duration of its term in the
event of certain changes in control. If the director's 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 1995, options for a total of 52,000 shares of Common Stock were
granted to non-employee directors at a purchase price per share of $19.00,
which was the fair market value of the Common Stock on the date of grant.
In 1995, no non-employee director exercised options granted under that
plan.
Executive compensation is described below under the caption "Executive
Compensation."
Compensation Committee Interlocks, Insider Participation and
Related Party Transactions
There were no compensation committee interlocks or insider
participation in compensation decisions during 1995.
Between April and July 1995, a subsidiary of Ascent, which was
previously a direct subsidiary of the Corporation, loaned a total of $2
million to Bruce L. Crockett, President and Chief Executive Officer and a
director of the Corporation. The loan, plus interest thereon at the prime
rate plus one percent, was repaid in full in November 1995.
COMMON STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Corporation's Common Stock and the common stock of Ascent
Entertainment Group, Inc., a publicly-traded, 80.67%-owned subsidiary of
the Corporation, as of March 1, 1996 or as noted, by all directors and
nominees, by each of the executive officers named in the Summary
Compensation Table
12
<PAGE>
under the caption "Executive Compensation," and by all directors and
executive officers as a group. Under the 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 Amount and
Nature of Nature of
Beneficial Beneficial
Ownership of Ownership of
COMSAT Common Ascent Common
Name (1) Stock (2) Stock
- ---- -------------- -------------
Betty C. Alewine......... 238,248(3) --
Lucy Wilson Benson....... 20,800 500
Edwin I. Colodny......... 11,000 1,400
Bruce L. Crockett........ 470,640(4) 1,000
Lawrence S. Eagleburger.. 100 --
Neal B. Freeman.......... 14,400 --
Barry M. Goldwater....... 10,000 --
Arthur Hauspurg.......... 13,800 --
Caleb B. Hurtt.......... 1,000 --
Peter S. Knight.......... 1,000 1,000
Melvin R. Laird.......... 22,000 2,500
Peter W. Likins.......... 17,850(5) --
Howard M. Love........... 18,300(6) --
Charles Lyons............ 196,931(7) 2,500
Ronald J. Mario.......... 234,413(8) --
Charles T. Manatt........ 1,500 1,000
Robert G. Schwartz....... 22,000 2,400
C. J. Silas.............. 7,000 4,400
Richard E. Thomas........ 193,955(9) 200(10)
Dolores D. Wharton....... 3,000 --
All directors and executive
officers as a group
(27 persons)............. 1,832,694(11) 17,250
- --------------------
13
<PAGE>
(1) Unless otherwise indicated, each person has sole voting and investment
powers over the shares listed, and no director or executive officer
beneficially owns more than 1.0% of the common stock of the
Corporation or Ascent.
(2) Each number in this column has been rounded down to the nearest whole
share. Beneficial ownership of COMSAT Common Stock includes shares
that may be acquired within 60 days after March 1, 1996 through the
exercise of options as follows: Ms. Alewine, 165,984 shares; Mrs.
Benson, 20,000 shares; Mr. Colodny, 10,000 shares; Mr. Crockett,
343,900 shares; Mr. Freeman, 14,000 shares; Sen. Goldwater, 10,000
shares; Mr. Hauspurg, 10,000 shares; Mr. Laird, 20,000 shares; Dr.
Likins, 15,000 shares; Mr. Love, 13,000 shares; Mr. Lyons, 137,750
shares; Mr. Mario, 172,264 shares; Mr. Schwartz, 20,000 shares; Mr.
Silas, 6,000 shares; Mr. Thomas, 53,750; Mrs. Wharton, 2,000; and all
directors and executive officers as a group, 1,255,555 shares. Mr.
Hurtt's beneficial ownership is shown as of March 21, 1996.
(3) Includes 58,750 shares which are restricted against transfer and 550
shares which are held in the Corporation's Savings and Profit-Sharing
Plan as of December 31, 1995.
(4) Includes 2,400 shares held by Mrs. Crockett with respect to which Mr.
Crockett disclaims beneficial ownership. Also includes 103,500 shares
which are restricted against transfer and 8 shares which are held in
the Corporation's Savings and Profit-Sharing Plan as of December 31,
1995. Mr. Crockett beneficially owned 1% of the Corporation's
outstanding Common Stock as of March 1, 1996.
(5) Includes 2,850 shares over which Dr. Likins shares voting power and
investment power with Mrs. Likins.
(6) Includes 2,500 shares held in a trust over which Mr. Love has no
voting power and shared investment power.
(7) Includes 56,750 shares which are restricted against transfer and 548
shares which are held in the Corporation's Savings and Profit-Sharing
Plan as of December 31, 1995.
(8) Includes 50,250 shares which are restricted against transfer and 1,856
shares which are held in the Corporation's Savings and Profit-Sharing
Plan as of December 31, 1995.
(9) Includes 104,371 shares over which Mr. Thomas shares voting power and
investment power with Mrs. Thomas. Also includes 12,500 shares which
are restricted against transfer and 5,784 shares which are held in the
COMSAT RSI, Inc. Employee Stock Ownership Plan as of December 31,
1995.
(10) Mr. Thomas shares voting power and investment power for the shares
with Mrs. Thomas.
(11) Includes 2,400 shares with respect to which beneficial ownership is
disclaimed. Also includes an aggregate of 365,104 shares which are
restricted against transfer, which are held in the Corporation's
Savings and Profit-Sharing Plan as of December 31, 1995, or which are
held in the COMSAT RSI, Inc. Employee Stock Ownership Plan as of
December 31, 1995. All directors and executive officers as
14
<PAGE>
a group beneficially owned 3.7% of the Corporation's outstanding Common
Stock as of March 1, 1996.
Section 16(a) Reports
A trust in which Howard M. Love, a director of the Corporation, holds
a beneficial interest inadvertently omitted to report one transaction in
1993 and filed a late report for that transaction in 1996. Arthur R. Sando,
a former executive officer of the Corporation, filed a late report in 1995
related to the disposition of the remaining shares held in his Employee
Stock Purchase Plan account. Warren Y. Zeger, an executive officer of the
Corporation, filed an annual report on Form 5 which reported one
transaction approximately one month late that he believed had been reported
in the prior month.
ITEM 2. PROPOSED AMENDMENTS TO NON-EMPLOYEE DIRECTORS
STOCK OPTION PLAN
The Non-Employee Directors Stock Option Plan (the Plan) was adopted by
the Board of Directors and approved by the shareholders in 1988. Amendments
to the Plan were adopted and approved by the Board of Directors and the
shareholders in 1990 and 1993. The Plan is described under the caption
"Other Information Concerning Directors -- Directors Compensation."
