SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
FORM 10-K/A
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996 Commission file
number 1-4929
COMSAT Corporation
(Exact name of registrant as specified in its charter)
District of Columbia 52-0781863
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6560 Rock Spring Drive, Bethesda, MD 20817
(Address of principal executive offices)
Registrant's telephone number, including area code: (301) 214-3000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ------------------------
Common Stock, without par value New York Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange
8 1/8% Cumulative Monthly Income New York Stock Exchange
Preferred Securities of
COMSAT Capital I, L.P.
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ]
Aggregate market value of voting stock held by non-affiliates of the
Registrant was $1,223,921,370 based on a closing market price of $26.25 per
share on February 28, 1997, as reported on the composite tape for New York
Stock Exchange listed issues.
48,820,044 shares of common stock, without par value, were outstanding
on February 28, 1997.
<PAGE>
The undersigned registrant hereby amends the following items, exhibits
or other portions of its Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 as set forth in the pages attached hereto.
This Amendment No. 1 to the registrant's Annual Report on Form 10-K/A
is being filed in accordance with General Instruction G(3) to Form 10-K to
include the information required by Part III, since the registrant's
definitive proxy statement pursuant to Regulation 14A will not be filed
with the Commission within 120 days after the end of the registrant's
fiscal year.
PART III
Item 10. Directors and Officers of the Registrant
Directors
The Communications Satellite Act of 1962, as amended (the "Satellite
Act"), provides that the Corporation's Board of Directors shall consist of
15 directors, of whom 12 are to be elected annually by the shareholders for
terms of one year and three are to be 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 Corporation's Board of Directors currently consists of 13
directors, pending action to fill an existing vacancy in one of the elected
director positions and pending Presidential appointment and Senate
confirmation to fill an existing vacancy in one of the
Presidentially-appointed director positions.
The following sets forth certain information concerning the directors
of COMSAT Corporation.
ELECTED DIRECTORS
BETTY C. ALEWINE, 48, has been President and Chief Executive Officer of
COMSAT since July 1996. She was President, COMSAT International
Communications from January 1995 to July 1996, and was President, COMSAT
World Systems from May 1991 to January 1995. She joined COMSAT from MCI
Telecommunications Corporation in 1986 and has held various operational
positions. She has been a director since July 1996.
LUCY WILSON BENSON, 69, has been a director of various business,
educational and nonprofit organizations since 1980. She was Under Secretary
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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.
EDWIN I. COLODNY, 70, was Chairman of US Airways Group, Inc. and of its
subsidiary, US Airways, Inc., a commercial airline company, from 1978 until
July 1992 and is a director of both corporations. He was Chief Executive
Officer of US Airways Group from 1983 to June 1991 and of its subsidiary from
1975 to June 1991. Mr. Colodny has been counsel to the Washington, D. C. law
firm of Paul, Hastings, Janofsky and Walker since September 1991. He has been
a COMSAT director since May 1992. He also is a director of Ascent
Entertainment Group, Inc. and Esterline Technologies Corporation and a member
of the Board of Trustees of the University of Rochester.
LAWRENCE S. EAGLEBURGER, 66, 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.
NEAL B. FREEMAN, 56, 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.
ARTHUR HAUSPURG, 71, 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.
CALEB B. HURTT, 65, 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
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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. He has been a COMSAT
director since May 1996.
PETER W. LIKINS, 60, 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.
HOWARD M. LOVE, 66, 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.
ROBERT G. SCHWARTZ, 69, 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 and The Reader's Digest Association, Inc.
DOLORES D. WHARTON, 69, 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. and Capital Bank & Trust Company.
C.J. Silas resigned as Chairman and as a member of the Board of Directors
of the Corporation on April 29, 1997. The Board of Directors has elected
Edwin I. Colodny to serve as Chairman.
PRESIDENTIALLY APPOINTED DIRECTORS
PETER S. KNIGHT, 46, 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 Campaign Manager for Clinton/Gore '96.
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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 1999 Annual Meeting.
CHARLES T. MANATT, 60, 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.
Barry M. Goldwater resigned as a director of the Corporation in April
1996. The President of the United States has not nominated a replacement to
fill the vacancy created by Sen. Goldwater's resignation.
Executive Officers
The information concerning the Corporation's executive officers required
by Item 10 is included in Part I of this Report as previously filed. See
"Executive Officers."
Compliance with Section 16(a) of the Exchange Act
Mrs. Alewine, a director and executive officer of the Corporation,
reported two transactions (the grant of options and phantom stock) on a
single amended report less than one month late due to an inadvertent
support staff oversight.
Item 11. Executive Compensation
EXECUTIVE COMPENSATION
The following table shows the compensation for the three fiscal years
ended December 31, 1996 received by (1) Mrs. Alewine, the Chief Executive
Officer since July 19, 1996; (2) the other four most highly compensated
executive officers of the Corporation who were serving as such at year-end
1996; (3) Mr. Crockett, who served as the Chief Executive Officer until
July 19, 1996; and (4) Richard E. Thomas, who resigned as an executive
officer on September 20, 1996 and whose compensation would have been
reportable under clause (2) above but for the fact that he was not an
executive officer of the Corporation at year-end 1996 (the Named Executive
Officers).
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
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 ($) ($) ($)(5) ($)(6) (#) ($)(8)
- - ---------------------- ---- -------- -------- ------------ ---------- ---------- ------------
Betty C. Alewine, 1996 $355,846 $180,000 $ 3,238 $ 238,188 210,000 $ 29,910
President & Chief 1995 226,923 140,000 448 178,363 55,000 23,339
Executive Officer 1994 210,000 190,000 387 562,788 80,000 31,221
John V. Evans, 1996 195,000 50,000 7,284 63,000 25,000 77,937
Chief Technical 1995 184,000 50,000 6,103 123,061 25,000 58,346
Officer 1994 184,000 75,000 4,405 288,338 30,000 60,552
Allen E. Flower 1996 180,000 65,000 60,122 90,000 35,000 39,879
Vice President and 1995 145,000 45,000 0 121,563 7,000 11,536
Chief Financial Officer 1994 134,039 41,500 0 81,438 5,000 12,366
Charles Lyons, 1996 500,000 75,000 62,399 0 0 236,450
President, Ascent 1995 335,961(3)150,000 1,886 382,113 352,500 (7) 303,275
Entertainment Group, 1994 210,000 190,000 992 562,788 80,000 38,803
Inc.
Warren Y. Zeger, 1996 196,551 170,000(4) 2,422 63,000 30,000 37,358
Vice President, 1995 184,050 65,000 2,755 123,061 30,000 29,873
General Counsel and 1994 179,999 90,000 12,431 301,813 60,000 32,177
Secretary
Bruce L. Crockett, (1) 1996 433,173 0 5,017 459,360 120,000 48,136
Former President & 1995 350,000 160,000 6,142 547,091 130,000 $135,405
Chief Executive Officer 1994 350,000 350,000 28,930 1,139,050 200,000 140,215
Richard E. Thomas, (2) 1996 315,016 140,000 440 90,000 40,000 5,073
Retired President, 1995 315,071 140,000 0 239,680 55,000 6,648
COMSAT RSI, Inc. 1994 181,740 150,000 0 431,281 80,000 4,251
</TABLE>
- - ---------------
(1) Mr. Crockett resigned as President and Chief Executive Officer of
the Corporation in July 1996. His compensation for 1996 includes
amounts paid after that date pursuant to an agreement with the
Corporation. See "Agreements with Executive Officers."
(2) 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. Mr. Thomas resigned in
September 1996. His compensation for 1996 reflects amounts paid
after that date pursuant to an agreement with the Corporation.
See "Agreements with Executive Officers."
(3) Mr. Lyons received a retroactive pay increase, thereby increasing
his 1995 salary to $335,961 from the $328,461 reported in last
year's proxy statement.
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(4) The bonus reflected for Mr. Zeger for 1996 includes a special
performance-based spot bonus in the amount of $100,000.
(5) With the exception of Mr. Flower, Other Annual Compensation shown
for 1994, 1995 and 1996 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. For Mr. Flower, Other Annual
Compensation for 1996 includes $30,000 for club membership fees.
(6) Includes restricted stock awards (RSAs), restricted stock units
(RSUs) and phantom stock units (PSUs). Dividends are paid on
RSAs. Half of the RSAs granted to Named Executive Officers in
1994 were 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, 1996, are as follows:
Number of Value as of
RSAs/RSUs/PSUs 12/31/96
-------------- -----------
Mrs. Alewine......... 62,305 $1,483,638
Dr. Evans............ 15,510 369,332
Mr. Flower........... 12,550 298,847
Mr. Lyons............ 60,305 1,436,013
Mr. Zeger............ 26,000 619,125
Mr. Crockett......... 121,380 2,890,361
Mr. Thomas........... 26,515 631,388
(7) 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.
(8) All Other Compensation for 1996 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
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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 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 for 1996
also includes $149,435 of relocation expenses paid to him as a
result of the relocation of Ascent's offices to Denver.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Above-
Unused Time Off 401(k) Plan Market Life Insurance
Credits Buy-Back Contributions Interest Premiums
------- -------- ------------- -------- --------------
Mrs. Alewine....... $ 9,111 $ 0 $4,500 $ 6,680 $9,619
Dr. Evans........ 4,695 1,170 4,244 58,717 9,111
Mr. Flower........ 4,701 3,600 4,500 8,385 18,693
Mr. Lyons.......... 22,491 10,000 4,500 34,648 15,376
Mr. Zeger......... 7,725 3,762 4,500 5,380 15,991
Mr. Crockett....... 20,244 0 346 2 27,544
Mr. Thomas......... 0 0 0 0 5,073
</TABLE>
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Option Grants
The following table sets forth information on options granted to the
Named Executive Officers in 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Individual Grants
-----------------------------------------------------------
Number of
Securities % of Total
Underlying Options Options Exercise
Granted Granted to Price Expiration Grant Date
Name (#)(1) Empl in FY(2) ($/Sh) Date Present Value(3)
---- ------------------- --------------- --------- ----------- ----------------
Betty C. Alewine......... 60,000 7.12% $18.0000 01/19/06 $ 286,200
150,000 17.79 22.4375 10/17/06 1,149,000
John V. Evans. .......... 25,000 2.97 18.0000 01/19/06 119,250
Allen E. Flower.......... 35,000 4.15 18.0000 01/19/06 166,950
Charles Lyons............ 0 -- -- -- --
Warren Y. Zeger.......... 30,000 3.56 18.0000 01/19/06 143,100
Bruce L. Crockett........ 120,000 14.23 18.0000 01/19/06 572,400
Richard E. Thomas........ 40,000 4.74 18.0000 01/19/06 190,800
</TABLE>
- - ---------------
(1) Except for the second option grant to Mrs. Alewine, the options
shown were granted on January 19, 1996 to acquire the
Corporation's Common Stock. The second option grant to Mrs.
Alewine was made on October 17, 1996. All options granted in 1996
vest as follows: 25% on the first anniversary of the date of
grant; another 25% on second anniversary of the date of grant;
and the remaining 50% on the third anniversary of the date of
grant.
(2) The total number of COMSAT options granted to key employees in
1996 was 843,150.
(3) The Corporation used the Black-Scholes option pricing model to
determine grant date present values using the following
assumptions: a dividend yield of 3.39% for the January grants and
3.32% for the October grant; stock price volatility of 0.28 for
the January grants and 0.36 for the October grant; a seven-year
option term; a risk-free rate of return of 5.48% for the January
grants and 6.26% for the October grant; a retention discount of
3.39% for the January Grant and 3.32% for the October Grant; and
the vesting schedule described in footnote 1 above. 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.
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Option Exercises and Fiscal Year-End Values
The following table sets forth information on (1) options exercised by
the Named Executive Officers in 1996, and (2) the number and value of their
unexercised options as of December 31, 1996.
AGGREGATED OPTION EXERCISES IN 1996 AND 12/31/96 OPTION VALUES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Options at 12/31/96 Options at 12/31/96
--------------------------- ---------------------------
Shares
Underlying
Options Value
Exercised Realized Exercisable Unexercisable Exercisable Unexercisable
Name (#) ($) (#) (#) ($) ($)
- - ---- ---------- -------- ------------ -------------- ------------ ---------------
Betty C. Alewine......... 0 $ 0 165,984 291,250 $500,802 $ 740,625
John V. Evans............ 5,000 120,156 49,938 58,750 210,399 229,688
Allen E. Flower.......... 2,000 8,685 28,450 42,750 247,768 227,063
Charles Lyons............ 0 0 137,750 81,250 133,250 185,625
0 0 0 297,500* 0 0
Warren Y. Zeger.......... 1,000 11,719 104,144 82,500 116,411 275,625
Bruce L. Crockett........ 11,400 57,342 332,500 317,500 146,250 1,136,250
Richard E. Thomas........ 0 0 53,750 121,250 61,875 418,125
</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 1996 is $120,000.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Estimated Annual Benefits Payable Upon Retirement
----------------------------------------------------------------
Years of Service
----------------------------------------------------------------
Average Annual Salary 15 20 25 30 35
- - --------------------- -------- -------- -------- -------- --------
$100,000.................... $ 25,520 $ 38,056 $ 43,290 $52,176 $ 59,007
150,000.................... 39,645 58,501 67,415 81,301 91,882
200,000.................... 51,307 76,483 89,077 107,963 120,000
250,000.................... 60,095 91,591 107,865 120,000 120,000
300,000.................... 67,095 104,911 120,000 120,000 120,000
350,000.................... 74,095 118,231 120,000 120,000 120,000
</TABLE>
The compensation covered by the Retirement Plan includes only base
salary. Benefits are determined on a straight life annuity basis under a
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formula based on length of service and average annual base salary for the
highest five consecutive years during the final 10 years of employment.
Prior to 1989, benefits were offset by a portion of each participant's
estimated Social Security benefits. Beginning in 1989, each participant
accrues a benefit at a specified percentage of salary up to the Social
Security wage base, and at a higher percentage of salary above the Social
Security wage base. The years of credited service for the Named Executive
Officers as of December 31, 1996 are: 10 for Mrs. Alewine; 13 for Dr.
