<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
COMSAT CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
Notes:
<PAGE>
COMSAT CORPORATION
6560 Rock Spring Drive
Bethesda, Maryland 20817
Telephone: (301) 214-3000
PROXY STATEMENT
This Proxy Statement is provided by the Board of Directors of COMSAT
Corporation (the Corporation or COMSAT) in connection with its solicitation of
proxies for the 1998 Annual Meeting of Shareholders. The Proxy Statement is
first being mailed on or about March 31, 1998.
Shareholders of record of the Corporation's common stock, without par value
(Common Stock), at the close of business on March 26, 1998 are entitled to
vote at the meeting in person or by proxy. Each share is entitled to one vote.
Shareholders may cumulate votes in the election of directors. The number of
shares printed on the accompanying proxy card includes, when applicable,
shares held in the Corporation's INVESTORS Plus Dividend Reinvestment and
Share Purchase Plan, Savings and Profit-Sharing Plan, and Employee Stock
Purchase Plan.
If a proxy in the accompanying form is properly executed and returned, the
shares represented by the proxy will be voted as the shareholder specifies. A
shareholder may revoke a proxy at any time before it is exercised by
submitting a written revocation, submitting a later-dated proxy, or voting in
person at the meeting.
Abstentions and broker non-votes will not be counted for purposes of
determining whether any given proposal has been approved by the shareholders.
Accordingly, abstentions and broker non-votes will not affect the votes on any
of the proposals, all of which require for approval the affirmative vote of a
majority of the shares represented and entitled to vote at the meeting.
OWNERSHIP OF COMMON STOCK
As of March 26, 1998, the record date, approximately 51,665,000 shares of
Common Stock were outstanding, of which 18,984 were Series II shares (held by
communications common carriers authorized to hold shares by the Federal
Communications Commission) and approximately 51,646,000 were Series I shares
(held by other persons).
To the knowledge of the Corporation, based upon Schedules 13G or 13D filed
with the Securities and Exchange Commission (the SEC) as of March 1, 1998, the
following persons reported beneficial ownership of more than five percent of
the Corporation's Common Stock.
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- ---------------------------- -------------------- --------
<S> <C> <C>
Capital Group Companies,
Inc. 3,337,920(1) 6.5%
333 South Hope Street
Los Angeles, CA 90071
Morgan Stanley, Dean Witter, 2,882,803(2) 5.7%
Discover & Co.
1585 Broadway
New York, NY 10036
</TABLE>
- --------
(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 3,077,920 shares and indirect sole dispositive power with
respect to 3,337,920 shares. The Capital Group Companies, Inc. disclaims
beneficial ownership of all of the shares reported.
(2) Morgan Stanley, Dean Witter, Discover & Co. and Morgan Stanley Asset
Management Limited reported shared voting power with respect to 2,723,803
and 2,644,317 shares, respectively, and shared dispositive power with
respect to 2,882,803 and 2,799,117 shares, respectively.
There are certain limitations on ownership of the Corporation's Common Stock
that are intended to ensure that the Common Stock is widely held. The
Communications Satellite Act of 1962, as amended (the Satellite Act), provides
that no stockholder (other than communications common carriers authorized to
hold shares by the Federal Communications Commission), or any syndicate or
affiliated group of stockholders, may own more than 10 percent of the
aggregate number of outstanding shares of Common Stock. The Corporation's
Articles of Incorporation authorize the Board to establish an ownership
limitation below the 10 percent statutory maximum. Pursuant to this authority,
the Board has set the ownership limitation at 10 percent and has also
established a voting limitation of 5 percent pursuant to which shares owned in
excess of the 5 percent limitation, but not in excess of the 10 percent
limitation, may not be voted by the holder but will be voted pro rata with all
other shares of Common Stock voted on any given matter.
ITEM 1. ELECTION OF DIRECTORS
BOARD OF DIRECTORS
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 and, in each case, until their
successors have been appointed and qualified.
The Board met 15 times in 1997. All incumbent directors, except Mr.
Eagleburger, attended 75% or more of Board meetings and meetings of Board
committees of which they were members in 1997.
VOTING FOR DIRECTORS
At the meeting 12 directors will be elected to serve until the 1999 Annual
Meeting. As provided in the Satellite Act, because the Series II shares
outstanding at the record date constituted less than 8 percent of the total
outstanding shares, all shareholders will vote together for the election of
directors.
Subject to the voting limitation of 5 percent described above, each
shareholder may vote the number of shares held by such shareholder for each of
12 nominees. Alternatively, the shareholder may cumulate such votes; that is,
give one nominee a number of votes equal to the number of the shareholder's
shares multiplied by 12 or distribute such votes among any number of nominees
not exceeding 12.
2
<PAGE>
The Board of Directors has authorized the management to solicit proxies in
favor of the election of the 12 nominees whose biographical information is set
forth under the caption "Nominees For Election As Directors." Each of the
nominees currently serve as directors. Biographical information for the
Presidentially appointed directors is set forth under the caption
"Presidentially Appointed Directors."
Pursuant to a settlement agreement the Corporation entered into on June 9,
1997 with Messrs. Schafran and Wyser-Pratte and certain other persons and
entities, the Corporation agreed to nominate Messrs. Schafran and Wyser-Pratte
on the Board's slate of candidates for the 1997 Annual Meeting and to re-
nominate them on the slate for the 1998 Annual Meeting.
Shares represented by proxies in the accompanying form will be voted for the
12 stated nominees unless the proxy is otherwise marked. If any of these
nominees becomes unavailable for election, which is not currently anticipated,
shares represented by proxies in the accompanying form will be voted for a
substitute nominee designated by the proxy holders. The proxy holders may in
their discretion vote the shares cumulatively for fewer than 12 of the
nominees.
REQUIREMENTS FOR NOMINATIONS AND SHAREHOLDER PROPOSALS
The Corporation's By-laws require that shareholders provide advance notice
of director nominations or proposals which they would like to have brought
before an annual meeting of shareholders. A shareholder generally must deliver
certain information concerning himself and any director nomination or
shareholder proposal to the Corporation not less than 60 nor more than 90 days
prior to the anniversary date of the immediately preceding annual meeting of
shareholders (the Anniversary Date). In the event that the annual meeting is
scheduled to be held on a date more than 30 days before or after the
Anniversary Date, such information must be received by the Corporation no
later than the close of business on the 10th day following the day on which
notice of the date of the annual meeting was mailed or public disclosure of
the date of the annual meeting was made, whichever first occurs. On February
20, 1998, the Corporation issued a press release announcing, among other
things, the date of the 1998 Annual Meeting. Accordingly, nominations by
shareholders for director and proposals by shareholders were required to be
received no later than March 2, 1998 to be considered at the 1998 Annual
Meeting. No such nominations or proposals were received by the deadline other
than the proposal discussed under the caption "Item 3. Shareholder Proposal."
Consequently, no nomination and no other proposal will be in order at the 1998
Annual Meeting.