At its meeting held on February 16, 1996, the Board of Directors
adopted two amendments to the Plan that are subject to the approval of the
shareholders. The first amendment, if approved, would authorize the annual
grant of 600 shares of the Corporation's Common Stock, or 600 phantom stock
units (PSUs) if a director elects to defer receipt of the shares, in lieu
of a portion of the current annual cash retainer paid to directors.
Non-employee directors, except for the chairman, currently receive an
annual cash retainer of $21,500 paid in quarterly installments. If the
amendment is approved, the annual cash retainer would be reduced to $10,000
beginning in 1996. The $10,000 cash retainer and the 600-share stock award
under the Plan would be paid at the first meeting of the Board of Directors
after each Annual Meeting to directors who are elected at the Annual
Meeting or who then serve as Presidential appointees. Non-employee
directors elected by the Board or appointed by the President to fill
vacancies would receive a prorated cash retainer and share grant based on
the number of full months such director serves between his or her election
or appointment and the next Annual Meeting.
Under the proposed amendment, directors may elect to defer receipt of
the annual stock award and receive PSUs in lieu thereof. The PSUs would be
held in an account for the director
15
<PAGE>
pending his or her retirement or termination of service on the Board.
Upon payment of a dividend on the Corporation's Common Stock, an equivalent
amount would be converted to PSUs, based on the fair market value of the
stock on the dividend payment date, and would be credited to the director's
account. The PSUs would increase or decrease in value based on an
equivalent number of shares of the Corporation's Common Stock. Upon
retirement or termination of service, a director would receive payment in
shares of the Corporation's Common Stock equal to the number of PSUs
credited to his or her account under the Plan.
If the amendment is approved, the Corporation's non-employee directors
other than Mr. Laird, who is compensated separately as Chairman, currently
consisting of 13 persons, would each receive a stock award of 600 shares or
a like amount of PSUs, or 7,800 shares or PSUs in the aggregate, under the
Plan. Based on the average of the high and low sales prices for the
Corporation's Common Stock on March 1, 1996, such shares or PSUs would have
had an aggregate fair market value of $180,863 on that date. The actual
number of shares or PSUs awarded in any year may vary depending on the
number of non-employee directors serving as of the first Board meeting
after the Annual Meeting and the timing of Presidential appointments.
The purpose of this amendment is to more closely align the interests
of directors with those of the shareholders by replacing a portion of the
cash compensation currently paid to non-employee directors with a stock
award. The amendment is also consistent with recent compensation changes
adopted by the Board of Directors and the Corporation's current executive
compensation policies which are designed to align the interests of senior
management and the shareholders. See "Committee on Compensation and
Management Development Report on Executive Compensation."
The second amendment, if approved, would accelerate the vesting of
options granted or the payment of shares deferred under the Plan upon the
occurrence of certain events defined as a "Change of Control." Under the
proposed amendment, a "Change of Control" would include: (1) the
acquisition by any person (other than the Corporation or an employee
benefit plan sponsored by the Corporation) of beneficial ownership of 50%
or more of the outstanding voting securities of the Corporation; (2) any
change in the composition of the Board of Directors such that the elected
directors as of the date of approval of the amendment (the Incumbent
Directors) cease to constitute a majority of the Board (provided that any
individual whose nomination or election is approved by a vote of
three-fourths of the then Incumbent Directors shall be treated as an
Incumbent Director); (3) approval by the shareholders of a merger, share
exchange, swap, consolidation, recapitalization or other business
combination which, if consummated, would result in the Corporation's
shareholders holding less than 60% of the combined voting power
16
<PAGE>
of the Corporation, the surviving entity or its parent (as
applicable); (4) approval by the shareholders of the liquidation or
dissolution of the Corporation, or sale by the Corporation of all or
substantially all of the Corporation's assets, other than to an entity 80%
of the combined voting power of which would be beneficially owned by the
Corporation's then existing shareholders; or (5) any event which would have
to be reported as a "change of control" under the regulations governing the
solicitation of proxies by the SEC. The Satellite Act and the Corporation's
Articles of Incorporation impose certain limitations on the amount of
Common Stock that may be beneficially owned or voted by any one person or
affiliated group. See "Ownership of Common Stock." Accordingly, in the
absence of amendment of the Satellite Act and the Corporation's Articles of
Incorporation, it is unlikely that a Change of Control would occur under
clause (1) of the above definition.
Under the amendment, the Board of Directors would retain the authority
to determine in advance that the "Change-of-Control" provisions would not
apply to a particular transaction. In the event of such a determination,
the vesting of options granted or the payment of PSUs credited under the
Plan would not be accelerated. This provision is intended to afford the
Board of Directors flexibility in structuring transactions and to encourage
negotiated transactions.
Options granted under the Plan currently become 50% exercisable one
year after the date of grant, and the remaining 50% becomes exercisable two
years after the date of grant. The Plan does not currently authorize the
acceleration of vesting in the event of a change of control.
The purpose of the second amendment is to assure that the Board of
Directors places the interests of shareholders first in considering
potential change-of-control transactions without having to be distracted by
personal financial considerations related to the treatment of unvested
options in such a transaction. The Board believes that the proposed
amendment will protect shareholder interests by promoting the objective,
disinterested evaluation of potential change-of-control transactions. The
amendment also would enhance the Corporation's ability to attract and
retain qualified directors, thereby promoting Board stability and
continuity.
If the amendments are approved, the Plan will be renamed the "COMSAT
Corporation Non-Employee Directors Stock Plan." The remaining provisions of
the Plan will continue in effect. The Corporation will continue to grant
annually in March to each non-employee director, who was serving on the
date of the Annual Meeting of Shareholders for the prior year, an option to
purchase 4,000 shares of the Corporation's Common Stock at an exercise
17
<PAGE>
price equal to the fair market value on, and with an expiration date
15 years from, the date of grant.
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, which is
composed of independent outside directors, is responsible for establishing
and administering the Corporation's executive compensation philosophy. Set
forth below is the Committee's report on the 1995 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).
The Corporation's executive compensation philosophy is designed to
attract, motivate and retain talented executives critical to the long-term
success of the Corporation. 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. The main
components of this philosophy are annual compensation, consisting of salary
plus bonuses awarded under the Corporation's Annual Incentive Plan, and
long-term compensation, consisting of stock- based incentives. The
Committee reviews and recommends to the Board the annual compensation of
all executive officers, and reviews and approves executive officers'
long-term compensation.