Evans; 27 for Mr. Flower; 5 for Mr. Lyons; 21 for Mr. Zeger; and 16 for Mr.
Crockett. Mr. Thomas was 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, 1996 for each of
the Named Executive Officers are: $270,173 for Mrs. Alewine; $102,945 for Dr.
Evans; $42,313.24 for Mr. Flower; $86,001 for Mr. Zeger; and $251,605 for Mr.
Thomas. Mrs. Alewine and Messrs. Evans, Flower, Zeger and Thomas are each
100% vested in the Plan. Mr. Lyons is not a participant in the Plan. For
description of the annual benefits payable to Mr. Crockett upon retirement,
see "Agreements with Executive Officers."
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Directors Compensation
In April 1997, the Board of Directors approved a change in the method
in which directors are compensated. Subject to shareholder approval,
directors will receive all of their annual retainer in shares of COMSAT
common stock. Directors, other than the Chairman and Mrs. Alewine,
currently receive an annual cash retainer of $10,000 payable in equal
quarterly installments 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. Prior to the 1997 Annual Meeting of Shareholders,
each director who was not an employee of the Corporation, other than the
Chairman, received a quarterly retainer of $5,375. Non-employee directors,
other than the Chairman, also receive 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. As Chairman of the Board,
Mr. Silas was compensated solely on an annual basis in the amount of
$225,000 per year. Mrs. Alewine is not compensated separately for service
as a director.
Under the Directors and Executives Deferred Compensation Plan, a
non-employee director may elect to defer all or part of his or her 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 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
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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 1996, the aggregate value of split dollar
life insurance premiums paid for the benefit of all covered directors was
$129,568.
Under the Non-Employee Directors Stock 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.
All options granted before March 15, 1996 under the Non-Employee
Directors Stock Plan are currently exercisable. For options granted on or
after that date, 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
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<PAGE>
or resignation with the Board's consent, the option becomes fully
exercisable and continues in force for the duration of its term. The option
also becomes fully exercisable and continues in force for the duration of
its term in the event of certain changes in control. A "Change of Control"
includes: (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 May 17, 1996 (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 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. 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 1996, options for a total of 56,000 shares of Common Stock were
granted to non-employee directors at a purchase price per share of
$28.8125, which was the fair market value of the Common Stock on the date
of grant. In 1996, Mr. Goldwater exercised options for 4,000 shares
previously granted under that plan and realized a net value (market value
on exercise date less exercise price) of $36,156.
14
<PAGE>
Agreements with Executive Officers
The Corporation and Mrs. Alewine have entered into an employment
agreement dated July 19, 1996 which provides for successive three-year
terms from each successive day thereafter until July 19, 2003. The
agreement provides for a base salary of $450,000 for the first year, with
an increase to $500,000 in the second year, subject to further increases at
the discretion of the Corporation's Board of Directors. Mrs. Alewine is
eligible for an annual bonus based on performance measures determined by
the Board's Compensation Committee with a target bonus equal to 70% of Mrs.
Alewine's base salary. Pursuant to the agreement, on October 17, 1996, Mrs.
Alewine was granted (i) an option to purchase 150,000 shares of the
Corporation's common stock at a price equal to the market value of the
stock on the grant date, which vests 25% after one year, another 25% after
the second year and the remaining 50% after the third year; and (ii) 5,000
restricted stock units which vest after three years. Mrs. Alewine was also
granted 20,000 restricted stock awards on February 20, 1997 pursuant to the
agreement which are subject to the same terms as restricted stock awards
made to other executives of the Corporation on that date.
If Mrs. Alewine's employment is terminated without "cause," or if Mrs.
Alewine elects to terminate her employment for "good reason" (both as
defined in the agreement), Mrs. Alewine will be entitled to receive the
following for three years from her termination date or until July 19, 2003,
whichever is earlier, but in no case for less than one year following
termination: (i) her then current base salary; (ii) an annual bonus equal
to 70% of her then current base salary; and (iii) all other benefits
provided for pursuant to the agreement, which shall be deemed fully and
immediately vested if subject to vesting. The agreement provides that if
Mrs. Alewine's employment is not renewed after July 19, 2003 or is
terminated before then either by Mrs. Alewine for "good reason" or by the
Corporation without "cause," Mrs. Alewine will be entitled to begin
receiving retirement benefits at age 55 under the Insurance and Retirement
Plan for Executives at the actuarially reduced rate for early retirement,
subject to the Board's discretion to waive such reduction.
The Corporation and Mr. Flower have entered into a three-year
employment agreement dated April 18, 1997. Pursuant to the agreement, Mr.
Flower's base salary is $210,000 per year, subject to increases at the
discretion of the Corporation's Board of Directors. Mr. Flower is eligible
for an annual bonus based on performance measures determined by the Board's
Compensation Committee with a target bonus equal to 50% of his base salary.
If Mr. Flower's employment is terminated without "cause," or if Mr. Flower
elects to terminate his employment for "good reason" (both as defined in
the agreement), Mr. Flower will be entitled to receive the following until
the later of one year from his termination date or April 17, 2000: (i) his
then current base salary; (ii) an annual bonus equal to 50% of his then
current
15
<PAGE>
base salary; and (iii) all other benefits provided for pursuant to the
agreement, which shall be deemed fully and immediately vested if subject to
vesting. The agreement provides that if Mr. Flower's employment is not
renewed after April 17, 2000, Mr. Flower will be entitled to receive (i)
the benefits described in the preceding sentence for one year thereafter
and (ii) retirement benefits under the Insurance and Retirement Plan for
Executives beginning on May 1, 2000 at the actuarially reduced rate for
early retirement, subject to the Board's discretion to waive such
reduction. If Mr. Flower's employment is terminated by Mr. Flower for "good
reason" or by the Corporation without "cause" before he attains age 55, Mr.
Flower will be entitled to begin receiving retirement benefits under the
plan at age 55 at the actuarially reduced rate for early retirement, again
subject to the Board's discretion to waive such reduction. In the event
that Mr. Flower dies after his employment terminates but before his
retirement benefits begin, his spouse will receive the death benefits
provided in the plan for participants who die while employed by the
Corporation.
The Corporation and Mr. Zeger have entered into a five-year employment
agreement dated April 18, 1997. Pursuant to the agreement, Mr. Zeger's base
salary is $230,000 per year, subject to increases at the discretion of the
Corporation's Board of Directors. Mr. Zeger is eligible for an annual bonus
based on performance measures determined by the Board's Compensation
Committee with a target bonus equal to 50% of his base salary. If Mr.
Zeger's employment is terminated without "cause," or if Mr. Zeger elects to
terminate his employment for "good reason" (both as defined in the
agreement), Mr. Zeger will be entitled to receive the following until
April, 2002: (i) his then current base salary; (ii) an annual bonus equal
to 50% of his then current base salary; and (iii) all other benefits
provided for pursuant to the agreement, which shall be deemed fully and
immediately vested if subject to vesting. The agreement provides that if
Mr. Zeger's employment is not renewed after April 17, 2002 or is terminated
before then either by Mr. Zeger for "good reason" or by the Corporation
without "cause," Mr. Zeger will be entitled to begin receiving retirement
benefits at age 55 under the Insurance and Retirement Plan for Executives
at the actuarially reduced rate for early retirement, subject to the
Board's discretion to waive such reduction. In the event that Mr. Zeger
dies after his employment terminates but before his retirement benefits
begin, his spouse will receive the death benefits provided in the plan for
participants who die while employed by the Corporation.
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
16
<PAGE>
Ascent's common stock, which 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.
Ascent and Mr. Lyons amended and restated Mr. Lyons' employment
agreement on November 18, 1996. The material changes were (i) Mr. Lyons'
stock options to purchase 297,500 shares of common stock of Ascent will
vest immediately upon a "change of control," as defined above, or if Ascent
is no longer publicly traded; (ii) Ascent agreed to use its best efforts to
cause 100% of Mr. Lyons' COMSAT stock awards to vest upon a "change of
control"; (iii) if Mr. Lyons' employment with Ascent is not renewed at the
end of his term of employment, he will be retained as a consultant to
Ascent for 18 months with full pay and benefits; and (iv) upon a
termination of the agreement upon which Mr. Lyons receives continued
17
<PAGE>
benefits, such benefits shall continue for the longer of the remainder of
the term or one year after termination.
In connection with Mr. Crockett's resignation as President and Chief
Executive Officer of the Corporation on July 19, 1996, the Corporation and
Mr. Crockett entered into an agreement, which provided that he would remain
an employee, and would continue to receive salary at the same rate and to
participate in the Corporation's executive benefit plans, until January 31,
1998. The agreement provided, however, that Mr. Crockett would not be
eligible for any bonuses or stock-based awards during this period. In
accordance with their terms, the existing stock options and other
stock-based awards granted to Mr. Crockett would have continued to vest
during this period but any unvested options or awards would be forfeted
after January 31, 1998 and options exercisable as of such date would have
terminated if not exercised within three months thereafter, or such later
date as provided in the option agreement. As executed, the agreement also
provided that when Mr. Crockett reached age 55 in April 1999, he would be
entitled to begin receiving retirement benefits under the Insurance and
Retirement Plan for Executives at a reduced rate determined in accordance
with the Plan's early retirement and termination of employment factors. The
agreement also provided that in the event that Mr. Crockett died after his
employment terminated but before his retirement benefits began, his spouse
would be entitled to receive the death benefits provided in the plan for
participants who die while employed by the Corporation.
Mr. Crockett's salary continuation and benefits under the agreement
were specifically conditioned upon his agreement not to disparage, harm,
compete with or disclose confidential information about COMSAT (or its
directors and officers)during the term of the agreement. On April 23, 1997,
COMSAT filed suit against Mr. Crockett alleging, among other things, that
he had breached his agreement with COMSAT. COMSAT has terminated the
agreement with Mr. Crockett.
In connection with his resignation as President of COMSAT RSI, Inc. on
September 20, 1996, the Corporation and Richard Thomas entered into an
agreement which amends and supersedes Mr. Thomas' employment agreement with
the Corporation. The agreement provides that Mr. Thomas will remain an
employee, and will continue to receive salary and to participate in the
Corporation's executive benefit plans, until June 3, 1997, the date on
which his employment agreement terminated, at which time he will retire.
Pursuant to the agreement, Mr. Thomas received a bonus of $90,000 in
February 1997 but is not eligible for any stock-based awards during the
term of the agreement. In accordance with their terms, the existing stock
options and other stock-based awards granted to Mr. Thomas will continue to
vest during this period and will fully vest on his retirement to the extent
not previously vested. The agreement also provides for Mr. Thomas to
receive the $100,000 retention bonus payable on June 3, 1997 under his
prior employment agreement. Upon his retirement, Mr. Thomas will be
entitled to begin receiving retirement benefits under the Insurance and
Retirement Plan. The agreement provides for the retention bonuses of
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<PAGE>
$150,000 previously paid to Mr. Thomas under his employment agreement and
the $100,000 retention bonus payable upon his retirement to be included in
the compensation which is taken into account in calculating his retirement
benefits under 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 "Directors' Compensation." 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 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.
19
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Compensation Committee Interlocks and Insider Participation
There were no compensation committee interlocks or insider
participation in compensation decisions during 1996.
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 1996 compensation of the
executive officers of the Corporation, including Mrs. Alewine and Mr.
Crockett, each of whom held the position of Chief Executive Officer for a
portion of 1996, and the other executive officers named in the Summary
Compensation Table above (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 align
executive compensation more closely with the interests of shareholders
through performance incentives. 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. Mr. Lyons'
compensation as Chief Executive Officer of Ascent Entertainment Group, Inc.
is determined by the Ascent Board of Directors and its Compensation
Committee.
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.
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 had fallen significantly behind the market while
long-term compensation levels were above the market, with the result that
20
<PAGE>
total compensation (annual cash compensation plus long-term compensation)
had been achieving desired 75th percentile positioning. However, the
combination of low base salaries, aggressive annual bonus targets and
above-market long-term compensation was causing salary compression below
the executive officer level where annual bonus and long-term compensation
comprise a smaller percentage of the total compensation package.
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 adjusting annual bonus targets, which are set as a
percentage of base salary, 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 at levels consistent with
the median for the revenue group of competitive companies and
performance-based restricted stock at levels consistent with the 75th
percentile for these companies if the business achieves prescribed
performance standards over the long term.
Annual Compensation
The independent consultant engaged in 1995 conducted an analysis of
competitive cash compensation for the Corporation's Chief Executive Officer
position at the median of the market based on comparably sized
telecommunications and entertainment companies. Based on this analysis, the
consultant recommended a base salary of $500,000 with an annual bonus
target of 70% of base salary. The Committee used this data in determining
Mr. Crockett's base salary and bonus target for 1996. Mr. Crockett's salary
remained frozen at $350,000 since January 1993. The Committee recommended
that Mr. Crockett's base salary be increased to the median of the market in
two steps, with a base salary increase to $425,000 for 1996 coupled with a
bonus target of 100% of base salary. This would produce the same level of
total cash compensation, provided the Corporation achieved targeted
financial results in 1996. The Board approved the Committee's
recommendation. Mr. Crockett resigned as Chief Executive Officer effective
July 19, 1996, and did not receive a bonus for 1996.
Mrs. Alewine was elected to succeed Mr. Crockett as Chief Executive
Officer of the Corporation. Upon recommendation of the Committee, the Board
approved an employment agreement for Mrs. Alewine which is summarized above
under the caption "Agreements with Executive Officers." Mrs. Alewine's
annual compensation under the employment agreement is based on the
independent consultant's recommendations for the Chief Executive Officer
position. The agreement provides for a base salary of $450,000 for the
first year, with an increase to $500,000 beginning in the second year, and
for an annual bonus target of 70% of base salary. Mrs. Alewine's 1996 bonus
21
<PAGE>
was prorated based on her base salary and bonus target for the first and
second halves of the year, when she held the positions of President of
COMSAT International Communications and Chief Executive Officer,
respectively. The bonus formula for each position measures profit before
tax compared to planned achievement at the corporate and business unit
level, as well as individual performance based on the achievement of
established performance goals for the year. Taking these factors into
account, the Committee recommended to the Board a 1996 cash bonus award of
$180,000 for Mrs. Alewine. The Board approved the Committee's
recommendation.
