DIRECTV PERFORMANCE STOCK UNIT AWARD AGREEMENT
Exhibit
10.3
THIS PERFORMANCE STOCK UNIT AWARD
AGREEMENT (this “Agreement”), dated as of
January 4, 2010 (“Effective Date”), is entered
into between DIRECTV, a Delaware corporation (“DIRECTV”), and Xxxxxxx X.
Xxxxx (“Executive”).
WHEREAS, at its meeting on
December 21, 2009, the Compensation Committee of DIRECTV’s Board of
Directors (the “Committee”) approved the grant
to Executive of restricted stock units (the “Stock Units”), upon the terms
and conditions set forth herein and subject to the terms and conditions of the
Amended and Restated 2004 Stock Plan of The DIRECTV Group, Inc. (as it
may be amended from time to time, the “Plan”); and
WHEREAS, at its meeting on
November 18, 2009, the Board of Directors of The DIRECTV Group, Inc.
(“Board”) approved the
material terms and conditions of Executive’s employment as President and Chief
Executive Officer of DIRECTV, including the grant of the Stock Units;
and
WHEREAS, the Committee and the
Board each has also approved the terms and conditions of an employment agreement
with Executive effective as of January 1, 2010 (such agreement, as it
may be amended from time to time, is referred to herein as the “Employment Agreement”);
and
WHEREAS, both the Committee
and the Board authorized the Chairman of the Committee to execute this Agreement
on behalf of DIRECTV, in accordance with the resolutions adopted by each of the
Committee and the Board at their respective meetings as referenced
above.
NOW THEREFORE, in
consideration of services rendered and to be rendered by Executive, and the
mutual promises made herein and the mutual benefits to be derived therefrom,
DIRECTV and Executive agree as follows:
1. Defined
Terms. Any capitalized term used herein and not otherwise
defined herein shall have the meaning assigned to such term in the
Plan. Whenever the following words or phrases are used herein with
the first letter capitalized, they shall have the respective meaning specified
below:
“Award” means the grant to
Executive of Stock Units pursuant to this Agreement and the Plan.
“Annual Performance Factor”
means the factor determined annually with respect to the Performance Measures as
established by the Committee pursuant to Section 8(a) and used to compute the
Final Performance Factor.
“Company” means DIRECTV and its
Subsidiaries.
“Early Vesting Date” means
Executive’s Termination Date if Executive is terminated without Cause (as
defined in the Employment Agreement), or if Executive’s employment is terminated
due to his resignation for an Effective Termination (as defined in the
Employment Agreement), or due to his death or Disability (as defined in the
Employment Agreement) in each case prior to the Vesting Date.
“Final Performance Factor”
means the final performance factor determined as of the Vesting Date pursuant to
Section 8(a) and used to establish the number of Stock Units (if any) which
shall vest under this Agreement.
“Performance Measure” means one
of the three performance measures to be established by the Committee in
accordance with Section 10 of the Plan for the Performance Period and
Section 2.4(a) of the Employment Agreement.
“Performance Period” means the
period beginning on January 1, 2010 and ending on December 31,
2012.
“Termination Date” means the
date on which Executive’s employment with the Company terminates, if prior to
the Vesting Date.
“Vesting Date” means
December 31, 2012.
2. Grant. Subject
to the terms of this Agreement and the Plan, DIRECTV hereby grants to Executive
a Stock Unit Award with respect to an aggregate of Four Hundred Thirty-Five
Thousand, Four Hundred (435,400) Stock Units (subject to adjustment as provided
in Section 14 of the Plan). As used herein, the term “Stock
Unit” shall mean a non-voting unit of measurement which is deemed for
bookkeeping purposes to be equivalent to one outstanding share of DIRECTV’s
Class A Common Stock (subject to adjustment as provided in Section 14 of
the Plan) solely for purposes of the Plan and this Agreement. The
Stock Units shall be used solely as a device for the determination of the
payment to be made to Executive if such Stock Units vest pursuant to
Section 3 or Section 7. The Stock Units shall not be
treated as property or as a trust fund of any kind. This Award is
intended to be a Performance-Based Award, as defined in Section 10 of the
Plan.
3. Performance
Based Vesting. Subject to Section 7, as of the Vesting
Date, the Award shall vest and become nonforfeitable with respect to that number
of Stock Units determined by multiplying the Final Performance Factor times the
total number of Stock Units comprising the Award (subject to adjustment under
Section 14 of the Plan).
4. Continuance
of Employment. Except as otherwise provided in Section 7
or pursuant to the Plan or the Employment Agreement, Executive’s continued
employment or service through the Vesting Date is required as a condition to the
vesting of the Award and the rights and benefits under this
Agreement. Partial employment or service, even if substantial, during
the Performance Period will not entitle Executive to any proportionate vesting
or avoid or mitigate a termination of rights and benefits upon or following a
termination of employment or services, except as otherwise provided in
Section 7 below or under the Plan or the Employment Agreement.