There are two groups of competitive companies that are used in the
executive compensation analysis. The first group, consisting of the larger
companies that make up the Peer Group Index discussed under the caption
"Performance Graph," is used to compare executive compensation strategy and
practices. The second group, consisting of companies in the
telecommunications and entertainment industries with revenues more
comparable to the Corporation's, is used to benchmark competitive
compensation levels.
Annual Compensation
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
18
<PAGE>
adjusted as changes in the 50th percentile occur in the marketplace.
If an executive's base salary reaches the cap, both the executive's base
salary and the salary cap are frozen for three years. The salary cap is
again subject to adjustment at the end of the three-year period based on
changes in the 50th percentile of base salary during this period, at which
time the executive's base salary may be increased if the cap is increased.
Total annual compensation - base salary and bonus - is targeted at the 75th
percentile for comparable positions in the competitive companies. Thus,
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 under the performance-driven annual
bonus process, thus producing greater incentive to perform. In January
1993, Mr. Crockett recommended to the Committee that, for the period
through 1995, his base salary be frozen at $350,000, the cash portion of
his bonus be no higher than $400,000, and a portion of his annual bonus be
awarded in the form of long-term compensation. The Committee approved these
recommendations, placing a greater portion of Mr. Crockett's compensation
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 Chief Executive Officer based on the principles
outlined above. The Committee used this data in determining Mr. Crockett's
bonus for 1995 in light of the performance of the Corporation as well as
Mr. Crockett's individual performance. Under Mr. Crockett's leadership, the
Corporation continued to implement the long-term strategic plan for its
international communications and entertainment businesses that it adopted
in 1994. Although the Corporation accomplished many of its strategic goals
for 1995, the Corporation's Profit Before Tax performance did not meet the
objectives set for the year. Taking all of these factors into account, the
Committee recommended to the Board a total 1995 bonus award of $240,000, a
50% reduction from 1994, of which $160,000 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 other executive officers for 1995 were
based on target award percentages of base salary for each position
determined by the Committee. A portion of each
19
<PAGE>
target award was tied to corporate and business unit performance
criteria based on the achievement of one or more financial measures as
compared to planned performance, and individual performance criteria 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 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 Committee 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. For 1995,
awards by the Committee consisted of non-qualified stock options,
restricted stock awards (RSAs) and phantom stock units (PSUs). These awards
were consistent with ranges in the revenue group of competitive companies
which were developed by an independent compensation consulting firm, and
which were reviewed and accepted by the Committee.
A significant portion of executive compensation is represented by
stock options granted at fair market value which the Committee believes
provide a strong tie to shareholder interests. In January 1995, Mr.
Crockett was awarded 130,000 of such stock options. Similar awards were
granted to the other Named Executive Officers: three received 55,000 stock
options, and one received 60,000 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
long-term compensation for comparable positions in the competitive
companies. Second, the Committee approved the actual awards for each
executive officer based on these guidelines and performance recommendations
made by Mr. Crockett based on his evaluation of each officer's performance
for 1994. The recommendation for Mr. Crockett was made to the Committee
based on the competitive ranges developed by the independent consulting
firm.
RSAs are restricted shares of COMSAT stock which are granted to
executive officers and selected key employees as a retention device based
on the vesting schedule established by the Committee for each grant. The
vesting of RSAs is subject to both a length of service requirement and the
achievement of objective performance-based criteria which have been
approved by the Committee. The percent of the award earned is based on the
level
20
<PAGE>
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. In January 1995, Mr. Crockett received 20,000 RSAs, and
each of the other Named Executive Officers received 7,500 RSAs. The number
of RSAs granted to Mr. Crockett was in recognition of his position as CEO
and his performance in that position during 1994, and was designed to put
more of his total compensation at risk in the form of long-term
compensation. The number of RSAs granted to each of the other Named
Executive Officers was based on the guidelines developed by the independent
compensation consulting firm discussed above.
The performance-based criteria applicable to RSAs are 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 Corporation intends to preserve the tax deductibility
under Section 162(m) of all compensation paid to its executive officers.
PSUs are equivalent in value to shares of COMSAT stock and vest at the
end of a period of years determined by the Committee. In January 1995, the
Committee awarded PSUs to the Named Executive Officers in lieu of a portion
of the cash bonus that otherwise would have been paid to them for 1994
under the Annual Incentive Plan as follows: Mr. Crockett received 7,940
PSUs for $125,000 of bonus; three others received 1,590 PSUs for $25,000 of
bonus; and one received 4,765 PSUs for $75,000 of bonus. These PSUs 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.
Modification of Compensation Philosophy in 1996
During 1995, the Committee engaged an independent consultant to
evaluate the effectiveness of the executive compensation philosophy that
had been in place since 1993. Based on the consultant's report, the
Committee concluded that annual cash compensation levels for the five
highest paid executives have fallen significantly behind the market while
total compensation (annual cash compensation plus long-term compensation)
has been achieving desired 75th percentile positioning. However, the
combination of low base salaries, aggressive annual incentive targets and
above-market long-term compensation is causing salary compression below the
executive officer level where annual incentive and long-term compensation
comprises a smaller percentage of the total compensation package.
21
<PAGE>
Beginning in 1996, the Committee decided to modify the executive
compensation philosophy to reflect a compensation mix that is more
consistent with market practice. This involves setting base salaries at
competitive levels and lowering annual incentive targets to achieve
competitive cash compensation when business results are attained. The
Corporation will continue to use a mix of long-term compensation, awarding
stock options to the median of the market and performance-based restricted
stock to the 75th percentile which will be earned if the business achieves
a high level of performance over the long term.
Stock Ownership Guidelines
The Committee believes that stock ownership by management is an
important factor which strengthens and reinforces the linkage between
increased shareholder value and executive compensation. The Committee has
established guidelines for target levels of stock ownership to be attained
over the next five years by all executive officers and key employees who
regularly receive grants from the Key Employee Stock Plan. While compliance
with these guidelines is voluntary, the Committee will review executives'
progress toward these goals annually.
Committee on Compensation and Management Development
Edwin I. Colodny, Chairman
Neal B. Freeman
Robert G. Schwartz
C. J. Silas
Dolores D. Wharton
22
<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, 1995.
<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 ($) ($) ($)(2) ($)(3) (#) ($)(5)
- ------------------------ ---- -------- -------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Bruce L. Crockett, 1995 $350,000 $160,000 $ 6,142 $ 547,091 130,000 $135,405
President & Chief 1994 350,000 350,000 28,930 1,139,050 200,000 140,215
Executive Officer 1993 350,000 400,000 3,759 1,119,148 200,000 116,783
Betty C. Alewine, 1995 226,923 140,000 448 178,363 55,000 23,339
President, COMSAT 1994 210,000 190,000 387 562,788 80,000 31,221
International 1993 200,000 180,000 697 552,079 80,000 25,777
Communications
Charles Lyons, 1995 328,461 150,000 1,886 382,113 352,500 (4) 303,275
President, Ascent 1994 210,000 190,000 992 562,788 80,000 38,803
Entertainment Group, 1993 200,000 180,000 4,340 552,079 80,000 32,136
Inc.