In addition, a director nominee must file with the Secretary a statement of
his or her interests in communications common carriers in such reasonable
detail as the Board of Directors may require. The form of such statement will
be provided by the Secretary upon written request.
A list of persons whose nominations have been duly proposed in accordance
with the By-laws and not withdrawn will be provided to any shareholder upon
written request to the Secretary. Such list, together with the statement of
interests filed by each such person, also may be inspected by any shareholder
(1) at the office of the Secretary, 6560 Rock Spring Drive, Bethesda, Maryland
20817, during normal business hours from the date of this Proxy Statement
until the date of the meeting, and (2) at the place of the meeting during the
meeting.
3
<PAGE>
NOMINEES FOR ELECTION AS DIRECTORS
BETTY C. ALEWINE, 49, 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 Communications Corporation in 1986 and
has been a director since July 1996. She is a member of
the President's National Security Telecommunications
Advisory Council (NSTAC) and the Inter-American
Development Bank Advisory Council.
LOGO
MARCUS C. BENNETT, 62, is Executive Vice President and
Chief Financial Officer and a director of Lockheed Martin
Corporation. He joined Martin Marietta Corporation in
1959 and has held various administrative and finance
positions with Martin Marietta and Lockheed Martin
Corporation. He has been a COMSAT director since August
1997. He also is a director of Carpenter Technology, Inc.
and Martin Marietta Materials, Inc. and a member of the
board of directors of the Private Sector Council and the
Georgia Tech Advisory Board.
LOGO
LUCY WILSON BENSON, 70, has been a director of various
business, educational and nonprofit organizations since
1980. She was Under Secretary of State for Security
Assistance, Science and Technology from 1977 to 1980. She
has been a COMSAT director since September 1987. She also
is a director of General Re Corporation and Logistics
Management Institute, a trustee of the Alfred P. Sloan
Foundation and Vice Chairman of the Atlantic Council of
the U.S., the Board of Trustees of Lafayette College and
the Citizens Network for Foreign Affairs. She also is a
director or trustee of funds of The Dreyfus Corporation.
LOGO
EDWIN I. COLODNY, 71, has been Chairman of the Board of
COMSAT since April 1997 and a director since May 1992. He
was Chairman of US Airways Group, Inc. and of its
subsidiary, US Airways, Inc., a commercial airline
company, from 1978 until July 1992 and was a director of
both corporations until May 1997. He was Chief Executive
Officer of US Airways Group from 1983 to June 1991 and of
its subsidiary, US Airways, Inc., from 1975 to June 1991.
He has served as counsel to the Washington, D. C., law
firm of Paul, Hastings, Janofsky and Walker since
September 1991.
LOGO
LAWRENCE S. EAGLEBURGER, 67, 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.
LOGO
4
<PAGE>
NEAL B. FREEMAN, 57, has been Chairman and Chief
Executive Officer of The Blackwell Corporation, a
television production and distribution company, since
1981. 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 Vice Chairman
of The Ethics and Public Policy Center and a director of
National Review, Inc. and Infosafe Systems, Inc.
LOGO
CALEB B. HURTT, 66, 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 has been a COMSAT director since
May 1996. He also is a director of Lockheed Martin
Corporation and has served as Chairman of the Board of
Governors of the Aerospace Industries Association, as
Chairman of the NASA Advisory Council, as Chairman of the
Federal Reserve Bank, Denver Branch, and as Vice Chairman
of the Board of Trustees of Stevens Institute of
Technology.
LOGO
PETER W. LIKINS, 61, has been President of the University
of Arizona since October 1997. He was President of Lehigh
University from 1982 to September 1997, 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.
LOGO
LARRY G. SCHAFRAN, 59, has been the Managing General
Partner of L.G. Schafran & Associates, a real estate
investment and development firm, since 1984. He was
Chairman of the Executive Committee of Dart Group
Corporation from 1994 to October 1997 and a director of
Dart from 1993 to October 1997. He has been a COMSAT
director since August 1997. He also is a director of
Publicker Industries Inc., Discovery Zone, Inc. and
Kasper A.S.L., Ltd., a trustee of National Income Realty
Trust and Chairman of the board of directors of Delta-
Omega Technologies, Inc.
LOGO
ROBERT G. SCHWARTZ, 70, is a director or trustee of
various business organizations. He was Chairman of the
Board, President and Chief Executive Officer of
Metropolitan Life Insurance Co. (MetLife) from September
1989 to March 1993 and remains a director of MetLife. He
was Chairman of the Board of MetLife from February 1983
to September 1989. He has been a COMSAT director since
May 1986. He also is a trustee of Consolidated Edison
Company of New York, Inc. and a director of Lone Star
Industries, Inc., Lowe's Companies, Inc., Mobil Oil
Corporation, Potlatch Corporation and The Reader's Digest
Association, Inc.
LOGO
5
<PAGE>
KATHRYN C. TURNER, 50, is the founder and sole
shareholder of Standard Technology, Inc., a high-
technology, engineering and systems integration firm. She
previously has been appointed by the President to serve
on the President's Export Council, the Eximbank Advisory
Committee, and the Commission on the Future of Worker-
Management Relations and by the Secretary of Defense to
the Defense Policy Advisory Committee on Trade. She has
been a COMSAT director since August 1997. She also is a
director of Phillips Petroleum Company and Carpenter
Technology Corporation.
LOGO
GUY P. WYSER-PRATTE, 57, is President of Wyser-Pratte &
Co., Inc. and Wyser-Pratte Management Co., Inc. He has
been a COMSAT director since August 1997. He also is a
director of The Eureka (US$) Fund, The Eureka (DM) Fund
and the International Rescue Committee, a non-
governmental international refugee organization, and a
trustee of the U.S. Marine Corps University Foundation.
LOGO
PRESIDENTIALLY APPOINTED DIRECTORS
PETER S. KNIGHT, 47, has been a partner in the
Washington, D.C., law firm of Wunder, Knight, Levine,
Thelen & Forscey since 1991. In 1996, he took a leave of
absence from his firm to serve as Campaign Manager for
Clinton/Gore '96. From 1989 to 1991, he was General
Counsel and Secretary of the Medicis Pharmaceutical
Corporation. From 1977 to 1989, he served as the Chief of
Staff to Congressman and later Senator Al Gore. He has
been a Presidentially appointed COMSAT director since
September 1994. He also is a director of the Medicis
Pharmaceutical Corporation, Whitman Education Group Inc.,
Healthworld and the Schroder Series Trust. His current
term expires at the 1999 Annual Meeting.
LOGO
CHARLES T. MANATT, 61, is the Chairman 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 expired at the 1997 Annual Meeting, and he continues
to serve in accordance with the Satellite Act.
LOGO
The third Presidentially appointed director position is currently vacant
pending nomination and confirmation of a successor to fill the vacancy.
6
<PAGE>
OTHER INFORMATION CONCERNING DIRECTORS
COMMITTEES
The Board currently has six standing committees, described below.
The Committee on Audit, Corporate Responsibility and Ethics consists of Lucy
Wilson Benson (Chairman), Marcus C. Bennett, Lawrence S. Eagleburger, Peter W.