In accordance with the modifications to the Corporation's executive
compensation philosophy beginning in 1996, base salary ranges have been
established for the other executive officers based on the average of the
market for comparable positions in the revenue group of competitive
companies. Individual salaries within each range will be based on
recommendations to the Committee by the Chief Executive Officer taking into
account such factors as experience, performance and time in the position.
The bonus opportunities for other executive officers for 1996 were based on
target award percentages of base salary for each position determined by the
Committee, as adjusted to reflect the adjustment of annual bonus targets
pursuant to the compensation philosophy modification. A portion of each
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 the
Committee'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 and the performance measures noted above. The Board
had final approval authority for these awards. Mr. Richard Thomas was
awarded the same bonus as he received the prior year pursuant to the
agreement entered into in connection with his resignation as an executive
officer.
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 1996,
awards by the Committee consisted of non-qualified stock options,
restricted stock awards (RSAs), restricted stock units (RSUs) and phantom
stock units (PSUs). These awards were consistent with ranges in the revenue
group of competitive companies which were approved by the Committee. In
accordance with the 1996 modifications to the executive compensation
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<PAGE>
philosophy, the stock option ranges position the Corporation at the median
of the market for these companies while the performance-based restricted
stock awards allow for total long-term compensation to reach the 75th
percentile for this market if the business achieves prescribed performance
standards over the long term.
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 1996, Mr.
Crockett was awarded 120,000 such stock options in his capacity as Chief
Executive Officer at the time. This award was within the competitive range
approved by the Committee. Pursuant to the terms of her employment
agreement, on October 17, 1996, Mrs. Alewine was granted 150,000 stock
options at fair market value in recognition of her promotion to Chief
Executive Officer. She will not be eligible for another stock option grant
until 1998.
Stock options were also granted to the other Named Executive Officers
in January 1996 as reflected in the table above setting forth 1996 option
grants. These stock option awards were determined on the basis of two
factors. First, the Committee established target award guidelines for each
executive officer based on a percentage of that officer's base salary.
Second, the Committee approved the actual awards for each executive officer
based on these guidelines and performance recommendations made by Mr.
Crockett when he was Chief Executive Officer based on his evaluation of
each officer's performance for 1995.
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 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 1996, Mr. Crockett received 20,000 RSAs in
recognition of his position as CEO at the time and his performance in that
position during 1995, which award was designed to put more of his total
compensation at risk in the form of long-term compensation. The other Named
Executive Officers also received RSAs in January 1996 as shown in the
Summary Compensation Table, the number of which in each case was consistent
with the guidelines approved by the Committee.
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
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<PAGE>
pursuant to RSAs. The Corporation intends to preserve the tax deductibility
under Section 162(m) of all compensation paid to its executive officers.
RSUs and PSUs are equivalent in value to shares of COMSAT stock and
vest after 3 years. In January 1996, the Committee awarded 5,520 PSUs to
Mr. Crockett in his position as the Chief Executive Officer in lieu of
$80,000 of the cash bonus that otherwise would have been paid to him for
1995 under the Annual Incentive Plan. As part of the modification of the
executive compensation philosophy, PSUs have been eliminated and annual
bonus awards are being paid solely in cash beginning with the 1996 bonuses
reported in this Proxy Statement. Pursuant to the terms of her employment
agreement, Mrs. Alewine was granted 5,000 RSUs on October 17, 1996 in
recognition of her promotion to Chief Executive Officer.
Committee on Compensation and Management Development
Edwin I. Colodny, Chairman
Neal B. Freeman
Caleb B. Hurtt
Robert G. Schwartz
Dolores D. Wharton
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, 1992, and
ending on December 31, 1996.
24
<PAGE>
Comparison of Five-Year Cumulative Total Return Among
COMSAT, S&P 500 Index & Peer Group Index
(Assumes $100 Invested on December 31, 1991 & 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:
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
COMSAT $100 $143 $184 $119 $123 $168
S&P 500 Index 100 108 118 120 165 203
Peer Group* 100 118 134 127 180 185
* Peer Group consists of three S&P Industry Groups: Telecommunications
(Long-Distance) (AT&T Corporation, MCI Communications, Inc. and Sprint
Corporation); Telephone Companies (Ameritech Corp., Bell Atlantic Corp.,
BellSouth Corp., GTE Corp., NYNEX Corp., Pacific Telesis Group, Inc., SBC
Communications Inc., and US West Corp.); and Entertainment (The Walt Disney
Company, King World Productions Inc. and Viacom Inc.).
25
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
OWNERSHIP OF COMMON STOCK
To the knowledge of the Corporation, based upon Schedules 13G or 13D
filed with the Securities and Exchange Commission (the SEC) as of March 1,
1997, the 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
- - ---------------------- ---------------------------- --------
Capital Group
Companies, Inc. (1) 2,567,100 5.3%
333 South Hope Street
Los Angeles, CA 90071
Ryback Management
Corporation (2) 2,591,400 5.4%
7711 Carondelet Avenue
Box 16900
St. Louis, MO 63105
Travelers Group, Inc. 4,100,425 8.4%
Smith Barney Holdings Inc. (3)
388 Greenwich Street
New York, NY 10013
- - -----------------
(1) The Capital Group Companies, Inc., a parent holding company of a
group of investment management companies, reported indirect sole
voting power with respect to 2,282,500 shares and indirect sole
dispositive power with respect to 2,567,100 shares. The Capital
Group Companies, Inc. disclaims beneficial ownership of all of
the shares reported.
(2) Ryback Management Corporation reported sole voting and
dispositive power with respect to 2,591,400 shares held in a
fiduciary capacity by Ryback Management Corporation and/or the
Lindner Investment Series Trust.
(3) Travelers Group, Inc. and Smith Barney Holdings Inc. reported
shared voting and dispositive power with respect to 4,100,425 and
3,810,425 shares, respectively. The Travelers Group, Inc. and
Smith Barney Holding Inc. both disclaim beneficial ownership of
the shares reported.
26
<PAGE>
On April 23, 1997, COMSAT filed suit against Burce Crockett, Herbert
Denton, Providence Capital, Inc., Wyser-Pratte, Inc. and others alleging,
among other things, that those persons are acting in concert and constitute
a "syndicate" or "affiliated group" of shareholders in violation of the
Communications Satelliet Act of 1962, pursuant to which COMSAT was created
and in regulated.
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, 1997, by all directors and nominees, by
each of the executive officers named in the Summary Compensation Table
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 which an individual has the right to acquire
within 60 days through the exercise of any stock option or other right.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Amount and
Nature of Amount and
Beneficial Nature of
Ownership of Beneficial
COMSAT Ownership of
Common Ascent
Name (1) Stock(2) Common Stock
- - -------- ------------ ------------
Betty C. Alewine 321,301(3) -
Lucy Wilson Benson 24,800 500
Edwin I. Colodny 15,000 1,800
Bruce L. Crockett 616,564(4) 1,000
Lawrence S. Eagleburger 2,700 -
John V. Evans 95,279(5) -
Allen E. Flower 70,276(6) -
Neal B. Freeman 18,400 -
Arthur Hauspurg 18,400 -
Caleb B. Hurtt 1,000 -
Peter S. Knight 3,000 1,000
Peter W. Likins 21,850(7) -
Howard M. Love 22,300(8) -
Charles Lyons 243,663(9) 2,500
Charles T. Manatt 3,500 1,000
Robert G. Schwartz 26,600 2,800
C. J. Silas 11,600 4,800
Richard E. Thomas 267,439(10) 200(11)
Dolores D. Wharton 7,600 -
Warren Y. Zeger 179,979(12) -
All directors and executive
officers as a group (30 2,210,424(13) 15,950
persons)
</TABLE>
- - --------------
(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 to the nearest whole
share. Beneficial ownership of COMSAT Common Stock includes
shares that may be acquired within 60 days after March 1, 1997
through the exercise of options as follows: Mrs. Alewine, 234,734
shares; Mrs. Benson, 24,000 shares; Mr. Colodny, 14,000 shares;
Mr. Crockett, 495,000 shares; Mr. Eagleburger, 2,000 shares; Dr.
Evans, 77,438 shares; Mr. Flower, 41,450 shares; Mr. Freeman,
18,000 shares; Mr. Hauspurg, 14,000 shares; Mr. Knight, 2,000
shares; Dr. Likins, 19,000 shares; Mr. Love, 17,000 shares; Mr.
Lyons, 191,500 shares; Mr. Manatt, 2,000 shares; Mr. Schwartz,
24,000 shares; Mr. Silas, 10,000 shares; Mr. Thomas, 117,500;
Mrs. Wharton, 6,000; Mr. Zeger, 147,644 shares; and all directors
and executive officers as a group, 1,607,391 shares.
28
<PAGE>
(3) Includes 57,900 shares which are restricted against transfer and
865 shares which are held in the Corporation's Savings and
Profit-Sharing Plan as of December 31, 1996.
(4) Includes 3,400 shares held by Mrs. Crockett with respect to which
Mr. Crockett disclaims beneficial ownership. Also includes 86,800
shares which are restricted against transfer and 81 shares which
are held in the Corporation's Savings and Profit-Sharing Plan as
of December 31, 1996. Mr. Crockett beneficially owned 1% of the
Corporation's outstanding Common Stock as of March 1, 1997.
(5) Includes 15,300 shares which are restricted against transfer and
789 shares which are held in the Corporation's Savings and
Profit-Sharing Plan as of December 31, 1996.
(6) Includes 14,200 shares which are restricted against transfer and
664 shares which are held in the Corporation's Savings and
Profit-Sharing Plan as of December 31, 1996.
(7) Includes 2,850 shares over which Dr. Likins shares voting power
and investment power with Mrs. Likins.
(8) Includes 2,500 shares held in a trust over which Mr. Love has no
voting and shared investment power.
(9) Includes 30,900 shares which are restricted against transfer and
862 shares which are held in the Corporation's Savings and
Profit-Sharing Plan as of December 31, 1996.
(10) Includes 104,371 shares over which Mr. Thomas shares voting power
and investment power with Mrs. Thomas. Also includes 21,750
shares which are restricted against transfer and 6,268 shares
which are held in the COMSAT RSI, Inc. Employee Stock Ownership
Plan as of December 31, 1996.
(11) Mr. Thomas shares voting and investment power for the shares with
Mrs. Thomas.
(12) Includes 27,300 shares which are restricted against transfer and
792 shares which are held in the Corporation's Savings and
Profit-Sharing Plan as of December 31, 1996.
(13) Includes 3,900 shares with respect to which beneficial ownership
is disclaimed. Also includes an aggregate of 325,823 shares which
are restricted against transfer, which are held in the
Corporation's Savings and Profit-Sharing Plan as of December 31,
1996, or which are held in the COMSAT RSI, Inc. Employee Stock
Ownership Plan as of December 31, 1996. All directors and
executive officers as a group beneficially owned 5% of the
Corporation's outstanding Common Stock as of March 1, 1997.
Item 13. Certain Relationships and Related Transactions
None.
29
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) Documents filed as part of this Report
1. Consolidated Financial Statements and Supplementary Data of
Registrant
a. Independent Auditors' Report
b. Consolidated Financial Statements of COMSAT Corporation
and Subsidiaries
(i) Consolidated Income Statements for the Years Ended
December 31, 1996, 1995 and 1994
(ii) Consolidated Balance Sheets as of December 31,
1996 and 1995
(iii)Consolidated Cash Flow Statements for the Years
Ended December 31, 1996, 1995 and 1994
(iv) Statements of Changes in Consolidated
Stockholders' Equity for the Years Ended December
31, 1996, 1995 and 1994
(v) Notes to Consolidated Financial Statements for
Each of the Three Years in the Period Ended
December 31, 1996
2. Financial Statement Schedules Relating to the Consolidated
Financial Statements of COMSAT Corporation for Each of the
Three Years in the Period Ended December 31, 1996
a. Schedule I -- Condensed Financial Information of
Registrant
b. Schedule II -- Valuation and Qualifying Accounts
All Schedules (except those listed above) have been omitted,
because they are not applicable or not required or because
the required information is included elsewhere in the
financial statements in this filing.
(b) Reports on Form 8-K
The corporation filed a Report on Form 8-K dated October 18,
1996 related to the announcement of its intent to divest its
interest in Ascent Entertainment Group, Inc. and third
quarter 1996 operating results.
30
<PAGE>
(c) Exhibits (listed according to the number assigned in the table in
Item 601 of Regulation S-K)
Exhibit No. 3 - Articles of Incorporation and By-laws
3.1 Articles of Incorporation of Registrant, composite copy, as
amended through June 1, 1993 (Incorporated by reference from
Exhibit No. 4(a) to Registrant's Registration Statement on
Form S-3 (No. 33-51661) filed on December 22, 1993)
3.2 By-laws of Registrant, as amended through April 18, 1997
(Incorporated by reference from Exhibit No. 3.2 to
Registrant's Report on Form 8-K dated April 21, 1997)
3.3 Regulations adopted by Registrant's Board of Directors
pursuant to Section 5.02(c) of Registrant's Articles of
Incorporation (Incorporated by reference from Exhibit No.
3(c) to Registrant's Report on Form 10-K for the fiscal year
ended 1992)
Exhibit No. 4 - Instruments defining the rights of security holders, including
indentures
4.1 Specimen of a certificate representing Series I shares of
COMSAT Common Stock, without par value, which are held by
citizens of the United States (Incorporated by reference
from Exhibit No. 4(a) to Registrant's Report on Form 10-K
for the fiscal year ended December 31, 1993)
4.2 Specimen of a certificate representing Series I shares of
COMSAT Common Stock, without par value, which are held by
aliens (Incorporated by reference from Exhibit No. 4(b) to
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1982)
4.3 Specimen of a certificate representing Series II shares of
COMSAT Common Stock, without par value (Incorporated by
reference from Exhibit No. 4(c) to Registrant's Report on
Form 10-K for the fiscal year ended December 31, 1982)
4.4 Standard Multiple-Series Indenture Provisions dated March
15, 1991 (Incorporated by reference from Exhibit No. 4(a) to
Registrant's Registration Statement on Form S-3 (No.