Ronald J. Mario, 1995 217,500 90,000 2,161 178,363 60,000 64,758
Senior Vice President, 1994 210,000 130,000 3,350 562,788 80,000 58,029
Business Development 1993 200,000 155,000 1,100 552,079 80,000 45,594
Richard E. Thomas 1995 315,071 140,000 0 239,680 55,000 6,648
President, COMSAT RSI, 1994 181,740 150,000 0 431,281 80,000 4,251
Inc. (1)
- ---------------
</TABLE>
(1) Mr. Thomas became an executive officer on June 3, 1994, when he became
President, COMSAT RSI, Inc., upon consummation of the acquisition of
Radiation Systems, Inc. His compensation for 1994 reflects amounts
paid after that date.
(2) Other Annual Compensation shown for 1993, 1994 and 1995 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.
(3) Includes restricted stock awards (RSAs), restricted stock units (RSUs)
and phantom stock units (PSUs). Dividends are paid on RSAs granted in
1993 and 1995. For performance-based RSAs granted in 1994, dividend
equivalents are paid
23
<PAGE>
with respect to the performance period, and dividends will be paid
during the subsequent vesting period on shares earned under the
applicable performance measures. Half of the RSAs granted to Named
Executive Officers in 1994 will be forfeited in 1996 based on the
non-satisfaction of certain required performance measures during 1994
and 1995. Dividend equivalents are paid on RSUs and PSUs. The number
and value of the aggregate restricted stock holdings of each of the
Named Executive Officers as of December 31, 1995, are as follows:
Number of Value as of
RSAs/RSUs/PSUs 12/31/95
-------------- -----------
Mr. Crockett......... 135,910 $2,590,784
Ms. Alewine.......... 66,285 1,263,558
Mr. Lyons............ 76,285 1,454,183
Mr. Mario............ 66,285 1,263,558
Mr. Thomas........... 30,765 586,458
(4) Includes options to acquire 55,000 shares of the Corporation's Common
Stock and options to acquire 297,500 shares of Ascent's common stock.
(5) All Other Compensation for 1995 includes the following elements: (i)
unused credits under the Corporation's cafeteria plan that were paid
in cash to the Named Executive Officers; (ii) time off buy-back under
the Corporation's cafeteria plan that was paid in cash to the Named
Executive Officers; (iii) contributions by the Corporation to the
Corporation's 401(k) Plan on behalf of the Named Executive Officers;
(iv) above-market interest accrued for the Named Executive Officers
under the Corporation's Deferred Compensation Plan; and (v) life
insurance premiums for the Named Executive Officers. The life
insurance premiums shown for Mr. Thomas represent the premiums paid by
the Corporation with respect to a term life insurance policy for him.
The life insurance premiums shown for the other Named Executive
Officers represent split dollar premiums which 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
24
<PAGE>
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. All Other Compensation for Mr. Lyons also includes
$249,576 of additional compensation awarded to him in connection with
his services during 1995 as President of Ascent prior to commencement
of his employment agreement with Ascent in December 1995, which is
described under the caption "Executive Compensation -- Employment
Agreements." This amount, which was determined on the basis of
Ascent's financial performance for 1995, has been credited to a
deferred compensation account that will earn interest annually and be
paid to Mr. Lyons at the end of his employment agreement if he remains
employed for the full five-year term. All Other Compensation for Mr.
Thomas also includes a $2,000 service award.
Above-
Unused Time Off 401(k) Plan Market Life Insurance
Credits Buy-Back Contributions Interest Premiums
------- -------- ------------- -------- --------------
Mr. Crockett....... $14,112 $7,000 $5,262 $80,662 $28,369
Ms. Alewine........ 2,803 0 5,700 5,359 9,477
Mr. Lyons.......... 12,341 7,030 5,700 13,058 15,570
Mr. Mario.......... 0 4,200 5,700 40,138 14,720
Mr. Thomas......... 0 0 0 0 4,648
Option Grants
The following table sets forth information on options granted to the
Named Executive Officers in 1995.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
------------------------------------------------------------
Number of
Securities % of Total
Underlying Options Options Exercise
Granted Granted to Price Expiration Grant Date
Name (#)(1) Empl in FY(2) ($/Sh) Date Present Value(3)
---- ------------------ --------------- --------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Bruce L. Crockett........ 130,000 14.81% $19.3125 01/20/05 $ 694,200
Betty C. Alewine......... 55,000 6.27 19.3125 01/20/05 293,700
Charles Lyons............ 55,000 6.27 19.3125 01/20/05 293,700
297,500 32.23 15.0000 12/18/05 2,115,225
Ronald J. Mario.......... 60,000 6.84 19.3125 01/20/05 320,400
Richard E. Thomas........ 55,000 6.27 19.3125 01/20/05 293,700
- ---------------
</TABLE>
(1) Except for the second option grant to Mr. Lyons, the options shown
were granted on January 20, 1995 to acquire the Corporation's Common
Stock and vest as follows: 25% on
25
<PAGE>
January 20, 1996; another 25% on January 20, 1997; and the remaining 50%
on January 20, 1998. The second option grant to Mr. Lyons was made on
December 18, 1995 to acquire 297,500 shares of the common stock of
Ascent and vests as follows: 10% on December 18, 1996; 15% on December
18, 1997; 25% on December 18, 1998; another 25% on December 18, 1999;
and the remaining 25% on December 18, 2000; provided that the option
will not vest to any extent prior to December 18, 1998 if the
Corporation continues to own at least 80% of Ascent.
(2) The total number of COMSAT options granted to key employees in 1995
was 877,650; the total number of Ascent options granted to Ascent
employees in 1995 was 923,000.
(3) The Corporation and Ascent used the Black-Scholes option pricing model
to determine grant date present values using the following
assumptions: a dividend yield of 3.38% for the Corporation and 0.0%
for Ascent; stock price volatility of 0.28; a 10-year option term; a
risk-free rate of return of 5.84% for the Corporation and 5.71% for
Ascent; a retention discount of 3.0%; and the vesting schedule
described in footnote 1 above for the Corporation and Ascent. The 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.
Option Exercises and Fiscal Year-End Values
The following table sets forth information on (1) options exercised by
the Named Executive Officers in 1995, and (2) the number and value of their
unexercised options as of December 31, 1995.