Likins, Charles T. Manatt and Guy P. Wyser-Pratte. The Committee makes
recommendations to the Board concerning the selection of independent public
accountants; reviews with the independent accountants the scope of their
audit; reviews the financial statements with the independent accountants;
reviews with the independent accountants and the Corporation's management and
internal auditors the Corporation's accounting and audit practices and
procedures, its internal controls and its compliance with laws and
regulations; and reviews the Corporation's policies regarding community and
governmental relations, conflicts of interest, business conduct, ethics and
other social, political and public matters, and the administration of such
policies. The Committee met seven times during 1997.
The Committee on Compensation and Management Development consists of Caleb
B. Hurtt (Chairman), Neal B. Freeman, Peter S. Knight, Robert G. Schwartz and
Kathryn C. Turner. The Committee approves long-term compensation for senior
executives; considers and makes recommendations to the Board with respect to
programs for human resources development and management organization and
succession; recommends salary and bonus awards for senior executives; reviews
compensation policies and employee benefit and incentive plans; and exercises
authority granted to it to administer such plans. The Committee met nine times
during 1997.
The Finance Committee consists of Robert G. Schwartz (Chairman), Betty C.
Alewine, Marcus C. Bennett, Neal B. Freeman, Peter S. Knight and Larry G.
Schafran. The Committee considers and makes recommendations to the Board with
respect to the financial affairs of the Corporation, including matters
relating to capital structure and requirements, financial performance,
dividend policy, capital and expense budgets and significant capital
commitments, and such other matters as may be referred to it by the Board, the
Chairman of the Board or the Chief Executive Officer. The Committee met eight
times during 1997.
The Nominating and Corporate Governance Committee consists of Edwin I.
Colodny (Chairman), Lucy Wilson Benson, Caleb B. Hurtt, Charles T. Manatt and
Robert G. Schwartz. The Committee recommends to the Board qualified candidates
for election as directors and as Chairman of the Board, and considers, acts
upon or makes recommendations to the Board with respect to such other matters
as may be referred to it by the Board, the Chairman of the Board or the Chief
Executive Officer. The Committee met seven times during 1997. It will consider
candidates recommended by shareholders, if the recommendations are submitted
in writing to the Secretary of the Corporation.
The Committee on Research and International Matters consists of Peter W.
Likins (Chairman), Lucy Wilson Benson, Lawrence S. Eagleburger, Charles T.
Manatt, Larry G. Schafran and Kathryn C. Turner. The Committee considers and
makes recommendations to the Board with respect to the research and
development programs of the Corporation and the relationship of such programs
to the business of the Corporation; matters relating to the Corporation's
responsibilities and activities under the Satellite Act and the relationships
of the Corporation with international organizations such as INTELSAT and
Inmarsat or with foreign governments or entities; and such other matters as
may be referred to it by the Board, the Chairman of the Board or the Chief
Executive Officer. The Committee met three times during 1997.
The Strategic Planning Committee consists of Edwin I. Colodny (Chairman),
Robert G. Schwartz and Guy P. Wyser-Pratte. The Committee reviews and makes
recommendations to the Board with respect to all aspects of the Corporation's
business and its current and future business and financial strategies,
transactional opportunities and the enhancement of shareholder value. The
Committee met six times during 1997.
7
<PAGE>
DIRECTORS COMPENSATION
Directors, other than the Chairman of the Board and the President, currently
receive an annual retainer of 1,000 shares of the Corporation's Common Stock
payable at the first meeting of the Board of Directors after the Annual
Meeting of Shareholders. Those directors also receive a fee of $1,000 per
meeting for attending Board meetings, Board committee meetings or meetings
held pursuant to a special assignment; and, for service as chair of a Board
committee, an annual retainer of $3,000 paid in quarterly installments. The
President and Chief Executive Officer is not compensated separately for
service as a director.
The Chairman of the Board is compensated solely on an annual basis in the
amount of $190,000 per year. The Chairman may elect to receive all or a
portion of this annual cash compensation in the form of COMSAT stock or stock
options. The shares or stock options are granted on the date of each Annual
Meeting of Shareholders based on the amount of the annual cash compensation,
if any, which the Chairman elects to receive in shares or stock options. The
number of shares of Common Stock granted are determined by dividing the amount
which the Chairman elects to receive in shares by the fair market value of the
Common Stock on the date of the grant. The number of stock options granted are
determined by multiplying the amount which the Chairman elects to receive in
options by three and then dividing by the fair market value of the Common
Stock on the date of grant. The exercise price per share of options granted
pursuant to the Chairman's election to receive options is the fair market
value of a share of Common Stock on the date of grant. Each option expires 10
years from the date of grant and is exercisable for half of the shares covered
by the option six months after the date of grant and for the remaining half of
the shares one year after such date. For 1997, Mr. Colodny elected to receive
$90,000 of the $190,000 of annual cash compensation payable to him as Chairman
in stock options. Pursuant to his election, he was granted options to purchase
16,123 shares of Common Stock determined in the manner described above except
that the date used to calculate the number of options was April 29, 1997, the
date of his election as Chairman.
Under the Non-Employee Directors Stock Plan, directors may elect to defer
receipt of the annual 1,000 share stock award and receive phantom stock units
(PSUs) in lieu thereof. The PSUs would be held in an account for the director
pending his or her retirement or termination of service on the Board. Upon
payment of a dividend on the Corporation's Common Stock, an equivalent amount
would be converted to PSUs, based on the fair market value of the stock on the
dividend payment date, and would be credited to the director's account. The
PSUs would increase or decrease in value based on an equivalent number of
shares of the Corporation's Common Stock. Upon retirement or termination of
service, a director would receive payment in shares of the Corporation's
Common Stock equal to the number of PSUs credited to his or her account under
the Plan.
Under the Directors and Executives Deferred Compensation Plan, a non-
employee director may elect to defer all or part of the cash retainer 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 age 73. In the case of death, the
accumulated deferrals are paid to the director's beneficiary. For 1997, (1)
the interest crediting rate was prime plus 1% for amounts deferred after 1996,
12.5% for amounts deferred from February 1994 to December 1996 and 13.7% for
amounts deferred prior to that period under the Directors and Executives
Deferred Compensation Plan; and (2) the aggregate amount of interest accrued
in respect of amounts deferred by participating directors (13 persons) was
$352,700.
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
8
<PAGE>
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.
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 1997, the aggregate value of split dollar life insurance premiums
paid for the benefit of all covered directors was $140,612.
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 1990, each option is for
2,480 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 from 1990 to 1992, each option is for 2,480
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 after 1992, each option is for 4,961 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 27, 1997 have been adjusted to reflect
(1) the two-for-one split in the Corporation's Common Stock effective June 1,
1993 and (2) the spin-off of Ascent Entertainment Group, Inc. to the
Corporation's shareholders on June 27, 1997, pursuant to which all outstanding
options under the Non-Employee Directors Stock Plan on that date were adjusted
by multiplying the number of options held by an adjustment ratio of 1.2402,
and the exercise price for such options was adjusted by dividing the exercise
price by the same ratio.