33-39472) filed on March 15, 1991)
31
<PAGE>
4.5 Indenture dated as of March 15, 1991 between Registrant and
The Chase Manhattan Bank, N.A. (Incorporated by reference
from Exhibit No. 4(b) to Registrant's Registration Statement
on Form S-3 (No. 33-39472) filed on March 15, 1991)
4.6 Supplemental Indenture, dated as of June 29, 1994, from the
Registrant to The Chase Manhattan Bank, N. A. (Incorporated
by reference from Exhibit No. 4(c) to Registrant's
Registration Statement on Form S-3 (No. 33-54369) filed on
June 30, 1994)
4.7 Officers' Certificate pursuant to Section 3.01 of the
Indenture, dated as of March 15, 1991, from the Registrant
to The Chase Manhattan Bank, N.A., as Trustee, relating to
the authorization of $75,000,000 aggregate principal amount
of Registrant's 8.95% Notes Due 2001 (with form of Note
attached) (Incorporated by reference from Exhibit No. 4 to
Registrant's Current Report on Form 8-K filed on May 15,
1991)
4.8 Officers' Certificate pursuant to Section 3.01 of the
Indenture, dated as of March 15, 1991, from the Registrant
to The Chase Manhatta n Bank, N.A., as Trustee, relating to
the authorization of $160,000,000 aggregate principal amount
of Registrant's 8.125% Debentures Due 2004 (with form of
Debenture attached) (Incorporated by reference from Exhibit
No. 4 to Registrant's Current Report on Form 8-K filed on
April 9, 1992)
4.9 Officers' Certificate pursuant to Section 3.01 of the
Indenture, dated as of March 15, 1991, as supplemented by
the Supplemental Indenture, dated as of June 29, 1994, from
the Registrant to The Chase Manhattan Bank, N.A., as
Trustee, relating to the authorization of $100,000,000
aggregate principal amount of Registrant's Medium Term
Notes, Series A (with forms of Notes attached) (Incorporated
by reference from Exhibit No. 4(i) to Registrant's Report on
Form 10-K for the fiscal year ended December 31, 1994)
4.10 Limited Partnership Agreement of COMSAT Capital I, L.P.,
dated as of July 18, 1995, relating to issuance of monthly
income preferred securities (Incorporated by reference from
Exhibit No. 4(a) to Registrant's Report on Form 10-Q for the
quarter ended June 30, 1995)
32
<PAGE>
4.11 Guarantee Agreement for Preferred Securities of COMSAT
Capital I, L.P., dated as of July 18, 1995 (Incorporated by
reference from Exhibit No. 4(b) to Registrant's Report on
Form 10-Q for the quarter ended June 30, 1995)
4.12 Indenture between Registrant and the First National Bank of
Chicago, as Trustee, dated as of July 18, 1995 (Incorporated
by reference from Exhibit No. 4(c) to Registrant's Report on
Form 10-Q for the quarter ended June 30, 1995)
Exhibit No. 10 - Material Contracts
10.1 Agreement relating to the International Telecommunications
Satellite Organization (INTELSAT) by Governments, which
entered into force on February 12, 1973 (Incorporated by
reference from Exhibit No. 10(a) to Registrant's Report on
Form 10-K for the fiscal year ended December 31, 1980)
10.2 Operating Agreement Relating to INTELSAT by Governments
which entered into force on February 12, 1973 (Incorporated
by reference from Exhibit No. 10(b) to Registrant's Report
on Form 10-K for the fiscal year ended December 31, 1980)
10.3 Agreement dated August 15, 1975, among COMSAT General
Corporation, RCA Global Communications, Inc., Western Union
International, Inc. and ITT World Communications, Inc.
relating to the establishment of a joint venture for the
purpose of participating in the ownership and operation of a
maritime communications satellite system and Amendment Nos.
1-4 and Amendment No. 5 dated March 24, 1980 (Incorporated
by reference from Exhibit No. 10(p) to Registrant's Report
on Form 10-K for the fiscal year ended December 31, 1980)
10.4 Amendment No. 6 to Exhibit 10.3 dated September 1, 1981
(Incorporated by reference from Exhibit No. 10(p)(ii) to
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1981)
10.5 Convention on the International Maritime Satellite
Organization (INMARSAT) dated September 3, 1976
(Incorporated by reference from Exhibit No. 11 to
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1978)
33
<PAGE>
10.6 Operating Agreement on INMARSAT dated September 3, 1976
(Incorporated by reference from Exhibit No. 12 to
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1978)
10.7* Registrant's 1982 Stock Option Plan (Incorporated by
reference from Exhibit No. 10(x) to Registrant's Report on
Form 10-K for the fiscal year ended December 31, 1981)
10.8 Agreement dated October 6, 1983, between COMSAT General
Corporation and National Broadcasting Company for the
provision of satellite distribution network programming
(Incorporated by reference from Exhibit No. 10(r) to
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1983)
10.9 Amendment to Exhibit 10.8 dated September 1, 1992
(Incorporated by reference from Exhibit No. 10(j)(i) to
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1992)
10.10* Registrant's Insurance and Retirement Plan for Executives,
as amended and restated effective January 1, 1997**
10.11* Registrant's Non-Employee Directors Stock Plan**
10.12 Memorandum of Understanding between Registrant and National
Aeronautics and Space Administration (NASA), dated July 21,
1988 and amended through February 22, 1990 (Incorporated by
reference from Exhibit No. 10(aa) to Registrant's Report on
Form 10-K for the fiscal year ended December 31, 1989)
10.13 Agreement to Acquire and Lease (and Supplemental Agreements
thereto) dated September 28 and October 10, 1988,
respectively, among the International Maritime Satellite
Organization (Inmarsat), the North Sea Marine Leasing
Company, British Aerospace Public Limited Company, the
European Investment Bank, Kreditanstalt Fuer Wiederaufbau,
European Investment Bank (as Agent and as Trustee),
Instituto Mobiliare Italiano, Credit National, Hellenic
Industrial Development Bank, and Society Nationale de Credit
a L'Industrie relating to the financing of three Inmarsat
spacecraft (Incorporated by Reference from Exhibit No. 3(a)
to Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1988)
34
<PAGE>
10.14 Service Agreement, dated September 14, 1989, between
Registrant and Aeronautical Radio, Inc. relating to
satellite-based communications services (Incorporated by
reference from Exhibit No. 10(y) to Registrant's Report on
Form 10-K for the fiscal year ended December 31, 1989)
10.15 Agreement, dated January 22, 1990, between Registrant and
Kokusai Denshin Denwa Co., Ltd. for provision of
aeronautical services (Incorporated by reference from
Exhibit No. 10(z) to Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1990)
10.16 Amendment No. 1 to Exhibit 10.15 dated May 20, 1993
(Incorporated by reference from Exhibit No. 10(q)(i) to
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1993)
10.17* Registrant's 1990 Key Employee Stock Plan (Incorporated by
reference from Exhibit No. 10 (p) to Registrant's Report on
Form 10-K for the fiscal year ended December 31, 1989)
10.18* Amendment No. 1 to Exhibit 10.17 dated January 15, 1993
(Incorporated by reference from Exhibit No. 10(r)(i) to
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1993)
10.19* Amendment No. 2 to Exhibit 10.17 dated January 16, 1994
(Incorporated by reference from Exhibit No. 10(o)(ii) to
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1994)
10.20 Amended and Restated Agreement, dated November 14, 1990, of
Limited Partnership of Rock Spring II Limited Partnership
(Incorporated by reference from Exhibit No. 10(a) to
Registrant's Current Report on Form 8-K filed on February
24, 1992)
10.21 Amended and Restated Lease Agreement, dated November 14,
1990, of Limited Partnership of Rock Spring II Limited
Partnership (Incorporated by reference from Exhibit No.
10(b) to Registrant's Current Report on Form 8-K filed on
February 24, 1992)
10.22 Amended and Restated Ground Lease Indenture, dated November
14, 1990, between Anne D. Camalier (Landlord) and Rock
Spring II Limited Partnership (Tenant) (Incorporated by
reference from Exhibit No. 10(c) to Registrant's Current
Report on Form 8-K filed on February 24, 1992)
35
<PAGE>
10.23 Finance Facility Contract (and Supplemental Agreements
thereto), dated December 20, 1991, among the International
Maritime Satellite Organization (Inmarsat), Abbey National
plc, General Electric Technical Services Company, Inc.,
European Investment Bank, Kreditanstalt Fuer Wiederaufbau,
Instituto Mobiliare Italiano S.p.A., Credit National,
Societe Nationale de Credit a L'Industrie,
Finansieringsinstituttet for Industri OG Haandvaerk A/S, De
Nationale Investeringsbank NV, and Osterreichische
Investitionkredit Aktiengesellschaft relating to the
financing of three Inmarsat spacecraft (Incorporated by
reference from Exhibit No. 10 (dd) to Registrant's Report on
Form 10-K for the fiscal year ended December 31, 1991)
10.24* Registrant's Directors and Executives Deferred Compensation
Plan, as amended by the Board of Directors on July 15, 1993
(Incorporated by reference from Exhibit No. 10(v) to the
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1993)
10.25 Service Agreement, dated September 12, 1990, between
Registrant and GTE Airfone, Incorporated, for the provision
of aeronautical satellite services (Incorporated by
reference from Exhibit No. 10(r) to Registrant's Report on
Form 10-K for the fiscal year ended December 31, 1990)
10.26 Fiscal Agency Agreement, dated as of August 6, 1992, between
International Telecommunications Satellite Organization and
Morgan Guaranty Trust Company of New York (Incorporated by
reference from Exhibit No. 10 (dd) to Registrant's Report on
Form 10-K for the fiscal year ended December 31, 1992)
10.27 Fiscal Agency Agreement, dated as of January 19, 1993,
between International Telecommunications Satellite
Organization and Morgan Guaranty Trust Company of New York
(Incorporated by reference from Exhibit No. 10 (ee) to
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1992)
10.28 Lease Agreement, dated June 8, 1993, between GTE Airfone,
Incorporated, United Airlines, Inc. and Registrant for the
provision and financing of aeronautical satellite equipment
(Incorporated by reference from Exhibit No. 10(aa) to
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1993)
36
<PAGE>
10.29 Agreement dated July 1, 1993, between Registrant and AT&T
Easylink Services relating to exchange of telex traffic
(Incorporated by reference from Exhibit No. 10(bb) to
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1993)
10.30 Agreement dated July 27, 1993, between the Registrant and
American Telephone & Telegraph Company relating to
utilization of space segment (Incorporated by reference from
Exhibit No. 10(cc) to Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1993)
10.31 Amendment to Exhibit 10.30 dated as of December 1, 1995
(Incorporated by reference from Exhibit No. 10.34 to
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1995)
10.32 Amendment to Exhibit 10.30 dated as of January 8, 1997**
10.33 Agreement dated September 1, 1993, between Registrant and
MCI International, Inc. relating to exchange of traffic
(Incorporated by reference from Exhibit No. 10(dd) to
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1993)
10.34 Agreement dated November 30, 1993, between the Registrant
and Sprint Communications Company L.P. relating to
utilization of space segment (Incorporated by reference from
Exhibit No. 10(ee) to Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1993)
10.35 Amendment to Exhibit 10.34 dated April 7, 1995 (Incorporated
by reference from Exhibit No. 10(a)(i) to Registrant's
Report on Form 10-Q/A Amendment No. 2 dated June 29, 1995
for the quarter ended March 31, 1995)
10.36 Agreement dated December 10, 1993, between Registrant and
Sprint International relating to the exchange of traffic
(Incorporated by refere nce from Exhibit No. 10(ff) to
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1993)
37
<PAGE>
10.37 Credit Agreement dated as of December 17, 1993 among
Registrant, NationsBank of North Carolina, N.A., Bank of
America National Trust and Savings Association, The First
National Bank of Chicago, The Chase Manhattan Bank, N.A.,
The Sumitomo Bank, Limited, New York Branch, Swiss Bank
Corporation, New York Branch, as lenders, and NationsBank of
North Carolina, N.A., as agent (Incorporated by reference
from Exhibit No. 10(gg) to Registrant's Report on Form 10-K
for the fiscal year ended December 31, 1993)
10.38 Amendment No. 1 to Exhibit 10.37 dated as of December 17,
1994 (Incorporated by reference from Exhibit No. 10(cc)(i)
to Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1994)
10.39 Agreement dated January 24, 1994, between MCI International,
Inc. and Registrant relating to utilization of space segment
(Incorporated by reference from Exhibit No. 10(ii) to
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1993)
10.40 Amendment to Exhibit 10.39 dated as of July 1, 1995
(Incorporated by reference from Exhibit No. 10.42 to
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1995)
10.41 Amendment to Exhibit 10.39 dated as of September 17, 1996**
10.42 Agreement dated February 18, 1994, between Registrant and
AT&T relating to exchange of traffic (Incorporated by
reference from Exhibit No. 10(jj) to Registrant's Report on
Form 10-K for the fiscal year ended December 31, 1993)
10.43 Fiscal Agency Agreement between International
Telecommunications Satellite Organization, Issuer, and
Bankers Trust Company, Fiscal Agent and Principal Paying
Agent, dated as of March 22, 1994 (Incorporated by reference
from Exhibit No. 10(kk) to Registrant's Report on Form 10-K
for the fiscal year ended December 31, 1993)
38
<PAGE>
10.44 Distribution Agreement dated July 11, 1994 between
Registrant and CS First Boston Corporation, Salomon Brothers
Inc and Nationsbanc Capital Markets, Inc., as Distributors,
of Registrant's Medium-Term Notes, Series A (Incorporated by
reference from Exhibit No. 10(ff) to Registrant's Report on
Form 10-K for the fiscal year ended December 31, 1994)
10.45 Fiscal Agency Agreement between International
Telecommunications Satellite Organization, Issuer, and
Morgan Guaranty Trust Company, Fiscal Agent and Principal
Paying Agent, dated as of October 14, 1994 (Incorporated by
reference from Exhibit No. 10(gg) to Registrant's Report on
Form 10-K for the fiscal year ended December 31, 1994)
10.46* Registrant's Annual Incentive Plan (Incorporated by
reference from Exhibit No. 10(hh) to Registrant's Report on
Form 10-K for the fiscal year ended December 31, 1994)
10.47 Fiscal Agency Agreement between International
Telecommunications Satellite Organization, Issuer, and
Morgan Guaranty Trust Company, Fiscal Agent and Principal
Paying Agent, dated as of February 28, 1995 (Incorporated by
reference from Exhibit No. 10(ii) to Registrant's Report on
Form 10-K for the fiscal year ended December 31, 1994)
10.48 Consent Agreement, dated as of July 1, 1995, by and among
the National Hockey League, Le Club de Hockey Les Nordiques,
Les Nordiques de Quebec 1988, Marcel Aubut, COMSAT Hockey
Enterprises, LLC, COMSAT Video Enterprises, Inc., Ascent
Entertainment Group, Inc., and the Registrant (Incorporated
by reference from Exhibit No. 10.7 to Ascent Entertainment
Group, Inc.'s Report on Form 10-K for the fiscal year ended
December 31, 1996)
10.49* Amended and Restated Employment Agreement, dated as of
December 18, 1995, between Ascent and Charles Lyons**
10.50* Agreement, dated as of November 4, 1996, between the
Registrant and Richard E. Thomas**
10.51* Registrant's 1995 Key Employee Stock Plan (Incorporated by
reference from Exhibit No. 99 to the Registrant's definitive
Proxy Statement on Schedule 14A filed on April 7, 1995)
39
<PAGE>
10.52 Corporate Agreement, dated as of December 18, 1995, between
the Registrant and Ascent relating to certain matters
arising in connection with Ascent's initial public offering
(Incorporated by reference from Exhibit No. 10.54 to the
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1995)
10.53 Intercompany Services Agreement, dated as of December 18,
1995, between the Registrant and Ascent relating to the
provision of certain services subsequent to Ascent's initial
public offering (Incorporated by reference from Exhibit No.