26
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1995 AND 12/31/95 OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Options at 12/31/95 Options at 12/31/95
--------------------------- ---------------------------
Shares
Underlying
Options Value
Exercised Realized Exercisable Unexercisable Exercisable Unexercisable
Name (#) ($) (#) (#) ($) ($)
- ---- ---------- -------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Bruce L. Crockett........ 126,850 $744,645 161,400 380,000 $ 9,605 $ 0
Betty C. Alewine......... 0 0 92,234 155,000 285,815 0
Charles Lyons............ 0 0 64,000 155,000 52,375 0
0 0 0 297,500* 0 74,375
Ronald J. Mario.......... 2,000 11,687 97,264 160,000 298,129 0
Richard E. Thomas........ 0 0 20,000 115,000 0 0
- ---------------
</TABLE>
* Option to acquire Ascent common stock. All other options shown are to
acquire COMSAT Common Stock.
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 Internal Revenue Code
limits the annual benefits payable under the Retirement Plan. Under this
limitation, the maximum annual benefit for 1995 is $120,000.
Estimated Annual Benefits Payable Upon Retirement
----------------------------------------------------
Years of Service
----------------------------------------------------
Average Annual Salary 15 20 25 30 35
- --------------------- -------- -------- -------- -------- --------
$100,000................. $ 25,870 $ 37,366 $ 43,662 $ 52,558 $ 58,367
150,000................. 40,170 57,346 67,962 81,858 90,792
200,000................. 52,827 75,683 90,619 109,515 120,000
250,000................. 62,615 91,152 110,407 120,000 120,000
300,000................. 70,615 104,831 120,000 120,000 120,000
350,000................. 78,615 118,511 120,000 120,000 120,000
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
27
<PAGE>
the Social Security wage base. The years of credited service for the
Named Executive Officers as of December 31, 1995 are: 15 for Mr. Crockett;
9 for Ms. Alewine; 5 for Mr. Lyons; and 10 for Mr. Mario. Mr. Thomas is not
a participant in the Retirement Plan, and Mr. Lyons ceased accruing
benefits under the Retirement Plan as of December 31, 1995.
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.
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, 1995 for
each of the Named Executive Officers are: $435,897 for Mr. Crockett;
$187,120 for Ms. Alewine; $174,499 for Mr. Mario; and $211,037 for Mr.
Thomas. Mr. Crockett, Ms. Alewine, Mr. Mario and Mr. Thomas are each 100%
vested in the Plan. Mr. Lyons is not a participant in the Plan.
Employment Agreements
Ascent and Mr. Lyons have entered into a five-year employment
agreement that became effective upon completion of Ascent's initial public
offering on December 18, 1995. Pursuant to the agreement, Mr. Lyons' base
salary is $500,000 per year, subject to increases at the discretion of
Ascent's board of directors. Mr. Lyons is also eligible for an annual bonus
based on performance measures determined by Ascent's compensation committee
with a target bonus equal to 70% of Mr. Lyons' base salary. Pursuant to the
agreement, Mr. Lyons was granted an option to purchase 297,500 shares of
Ascent's common stock, which
28
<PAGE>
represented 1% of Ascent's outstanding stock upon completion of
Ascent's initial public offering, at the offering price of $15 per share.
The option vests 10% after one year, an additional 15% after two years and
an additional 25% each year thereafter until fully vested. Until the third
anniversary of the grant, Mr. Lyons (i) may not exercise the option so long
as COMSAT owns at least 80% of Ascent's common stock and (ii) is not
eligible for any further option grants. Pursuant to the agreement, Mr.
Lyons' participation in COMSAT's executive compensation plans ceased and
Mr. Lyons will participate in benefit plans offered to executives of
Ascent. However, existing COMSAT stock and option awards granted to Mr.
Lyons will continue to vest according to their respective vesting
schedules.
If Mr. Lyons' employment is terminated without "cause" (as defined in
the agreement), or if Mr. Lyons elects to terminate his employment as a
result of certain events defined in the agreement which have the effect of
a constructive termination, Mr. Lyons will be entitled, for the remainder
of the term of the agreement as if the agreement had not been terminated,
to receive: (i) his then current base salary; (ii) an annual bonus equal to
70% of his then current base salary; and (iii) all other benefits provided
for pursuant to the agreement; provided that if Mr. Lyons becomes employed
during such period, any compensation from such employment will offset up to
50% of the amounts owed by Ascent pursuant to the agreement. In addition,
Mr. Lyons' employment agreement provides that upon a "Change of Control
Event" (as defined in the agreement), Mr. Lyons will be entitled to elect
to terminate his employment with Ascent and receive the same benefits
described in the preceding sentence. A "Change of Control Event" is defined
as an affirmative determination, either jointly by Mr. Lyons and the board
of directors of Ascent or pursuant to an arbitration which Mr. Lyons has
the right to invoke, that any "change of control" of Ascent (defined as an
event as a result of which a person or entity other than COMSAT owns 50% or
more of the voting stock of Ascent) or prospective change of control would
be reasonably likely to have a materially detrimental effect on either the
day-to-day circumstances of Mr. Lyons' employment or the compensation
payable to Mr. Lyons under such agreement.
The Corporation and Mr. Thomas entered into a three-year employment
agreement that became effective upon the Corporation's acquisition of
Radiation Systems, Inc. (RSi) on June 3, 1994. The agreement provides that
Mr. Thomas will receive a minimum salary of $315,000, subject to annual
review for merit-based increases. The agreement also guaranteed Mr. Thomas
a minimum bonus of $100,000 for 1994, which was paid in January 1995, and
provides for subsequent annual bonuses as determined by the Corporation's
Compensation Committee. The agreement also provides that Mr. Thomas will be
entitled to receive retention bonuses so long as he remains employed by the
Corporation on the
29
<PAGE>
date such bonuses are payable. Mr. Thomas was paid a retention bonus
of $50,000 in each of 1994 and 1995, and will be eligible to receive
additional retention bonuses of $50,000 and $100,000 if he continues to be
employed by the Corporation on the second and third anniversaries of the
effective date of the agreement, respectively. The agreement provides
further for the grant to Mr. Thomas of options to purchase 80,000 shares of
the Corporation's Common Stock and of a restricted stock award of 18,500
shares of Common Stock. The terms of the option and restricted stock awards
are the same as awards made to other executives of the Corporation. Under
the terms of the agreement, Mr. Thomas is also entitled to receive the same
types of benefits generally made available by the Corporation to its senior
management group. If Mr. Thomas' employment with the Corporation is
constructively terminated, Mr. Thomas will be paid in a lump sum (i) his
then current base salary through the remainder of the employment period and
(ii) an amount equal to his last bonus under the Corporation's Annual
Incentive Plan multiplied by the number of January months remaining in the
employment period.