All options granted before 1996 under the Non-Employee Directors Stock Plan
are currently exercisable. For options granted after 1995, each option becomes
exercisable for 2,481 shares one year after the date of grant and for the
remaining 2,480 shares two years after the date of grant. If the director's
service on the Board terminates by reason of retirement at age 72, expiration
of a term as a Presidentially appointed director, failure to stand for
election with the Board's consent or resignation with the Board's consent, the
option becomes fully exercisable and continues in force for the duration of
its term. If the director's service terminates under any other circumstance
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. 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.
In 1997, options for a total of 64,493 shares of Common Stock were granted
to non-employee directors at a purchase price per share of $21.0148, which was
the fair market value of the Common Stock on the date of grant. In 1997, no
non-employee director exercised options granted under the Plan.
9
<PAGE>
On August 26, 1997, the Corporation entered into agreements with Arthur
Hauspurg and Howard M. Love, directors who retired at the 1997 Annual Meeting
of Shareholders, to retain their advisory services to the Chairman of the
Board and the President and Chief Executive Officer of the Corporation for a
period of two years at a rate of $25,000 per year.
Executive compensation is described below under the caption "Executive
Compensation."
COMPENSATION COMMITTEE INTERLOCKS, INSIDER PARTICIPATION AND RELATED PARTY
TRANSACTIONS
There were no compensation committee interlocks, insider participation in
compensation decisions or related party transactions during 1997.
10
<PAGE>
COMMON STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Corporation's Common Stock as of March 1, 1998, 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 over which an individual has sole or
shared voting or investment power, and also any shares that the individual has
the right to acquire within 60 days through the exercise of any stock option
or other right.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
OF COMSAT
NAME(1) COMMON STOCK(2)
- ------- --------------------
<S> <C> <C>
Betty C. Alewine...................................... 484,656(3)
Marcus C. Bennett..................................... --
Lucy Wilson Benson.................................... 35,524
Edwin I. Colodny...................................... 32,385
Lawrence S. Eagleburger............................... 8,141
Allen E. Flower....................................... 116,728(4)
Neal B. Freeman....................................... 26,204
Caleb B. Hurtt........................................ 3,480
Dwight E. Jasmann..................................... 9,002(5)
Peter S. Knight....................................... 8,441
Peter W. Likins....................................... 32,374(6)
Charles T. Manatt..................................... 8,941
John H. Mattingly..................................... 29,939(7)
Larry G. Schafran..................................... 5,000(8)
Robert G. Schwartz.................................... 38,324
Kathryn C. Turner..................................... 1,000
Guy P. Wyser-Pratte................................... 1,856,300(9)
Warren Y. Zeger....................................... 254,040(10)
All directors and executive officers as a group (21
persons)............................................. 3,020,788(11)
</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 Corporation's Common Stock.
(2) Each number in this column has been rounded to the nearest whole share.
The following directors elected to defer receipt of their 1,000 share
annual retainer for 1997 and instead received phantom stock units which
are not included in their beneficial ownership of COMSAT Common Stock: Mr.
Bennectt, Mrs. Benson, Mr. Eagleburger, Mr. Hurtt, Mr. Knight, Mr. Manatt
and Mr. Schafran. Beneficial ownership of COMSAT Common Stock includes
shares that may be acquired within 60 days after March 1, 1998 through the
exercise of options as follows: Mrs. Alewine, 381,650 shares; Mrs. Benson,
34,724 shares; Mr. Colodny, 30,385 shares; Mr. Eagleburger, 7,441 shares;
Mr. Flower, 75,281 shares; Mr. Freeman, 24,804 shares; Mr. Hurtt, 2,480
shares; Mr. Jasmann, 7,750 shares; Mr. Knight, 7,441 shares; Dr. Likins,
26,044 shares; Mr. Manatt, 7,441 shares; Mr. Mattingly, 16,122 shares; Mr.
Schwartz, 32,244 shares; Mr. Zeger, 223,415 shares; and all directors and
executive officers as a group, 911,948 shares. The number of option shares
and shares awarded under COMSAT benefit plans which are restricted against
transfer that are included as beneficially owned have been adjusted to
give effect to the Ascent spin-off to COMSAT shareholders on June 27,
1997. All outstanding options and restricted shares held on that date were
adjusted by multiplying the number of options or shares held by an
adjustment ratio of 1.2402.
(3) Includes 61,438 shares which are restricted against transfer and 1,315
shares which are held in the Corporation's Savings and Profit-Sharing Plan
as of March 1, 1998.
(4) Includes 20,618 shares which are restricted against transfer and 1,069
shares which are held in the Corporation's Savings and Profit-Sharing Plan
as of March 1, 1998.
(5) Includes 302 shares which are held in the Corporation's Savings and
Profit-Sharing Plan as of March 1, 1998. Mr. Jasmann resigned in February
1998.
(6) Includes 2,850 shares over which Dr. Likins shares voting power and
investment power with Mrs. Likins.
11
<PAGE>
(7) Includes 9,201 shares which are restricted against transfer and 885 shares
which are held in the Corporation's Savings and Profit-Sharing Plan as of
March 1, 1998.
(8) Mr. Schafran disclaims beneficial ownership of the 5,000 shares, which are
held by Mrs. Schafran.
(9) Includes 20,000 shares held by an IRA trustee and 1,815,300 shares owned
by investment partnerships and other managed accounts for which Wyser-
Pratte Management Co., Inc. and its affiliates are the general partner or
investment manager. Mr. Wyser-Pratte beneficially owned 3.6% of the
Corporation's outstanding Common Stock as of March 1, 1998.
(10) Includes 29,300 shares which are restricted against transfer and 1,225
shares which are held in the Corporation's Savings and Profit-Sharing
Plan as of March 1, 1998.
(11) Includes 5,000 shares with respect to which beneficial ownership is
disclaimed. Also includes an aggregate of 149,849 shares which are
restricted against transfer, which are held in the Corporation's Savings
and Profit-Sharing Plan as of March 1, 1998, or which are held in the
COMSAT RSI, Inc. Employee Stock Ownership Plan as of December 31, 1997.
All directors and executive officers as a group beneficially owned 5.9%
of the Corporation's outstanding Common Stock as of March 1, 1998.
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 1997 compensation of the executive
officers of the Corporation, including Mrs. Alewine, the Chief Executive
Officer, and the other four most highly compensated executive officers (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. One of the objectives 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.
There are two groups of competitive companies that are used in the executive
compensation analysis. The first group, consisting of the companies that make
up the new 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 industries with
revenues comparable to the Corporation's, is used to benchmark competitive
compensation levels.
ANNUAL COMPENSATION
Mrs. Alewine has an employment agreement as Chief Executive Officer dated
July 19, 1996 which is summarized below under the caption "Agreements with
Executive Officers." Pursuant to the agreement, Mrs. Alewine received a base
salary of $450,000 for the first year and an increase to $500,000 beginning in
the second year. The Committee recommended to the Board a 1997 cash bonus
award of $215,000 for Mrs. Alewine. The Board approved the Committee's
recommendation.