10.55 to the Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1995)
10.54 Tax Sharing Agreement, dated as of December 18, 1995,
between the Registrant and Ascent relating to certain tax
matters arising subsequent to Ascent's initial public
offering (Incorporated by reference from Exhibit No. 10.56
to the Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1995)
10.55 $200,000,000 Credit Agreement dated as of October 8, 1996
among Ascent Entertainment Group, Inc., the lenders named
therein and NationsBank of Texas, N.A. (Incorporated by
reference from the Current Report on Form 8-K filed by
Ascent Entertainment Group, Inc. on October 17, 1996)
10.56 $125,000,000 Credit Agreement dated as of October 8, 1996
among On Command Corporation, the lenders named therein and
NationsBank of Texas, N.A. (Incorporated by reference from
the Current Report on Form 8-K filed by Ascent Entertainment
Group, Inc. on October 17, 1996)
10.57 Agreement between Beacon Communications Corp. and Universal
Pictures, a division of Universal City Studios, Inc., dated
as of July 10, 1996 (Incorporated by reference from Exhibit
No. 10.5 to the Quarterly Report on Form 10-Q filed by
Ascent Entertainment Group, Inc. on November 13, 1996 as
amended on January 6, 1997)
10.58 Employment Agreement, dated as of July 19, 1996, between the
Registrant and Betty C. Alewine**
10.59 Agreement, dated as of July 19, 1996, between the Registrant
and Bruce L. Crockett (Incorporated by reference from
Exhibit No. 10 to the Registrant's Report on Form 10-Q filed
on November 14, 1996)
40
<PAGE>
10.60 Employment Agreement, dated as of April 18, 1997, between
the Registrant and Allen E. Flower.
10.61 Employment Agreement, dated as of April 18, 1997, between
the Registrant and Warren Y. Zeger.
Exhibit No. 11 - Statement re computation of per share earnings**
Exhibit No. 21 - Subsidiaries of the Registrant as of March 1, 1997
41
<PAGE>
Exhibit No. 23 - Consents of experts and counsel
Consent of Independent Auditors dated March 21, 1997.**
Exhibit No. 27 - Financial Data Schedule
*Compensatory plan or arrangement.
**Previously filed.
42
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Form 10-K/A to be
signed on its behalf by the undersigned, thereunto duly authorized.
COMSAT CORPORATION
(Registrant)
Date: April 30, 1997 By /s/ Alan G. Korobov
---------------------------------
(Alan G. Korobov, Controller)
43
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EXHIBIT INDEX
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Exhibit
No. Description
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10.60 Employment Agreement, dated as of April 18, 1997, between
the Registrant and Allen E. Flower
10.61 Employment Agreement, dated as of April 18, 1997, between
the Registrant and Warren Y. Zeger
21 Subsidiaries of the Registrant as of March 1, 1997
44
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EMPLOYMENT AGREEMENT
This AGREEMENT is made as of April 18, 1997 by and between COMSAT
Corporation ("COMSAT"), a District of Columbia corporation, and Allen
Flower, a resident of the Commonwealth of Virginia (the "Executive").
WHEREAS, the Executive serves as Vice President and Chief Financial
Officer of COMSAT;
WHEREAS, the Board of Directors of COMSAT (the "Board") believes it to
be in the best interests of COMSAT to enter into this Agreement to ensure
the Executive's continuing services to COMSAT; and
WHEREAS, COMSAT desires to continue to employ the Executive as Vice
President and Chief Financial Officer of COMSAT, and the Executive desires
to continue such employment, on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements made herein, and intending to be legally bound hereby, COMSAT
and the Executive agree as follows:
1. Employment; Duties.
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(a) EMPLOYMENT AND EMPLOYMENT PERIOD. COMSAT shall employ the
Executive to serve as Vice President and Chief Financial Officer of COMSAT
or any successor entity for a period (the "Employment Period") commencing
on April 18, 1997 (the "Effective Date") and continuing thereafter until
April 17, 2000 unless terminated in accordance with the provisions of this
Agreement. Each 12-month period ending on the anniversary date of the
Effective Date is referred to herein as a "year of the Employment Period."
(b) OFFICES, DUTIES AND RESPONSIBILITIES. The Executive shall
report to the Chief Executive Officer of COMSAT. The Executive's offices
initially shall be located at COMSAT's present headquarters in Bethesda,
Maryland. The Executive shall have all duties and authority customarily
accorded a Vice President and Chief Financial Officer.
(c) DEVOTION TO INTERESTS OF COMSAT. During the Employment
Period, the Executive shall devote his best efforts and full business time
and attention to the performance of his duties hereunder. Notwithstanding
the foregoing, the Executive shall be entitled to undertake outside
activities (e.g. charitable, educational, personal interests, and board of
directors memberships) that do not compete with COMSAT and do not
unreasonably or materially interfere with the performance of his duties
hereunder as reasonably determined by the Chief Executive Officer in
consultation with the Executive.
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2. Compensation and Fringe Benefits.
---------------------------------
(a) BASE COMPENSATION. COMSAT shall pay the Executive a base
salary ("Base Salary") during the Employment Period, with payments made in
installments in accordance with COMSAT's regular practice for compensating
executive personnel, provided that in no event shall such payments be made
less frequently than twice per month. The initial annual Base Salary shall
be $210,000. Thereafter, the Base Salary for the Executive shall be
reviewed for increases annually during the Employment Period, consistent
with COMSAT's normal review process. Any Base Salary increases shall
approved by the Board in its sole discretion.
(b) BONUS COMPENSATION. The Executive will be eligible to receive
bonuses ("Annual Bonus") during the Employment Period under the Annual
Incentive Plan (the "AIP") in accordance with the following parameters: (i)
the target bonus for each year during the Employment Period shall be 50% of
Base Salary for achieving 100% of the target level for the performance
measures and (ii) the performance measures, the relative weight to be
accorded each performance measure and the amount of bonus payable in
relation to the target bonus for achieving more or less than 100% of the
target level for the performance measures shall be determined for each year
during the Employment Period by the Committee on Compensation and
Management Development of the Board (the "Compensation Committee").
(c) FRINGE BENEFITS. The Executive shall be entitled to the
fringe benefits in effect for COMSAT senior executives from time to time,
including (i) participation in the COMSAT Directors and Executives Deferred
Compensation Plan, the COMSAT Split Dollar Insurance Plan, the COMSAT
Educational Grant Program, the COMSAT Retirement Plan, the COMSAT Savings
and Profit-Sharing Plan, the COMSAT 1995 Key Employee Stock Plan, the
COMSAT Employee Stock Purchase Plan, the COMSAT health and disability
insurance programs and the COMSAT financial planning program and (ii)
reimbursement of reasonable expenses incurred in connection with travel and
entertainment related to COMSAT's business and affairs. The Executive also
shall be entitled to such other or additional fringe benefits as are made
available to COMSAT senior executives during the Employment Period. COMSAT
reserves the right to modify or terminate at any time the fringe benefits
provided to the senior management group.
(d) SERP. The Executive shall continue to participate in the
COMSAT Insurance and Retirement Plan for Executives (the "SERP"). Any
future amendments or changes to the SERP which provide for a reduction,
deferral or elimination of benefits payable to participants in the SERP
shall expressly not apply to the Executive unless the Executive consents
otherwise.
(e) LEGAL EXPENSES. The Executive shall be entitled to
reimbursement of the Executive's reasonable legal fees and costs incurred in
connection with the negotiation and execution of this Agreement, subject to a
maximum reimbursement of $5,000.
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3. Trade Secrets; Return of Documents and Property.
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(a) The Executive acknowledges that during the course of his
employment he will receive secret, confidential and proprietary information
("Trade Secrets") of COMSAT and of other companies with which COMSAT does
business on a confidential basis and that the Executive will create and
develop Trade Secrets for the benefit of COMSAT. Trade Secrets shall
include, without limitation, matters of a technical nature, such as
scientific and engineering secrets, "know-how," formulae, secret processes
or machines, inventions and computer programs (including documentation of
such programs), and matters of a business nature, such as customer data and
proprietary information about costs, profits, markets, sales and customer
databases, and other information of a similar nature to the extent not
available to the public, and plans for future development. All Trade
Secrets disclosed to or created by the Executive shall be deemed to be the
exclusive property of COMSAT. The Executive acknowledges that Trade Secrets
have economic value to COMSAT due to the fact that Trade Secrets are not
generally known to the public or the trade and that the unauthorized use or
disclosure of Trade Secrets is likely to be detrimental to the interests of
COMSAT and its subsidiaries. The Executive therefore agrees to hold in
strict confidence and not to disclose to any third party any Trade Secret
acquired or created or developed by the Executive during the term of this
Agreement except (i) when the Executive uses or discloses any Trade Secret
in the proper course of the Executive's rendition of services to COMSAT
hereunder, (ii) when such Trade Secret becomes public knowledge other than
through a breach of this Agreement, or (iii) when the Executive is required
to disclose any Trade Secret pursuant to any valid legal process. The
Executive shall notify COMSAT immediately of any such legal process in
order to enable COMSAT to contest such legal process's validity. After
termination of this Agreement, the Executive shall not use or otherwise
disclose Trade Secrets unless such information (x) becomes public knowledge
other than through a breach of this Agreement, (y) is disclosed to the
Executive by a third party who is entitled to receive and disclose such
Trade Secret, or (z) is required to be disclosed pursuant to any valid
legal process, in which case the Executive shall notify COMSAT immediately
of any such legal process in order to enable COMSAT to contest such legal
process's validity.
(b) Upon the effective date of notice of the Executive's or
COMSAT's election to terminate this Agreement, or at any time upon the
request of COMSAT, the Executive (or his heirs or personal representatives)
shall deliver to COMSAT (i) all documents and materials containing or
otherwise relating to Trade Secrets or other information relating to
COMSAT's business and affairs, and (ii) all documents, materials and other
property belonging to COMSAT, which in either case are in the possession or
under the control of the Executive (or his heirs or personal
representatives). The Executive shall be entitled to keep his personal
records (including Rolodex) relating to COMSAT's business and affairs
except to the extent those contain documents or materials described in
clause (i) of the preceding sentence.
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4. DISCOVERIES AND WORKS. All discoveries and works made or
conceived by the Executive during his employment by COMSAT pursuant to this
Agreement, jointly or with others, that relate to COMSAT's activities
("Discoveries and Works") shall be owned by COMSAT. Discoveries and Works
shall include, without limitation, inventions, computer programs (including
documentation of such programs), technical improvements, processes,
drawings and works of authorship. The Executive shall (a) promptly notify,
make full disclosure to, and execute and deliver any documents requested
by, COMSAT to evidence or better assure title to such Discoveries and Works
in COMSAT, (b) assist COMSAT in obtaining or maintain for itself at its own
expense United States and foreign patents, copyrights, trade secret
protection or other protection of any and all such Discoveries and Works,
and promptly execute, whether during his employment by COMSAT or
thereafter, all applications or other endorsements necessary or appropriate
to maintain patents and other rights for COMSAT and to protect its title
thereto. Any Discoveries and Works which, within six months after the
termination of the Executive's employment by COMSAT, are made, disclosed,
reduced to a tangible or written form or description, or are reduced to
practice by the Executive and which pertain to work performed by the
Executive while with COMSAT shall, as between the Executive and COMSAT, be
presumed to have been made during the Executive's employment by COMSAT.