The Corporation has entered into an agreement with Mr. Mario pursuant
to which Mr. Mario will serve as Senior Vice President, Business
Development through June 30, 1996. The Corporation's President may extend
Mr. Mario's service through December 31, 1996. After Mr. Mario's service as
Senior Vice President ends, Mr. Mario's employment with the Corporation
will continue until July 1, 1998, when Mr. Mario will retire from the
Corporation. Until Mr. Mario retires, he will receive an annual salary of
$225,000 and will continue to participate in the Corporation's executive
benefit plans. The agreement provides for Mr. Mario to be entitled to
receive stock-based awards (options and restricted stock) for 1995 and
annual bonuses for 1995 and the portion of 1996 for which he serves as
Senior Vice President. However, Mr. Mario will not be entitled to any
bonuses or stock-based awards thereafter. The Corporation's Compensation
Committee has agreed to recommend to the Board of Directors, upon the
completion of Mr. Mario's service as Senior Vice President, that the Board
approve Mr. Mario's early retirement under the Corporation's Insurance and
Retirement Plan for Executives on July 1, 1998, in which case retirement
benefits under the plan would commence on that date subject to actuarial
reduction as provided in the plan.
Change in Control Arrangements
Certain of the Corporation's benefit and compensation programs have
provisions that are intended to assure the continuity and stability of
management and the Board of Directors necessary to protect shareholders'
interests, and to protect the rights of the participants under those
programs, in the event of a "Change of Control" of the Corporation. A
"Change of Control" for this purpose is defined in the same manner as
described above under the caption "Item 2. Proposed Amendments to
Non-Employee
30
<PAGE>
Directors Stock Option Plan." The following actions will take place
upon the occurrence of a Change of Control: (1) the vesting of all stock
options, RSAs, RSUs and PSUs will be accelerated under the Corporation's
1990 and 1995 Key Employee Stock Plans and Annual Incentive Plan; (2) the
deferred compensation accounts under the Corporation's Directors and
Executives Deferred Compensation Plan, Annual Incentive Plan and
Non-Employee Directors Stock Option Plan (if the amendments with respect to
this plan discussed under the caption "Item 2. Proposed Amendments to
Non-Employee Directors Stock Option Plan" are approved by the shareholders
at the Annual Meeting) will become immediately payable; (3) participants in
the Split Dollar Insurance Plan will receive fully-paid individual
policies; (4) directors will receive an immediate lump sum payment of their
accrued benefits under the Directors Retirement Plan using present value
assumptions; and (5) participants in the Corporation's Insurance and
Retirement Plan for Executives will become vested in their accrued benefits
under the plan and will receive an immediate lump sum payment using present
value assumptions.
The Board of Directors retains the authority under the
Change-of-Control provisions to determine that the provisions should not
apply to a particular transaction. In the event of such a determination,
the vesting of stock awards and the payment of various plan benefits would
not be accelerated. This feature is intended to afford the Board of
Directors flexibility in structuring transactions and to encourage
negotiated transactions.
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, 1991, and
ending on December 31, 1995.
31
<PAGE>
Comparison of Five-Year Cumulative Total Return Among
COMSAT, S&P 500 Index & Peer Group Index
(Assumes $100 Invested on December 31, 1990 & Dividends
Reinvested)
[The following table is presented in lieu of the performance graph
appearing in the printed version of this document in accordance with Rule
304(d) of Regulation S-T:
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
COMSAT $100 $150 $214 $275 $178 $185
S&P 500 Index 100 130 140 155 157 215
Peer Group* 100 114 136 154 146 206]
* 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).
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, 1996.
The Board of Directors has recommended the appointment of Deloitte & Touche
LLP as such independent public accountants; they acted in such capacity for
fiscal year 1995. Representatives of Deloitte & Touche LLP 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 LLP 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
32
<PAGE>
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 3,334,601 shares, representing approximately
10.5% 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.
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 1995 Annual Meeting of Shareholders by shareholders representing
approximately 89.5% 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
33
<PAGE>
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 12, 1996, 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 $5,000. 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 1997
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 13, 1996.
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 12, 1996
- -----------------------------------------------------------------
A copy of the Corporation's Annual Report to the Securities and
Exchange Commission for 1995 on Form 10-K, with a list of the
34
<PAGE>
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.
35
<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 Fernwood Road and Rockledge Drive
and walk to Rock Spring Plaza. It departs every half hour beginning at
approximately 6:30 a.m., and the trip takes 10 minutes. Alternatively, you
may take the #6 RIDE-ON express bus to Rock Spring Plaza. It departs every
10 minutes from 6:40 a.m. to 8:00 a.m.
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).
[The graphic map reflecting the location of the COMSAT Building at
Rock Spring Plaza in Bethesda, Maryland has been omitted in accordance with
Rule 304 of Regulation S-T.]
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 Spur 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]
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 Fernwood Road and Rockledge Drive
and walk to Rock Spring Plaza. It departs every half hour beginning at
approximately 6:30 a.m., and the trip takes 10 minutes. Alternatively, you
may take the #6 RIDE-ON express bus to Rock Spring Plaza. It departs every
10 minutes from 6:40 a.m. to 8:00 a.m.
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 Spur 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.
- --------------------------------------------------------------------------
COMSAT CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, May 17, 1996
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
<PAGE>
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 17, 1996, 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, Caleb
B. Hurtt, 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, this proxy
will not be used.
Continued and to be signed and dated on reverse side.
COMSAT CORPORATION
P.O. BOX 11141
NEW YORK, N.Y. 10203-0141
<PAGE>
[PROXY CARD - BACK]
COMSAT CORPORATION
The 1996 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 17, 1996, at 9:30 a.m., Eastern Daylight
Time, for the following purposes:
1. election of 12 directors;
2. action on a proposal to amend the Non-Employee Directors Stock Option
Plan to (i) authorize the grant of share awards or phantom stock
units, and (ii) provide for the vesting of participant's rights under
the Plan in the event of certain changes in control;
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.
To be sure that your vote is counted, we urge you to complete and sign
the proxy card below, and detach and return it in the postage-paid envelope
enclosed in this package. The giving of such proxy does not affect your
right to vote in person if you attend the meeting. The prompt return of
your signed proxy will aid the Corporation in reducing the expense of
additional proxy solicitation.
Detach Proxy Card Here
__ __
\/ \/
- -------------------------------------------------------------------------------
[ ]
Directors recommend a vote FOR Proposals 1 through 3 and AGAINST Proposal 4.