5. Limitations
on Rights Associated with Stock Units. Executive shall have no
rights as a stockholder of DIRECTV, no dividend rights (except as expressly
provided in Section 8(c) with respect to Dividend Equivalents) and no
voting rights, with respect to the Stock Units and any shares of Common Stock
underlying or issuable in respect of such Stock Units, until such shares of
Common Stock are actually issued to and held of record by
Executive. No adjustments will be made for dividends or other rights
of a holder for which the record date is prior to the date of issuance of the
shares of Common Stock, except as otherwise provided in
Section 8(c).
6. Restrictions
on Transfer. Neither the Stock Units nor any interest therein
or amount or shares payable in respect thereof may be sold, assigned,
transferred, pledged or otherwise disposed of, alienated or encumbered, either
voluntarily or involuntarily. The transfer restrictions in the
preceding sentence shall not apply to (a) transfers to DIRECTV,
(b) transfers by will or the laws of descent and distribution, or
(c) transfers permitted under Section 15(i) of the Plan.
7. Effect of
Termination of Employment on Vesting. If DIRECTV terminates
Executive’s employment for Cause (as defined in the Employment Agreement) or if
Executive’s employment terminates other than due to his death, Disability (as
defined in the Employment Agreement) or termination without Cause (as defined in
the Employment Agreement) or resignation by Executive for an Effective
Termination (as defined in the Employment Agreement), the Award of Stock Units
hereunder and all other rights and benefits of Executive under this Agreement
shall terminate on Executive’s Termination Date, unless otherwise approved by
the Committee. If DIRECTV terminates Executive’s employment without
Cause or if Executive’s employment terminates due to his death or Disability, or
due to his resignation for an Effective Termination, prior to the Vesting Date,
the Award shall immediately vest on the Early Vesting Date as to the total
number of Stock Units comprising the Award (subject to Section 14 of the
Plan) without regard to the level of performance with respect to the Performance
Measures.
8. Timing
and Manner of Distribution with Respect to Stock Units.
(a) Determination
of Number of Vested Stock Units.
On or
prior to the last day of February in each of 2011 and 2012, the Committee
shall determine the Annual Performance Factor for the immediately preceding
fiscal year, in accordance with the Plan. As soon as practicable
after the Vesting Date, the Committee shall determine the Annual Performance
Factor for the 2012 fiscal year and shall determine the Final Performance
Factor, in accordance with the Plan. The Final Performance Factor, as
so determined by the Committee, shall be multiplied by the total number of Stock
Units comprising this Award to determine the number of Stock Units that have
become vested as of the Vesting Date. In the case of an Early Vesting
Date, the number of vested Stock Units shall be as provided in
Section 7.
(b) Timing
and Manner of Distribution.
Notwithstanding
anything to the contrary in the Plan, DIRECTV shall deliver to Executive the
number of shares of Common Stock equal to the number of vested Stock Units
subject to this Award (subject to Section 14 of the Plan and subject to
Sections 8(e) and 12 below) on the later of (i) January 15th of the
calendar year following the calendar year of Executive’s termination of
employment or (ii) the date that is six months after Executive’s termination of
employment.
(c) Dividend
Equivalents.
As of the
Vesting Date (or, if applicable, the Early Vesting Date) Executive shall be
entitled to payment for Dividend Equivalents (if any) with respect to vested
Stock Units. For purposes of this Agreement, “Dividend Equivalents” means
the aggregate amount of dividends paid by DIRECTV on the number of shares of
Common Stock equivalent to the number of Stock Units that become vested during
the period from the Effective Date until the date the shares of DIRECTV Common
Stock associated with the vested Stock Units are issued or the cash amount paid
(without interest or other adjustments to reflect the time value of money but
subject to adjustment pursuant to Section 14 of the
Plan). Dividend Equivalents (if any) will be paid at the same time as
the shares of DIRECTV Common Stock associated with the vested Stock Units to
which they relate are issued or the cash amount provided for in
Section 8(e) is paid. Dividend Equivalents shall be paid in cash
except as otherwise provided in Section 8(f).
(d) Termination
of Stock Units.
To the
extent that any Stock Units fail to vest as of the Vesting Date, or if the Award
has terminated pursuant to Section 7, such unvested Stock Units shall
immediately terminate without payment. Executive shall have no
further rights with respect to such terminated Stock Units.
(e) Payment
of Cash in Lieu of Common Stock.
Notwithstanding
anything in Section 8(b) to the contrary, the Committee, in its sole
discretion, may elect to cause the Company to pay cash in an amount equal
to the Fair Market Value of the vested Stock Units, determined as of the date on
which the shares of Common Stock would otherwise have been issued pursuant to
Section 8(b) and payable within ten business days after such
date.