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 are
based on recommendations to the Committee by the Chief Executive Officer
taking into account such factors as total professional experience,
performance, and experience in the current assignment. The bonus opportunities
for other executive officers for 1997 were based on a range of award
percentages of base salary for each position determined by the Committee. A
portion of each bonus award was tied to corporate performance criteria based
12
<PAGE>
on the achievement of 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 Committee recommended a bonus award for each executive
officer based on a bonus range and the performance measures noted above. The
Board had final approval authority for these awards.
LONG-TERM COMPENSATION
Long-term compensation is an integral element of the Corporation's executive
compensation philosophy because the Committee believes that stock ownership by
senior management and stock-based performance-compensation arrangements
enhance shareholder value. The Corporation's long-term compensation strategy
includes a blend of stock compensation. For 1997, awards by the Committee
consisted of non-qualified stock options and restricted stock awards (RSAs).
These awards were consistent with ranges in the revenue group of competitive
companies which were approved by the Committee. 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 portion of executive compensation is represented by stock options granted
at fair market value which the Committee believes provide a tie to shareholder
interests. Pursuant to the terms of her employment agreement, Mrs. Alewine was
not eligible for a stock option grant in 1997.
Stock options were granted to the other Named Executive Officers in February
1997 as reflected in the table below setting forth 1997 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 competitive analysis of total compensation for each executive officer.
Second, the Committee approved the actual awards for each executive officer
based on these guidelines and performance recommendations made by Mrs. Alewine
based on her evaluation of each officer's performance for 1996.
RSAs are restricted shares of COMSAT stock which are granted to executive
officers and selected key employees as a performance incentive and 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. Pursuant to the terms of her employment agreement, Mrs. Alewine
received 20,000 RSAs in February 1997 (subsequently adjusted on June 27, 1997
to 24,804 RSAs as a result of the spin-off of Ascent Entertainment Group, Inc.
to the shareholders). The other Named Executive Officers also received RSAs in
February 1997 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 pursuant to RSAs.
The Corporation intends to preserve the tax deductibility under Section 162(m)
of all compensation paid to its executive officers.
COMMITTEE ON COMPENSATION AND MANAGEMENT DEVELOPMENT
Caleb B. Hurtt, Chairman
Neal B. Freeman
Peter S. Knight
Robert G. Schwartz
Kathryn C. Turner
13
<PAGE>
EXECUTIVE COMPENSATION
The following table shows the compensation received by the Chief Executive
Officer and the other four most highly compensated executive officers of the
Corporation (the Named Executive Officers) for the three fiscal years ended
December 31, 1997. The table shows the amounts received by each Named
Executive Officer for all three fiscal years, whether or not such Named
Executive Officer was the Chief Executive Officer or an executive officer of
the Corporation for each of those three years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------ ---------------------
OTHER RESTRICTED SECURITIES ALL
ANNUAL STOCK UNDERLYING OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) OPTIONS COMPENSATION
POSITION YEAR ($) ($)(2) ($)(3) ($)(4) (#)(5) ($)(6)
- ------------------ ---- -------- -------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Betty C. Alewine, 1997 $472,116 $221,756 $ 8,370 $498,749 0 $22,135
President & Chief 1996 355,846 189,111 3,238 238,188 260,442 20,799
Executive Officer 1995 226,923 142,803 448 178,363 68,211 20,536
Allen E. Flower 1997 209,770 83,627 5,622 174,554 49,608 36,855
Vice President and 1996 180,000 73,301 60,122 90,000 43,407 31,578
Chief Financial Officer 1995 145,000 46,483 0 121,563 8,681 10,053
Dwight E. Jasmann, (1) 1997 244,985 204,187 39,961 0 18,603 4,750
President and General 1996 98,770 203,600 13,795 97,813 12,402 923
Manager, COMSAT 1995 -- -- -- -- -- --
International
John H. Mattingly, 1997 190,308 75,029 0 74,820 24,804 4,750
President, COMSAT 1996 162,039 57,274 0 35,994 12,402 4,498
Satellite Services 1995 146,985 62,800 0 0 2,480 4,410
Warren Y. Zeger, 1997 229,808 94,348 5,466 174,554 49,608 26,938
Vice President, 1996 196,551 181,487 2,422 63,000 37,206 25,871
General Counsel and 1995 184,050 71,196 2,755 123,061 37,206 23,677
Secretary
</TABLE>
- --------
(1) Mr. Jasmann became an executive officer when he joined the Corporation as
President and General Manager, COMSAT International in August 1996. He
resigned in February 1998.
(2) Bonus for 1997 for each Named Executive Officer, as indicated below,
includes: (i) unused credits under the Corporation's cafeteria plan that
were paid in cash to the Named Executive Officers; and (ii) time off buy-
back under the Corporation's cafeteria plan that was paid in cash to the
Named Executive Officers. Bonus for Mr. Jasmann for 1997 also includes
$62,371 of relocation expenses paid to him as a result of his relocation
to COMSAT's offices in Bethesda, Maryland to become President and General
Manager, COMSAT International. The bonus reflected for Mr. Zeger for 1996
includes a special performance-based spot bonus in the amount of $100,000.
<TABLE>
<CAPTION>
UNUSED TIME OFF
CREDITS BUY-BACK
------- --------
<S> <C> <C>
Mrs. Alewine............................................. $ 6,756 $ 0
Mr. Flower............................................... 3,627 0
Mr. Jasmann.............................................. 11,816 0
Mr. Mattingly............................................ 6,529 3,500
Mr. Zeger................................................ 9,348 0
</TABLE>
14
<PAGE>
(3) With the exception of Mr. Flower, Other Annual Compensation shown for
1995, 1996 and 1997 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.
(4) Includes restricted stock awards (RSAs), restricted stock units (RSUs) and
phantom stock units (PSUs). Dividends are paid on RSAs. 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, 1997, are as follows:
<TABLE>
<CAPTION>
NUMBER OF VALUE AS OF
RSAS/RSUS/PSUS 12/31/97
-------------- -----------
<S> <C> <C>
Mrs. Alewine................................... 79,980 $1,909,523
Mr. Flower..................................... 23,811 568,488
Mr. Jasmann.................................... 6,201 148,049
Mr. Mattingly.................................. 6,201 148,049
Mr. Zeger...................................... 35,439 846,106
</TABLE>
The amounts shown have been adjusted to give effect to the Ascent spin-off
to COMSAT shareholders on June 27, 1997. In lieu of receiving a
distribution of Ascent stock, all outstanding RSAs, RSUs and PSUs held on
that date were adjusted by multiplying the number of shares or units held
by an adjustment ratio of 1.2402. Mr. Jasmann forfeited his restricted
stock holdings when he resigned in February 1998.
(5) All options shown have been adjusted to give effect to the Ascent spin-off
to COMSAT shareholders on June 27, 1997. All outstanding options held on
that date were adjusted by multiplying the number of options held by an
adjustment ratio of 1.2402.