5. TERMINATION. This Agreement shall remain in effect during the
Employment Period, and this Agreement and Executive's employment with COMSAT
may be terminated only a
follows:
(a) The Executive's employment may be terminated by the Executive
at any time upon 45 days advance written notice to COMSAT for "Good Reason"
(as defined below). In such event, or if the Executive's employment is
terminated by COMSAT without "Cause" (as defined below), the Executive
shall be entitled to receive the following benefits until the later of (x)
one year after the date of the Executive's termination of employment or (y)
April 17, 2000:
(i) The Executive's Base Salary in effect at the date of
termination;
(ii) An Annual Bonus equal to 50% of his then current Base
Salary; and
(iii) All benefits provided pursuant to Sections 2(c) and (d) of
this Agreement, which shall be deemed to vest fully and immediately if
subject to vesting; provided, however, that in the event COMSAT is
precluded from providing coverage under any such benefit plan by
applicable law or regulation, COMSAT may provide the Executive with a
payment equal to the cost of such coverage without regard to tax
effect. The foregoing benefits shall be calculated in accordance with
the provisions of the applicable plans as if the Executive had retired
on his date of termination, provided that the Board reserves the
discretion to waive the applicable early retirement reduction under
the SERP in such event.
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(b) "Good Reason" shall mean the occurrence of any of the
following (other than for "Cause"), without the Executive's express written
consent: (i) the assignment to the Executive of duties inconsistent with
the Executive's status as an executive officer of COMSAT or a substantial
reduction by COMSAT of the Executive's responsibilities as an executive
officer of COMSAT; (ii) any relocation of the Executive's offices outside
the Washington, D.C. metropolitan area by COMSAT prior to the third
anniversary of the Effective Date; or (iii) any material default of the
provisions of Section 2 of this Agreement which continues for 20 business
days following COMSAT's receipt of written notice from the Executive
specifying the manner in which COMSAT is in default of such provisions. In
order for the Executive to terminate employment for "Good Reason", the
Executive must give COMSAT written notice of his termination of employment
for "Good Reason", stating the basis for the termination, within 90 days
after the Executive learns of the occurrence of the event constituting
"Good Reason".
(c) The Executive's employment may be terminated by COMSAT for
Cause at any time upon ten days written notice to the Executive, and after
giving the Executive an opportunity to discuss such decision with the
Board. For purposes of this Agreement, COMSAT shall have "Cause" to
terminate the Executive's employment hereunder upon (i) the continued and
deliberate failure of the Executive to perform his material duties, in a
manner substantially consistent with the manner reasonably prescribed by
the Board and in accordance with the terms of this Agreement (other than
any such failure resulting from his incapacity due to physical or mental
illness), which failure continues for 20 business days following the
Executive's receipt of written notice from the Board specifying the manner
in which the Executive is in default of his duties, (ii) the engaging by
the Executive in intentional serious misconduct that is materially and
demonstrably injurious to COMSAT or its reputation, which misconduct, if it
is reasonably capable of being cured, is not cured by the Executive within
20 business days following the Executive's receipt of written notice from
the Board specifying the serious misconduct engaged in by the Executive,
(iii) the conviction of the Executive of commission of a felony, whether or
not such felony was committed in connection with COMSAT's business, or (iv)
any material breach by the Executive of Section 9 hereof, which breach, if
it is reasonably capable of being cured, is not cured by the Executive
within 20 business days following the Executive's receipt of written notice
from the Board specifying the breach of Section 9 by the Executive. If
COMSAT shall terminate the Executive's employment for "Cause", COMSAT, in
full satisfaction of all of COMSAT's obligations under this Agreement and
in respect of the termination of the Executive's employment with COMSAT,
shall pay the Executive his Base Salary and any other compensation,
benefits and reimbursements due him under COMSAT plans through the date of
termination of his employment.
(d) If, prior to the expiration or termination of the Employment
Period, the Executive shall have been unable to perform substantially his
duties by reason of disability or impairment of health for at least six
consecutive calendar months, COMSAT shall have the right to terminate this
Agreement by giving 60 days written notice to the Executive to that effect,
but only if at the time such notice is given such disability or impairment
is still continuing. Following the expiration of the notice period, the
Employment Period shall terminate with the payment of the Executive's Base
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Salary for the month in which notice is given and a prorated Annual Bonus
through such month. In the event of a dispute as to whether the Executive
is disabled within the meaning of this Section 5(d), or the duration of any
disability, either party may request a medical examination of the Executive
by a doctor appointed by the Chief of Staff of a hospital selected by
mutual agreement of the parties, or as the parties may otherwise agree, and
the written medical opinion of such doctor shall be conclusive and binding
upon the parties as to whether the Executive has become disabled and the
date when such disability arose. The cost of any such medical examinations
shall be borne by COMSAT. In no event shall this Agreement terminate before
COMSAT's long-term disability benefits under applicable plans become
payable to the Executive.
(e) If, prior to the expiration or termination of the Employment
Period, the Executive shall die, COMSAT shall pay to the Executive's estate
his Base Salary and a prorated Annual Bonus through the end of the month in
which the Executive's death occurred, at which time the Employment Period
shall terminate without further notice.
(f) If COMSAT elects not to renew the Executive's employment with
COMSAT at the end of the Employment Period and the Executive terminates
employment at the end of the Employment Period, the Executive shall be
entitled to receive the payments described in Section 5(a)(i), (ii) and
(iii) for the period beginning on the date of the Executive's termination
of employment and ending one year after the Executive's termination of
employment.
(g) If either the Executive or COMSAT elects not to renew the
Executive's employment with COMSAT at the end of the Employment Period, the
Executive shall be entitled to receive payments under the SERP beginning on
May 1, 2000 (the first day of the month after the end of such period),
calculated in accordance with the provisions of the SERP based on the
Executive's retirement on that date, provided that the Board reserves the
discretion to waive the applicable early retirement reduction under the
SERP in such event. If the Executive's employment with COMSAT under this
Agreement is terminated either by the Executive for Good Reason or by
COMSAT without Cause before the Executive attains age 55, the Executive
shall be entitled to receive payments under the SERP beginning on December
1, 1998 (the first day of the month after the Executive's 55th birthday),
calculated in accordance with the provisions of the SERP as if the
Executive retired on that date, provided that the Board reserves the
discretion to waive the applicable early retirement reduction under the
SERP in such event. If the Executive dies before payments begin under the
SERP, the Executive's surviving spouse, if any, shall receive under the
SERP a $200,000 lump sum death benefit, plus annual benefit payments for a
ten year period equal to 50% of the Executive's accrued benefit under the
SERP, according to the terms of the SERP. The provisions of this Section
5(g) shall be administered consistent with the terms of the SERP.
(h) If the Executive voluntarily terminates employment with
COMSAT, such termination shall not be considered a breach of this Agreement
by the Executive and shall not adversely affect the Executive's right to
receive such benefits as may be payable to the Executive on account of his
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termination of employment under applicable COMSAT plans. The Executive
shall remain obligated to comply with the provisions of Sections 3, 4, 9
and 11 of this Agreement.
6. CHANGE OF CONTROL. If a change of control (as defined for purposes
of COMSAT's benefit plans) occurs during the Employment Term, the change of
control shall not adversely affect any of the Executive's rights under this
Agreement, and this Agreement shall continue in effect according to its
terms. In the event of a change of control, the Executive shall be entitled
to vesting and payment of benefits according to the terms of COMSAT's
applicable plans.
7. SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of the Executive's employment and the
Employment Term to the extent necessary to the intended preservation of such
rights and obligations.
8. MITIGATION AND NO OFFSETS. The Executive shall not be required to
mitigate the amount of any payment or benefit provided for in this
Agreement by seeking other employment or otherwise and there shall be no
offset against amounts due the Executive under this Agreement on account of
any remuneration attributable to any subsequent employment that he may
obtain. COMSAT's obligations to make payments under this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which COMSAT may have against the
Executive or others.
9. Non-Competition.
----------------
(a) NON-COMPETITION AGREEMENT. As an inducement for COMSAT to
enter into this Agreement, the Executive agrees that, during the
Non-Competition Period (as defined below), the Executive shall not, without
the prior written consent of the Board, engage or participate, directly or
indirectly, as principal, agent, employee, employer, consultant,
stockholder, partner or in any other individual capacity whatsoever, in the
conduct or management of, or own any stock or any other equity investment
in or debt of, any business which is competitive with any business
conducted by COMSAT. The Non-Competition Period is the period commencing as
of the Effective Date and running through the date that is one year
following the date on which the Executive's employment with COMSAT
terminates for any reason.
(b) COMPETITIVE BUSINESS. For the purpose of this Agreement, a
business shall be considered to be competitive with any business of COMSAT
only if such business is engaged in providing services or products (i)
comparable to or competitive with (A) any service or product currently
provided by COMSAT during the Employment Period; (B) any service or product
which evolves from or results from enhancements in the ordinary course
during the Non-Competition Period to the services or products provided by
COMSAT as of the date hereof or during the Employment Period; or (C) any
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future service or product of COMSAT as to which the Executive materially
and substantially participated in the development or enhancement, and (ii)
to customers, distributors or clients of the type served by COMSAT during
the Non-Competition Period.
(c) NON-SOLICITATION OF EMPLOYEES. During the Non-Competition
Period, the Executive will not (for his own benefit or for the benefit of
any person or entity other than COMSAT) solicit, or assist any person or
entity other than COMSAT to solicit, any officer, director, executive or
employee (other than an administrative or clerical employee) of COMSAT to
leave his or her employment.
(d) REASONABLENESS; INTERPRETATION. The Executive acknowledges
and agrees, solely for purposes of determining the enforceability of this
Section 9 (and not for purposes of determining the amount of money damages
or for any other reason), that (i) the markets served by COMSAT are
national and international and are not dependent on the geographic location
of executive personnel or the businesses by which they are employed; (ii)
the length of the Non-Competition Period is linked to the term of the
Employment Period; and (iii) the above covenants are manifestly reasonable
on their face, and the parties expressly agree that such restrictions have
been designed to be reasonable and no greater than is required for the
protection of COMSAT. In the event that the covenants in this Section 9
shall be determined by any court of competent jurisdiction in any action to
be unenforceable by reason of their extending for too great a period of
time or over too great a geographical area or by reason of their being too
extensive in any other respect, they shall be interpreted to extend only
over the maximum period of time for which they may be enforceable, and/or
over the maximum geographical area as to which they may be enforceable
and/or to the maximum extent in all other respects as to which they may be
enforceable, all as determined by such court in such action.
(e) INVESTMENT. Nothing in this Agreement shall be deemed to
prohibit the Executive from owning equity or debt investments in any
corporation, partnership or other entity which is competitive with COMSAT,
provided that such investments (i) are passive investments and constitute
five percent or less of the outstanding equity securities of such an entity
the equity securities of which are traded on a national securities exchange
or other public market, or (ii) are approved by the Board.
10. INDEMNIFICATION; LIABILITY INSURANCE. The Executive shall be
entitled to indemnification and coverage under COMSAT's liability insurance
policy for officers to the same extent as other officers of COMSAT. In
addition, the Executive shall be indemnified to the maximum extent
permitted by law of the jurisdiction in which COMSAT is incorporated, as it
may be amended from time to time.
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11. Enforcement.
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(a) The Executive acknowledges that a breach of the covenants or
provisions contained in Sections 3, 4 and 9 of this Agreement will cause
irreparable damage to COMSAT, the exact amount of which will be difficult
to ascertain, and that the remedies at law for any such breach will be
inadequate. Accordingly, the Executive agrees that if the Executive
breaches or threatens to breach any of the covenants or provisions
contained in Sections 3, 4 and 9 of this Agreement, in addition to any
other remedy which may be available at law or in equity, COMSAT shall be
entitled to seek specific performance and injunctive relief in a court of
competent jurisdiction after notice and a hearing.
(b) The parties expressly agree that any litigation directly or
indirectly arising out of or relating to this Agreement, including an
action brought by COMSAT pursuant to this Section 11, shall be brought in a
court of competent jurisdiction in the State of Maryland.
12. EXPENSES OF ENFORCING THE AGREEMENT. If the Executive brings an
action to enforce any of the obligations of COMSAT under this Agreement and
prevails on any material issue, COMSAT shall pay the Executive on demand
the amount necessary to reimburse the Executive in full for all reasonable
expenses (including reasonable attorneys' fees and legal expenses) incurred
by the Executive in enforcing the obligations of COMSAT under this
Agreement.
13. SEVERABILITY. Should any provision of this Agreement be determined
to be unenforceable or prohibited by any applicable law, such provision
shall be ineffective to the extent, and only to the extent, of such
unenforceability or prohibition without invalidating the balance of such
provision or any other provision of this Agreement, and any such
unenforceability or prohibition in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
14. ASSIGNMENT. The Executive's rights and obligations under this
Agreement shall not be assignable by the Executive. COMSAT's rights and
obligations under this Agreement shall not be assignable by COMSAT except
as incident to the transfer, by merger or otherwise, of all or
substantially all of the business of COMSAT. In the event of any such
assignment by COMSAT, all rights of COMSAT hereunder shall inure to the
benefit of the assignee, provided that all references herein to COMSAT
shall be deemed to refer with equal force and effect to any corporate or
other successor of COMSAT.
15. NOTICES. All notices and other communications which are required
or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given when received if personally delivered; when
transmitted if transmitted by telecopy, electronic or digital transmission
method, provided that in such case it shall also be sent by certified or
registered mail, return receipt requested; the day after it is sent, if
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sent for next day delivery to a domestic address by recognized overnight
delivery service (e.g., Federal Express); and upon receipt, if sent by
certified or registered mail, return receipt requested. Unless otherwise
changed by notice, in each case notice shall be sent to:
If to the Executive, addressed to:
With a copy (not constituting notice) to:
Joseph E. Bachelder, Esquire
780 Third Avenue
New York, N.Y. 10017
If to COMSAT, addressed to:
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, MD 20817
Attention: Betty C. Alewine
Telecopier No.: (301) 214-7134
With a copy (not constituting notice) to:
16. MISCELLANEOUS. This Agreement constitutes the entire agreement,
and supersedes all prior agreements, of the parties hereto relating to the
subject matter hereof, and there are no written or oral terms or
representations made by either party other than those contained herein. No
amendment, supplement, modification or waiver of this Agreement shall be
binding unless executed in writing by the party to be bound thereby. The
validity, interpretation, performance and enforcement of the Agreement
shall be governed by the laws of the State of Maryland without giving
effect to conflicts of laws principles thereof. The headings contained
herein are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement. The waiver by any party of a
breach of any term or condition of this Agreement by the other party shall
not operate as nor be construed as a waiver of any subsequent breach
thereof or a waiver of a breach of any other term or condition of this
Agreement. This Agreement may be signed in two or more counterparts, each
of which shall constitute an original but all of which together shall form
only a single instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
/s/ Allen Flower
-------------------------------
Allen Flower, Executive
COMSAT Corporation
By: /s/ Betty C. Alewine
-------------------------------
Betty C. Alewine
President and Chief Executive Officer
<PAGE>
EMPLOYMENT AGREEMENT
This AGREEMENT is made as of April 18, 1997 by and between COMSAT
Corporation ("COMSAT"), a District of Columbia corporation, and Warren Y.