1. Election of Directors FOR all nominees [ ]
listed below
WITHHOLD AUTHORITY to vote [ ]
for all nominees listed below
*EXCEPTIONS [ ]
<PAGE>
Nominees: Lucy Wilson Benson, Edwin I. Colodny, Bruce L. Crockett, Lawrence S.
Eagleburger, Neal B. Freeman, Arthur Hauspurg, Caleb B. Hurtt, Peter W. Likins,
Howard M. Love, Robert G. Schwartz, C.J. Silas and Dolores D. Wharton.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided
below.)
*Exceptions____________________________________________________________________
2. Amendment of Non-Employee Directors
Stock Option Plan
For [ ] Against [ ] Abstain [ ]
3. Appointment of independent accountants
For [ ] Against [ ] Abstain [ ]
4. Action on a shareholder proposal relating
to past government service of directors,
officers and consultants
For [ ] Against [ ] Abstain [ ]
In their discretion the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any reconvened session
thereof.
Change of Address and/or
Comments Mark Here [ ]
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________________________________________________, 1996
SIGNED_____________________________________________________
_____________________________________________________
Please sign, date and return this Please mark votes
card promptly in the enclosed as in this example: [X]
envelope.
<PAGE>
APPENDIX A
COMSAT CORPORATION
NON-EMPLOYEE DIRECTORS STOCK PLAN
Adopted by the Board of Directors on January 15, 1988,
and approved by the Shareholders on May 20, 1988
Amendments adopted by the Board of Directors
on March 16, 1990, January 15, 1993 and February 16, 1996,
and approved by the Shareholders on May 18, 1990,
May 21, 1993 [and May 17, 1996]
<PAGE>
COMSAT CORPORATION
NON-EMPLOYEE DIRECTORS STOCK PLAN
1. Purpose. The purpose of the plan ("Plan") is to advance the
interests of COMSAT Corporation ("Corporation") and its shareholders by
encouraging increased share ownership by members of the Board of Directors
("Board") of the Corporation who are not employees of the Corporation, or
any of its subsidiaries. The Plan does this by enhancing the Corporation's
ability to attract and retain the services of experienced, able and
knowledgeable persons to serve as directors and by providing additional
incentive for such directors to make a maximum contribution to the
Corporation's success through continuing and increased share ownership in
the Corporation.
2. Administration. The Plan shall be administered by the Board. In
addition to its duties with respect to the Plan stated elsewhere in the
Plan, the Board shall have full authority, consistent 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 Board shall be binding upon all
persons.
3. Shares Covered by the Plan. Under the Plan, grants of stock options
("Options") and retainer awards ("Retainer Awards") will provide the
opportunity for eligible members of the Board to acquire shares of the
Corporation's common stock without par value ("Common Stock"). Shares of
Common Stock which may be delivered on exercise of Options and in
satisfaction of Retainer Awards may be previously issued shares reacquired
by the Corporation or authorized but previously unissued shares.
<PAGE>
4. Granting of Options.
(a) Eligible Directors. Each member of the Board who is not an
employee of the Corporation or any of its subsidiaries ("Non-Employee
Director") shall be eligible to receive Options in accordance with this
Section 4. As used herein, the term "subsidiary" means any corporation at
least 40% of whose outstanding voting stock is owned, directly or
indirectly, by the Corporation.
(b) Automatic Grants. An Option to purchase 2,000 shares of
Common Stock shall be granted annually at a meeting of the Board held in
March (or the next succeeding meeting date if no March meeting is held),
beginning in 1988, to each Non-Employee Director who was a director as of
the date of the Annual Meeting of Shareholders for the prior year, provided
the Non-Employee Director continues in office after the Board meeting date
on which the Option is granted. Beginning in 1993, each annual Option grant
shall be for 4,000 shares of Common Stock.
(c) Option Agreement. Each Option shall be evidenced by a written
instrument which shall state the terms and conditions of the grant, not
inconsistent with the Plan, as the Board in its sole discretion shall
determine and approve.
(d) Option Price. The purchase price for each share of Common
Stock subject to an Option shall be 100% (50% for Options granted from 1990
to 1992) of 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 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.
(e) Option Duration. Each Option shall expire fifteen years (ten
years for Options granted in 1988 and 1989) from the date that it is
granted, except that in the instance where a Non-Employee Director dies
within the 15th year following the date of grant of an Option, any
unexercised portion of the Option will continue to be exercisable for one
year following the date of death.
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(f) Nontransferability. An Option shall be nonassignable and
nontransferable by a Non-Employee Director other than by will or the laws
of descent and distribution. An Option shall be exercisable during the
Non-Employee Director's lifetime only by him or his guardian.
5. Option Exercises.
(a) Exercise Timing. Except as provided in Section 5(c) or 5(d)
below, each Option shall become exercisable for 50% of the shares of Common
Stock covered by the Option after the expiration of one year following the
date of grant and exercisable for 100% of the shares covered by the Option
after the expiration of two years following the date of grant.
(b) Method of Exercise. Exercise of each Option granted under the
Plan shall be by written notice in the form and manner determined by the
Board. Each notice of exercise shall be accompanied by the full purchase
price of the shares being purchased pursuant to the exercise. Such payment
may be made in cash, check, shares of Common Stock valued using the fair
market value as of the date of exercise or a combination thereof.
(c) Termination of Board Service. If a Non- Employee Director
granted an Option ceases to be a member of the Board, any unexercised or
partially exercised Options held by such Non-Employee Director shall be
exercisable in accordance with the following provisions:
(i) if termination of Board service is due to (A) retirement from
the Board upon reaching 72 years of age, (B) expiration of the
Non-Employee Director's term as a Presidential appointee to the Board,
(C) failure to stand for reelection to the Board with the Board's
consent, or (D) resignation from the Board with the Board's consent,
all outstanding Options shall become fully exercisable and shall
continue in force for the duration of their respective terms, or
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(ii) if termination of Board service is due to a Non-Employee
Director's death, or in the event of a Non-Employee Director's death
following termination of Board service for a reason provided in (i)
above, all outstanding Options shall become fully exercisable and
shall continue in force for one year following the date of death, or
(iii) if termination of Board service is for any reason other
than one of the reasons provided in (i) and (ii) above, all
outstanding Options shall terminate immediately.