(6) All Other Compensation for 1997 includes the following elements: (i)
contributions by the Corporation to the Corporation's 401(k) Plan on
behalf of the Named Executive Officers; (ii) above-market interest accrued
for the Named Executive Officers under the Corporation's Deferred
Compensation Plan; and (iii) life insurance premiums for the Named
Executive Officers. The life insurance premiums shown 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.
<TABLE>
<CAPTION>
ABOVE-
401(K) PLAN MARKET LIFE INSURANCE
CONTRIBUTIONS INTEREST PREMIUMS
------------- -------- --------------
<S> <C> <C> <C>
Mrs. Alewine........................ $4,750 $7,959 $ 9,426
Mr. Flower.......................... 4,750 9,944 22,161
Mr. Jasmann......................... 4,750 0 0
Mr. Mattingly....................... 4,750 0 0
Mr. Zeger........................... 4,750 6,620 15,568
</TABLE>
15
<PAGE>
OPTION GRANTS
The following table sets forth information on options granted to the Named
Executive Officers in 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS OPTIONS EXERCISE
GRANTED GRANTED TO PRICE EXPIRATION GRANT DATE
NAME (#)(1) EMPL IN FY(2) ($/SH)(3) DATE PRESENT VALUE(4)
- ---- ------------------ ------------- --------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Betty C. Alewine........ 0 --% $ -- -- $ --
Allen E. Flower......... 49,608 6.81 20.1076 02/20/07 334,358
Dwight E. Jasmann....... 18,603 2.55 20.1076 02/20/07 125,384
John H. Mattingly....... 24,804 3.41 20.1076 02/20/07 167,179
Warren Y. Zeger......... 49,608 6.81 20.1076 02/20/07 334,358
</TABLE>
- --------
(1) The options shown were granted on February 20, 1997 to acquire the
Corporation's Common Stock. All options granted in 1997 vest as follows:
25% on the first anniversary of the date of grant; another 25% on the
second anniversary of the date of grant; and the remaining 50% on the
third anniversary of the date of grant. All options shown have been
adjusted to give effect to the Ascent spin-off to COMSAT shareholders on
June 27, 1997. All outstanding options held on that date were adjusted by
multiplying the number of options held by an adjustment ratio of 1.2402.
(2) The total number of COMSAT options granted to key employees in 1997 was
728,392.
(3) The exercise price shown has been adjusted to give effect to the Ascent
spin-off to COMSAT shareholders on June 27, 1997. The exercise price for
all options outstanding on that date was adjusted by dividing the exercise
price by 1.2402.
(4)The Corporation used the Black-Scholes option pricing model to determine
grant date present values using the following assumptions: a dividend yield
of 3.3%; stock price volatility of 0.37; a six-year option term; a risk-
free rate of return of 6.41%; 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.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information on (1) options exercised by the
Named Executive Officers in 1997, and (2) the number and value of their
unexercised options as of December 31, 1997.
AGGREGATED OPTION EXERCISES IN 1997 AND 12/31/97 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
UNDERLYING OPTIONS AT 12/31/97(1) OPTIONS AT 12/31/97
OPTIONS VALUE ------------------------- -------------------------
EXERCISED REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
- ---- ---------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Betty C. Alewine........ 3,721 $29,718 333,902 229,438 $1,809,204 $1,612,508
Allen E. Flower......... 3,721 29,718 47,688 86,503 483,473 527,682
Dwight E. Jasmann....... 0 0 3,100 27,905 25,115 145,443
John H. Mattingly....... 0 0 5,581 35,345 49,621 190,811
Warren Y. Zeger......... 1,860 14,668 183,109 96,115 715,064 602,567
</TABLE>
- --------
(1) The amounts shown have been adjusted to give effect to the Ascent spin-off
to COMSAT shareholders on June 27, 1997. All outstanding options held on
the date of the spin-off were adjusted by multiplying the number of
options held by an adjustment ratio of 1.2402.
16
<PAGE>
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 1997 is $125,000.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFITS PAYABLE UPON RETIREMENT
-----------------------------------------------------
YEARS OF SERVICE
-----------------------------------------------------
AVERAGE ANNUAL SALARY 15 20 25 30 35
- --------------------- --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$100,000.................. $25,153 $ 38,729 $ 42,901 $ 51,776 $ 59,626
150,000.................. 39,103 59,639 66,852 80,727 92,951
200,000.................. 49,904 77,401 87,653 106,528 123,127
250,000.................. 57,692 92,149 105,441 125,000 125,000
300,000.................. 63,692 105,109 121,441 125,000 125,000
350,000.................. 69,692 118,069 125,000 125,000 125,000
400,000.................. 75,692 125,000 125,000 125,000 125,000
450,000.................. 81,692 125,000 125,000 125,000 125,000
500,000.................. 87,692 125,000 125,000 125,000 125,000
</TABLE>
The compensation covered by the Retirement Plan includes only base salary.
Benefits are determined on a straight life annuity basis under a formula based
on length of service and average annual base salary for the highest five
consecutive years during the final 10 years of employment. Prior to 1989,
benefits were offset by a portion of each participant's estimated Social
Security benefits. Beginning in 1989, each participant accrues a benefit at a
specified percentage of salary up to the Social Security wage base, and at a
higher percentage of salary above the Social Security wage base. The years of
credited service for the Named Executive Officers as of December 31, 1997 are:
11 for Mrs. Alewine; 28 for Mr. Flower; 1 for Mr. Jasmann; 3 for Mr.
Mattingly; and 22 for Mr. Zeger.
The Corporation also maintains the Insurance and Retirement Plan for
Executives (the Supplemental Retirement Plan), which covers those executive
officers and other key employees who are designated by the Board of Directors
to participate. The Supplemental Retirement 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 under the
Supplemental Retirement Plan. 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 Supplemental Retirement 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 Supplemental Retirement 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, 1997 for each of
the Named Executive Officers under the Supplemental Retirement Plan are:
$328,686 for Mrs. Alewine; $51,266 for Mr. Flower; and $96,184 for Mr. Zeger.
Mrs. Alewine and Messrs. Flower and Zeger are each 100% vested in the Plan.
Messrs. Jasmann and Mattingly are not participants in the Plan.
17
<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 186,030 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) 6,201 restricted stock units which vest after three years. Mrs.
Alewine was also granted 24,804 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 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 17, 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
18
<PAGE>
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.
The Corporation and Mr. Jasmann entered into a three-year employment
agreement dated August 1, 1996. Pursuant to the agreement, Mr. Jasmann's base
salary was $240,000 per year, subject to increases at the discretion of the
Corporation's Board of Directors. The agreement provided for a guaranteed
bonus of $130,000 for 1996 and annual bonuses thereafter based on performance
measures determined by the Board's Compensation Committee with a target bonus
equal to 40% of his base salary. Pursuant to the agreement, on August 1, 1996,
Mr. Jasmann was granted (i) an option to purchase 12,402 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) 6,201
restricted stock units which vest after three years. On February 2, 1998, Mr.