Zeger, a resident of the State of Maryland (the "Executive").
WHEREAS, the Executive serves as Vice President, General Counsel and
Secretary of COMSAT;
WHEREAS, the Board of Directors of COMSAT (the "Board") believes it to
be in the best interests of COMSAT to enter into this Agreement to ensure
the Executive's continuing services to COMSAT; and
WHEREAS, COMSAT desires to continue to employ the Executive as Vice
President, General Counsel and Secretary of COMSAT, and the Executive
desires to continue such employment, on the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements made herein, and intending to be legally bound hereby, COMSAT
and the Executive agree as follows:
1. Employment; Duties.
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(a) EMPLOYMENT AND EMPLOYMENT PERIOD. COMSAT shall employ the
Executive to serve as Vice President, General Counsel and Secretary of
COMSAT or any successor entity for a period (the "Employment Period")
commencing on April 18, 1997 (the "Effective Date") and continuing
thereafter until April 17, 2002 unless terminated in accordance with the
provisions of this Agreement. Each 12-month period ending on the
anniversary date of the Effective Date is referred to herein as a "year of
the Employment Period."
(b) OFFICES, DUTIES AND RESPONSIBILITIES. The Executive shall
report to the Chief Executive Officer of COMSAT. The Executive's offices
initially shall be located at COMSAT's present headquarters in Bethesda,
Maryland. The Executive shall have all duties and authority customarily
accorded a Vice President, General Counsel and Secretary.
(c) DEVOTION TO INTERESTS OF COMSAT. During the Employment
Period, the Executive shall devote his best efforts and full business time
and attention to the performance of his duties hereunder. Notwithstanding
the foregoing, the Executive shall be entitled to undertake outside
activities (e.g. charitable, educational, personal interests, and board of
directors memberships) that do not compete with COMSAT and do not
unreasonably or materially interfere with the performance of his duties
hereunder as reasonably determined by the Chief Executive Officer in
consultation with the Executive.
<PAGE>
2. Compensation and Fringe Benefits.
---------------------------------
(a) BASE COMPENSATION. COMSAT shall pay the Executive a base
salary ("Base Salary") during the Employment Period, with payments made in
installments in accordance with COMSAT's regular practice for compensating
executive personnel, provided that in no event shall such payments be made
less frequently than twice per month. The initial annual Base Salary shall
be $230,000. Thereafter, the Base Salary for the Executive shall be
reviewed for increases annually during the Employment Period, consistent
with COMSAT's normal review process. Any Base Salary increases shall
approved by the Board in its sole discretion.
(b) BONUS COMPENSATION. The Executive will be eligible to receive
bonuses ("Annual Bonus") during the Employment Period under the Annual
Incentive Plan (the "AIP") in accordance with the following parameters: (i)
the target bonus for each year during the Employment Period shall be 50% of
Base Salary for achieving 100% of the target level for the performance
measures and (ii) the performance measures, the relative weight to be
accorded each performance measure and the amount of bonus payable in
relation to the target bonus for achieving more or less than 100% of the
target level for the performance measures shall be determined for each year
during the Employment Period by the Committee on Compensation and
Management Development of the Board (the "Compensation Committee").
(c) FRINGE BENEFITS. The Executive shall be entitled to the
fringe benefits in effect for COMSAT senior executives from time to time,
including (i) participation in the COMSAT Directors and Executives Deferred
Compensation Plan, the COMSAT Split Dollar Insurance Plan, the COMSAT
Educational Grant Program, the COMSAT Retirement Plan, the COMSAT Savings
and Profit-Sharing Plan, the COMSAT 1995 Key Employee Stock Plan, the
COMSAT Employee Stock Purchase Plan, the COMSAT health and disability
insurance programs and the COMSAT financial planning program and (ii)
reimbursement of reasonable expenses incurred in connection with travel and
entertainment related to COMSAT's business and affairs. The Executive also
shall be entitled to such other or additional fringe benefits as are made
available to COMSAT senior executives during the Employment Period. COMSAT
reserves the right to modify or terminate at any time the fringe benefits
provided to the senior management group.
(d) SERP. The Executive shall continue to participate in the
COMSAT Insurance and Retirement Plan for Executives (the "SERP"). Any
future amendments or changes to the SERP which provide for a reduction,
deferral or elimination of benefits payable to participants in the SERP
shall expressly not apply to the Executive unless the Executive consents
otherwise.
(e) LEGAL EXPENSES. The Executive shall be entitled to
reimbursement of the Executive's reasonable legal fees and costs incurred
in connection with the negotiation and execution of this Agreement, subject
to a maximum reimbursement of $5,000.
-2-
<PAGE>
3. Trade Secrets; Return of Documents and Property.
------------------------------------------------
(a) The Executive acknowledges that during the course of his
employment he will receive secret, confidential and proprietary information
("Trade Secrets") of COMSAT and of other companies with which COMSAT does
business on a confidential basis and that the Executive will create and
develop Trade Secrets for the benefit of COMSAT. Trade Secrets shall
include, without limitation, matters of a technical nature, such as
scientific and engineering secrets, "know-how," formulae, secret processes
or machines, inventions and computer programs (including documentation of
such programs), and matters of a business nature, such as customer data and
proprietary information about costs, profits, markets, sales and customer
databases, and other information of a similar nature to the extent not
available to the public, and plans for future development. All Trade
Secrets disclosed to or created by the Executive shall be deemed to be the
exclusive property of COMSAT. The Executive acknowledges that Trade Secrets
have economic value to COMSAT due to the fact that Trade Secrets are not
generally known to the public or the trade and that the unauthorized use or
disclosure of Trade Secrets is likely to be detrimental to the interests of
COMSAT and its subsidiaries. The Executive therefore agrees to hold in
strict confidence and not to disclose to any third party any Trade Secret
acquired or created or developed by the Executive during the term of this
Agreement except (i) when the Executive uses or discloses any Trade Secret
in the proper course of the Executive's rendition of services to COMSAT
hereunder, (ii) when such Trade Secret becomes public knowledge other than
through a breach of this Agreement, or (iii) when the Executive is required
to disclose any Trade Secret pursuant to any valid legal process. The
Executive shall notify COMSAT immediately of any such legal process in
order to enable COMSAT to contest such legal process's validity. After
termination of this Agreement, the Executive shall not use or otherwise
disclose Trade Secrets unless such information (x) becomes public knowledge
other than through a breach of this Agreement, (y) is disclosed to the
Executive by a third party who is entitled to receive and disclose such
Trade Secret, or (z) is required to be disclosed pursuant to any valid
legal process, in which case the Executive shall notify COMSAT immediately
of any such legal process in order to enable COMSAT to contest such legal
process's validity.
(b) Upon the effective date of notice of the Executive's or
COMSAT's election to terminate this Agreement, or at any time upon the
request of COMSAT, the Executive (or his heirs or personal representatives)
shall deliver to COMSAT (i) all documents and materials containing or
otherwise relating to Trade Secrets or other information relating to
COMSAT's business and affairs, and (ii) all documents, materials and other
property belonging to COMSAT, which in either case are in the possession or
under the control of the Executive (or his heirs or personal
representatives). The Executive shall be entitled to keep his personal
records (including Rolodex) relating to COMSAT's business and affairs
except to the extent those contain documents or materials described in
clause (i) of the preceding sentence.
-3-
<PAGE>
4. DISCOVERIES AND WORKS. All discoveries and works made or conceived
by the Executive during his employment by COMSAT pursuant to this
Agreement, jointly or with others, that relate to COMSAT's activities
("Discoveries and Works") shall be owned by COMSAT. Discoveries and Works
shall include, without limitation, inventions, computer programs (including
documentation of such programs), technical improvements, processes,
drawings and works of authorship. The Executive shall (a) promptly notify,
make full disclosure to, and execute and deliver any documents requested
by, COMSAT to evidence or better assure title to such Discoveries and Works
in COMSAT, (b) assist COMSAT in obtaining or maintain for itself at its own
expense United States and foreign patents, copyrights, trade secret
protection or other protection of any and all such Discoveries and Works,
and promptly execute, whether during his employment by COMSAT or
thereafter, all applications or other endorsements necessary or appropriate
to maintain patents and other rights for COMSAT and to protect its title
thereto. Any Discoveries and Works which, within six months after the
termination of the Executive's employment by COMSAT, are made, disclosed,
reduced to a tangible or written form or description, or are reduced to
practice by the Executive and which pertain to work performed by the
Executive while with COMSAT shall, as between the Executive and COMSAT, be
presumed to have been made during the Executive's employment by COMSAT.
5. TERMINATION. This Agreement shall remain in effect during the
Employment Period, and this Agreement and Executive's employment with COMSAT
may be terminated only as follows:
(a) The Executive's employment may be terminated by the Executive
at any time upon 45 days advance written notice to COMSAT for "Good Reason"
(as defined below). In such event, or if the Executive's employment is
terminated by COMSAT without "Cause" (as defined below), the Executive
shall be entitled to receive the following benefits until April 17, 2002:
(i) The Executive's Base Salary in effect at the date of
termination;
(ii) An Annual Bonus equal to 50% of his then current Base
Salary; and
(iii) All benefits provided pursuant to Sections 2(c) and (d) of
this Agreement, which shall be deemed to vest fully and immediately if
subject to vesting; provided, however, that in the event COMSAT is
precluded from providing coverage under any such benefit plan by
applicable law or regulation, COMSAT may provide the Executive with a
payment equal to the cost of such coverage without regard to tax
effect. The foregoing benefits shall be calculated in accordance with
the provisions of the applicable plans as if the Executive had retired
on his date of termination, provided that the Board reserves the
discretion to waive the applicable early retirement reduction under
the SERP in such event.
-5-
<PAGE>
(b) "Good Reason" shall mean the occurrence of any of the
following (other than for "Cause"), without the Executive's express written
consent: (i) the assignment to the Executive of duties inconsistent with
the Executive's status as an executive officer of COMSAT or a substantial
reduction by COMSAT of the Executive's responsibilities as an executive
officer of COMSAT; (ii) any relocation of the Executive's offices outside
the Washington, D.C. metropolitan area by COMSAT prior to the third
anniversary of the Effective Date; or (iii) any material default of the
provisions of Section 2 of this Agreement which continues for 20 business
days following COMSAT's receipt of written notice from the Executive
specifying the manner in which COMSAT is in default of such provisions. In
order for the Executive to terminate employment for "Good Reason", the
Executive must give COMSAT written notice of his termination of employment
for "Good Reason", stating the basis for the termination, within 90 days
after the Executive learns of the occurrence of the event constituting
"Good Reason".
(c) The Executive's employment may be terminated by COMSAT for
Cause at any time upon 10 days written notice to the Executive, and after
giving the Executive an opportunity to discuss such decision with the
Board. For purposes of this Agreement, COMSAT shall have "Cause" to
terminate the Executive's employment hereunder upon (i) the continued and
deliberate failure of the Executive to perform his material duties, in a
manner substantially consistent with the manner reasonably prescribed by
the Board and in accordance with the terms of this Agreement (other than
any such failure resulting from his incapacity due to physical or mental
illness), which failure continues for 20 business days following the
Executive's receipt of written notice from the Board specifying the manner
in which the Executive is in default of his duties, (ii) the engaging by
the Executive in intentional serious misconduct that is materially and
demonstrably injurious to COMSAT or its reputation, which misconduct, if it
is reasonably capable of being cured, is not cured by the Executive within
20 business days following the Executive's receipt of written notice from
the Board specifying the serious misconduct engaged in by the Executive,
(iii) the conviction of the Executive of commission of a felony, whether or
not such felony was committed in connection with COMSAT's business, or (iv)
any material breach by the Executive of Section 9 hereof, which breach, if
it is reasonably capable of being cured, is not cured by the Executive
within 20 business days following the Executive's receipt of written notice
from the Board specifying the breach of Section 9 by the Executive. If
COMSAT shall terminate the Executive's employment for "Cause", COMSAT, in
full satisfaction of all of COMSAT's obligations under this Agreement and
in respect of the termination of the Executive's employment with COMSAT,
shall pay the Executive his Base Salary and any other compensation,
benefits and reimbursements due him under COMSAT plans through the date of
termination of his employment.
(d) If, prior to the expiration or termination of the Employment
Period, the Executive shall have been unable to perform substantially his
duties by reason of disability or impairment of health for at least six
consecutive calendar months, COMSAT shall have the right to terminate this
Agreement by giving 60 days written notice to the Executive to that effect,
but only if at the time such notice is given such disability or impairment
is still continuing. Following the expiration of the notice period, the
Employment Period shall terminate with the payment of the Executive's Base
-5-
<PAGE>
Salary for the month in which notice is given and a prorated Annual Bonus
through such month. In the event of a dispute as to whether the Executive
is disabled within the meaning of this Section 5(d), or the duration of any
disability, either party may request a medical examination of the Executive
by a doctor appointed by the Chief of Staff of a hospital selected by
mutual agreement of the parties, or as the parties may otherwise agree, and
the written medical opinion of such doctor shall be conclusive and binding
upon the parties as to whether the Executive has become disabled and the
date when such disability arose. The cost of any such medical examinations
shall be borne by COMSAT. In no event shall this Agreement terminate before
COMSAT's long-term disability benefits under applicable plans become
payable to the Executive.