(f) Payment of Common Stock in
Lieu of Cash for Dividend Equivalents
Notwithstanding
anything in Section 8(c) to the contrary, the Committee, in its sole
discretion, may elect to cause the Company to pay Dividend Equivalents (if
any) in shares of Common Stock in lieu of cash, if and to the extent that
DIRECTV issues shares of Common Stock to Executive in respect of the vested
Stock Units pursuant to Section 8(b). The number of shares of
Common Stock payable as Dividend Equivalents will be determined by (i)
determining the aggregate cash amount of Dividend Equivalents payable, and
(ii) dividing such amount by the Fair Market Value of a share of Common
Stock at the same date on which the Fair Market Value of shares of Common Stock
associated with the vested Stock Units are established.
9. Adjustments
Upon Specified Events. As provided in Section 14 of the
Plan, upon the occurrence of certain events relating to or affecting the Common
Stock as contemplated by Section 14 of the Plan, the Committee shall, in
such manner, to such extent (if any) and at such times as it deems appropriate
and equitable in the circumstances, make adjustments in the number of Stock
Units and the number and type of shares of Common Stock (or other securities or
property) that may be issued in respect of the Award or provide for a cash
payment or the assumption, substitution or exchange of the Award or the shares
of Common Stock or other securities subject to the Award, based upon the
distribution or consideration payable to holders of Common Stock
generally. All rights of Executive hereunder are subject to such
adjustments and other provisions of the Plan.
10. Possible
Early Termination of Award. As permitted by Section 14 of
the Plan, and without limiting the authority of the Committee under any of the
provisions of Section 14 of the Plan, the Committee retains the right to
terminate all or any portion of the Award upon a dissolution of DIRECTV or a
reorganization event or transaction in which DIRECTV does not survive (or does
not survive as a public company in respect of its outstanding Common
Stock). This Section 10 is not intended to prevent future
vesting (including provision for future vesting) if the Award (or a substituted
Award) remains outstanding following a transaction described in Section 14
of the Plan.
11. Leaves of
Absence. Absence from work caused by authorized sick leave or
other leave approved in writing by DIRECTV or the Committee shall not be
considered a termination of employment by DIRECTV for purposes of
Section 7, unless otherwise determined by the Committee.
12. No
Limitations on Acceleration; Deferral.
(a) No
Limitation on Acceleration.
The
Employment Agreement, in particular Section 4.9 thereof, contains express
provisions regarding Section 280G and/or 4999 of the Code of the type described
in Section 14(f) of the Plan. Accordingly, the limitations on acceleration set
forth in Section 14(f) of the Plan shall not apply to this Award. A
reduction, if any, to this Award or other effect related to Section 280G and/or
Section 4999 shall be governed by the Employment Agreement.
(b) Section 409A
of the Code.
Notwithstanding
anything herein to the contrary, (i) if, at the time of Executive’s
termination of employment with DIRECTV, Executive is a “specified employee” as
defined in Section 409A of the Code, and the deferral of the commencement
of any payments or other consideration otherwise payable hereunder as a result
of such termination of employment is necessary in order to prevent the
imposition of any accelerated or additional tax under Section 409A of the
Code, then DIRECTV will defer the commencement of the payment of any such
payments or other consideration hereunder (without any reduction in such
payments or other consideration ultimately paid or provided to Executive) until
the date that is six months following Executive’s termination of employment with
DIRECTV (or the earliest date as is permitted under Section 409A of the
Code) and (ii) if any other payments of money or other consideration due to
Executive hereunder would cause the application of an accelerated or additional
tax under Section 409A of the Code, such payments or other consideration
shall be deferred if deferral will make such payment or other consideration
compliant under Section 409A of the Code, or otherwise such payment or
other benefits shall be restructured, to the extent possible in a manner,
determined by the Committee or the Board, that does not cause such an
accelerated or additional tax or result in an additional cost to
DIRECTV. DIRECTV shall consult with its legal counsel and tax
accountants in good faith regarding the implementation of the provisions of this
Section 12(b), which shall be done only in a manner that is reasonably
acceptable to Executive; provided, however, that
neither DIRECTV, any subsidiary or other affiliate of DIRECTV, nor any of their
employees or representatives shall have any liability to Executive with respect
thereto.
13. Executive
Not a Shareholder. Neither Executive nor any Beneficiary or
Personal Representative of Executive shall have any of the rights or privileges
of a stockholder of DIRECTV as to any shares of Class A Common Stock subject to
the Award until the issuance and delivery to him or such other person of a
certificate (or book entry in lieu thereof) evidencing the shares registered in
his or such other person’s name. No adjustment will be made for
dividends or other rights as a stockholder as to which the record date is prior
to such date of delivery, except as otherwise provided in Section 8(c) or
as otherwise approved by the Committee.