Jasmann resigned pursuant to a provision of the agreement which permitted him
to terminate his employment if the Corporation failed to do an initial public
offering of COMSAT International by February 1, 1998. Pursuant to this
provision, Mr. Jasmann will continue to receive salary and an annual bonus at
the same rate as in effect on the date of his termination until August 1,
1999. His existing stock options, but not his restricted stock units, will
continue to vest during that period.
The share amounts discussed above have been adjusted to give effect to the
Ascent spin-off to COMSAT shareholders on June 27, 1997 by multiplying the
number of shares or units held on that date by an adjustment ratio of 1.2402.
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
<PAGE>
PERFORMANCE GRAPH
The following line graph compares the cumulative total shareholder return
for the Corporation's Common Stock with the cumulative total return of the S&P
500 Stock Index and a Peer Group Index constructed by the Corporation for the
five fiscal years beginning on January 1, 1993, and ending on December 31,
1997. During 1997, the Corporation changed its Peer Group Index to reflect the
restructuring of its businesses, pursuant to which the Corporation divested
its entertainment business, Ascent Entertainment Group, Inc., through a spin-
off to its shareholders and refocused on its core satellite and network
services businesses. The old peer group consisted of three S&P Industry
Groups: Telecommunications (Long-Distance) (AT&T Corporation, MCI
Communications Corporation 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.). The new peer group consists of the three long-distance
telecommunications companies in the old peer group (AT&T, MCI and Sprint) plus
the following companies in the satellite industry (the years for which the
returns of each such company have been included in the five-year period are
noted in parentheses): American Mobile Satellite Corporation (1994-1997), Asia
Satellite Telecom (American Depository Receipts (ADRs)) (1996-1997), British
Sky Broadcasting Group (ADRs) (1995-1997), Echostar Communications Corporation
(1996-1997), Globalstar Telecommunications Ltd. (1996-1997), Iridium World
Communications (1996-1997), Orion Network Systems, Inc. (1996-1997), PanAmSat
Corp. (1996-1997), PT Pasifik Satelit Nusantara (ADRs) (1996-1997) and United
States Satellite Broadcasting Co., Inc. (1996-1997).
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG COMSAT,
S&P 500 INDEX, NEW PEER GROUP INDEX AND OLD PEER GROUP INDEX
(Assumes $100 Invested on December 31, 1992 & Dividends Reinvested)
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Old New
Measurement Period S&P Peer Peer
(Fiscal Year Covered) COMSAT 500 INDEX Group Group
- --------------------- --------------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Measurement Pt-12/31/1992 $100.00 $100.00 $100.00 $100.00
FYE 12/31/1993 $128.00 $110.00 $113.00 $113.00
FYE 12/31/1994 $ 83.00 $112.00 $108.00 $103.00
FYE 12/31/1995 $ 86.00 $153.00 $152.00 $142.00
FYE 12/31/1996 $118.00 $189.00 $156.00 $152.00
FYE 12/31/1997 $137.00 $252.00 $215.00 $213.00
</TABLE>
20
<PAGE>
ITEM 2. APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The shareholders will vote at the meeting to appoint independent public
accountants to audit and certify to the shareholders the financial statements
of the Corporation for the fiscal year ending December 31, 1998. The Board of
Directors has recommended the appointment of Deloitte & Touche LLP as such
independent public accountants; they acted in such capacity for fiscal year
1997. Representatives of Deloitte & Touche LLP will be present at the meeting
to respond to appropriate questions and to make a statement if they desire to
do so.
THE DIRECTORS RECOMMEND A VOTE FOR THE APPOINTMENT OF DELOITTE & TOUCHE LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS. PROXIES SOLICITED BY THE MANAGEMENT WILL BE
SO VOTED UNLESS SHAREHOLDERS SPECIFY A CONTRARY CHOICE IN THEIR PROXIES. FOR
APPROVAL, THE PROPOSAL REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE
SHARES REPRESENTED AND ENTITLED TO VOTE AT THE MEETING.
ITEM 3. SHAREHOLDER PROPOSAL
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue, N.W.,
Suite 215, Washington, D.C. 20037, owner of 200 shares of Common Stock of the
Corporation, has given notice that she will introduce the following resolution
at the meeting:
RESOLVED: "That the stockholders of COMSAT assembled in Annual Meeting in
person and by proxy, hereby recommend that the Corporation affirm its
political non-partisanship. To this end the following practices are to be
avoided:
"(a) The handing of contribution cards of a single political party to an
employee by a supervisor.
"(b) Requesting an employee to send a political contribution to an individual
in the Corporation for a subsequent delivery as part of a group of
contributions to a political party or fund raising committee.
"(c) Requesting an employee to issue personal checks blank as to payee for
subsequent forwarding to a political party, committee or candidate.
"(d) Using supervisory meetings to announce that contribution cards of one
party are available and that anyone desiring cards of a different party
will be supplied one on request to his supervisor.
"(e) Placing a preponderance of contribution cards of one party at mail
station locations."
And if the Company engages in none of the above, to disclose this each quarter
to ALL shareholders."
REASONS: "The Corporation must deal with a great number of governmental units,
commissions and agencies. It should maintain scrupulous political neutrality
to avoid embarrassing entanglements detrimental to its business.
21
<PAGE>
Above all, it must avoid the appearance of coercion in encouraging its
employees to make political contributions against their personal inclinations.
The Troy (Ohio) News has condemned partisan solicitation for political
purposes by managers in a local company (not COMSAT)."
"Last year the owners of 3,661,791 shares, representing approximately 13% of
shares voting, voted FOR this proposal."
"If you AGREE, please mark your proxy FOR this resolution."
THE DIRECTORS OPPOSE THIS PROPOSAL.
COMSAT Corporation has a strong record of supporting the political process
in a bipartisan manner. To the knowledge of the directors and management of
the Corporation, the types of practices described in the proposal as "to be
avoided" have not occurred at the Corporation. The Corporation has directors
who have served as political appointees of both Democratic and Republican
administrations, which promotes a corporate culture of bi-partisanship.
The COMSAT Political Action Committee (PAC), which is funded by voluntary
contributions from employees, contributes to candidates of both of the two
major political parties. Employees are not required to contribute to the
COMSAT PAC. The COMSAT PAC solicits contributions once a year, and informs
employees that all contributions are entirely voluntary.
In light of the Corporation's past history of bi-partisanship, the Board of
Directors believes that the resolution is unnecessary. If passed, the
resolution would create an administrative quarterly reporting burden without
resulting in any real benefit to shareholders. Other companies, including the
Corporation's competitors, would not be subject to similar reporting
requirements and the related compliance burden and associated costs. For those
reasons, the company recommends that shareholders vote "no."
IT IS RECOMMENDED THAT THE SHAREHOLDERS VOTE AGAINST THIS PROPOSAL. PROXIES
SOLICITED BY THE MANAGEMENT WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY A
CONTRARY CHOICE IN THEIR PROXIES. FOR APPROVAL, THE PROPOSAL REQUIRES THE
AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES REPRESENTED AND ENTITLED TO BE
VOTED AT THE MEETING.