(e) If, prior to the expiration or termination of the Employment
Period, the Executive shall die, COMSAT shall pay to the Executive's estate
his Base Salary and a prorated Annual Bonus through the end of the month in
which the Executive's death occurred, at which time the Employment Period
shall terminate without further notice.
(f) If either the Executive or COMSAT elects not to renew the
Executive's employment with COMSAT at the end of the Employment Period, the
Executive shall be entitled to receive payments under the SERP beginning on
May 1, 2002 (the first day of the month after the end of such period),
calculated in accordance with the provisions of the SERP based on the
Executive's retirement on that date, provided that the Board reserves the
discretion to waive the applicable early retirement reduction under the
SERP in such event. If the Executive's employment with COMSAT under this
Agreement is terminated either by the Executive for Good Reason or by
COMSAT without Cause before the Executive attains age 55, the Executive
shall be entitled to receive payments under the SERP beginning on April 1,
2002 (the first day of the month after the Executive's 55th birthday),
calculated in accordance with the provisions of the SERP as if the
Executive retired on that date, provided that the Board reserves the
discretion to waive the applicable early retirement reduction under the
SERP in such event. If the Executive dies before payments begin under the
SERP, the Executive's surviving spouse, if any, shall receive under the
SERP a $200,000 lump sum death benefit, plus annual benefit payments for a
ten year period equal to 50% of the Executive's accrued benefit under the
SERP, according to the terms of the SERP. The provisions of this Section
5(f) shall be administered consistent with the terms of the SERP.
(g) If the Executive voluntarily terminates employment with
COMSAT, such termination shall not be considered a breach of this Agreement
by the Executive and shall not adversely affect the Executive's right to
receive such benefits as may be payable to the Executive on account of his
termination of employment under applicable COMSAT plans. The Executive
shall remain obligated to comply with the provisions of Sections 3, 4, 9
and 11 of this Agreement.
<PAGE>
6. CHANGE OF CONTROL. If a change of control (as defined for purposes
of COMSAT's benefit plans) occurs during the Employment Term, the change of
control shall not adversely affect any of the Executive's rights under this
Agreement, and this Agreement shall continue in effect according to its
terms. In the event of a change of control, the Executive shall be entitled
to vesting and payment of benefits according to the terms of COMSAT's
applicable plans.
7. SURVIVORSHIP. The respective rights and obligations of the
parties hereunder shall survive any termination of the Executive's employment
and the Employment Term to the extent necessary to the intended preservation
of such rights and obligations.
8. MITIGATION AND NO OFFSETS. The Executive shall not be required to
mitigate the amount of any payment or benefit provided for in this
Agreement by seeking other employment or otherwise and there shall be no
offset against amounts due the Executive under this Agreement on account of
any remuneration attributable to any subsequent employment that he may
obtain. COMSAT's obligations to make payments under this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which COMSAT may have against the
Executive or others.
9. Non-Competition.
----------------
(a) NON-COMPETITION AGREEMENT. As an inducement for COMSAT to
enter into this Agreement, the Executive agrees that, during the
Non-Competition Period (as defined below), the Executive shall not, without
the prior written consent of the Board, engage or participate, directly or
indirectly, as principal, agent, employee, employer, consultant,
stockholder, partner or in any other individual capacity whatsoever, in the
conduct or management of, or own any stock or any other equity investment
in or debt of, any business which is competitive with any business
conducted by COMSAT. The Non-Competition Period is the period commencing as
of the Effective Date and running through the date that is one year
following the date on which the Executive's employment with COMSAT
terminates for any reason.
(b) COMPETITIVE BUSINESS. For the purpose of this Agreement, a
business shall be considered to be competitive with any business of COMSAT
only if such business is engaged in providing services or products (i)
comparable to or competitive with (A) any service or product currently
provided by COMSAT during the Employment Period; (B) any service or product
which evolves from or results from enhancements in the ordinary course
during the Non-Competition Period to the services or products provided by
COMSAT as of the date hereof or during the Employment Period; or (C) any
future service or product of COMSAT as to which the Executive materially
and substantially participated in the development or enhancement, and (ii)
to customers, distributors or clients of the type served by COMSAT during
the Non-Competition Period. Without limiting the foregoing, employment of
the Executive by a law firm as a lawyer will not be considered employment
with a competitor for purposes of this Agreement.
-7-
<PAGE>
(c) NON-SOLICITATION OF EMPLOYEES. During the Non-Competition
Period, the Executive will not (for his own benefit or for the benefit of
any person or entity other than COMSAT) solicit, or assist any person or
entity other than COMSAT to solicit, any officer, director, executive or
employee (other than an administrative or clerical employee) of COMSAT to
leave his or her employment.
(d) REASONABLENESS; INTERPRETATION. The Executive acknowledges
and agrees, solely for purposes of determining the enforceability of this
Section 9 (and not for purposes of determining the amount of money damages
or for any other reason), that (i) the markets served by COMSAT are
national and international and are not dependent on the geographic location
of executive personnel or the businesses by which they are employed; (ii)
the length of the Non-Competition Period is linked to the term of the
Employment Period; and (iii) the above covenants are manifestly reasonable
on their face, and the parties expressly agree that such restrictions have
been designed to be reasonable and no greater than is required for the
protection of COMSAT. In the event that the covenants in this Section 9
shall be determined by any court of competent jurisdiction in any action to
be unenforceable by reason of their extending for too great a period of
time or over too great a geographical area or by reason of their being too
extensive in any other respect, they shall be interpreted to extend only
over the maximum period of time for which they may be enforceable, and/or
over the maximum geographical area as to which they may be enforceable
and/or to the maximum extent in all other respects as to which they may be
enforceable, all as determined by such court in such action.
(e) INVESTMENT. Nothing in this Agreement shall be deemed to
prohibit the Executive from owning equity or debt investments in any
corporation, partnership or other entity which is competitive with COMSAT,
provided that such investments (i) are passive investments and constitute
five percent or less of the outstanding equity securities of such an entity
the equity securities of which are traded on a national securities exchange
or other public market, or (ii) are approved by the Board.
10. INDEMNIFICATION; LIABILITY INSURANCE. The Executive shall be
entitled to indemnification and coverage under COMSAT's liability insurance
policy for officers to the same extent as other officers of COMSAT. In
addition, the Executive shall be indemnified to the maximum extent permitted
by law of the jurisdiction in which COMSAT is incorporated, as it may be
amended from time to time.
<PAGE>
11. Enforcement.
------------
(a) The Executive acknowledges that a breach of the covenants or
provisions contained in Sections 3, 4 and 9 of this Agreement will cause
irreparable damage to COMSAT, the exact amount of which will be difficult
to ascertain, and that the remedies at law for any such breach will be
inadequate. Accordingly, the Executive agrees that if the Executive
breaches or threatens to breach any of the covenants or provisions
contained in Sections 3, 4 and 9 of this Agreement, in addition to any
other remedy which may be available at law or in equity, COMSAT shall be
-8-
<PAGE>
entitled to seek specific performance and injunctive relief in a court of
competent jurisdiction after notice and a hearing.
(b) The parties expressly agree that any litigation directly or
indirectly arising out of or relating to this Agreement, including an
action brought by COMSAT pursuant to this Section 11, shall be brought in a
court of competent jurisdiction in the State of Maryland.
12. EXPENSES OF ENFORCING THE AGREEMENT. If the Executive brings an
action to enforce any of the obligations of COMSAT under this Agreement and
prevails on any material issue, COMSAT shall pay the Executive on demand
the amount necessary to reimburse the Executive in full for all reasonable
expenses (including reasonable attorneys' fees and legal expenses) incurred
by the Executive in enforcing the obligations of COMSAT under this
Agreement.
13. SEVERABILITY. Should any provision of this Agreement be determined
to be unenforceable or prohibited by any applicable law, such provision
shall be ineffective to the extent, and only to the extent, of such
unenforceability or prohibition without invalidating the balance of such
provision or any other provision of this Agreement, and any such
unenforceability or prohibition in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
14. ASSIGNMENT. The Executive's rights and obligations under this
Agreement shall not be assignable by the Executive. COMSAT's rights and
obligations under this Agreement shall not be assignable by COMSAT except
as incident to the transfer, by merger or otherwise, of all or
substantially all of the business of COMSAT. In the event of any such
assignment by COMSAT, all rights of COMSAT hereunder shall inure to the
benefit of the assignee, provided that all references herein to COMSAT
shall be deemed to refer with equal force and effect to any corporate or
other successor of COMSAT.
15. NOTICES. All notices and other communications which are required
or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given when received if personally delivered; when
transmitted if transmitted by telecopy, electronic or digital transmission
method, provided that in such case it shall also be sent by certified or
registered mail, return receipt requested; the day after it is sent, if
sent for next day delivery to a domestic address by recognized overnight
delivery service (e.g., Federal Express); and upon receipt, if sent by
certified or registered mail, return receipt requested. Unless otherwise
changed by notice, in each case notice shall be sent to:
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<PAGE>
If to the Executive, addressed to:
Warren Y. Zeger
11515 Gaugin Lane
Potomac, MD 20853
With a copy (not constituting notice) to:
Joseph E. Bachelder, Esquire
780 Third Avenue
New York, N.Y. 10017
If to COMSAT, addressed to:
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, MD 20817
Attention: Betty C. Alewine
Telecopier No.: (301) 214-7134
With a copy (not constituting notice) to:
-----------------------
16. MISCELLANEOUS. This Agreement constitutes the entire agreement,
and supersedes all prior agreements, of the parties hereto relating to the
subject matter hereof, and there are no written or oral terms or
representations made by either party other than those contained herein. No
amendment, supplement, modification or waiver of this Agreement shall be
binding unless executed in writing by the party to be bound thereby. The
validity, interpretation, performance and enforcement of the Agreement
shall be governed by the laws of the State of Maryland without giving
effect to conflicts of laws principles thereof. The headings contained
herein are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement. The waiver by any party of a
breach of any term or condition of this Agreement by the other party shall
not operate as nor be construed as a waiver of any subsequent breach
thereof or a waiver of a breach of any other term or condition of this
Agreement. This Agreement may be signed in two or more counterparts, each
of which shall constitute an original but all of which together shall form
only a single instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
/s/ Warren Y. Zeger
--------------------------
Warren Y. Zeger, Executive
COMSAT Corporation
By: /s/ Betty C. Alewine
--------------------------
Betty C. Alewine
President and Chief Executive Officer
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
AS OF MARCH 31, 1997
Jurisdiction of
Subsidiary Incorporation
- - ---------- ---------------
Ascent Entertainment Group, Inc. Delaware
Ascent Arena Corporation Delaware
Ascent Network Services, Inc. Delaware
Ascent Sports, Inc. Delaware
Ascent Sports Holdings, Inc. Delaware
Beacon Communications Corp. Delaware
Beacon Music Publishing, Inc. Delaware
Club Pictures, Inc. Delaware
Colorado Avalanche, LLC Colorado
Daily Double Music Co. Delaware
Denver Nuggets Limited Partnership Delaware
On Command Corporation Delaware
On Command Development Corporation Delaware
On Command Video Corporation Delaware
SpectraVision, Inc. Texas
Bethesda Real Property, Inc. Delaware
COMSAT Capital I, L.P. Delaware
COMSAT Enhanced Services, Inc. Delaware
COMSAT General Corporation Delaware
COMSAT General Telematics, Inc. Delaware
COMSAT Technology, Inc. Delaware
CTS Transnational, Inc. Delaware
COMSAT International, Inc. Delaware
BelCommunications, Ltd. Republic of Cyprus
BelCom, Inc. Delaware
BelCom Cellular, Inc. Delaware
BelComRus Russian Federation
BelCom Central Asia, Ltd. Kazakhstan
COMSAT Argentina, S.A. Argentina
COMSAT Asia (L) Incorporated Malaysia
COMSAT Brasil, Ltda. Brazil
COMSAT do Brasil Equipamentos Telecommunicacoes Ltda. Brazil
COMSAT de Bolivia, SRL Bolivia
COMSAT de Colombia, S.A. Colombia
COMSAT de Guatemala, S.A. Guatemala
COMSAT de Mexico, S.A. Mexico
COMSAT de Panama, S.A. Panama
COMSAT Dijital Hizmetleri Ticaret Anonim Sirketi Turkey
COMSAT Iletisim Hizmetleri Ticaret Anonim Sirketi Turkey
COMSAT Investments Inc., Mauritius Mauritius
COMSAT MAX, Ltd. India
COMSAT Peru, S.A. Peru
COMSAT VAnezuela, COMSATVEN, C.A. Venezuela
Comunicaciones Satelitales de Colombia, S.A. Colombia
CIV C.I.S. Holdings, Inc. Delaware
Guangzhou Tian Hang Communication Technology Services, Ltd. China
International Company of Telecommunications Russian Federation
Tian Hang Technology Services (Hong Kong) Limited Hong Kong
ZAO Novocom Russian Federation
COMSAT Mobile India, Inc. Delaware
COMSAT Mobile Investments, Inc. Delaware
COMSAT Overseas, Inc. Delaware
COMSAT Personal Communications, Inc. Delaware
COMSAT RSI, Inc. Delaware
Anghel Laboratories, Inc. Delaware
C&S Antennasn Inc. Delaware
C&S Antennas Limited United Kingdom
COMSAT RSI Communications Corp. Delaware
COMSAT RSI Foreign Sales Corporation US Virgin Islands
COMSAT RSI International Limited United Kingdom
COMSAT RSI Maryland, Inc. Delaware
CRSI Acquisition, Inc. Delaware
CSA Limited United Kingdom
Mark Antenna Products, Inc. Nevada
Mexia Fabricators, Inc. Texas
Plexsys International Corporation Illinois
PG Technology Limited United Kingdom
Radiation Systems Electromechanical Systems,
Incorporated Florida
Radiation Systems Precision Controls, Inc. Nevada
Universal Antennas Incorporated Nevada
</TABLE>