(d) Each Option granted under the Plan shall immediately vest and
become exercisable upon the occurrence of a Change in Control. For purposes
of this Plan, a "Change in Control" of the Corporation shall be deemed to
have occurred upon the happening of any one of the following events:
(i) the acquisition by any individual, entity or group (within
the meaning of Sections 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty
percent (50%) or more of the combined voting power of the then outstanding
voting securities of the Corporation; provided, however, that the following
acquisitions shall not constitute a Change in Control for purposes of this
definition: (A) any acquisitions of voting securities of the Corporation by
the Corporation, or (B) any acquisitions of voting securities of the
Corporation by any employee benefit or stock ownership plan or related
trust sponsored or maintained by the Corporation for the benefit of its
employees;
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(ii) any change in the composition of the Board such that the
individuals who, as of May 17, 1996, constitute those members of the Board
who have been elected by the shareholders of the Corporation in accordance
with the provisions of Section 303(a) of the Communications Satellite Act
of 1962, as amended (the "Incumbent Directors"), cease for any reason to
constitute less than a majority of the Board at any time; provided,
however, that any individual becoming a director subsequent to such date
whose election, or nomination for election, was approved by a vote of at
least three-fourths (3/4) of the then Incumbent Directors shall be
considered as though such individual were an Incumbent Director;
(iii) approval by the shareholders of the Corporation of a
merger, share exchange, swap, consolidation, recapitalization or other
business combination involving any other corporation or entity (a
"Transaction"), the effect of which would result in the combined voting
securities of the Corporation immediately prior to the effectiveness of
such Transaction continuing to represent less than sixty percent (60%) of
the combined voting power of the voting securities of the Corporation, or
of any surviving entity of, or parent entity following, the Transaction,
immediately after the effectiveness of the Transaction;
(iv) approval by the shareholders of the Corporation of (A) a
complete liquidation or dissolution of the Corporation, or (B) the sale or
disposition by the Corporation of all or substantially all of its assets
other than to a corporation or entity with respect to which following such
sale or other disposition more than eighty percent (80%) of the then
combined voting power of the voting securities of such corporation or
entity is, immediately following such sale or disposition, beneficially
owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
by all or substantially all of the individuals and entities who were the
beneficial owners of the voting securities of the Corporation upon or
immediately before such approval; or
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(v) any event that would be required to be reported in response
to Item 6(e) or any successor thereto of Schedule 14A of Regulation 14A
promulgated under the Exchange Act; provided, however that none of the
events described in clause (i) through (v) shall be deemed to constitute a
"Change in Control" if, prior to the occurrence of such event, the Board
adopts a resolution specifically providing that the event shall not be
deemed to constitute a "Change in Control" for purposes of the Plan.
6. Granting of Retainer Awards.
(a) Automatic Grants. A Retainer Award of 600 shares of Common
Stock shall be granted annually at the first meeting of the Board following
the Annual Meeting of Shareholders to each Non- Employee Director who is
serving as a director at such Board meeting. Non-Employee Directors who are
elected by the Board or appointed by the President of the United States to
fill vacancies between Annual Meetings shall receive a prorated Retainer
Award, payable at the time of election or appointment, equal to the number
of shares of Common Stock determined by multiplying (i) the number of full
months of service as a director between election or appointment and the
next Annual Meeting by (ii) the number 50.
(b) Phantom Stock Units. A Non-Employee Director may elect to
defer the entire annual Retainer Award to which he or she is entitled under
Section 6(a) by filing a deferral election ("Deferral Election"), in the
form and manner prescribed by the Board, by December 15 of the year
immediately preceding the year in which the Retainer Award otherwise would
be paid, except that a Deferral Election with respect to a prorated
Retainer Award shall be filed at such time following election or
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appointment as the Board shall determine. If a Non-Employee Director makes
a Deferral Election, 600 phantom stock units ("Phantom Stock Units") shall
be credited to an account maintained for the director. Each Phantom Stock
Unit shall be equivalent in value to a share of Common Stock. Upon payment
of a dividend on the Corporation's Common Stock, the Non-Employee
Director's account shall be credited with additional Phantom Stock Units
equal to the quotient obtained by dividing (i) the amount of the dividend
the Corporation would have paid to the director as if the director had been
the record owner of the shares of Common Stock covered by the Phantom Stock
Units in the director's account on the record date for the payment of the
dividend by (ii) the fair market value of the Common Stock on the dividend
payment date. Upon the Non-Employee Director's termination of Board service
for any reason, the Non-Employee Director shall receive payment in shares
of the Corporation's Common Stock equal to the number of whole Phantom
Stock Units credited to his account, plus cash in an amount equal to the
fair market value of any fractional Phantom Stock Unit interests. Any
Phantom Stock Units maintained for the account of a Non-Employee Director
pursuant to a Deferral Election shall become immediately payable, in the
manner described in the preceding sentence, upon the occurrence of a Change
in Control of the Corporation.
7. Adjustment Upon Changes in Capitalization. If there is a change in
the numb er 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 Board to the
number of shares covered by the automatic Option grants provided for in
Section 4(b) and by any outstanding Options; the purchase price for shares
of Common Stock covered by outstanding Options; the number of shares
covered by the automatic Retainer Award grants provided for in Section 6(a)
and by any outstanding Phantom Stock Units; and other relevant provisions,
to the extent that the Board, in its sole discretion, determines that such
change makes such adjustments necessary or equitable.
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8. Tax Withholding. Any exercise of an Option or payment of a Retainer
Award pursuant to the Plan shall be subject to withholding of income tax,
FICA tax or other taxes to the extent the Corporation is required to make
such withholding.
9. Laws and Regulations. The Plan, the grant and exercise of Options,
the grant and deferral of Retainer 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.
10. Termination and Amendment of the Plan. The Board may at any time
terminate the Plan or may at any time or times amend the Plan or amend any
outstanding Options or Phantom Stock Units 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:
(i) no amendment of any outstanding Options or Phantom Stock Units
shall contain terms or conditions inconsistent with the provisions of the
Plan as determined by the Board; and
(ii) except as provided in Section 7, no such amendment shall, without
the approval of the shareholders of the Corporation: (a) increase the
number of shares of Common Stock for which each Option or Retainer Award
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may be granted under the Plan; (b) increase the frequency of Option or
Retainer Award grants; (c) reduce the price at which Options may be granted
or exercised below the price provided for in Section 4(d); (d) extend the
period during which any outstanding Option may be exercised; (e) shorten
the exercise timing as provided for in Section 5(a); (f) materially
increase in any other way the benefits accruing to Non-Employee Directors;
(g) expand Plan eligibility beyond Non-Employee Directors; or (h)
disqualify a Non-Employee Director from being a "disinterested"
administrator, as defined for the purposes of Rule 16b-3 (or any successor
rule) under the Securities Exchange Act of 1934, of any other stock-based
plan of the Corporation.
11. 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 granted under the Plan before approval
of the Plan by the shareholders shall be granted subject to such approval
and shall not be exercisable before such approval.