22
<PAGE>
OTHER MATTERS
At March 31, 1998, the management knew of no other matters to be presented
for action at the meeting. If any other matter is properly introduced by the
Corporation, the persons named in the accompanying form of proxy will vote the
shares represented by the proxies according to their judgment. In accordance
with the Corporation's By-laws, proposals by shareholders were required to be
received no later than March 2, 1998 to be considered at the 1998 Annual
Meeting. See "Item 1. Election of Directors--Requirements for Nominations and
Shareholder Proposals." No such proposals were received other than the one
discussed under the caption "Item 3. Shareholder Proposal."
The Corporation will bear all costs of the proxy solicitation. In addition
to the solicitation by mail, the Corporation's directors, officers and
employees, without additional compensation, may solicit proxies by telephone,
personal contact or other means. The Corporation also has retained D. F. King
& Co., Inc., of New York, N.Y., to assist in the solicitation, at a cost of
$5,000. The Corporation will reimburse brokers and other persons holding
shares in their names, or in the names of nominees, for their expenses in
forwarding proxy materials to the beneficial owners.
The Corporation contemplates that the 1999 Annual Meeting will be held on or
about May 21, 1999. Shareholders wishing to submit proposals to be included in
the proxy statement for consideration at the 1999 Annual Meeting should submit
them in writing to the Secretary, COMSAT Corporation, 6560 Rock Spring Drive,
Bethesda, Maryland 20817, to be received no later than December 1, 1998.
This Proxy Statement is provided by direction of the Board of Directors.
/s/ Warren Y. Zeger
Warren Y. Zeger
Vice President, General Counsel
and Secretary
March 31, 1998
A COPY OF THE CORPORATION'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION FOR 1997 ON FORM 10-K, WITH A LIST OF THE EXHIBITS, WILL BE SENT
WITHOUT CHARGE TO ANY SHAREHOLDER OF RECORD OR BENEFICIAL OWNER OF SHARES OF
THE CORPORATION'S COMMON STOCK UPON RECEIPT OF A WRITTEN REQUEST ADDRESSED TO:
SHAREHOLDER SERVICES, COMSAT CORPORATION, 6560 ROCK SPRING DRIVE, BETHESDA,
MARYLAND 20817. ANY EXHIBIT WILL BE PROVIDED UPON PAYMENT OF THE REASONABLE
COST OF PROVIDING SUCH EXHIBIT.
23
<PAGE>
DIRECTIONS TO THE COMSAT BUILDING
6560 ROCK SPRING DRIVE--BETHESDA, MARYLAND
The COMSAT Building at Rock Spring Plaza in Bethesda, Maryland, is located
on the corner of Rock Spring Drive and Fernwood Road. For shareholders who
wish to use public transportation, take the Red Line of the Washington Metro
to the Grosvenor Station. Take the #47 RIDE-ON bus, operated by Montgomery
County Transit, to Fernwood Road and Rockledge Drive and walk to Rock Spring
Plaza. It departs every half hour beginning at approximately 6:30 a.m., and
the trip takes 10 minutes. Alternatively, you may take the #6 RIDE-ON express
bus to Rock Spring Plaza. It departs every 10 minutes from 6:40 a.m. to 8:00
a.m.
Set forth below is a map and instructions on how to get there by car. The
COMSAT garage will be open for shareholders' parking on the first level (P1).
LOGO
. FROM FREDERICK/I-270 SOUTH: Take I-270 East toward Silver Spring. Exit at
Old Georgetown Road and turn right. At the second light turn right on
Democracy Boulevard. At the second light turn right on Fernwood Road. Just
beyond the first light turn right onto the driveway that leads to the
COMSAT garage entrance.
. FROM SILVER SPRING/I-495 WEST: Take I-495 West to Exit 36 (Old Georgetown
Road). Turn right on Old Georgetown Road (toward Rockville). At the third
light turn left on Democracy Boulevard. At the second light turn right on
Fernwood Road. Just beyond the first light turn right onto the driveway
that leads to the COMSAT garage entrance.
. FROM NORTHERN VIRGINIA/I-495 NORTH: Take I-495 North to I-270 Spur North.
Take the first exit off ofI-270 Spur (Democracy Boulevard East). At the
first intersection light turn left on Fernwood Road. Just beyond the first
light turn right onto the driveway that leads to the COMSAT garage
entrance.
<PAGE>
COMSAT CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 15, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Betty C. Alewine, Lucy W. Benson and
Robert G. Schwartz, and each or any of them (with power of substitution),
proxies for the undersigned to represent and to vote, as designated on the
reverse side hereof, all shares of Common Stock of COMSAT Corporation which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of its shareholders to be held on May 15, 1998, and at any reconvened
session thereof, subject to any directions indicated on the reverse side of this
card. IF NO DIRECTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2
AND AGAINST PROPOSAL 3.
Your vote for the election of directors may be indicated on the reverse.
Nominees are: Betty C. Alewine, Marcus C. Bennett, Lucy W. Benson, Edwin I.
Colodny, Lawrence S. Eagleburger, Neal B. Freeman, Caleb B. Hurtt, Peter W.
Likins, Larry G. Schafran, Robert G. Schwartz, Kathryn C. Turner and Guy P.
Wyser-Pratte.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE. PLEASE SIGN AND RETURN
PROMPTLY IN THE ENVELOPE PROVIDED. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES. IF YOU ATTEND THE MEETING AND VOTE IN PERSON, THIS PROXY WILL
NOT BE USED.
Continued and to be signed and dated on reverse side.
COMSAT CORPORATION
P.O. BOX 11141
NEW YORK, N.Y. 10203-0141
<PAGE>
DETACH PROXY CARD HERE
- ----------
- ----------
Directors recommend a vote FOR Proposals 1 and 2 and AGAINST Proposal 3.
<TABLE>
<S> <C> <C> <C>
1. Election of Directors FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
listed below for all nominees listed below
</TABLE>
Nominees: Betty C. Alewine, Marcus C. Bennett, Lucy W. Benson, Edwin I. Colodny,
Lawrence S. Eagleburger, Neal B. Freeman, Caleb B. Hurtt, Peter W. Likins, Larry
G. Schafran, Robert G. Schwartz, Kathryn C. Turner and Guy P. Wyser-Pratte.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions
------------------------------------------------------------------
2. Appointment of independent accounts.
[ ] [ ] [ ]
FOR AGAINST ABSTAIN
3. Action on a shareholder proposal relating to political non-partsanship.
[ ] [ ] [ ]
FOR AGAINST ABSTAIN
In their discretion the proxies are authorized to vote upon such other matters
as may properly come before the meeting or any reconvened session thereof.
Change of Address and/or
[ ] Comments Mark Here
Please sign exactly as name or names appear on this proxy. If stock is held
jointly, each holder should sign. If signing as attorney, trustee, executor,
administrator, custodian, guardian or corporate officer please give full title.
DATED , 1998
-----------------------
SIGNED
-----------------------
-----------------------