14. No
Guarantee of Continued Service. Nothing contained in this
Agreement or the Plan constitutes an employment or service commitment by DIRECTV
or confers upon Executive any right to remain employed by DIRECTV, interferes in
any way with the right of DIRECTV at any time to terminate such employment or
affects the right of DIRECTV to increase or decrease Executive’s other
compensation or benefits. Nothing in this Section 14, however,
is intended to adversely affect any independent contractual right of Executive
under the Employment Agreement (or any other agreement between DIRECTV and
Executive) without his consent thereto.
15. Notices. Any
notice to be given under the terms of this Agreement shall be in writing and
addressed: to DIRECTV at 0000 Xxxx Xxxxxxxx Xxxxxxx, Xx Xxxxxxx, Xxxxxxxxxx
00000, to the attention of the Corporate Secretary; and to Executive at the
address on file with DIRECTV, or at such other address as either party
may hereafter designate in writing to the other.
16. Effect of
Agreement. This Agreement shall be binding upon and inure to
the benefit of any successor or successors of DIRECTV, except to the extent the
Committee determines otherwise.
17. Entire
Agreement; Governing Law. The Plan is incorporated herein and
made a part hereof by this reference. Subject to Section 19
below, the Plan and this Agreement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of DIRECTV and Executive with
respect to the subject matter hereof. The construction,
interpretation, performance and enforcement of this Agreement and the Award
shall be governed by the internal substantive laws, but not the choice of law
rules, of the State of Delaware.
18. Plan. The
Award and all rights of Executive with respect thereto are subject to, and
Executive agrees to be bound by, all of the terms and conditions of the
provisions of the Plan, to the extent such provisions are applicable to Awards
granted to Eligible Persons. Executive acknowledges receipt of a copy
of the Plan, and agrees to be bound by the terms thereof. Unless
otherwise expressly provided in other Sections of this Agreement,
provisions of the Plan that confer discretionary authority on the Committee do
not (and shall not be deemed to) create any rights in Executive unless such
rights are expressly set forth herein or are otherwise in the sole discretion of
the Committee specifically so conferred by appropriate action of the Committee
under the Plan after the date hereof.
19. Employment
Agreement. If any provision of this Agreement is inconsistent
with any provision of the Employment Agreement, the provisions of the Employment
Agreement shall control.
20. Tax
Withholding. Upon the distribution of shares of the Common
Stock in respect of the Stock Units or Dividend Equivalents, or payment of cash
in respect of the Stock Units or Dividend Equivalents, if any, pursuant to
Section 8(c) or otherwise in accordance with the Plan, DIRECTV shall have
the right at its option to (a) require Executive to pay or provide for
payment in cash of the amount of any taxes that DIRECTV may be required to
withhold with respect to such distribution, or (b) deduct from any amount
payable to Executive the amount of any taxes which DIRECTV may be required
to withhold with respect to such payment or distribution. In any case
where a tax is required to be withheld in connection with the delivery of shares
of Common Stock or other payment under this Agreement, the Committee may, in its
sole discretion, direct DIRECTV to reduce the number of shares of Common Stock
to be delivered by (or otherwise reacquire) the appropriate number of shares of
Common Stock, valued at their then Fair Market Value, to satisfy such
withholding obligation.
21. Limitation
on Executive’s Rights. Participation in the Plan confers no
rights or interests other than as herein provided. This Agreement
creates only a contractual obligation on the part of DIRECTV as to amounts
payable and shall not be construed as creating a trust. Neither the
Plan nor any underlying program, in and of itself, has any
assets. Executive shall have only the rights of a general unsecured
creditor of DIRECTV with respect to amounts credited and benefits payable in
cash, if any, with respect to the Stock Units and the Dividend Equivalents (if
any), and rights no greater than the right to receive the Common Stock (or
equivalent value) as a general unsecured creditor with respect to Stock Units
and the Dividend Equivalents (if any), as and when payable
hereunder.
22. Amendment. This
Agreement may be amended in accordance with the terms of the
Plan. Any such amendment must be in writing and signed by
DIRECTV. The terms and conditions of this Agreement may not be
restricted or limited by any amendment of this Agreement or the Plan without
Executive’s consent.
23. Counterparts. This
Agreement may be executed in any number of counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.
24. Section Headings. The
Section headings of this Agreement are for convenience of reference only
and shall not be deemed to alter or affect any provision hereof.
IN WITNESS WHEREOF, DIRECTV
has caused this Agreement to be executed on its behalf by the Chairman of its
Compensation Committee and Executive has hereunto set his hand as of the date
and year first above written.
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DIRECTV
By: /s/ XXXXXXX X.
XXX
Xxxxxxx X. Xxx
Chairman of the
Compensation
Committee
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EXECUTIVE
By: /s/ XXXXXXX X.
XXXXX
Xxxxxxx X. Xxxxx
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