Exhibit 10.41

 

THE DIRECTV GROUP, INC.

 

2004 STOCK PLAN

PERFORMANCE STOCK UNIT AWARD AGREEMENT

 

THIS PERFORMANCE STOCK UNIT AWARD AGREEMENT (this “Agreement”), dated as of
March 16, 2004, is entered into between The DIRECTV Group, Inc., a Delaware
corporation (“DIRECTV”) and Mitchell Stern (“Executive”).

 

WHEREAS, at its meeting on March 15, 2004, the Compensation Committee of
DIRECTV’s Board of Directors (the “Committee”) approved The DIRECTV Group, Inc.
2004 Stock Plan (as it may be amended from time to time, the “Plan”) and the
grant to Executive of 650,000 stock units (the “Stock Units”), upon the terms
and conditions set forth herein and subject to approval of the Plan by DIRECTV’s
Board of Directors and further subject to the approval of the Plan by DIRECTV’s
stockholders at their 2004 annual meeting; and

 

WHEREAS, at its meeting on March 16, 2004, the Board of Directors of DIRECTV
approved the Plan and ratified the grant to Executive, effective as of March 16,
2004 (the “Award Date”), of the Stock Units, upon the terms and conditions set
forth herein and subject to the approval of the Plan by DIRECTV’s stockholders
at their 2004 annual meeting; and

 

WHEREAS, the Committee has also approved, and the Board of Directors of DIRECTV
has authorized the Chief Executive Officer of DIRECTV to execute, an employment
agreement with Executive effective as of January 1, 2004 (such agreement, as it
may be amended from time to time, is referred to herein as the “Employment
Agreement”).

 

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:

 

“Adjustment Factor” means the factor that is to be multiplied by the number of
Stock Units comprising the Award to determine the number of Stock Units that
vest as a result of the performance by DIRECTV Holdings LLC and its Subsidiaries
with respect to the Performance Measures. The Adjustment Factor shall be the
product of all of the Performance Factors, but in no event shall the Adjustment
Factor be greater than one (1).

 

“Award” means the grant to Executive of Stock Units pursuant to this Agreement
and the Plan.

 

“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) prior to the
Vesting Date and means December 31 of the year in which Executive’s Termination
Date occurs if Executive’s employment terminates due to death or disability (as
determined in accordance with the Employment Agreement) prior to the Vesting
Date.

 

“Performance Factor” means the factor determined with respect to each
Performance Measure pursuant to the table in Exhibit A hereto and used to
compute the Adjustment Factor.

 

“Performance Measure” means one of the five performance measures established by
the Committee in accordance with Section 10 of the Plan for the Performance
Period and set forth in Exhibit A hereto.

 

“Performance Period” means the period beginning on January 1, 2004 and ending on
December 31, 2007 (or, if applicable, the Early Vesting Date).

 

“Termination Date” means the date on which Executive’s employment with the
Company terminates.

 

“Vesting Date” means December 31, 2007.

 

2. Grant. Subject to the terms of this Agreement and approval of the Plan by
DIRECTV’s stockholders at their 2004 annual meeting, DIRECTV hereby grants to
Executive a Performance Stock Unit Award with respect to an aggregate of 650,000
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 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
eventually 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.

 

3. Performance Based Vesting. Subject to Section 7, if DIRECTV achieves positive
Net Annual Subscriber Growth over the Performance Period, then, as of the
Vesting Date (or the Early Vesting Date, if applicable), the Award shall vest
and become nonforfeitable with respect to that number of Stock Units determined
by multiplying the Adjustment Factor times the total number of Stock Units
comprising the Award (subject to adjustment under Section 14 of the Plan).
Except as provided in Section 7(a), none of the Stock Units comprising this
Award shall vest unless DIRECTV achieves positive Net Annual Subscriber Growth
(as determined in accordance with Exhibit A) over the Performance Period.

 

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 as provided in Section 7 below or under the Plan.

 

2

--------------------------------------------------------------------------------

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, if any) 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 stock certificate, 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 or (b) transfers by will or the laws of
descent and distribution.

 

7. Effect of Termination of Employment on Vesting. If DIRECTV terminates
Executive’s employment for cause (as determined in accordance with the
Employment Agreement) or if Executive’s employment terminates other than due to
his death, disability (as determined in accordance with the Employment
Agreement) or termination without cause, 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. The
following vesting rules apply in the event that Executive is terminated without
cause or his termination is due to death or disability:

 

(a) Provided that the Termination Date occurs on or after December 31, 2004 and
provided further that DIRECTV, Inc achieves positive Net Annual Subscriber
Growth over the period beginning on January 1, 2004 and ending on December 31 of
the year in which Executive’s Termination Date occurs, the Award shall vest as
to that number of Stock Units determined by multiplying (i) 25% of the number of
Stock Units comprising the Award by (ii) the number of calendar years of
Executive’s employment with DIRECTV from January 1, 2004 to the Termination Date
(pro-rated on a daily basis for a partial year) and by (iii) the Adjustment
Factor, except that such Adjustment Factor shall be determined as of the last
day of the calendar year in which the Termination Date occurs based on the
Performance Factors determined as of that date.

 

(b) If the Termination Date occurs prior to December 31, 2004, 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.

 

8. Timing and Manner of Distribution with Respect to Stock Units.

 

(a) Determination of Number of Vested Stock Units.

 

As soon as practicable after the Vesting Date or the Early Vesting Date, as
applicable, the Committee shall (i) determine the level of performance that has
been achieved with respect to each Performance Measure, (ii) determine the
Performance Factor for each Performance Measure and (iii) multiply the five
Performance Factors

 

3

--------------------------------------------------------------------------------

together to determine the Adjustment Factor (which shall not be greater than one
(1)). If there has been positive Net Annual Subscriber Growth for the
Performance Period, the Committee shall multiply the Adjustment Factor times 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 or Early Vesting
Date. Notwithstanding the foregoing, in the case of an Early Vesting Date, the
number of vested Stock Units shall be the number determined under Section 7(a)
or 7(b), whichever is applicable.

 

(b) Timing and Manner of Distribution.

 

As soon as administratively practicable following the determination by the
Committee under Section 8(a) (or, if applicable, Section 7(a) or 7(b)), 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 Section 8(e) of this Agreement).

 

(c) Dividend Equivalents

 

If so authorized by the Committee pursuant to the Plan, 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 beginning of Performance Period until the date the vested Stock Units
are 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 vested Stock Units to
which they relate are paid. Dividend Equivalents shall be paid in shares of
Common Stock, except as otherwise provided in Section 8(e). The number of shares
of Common Stock payable as Dividend Equivalents will be determined by (i)
determining the aggregate cash amount of the Dividend Equivalents payable and
(ii) dividing such amount by the average Fair Market Value of a share of Common
Stock for each of the twenty (20) trading days preceding the Vesting Date (or,
if applicable, the Early Vesting Date).

 

(d) Termination of Stock Units.

 

To the extent that any Stock Units fail to vest as of the Vesting Date (or, if
applicable, the Early 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) and 8(c) 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 and/or
Dividend Equivalents (if any), determined as of the date on which the shares of
Common Stock

 

4

--------------------------------------------------------------------------------

would otherwise have been issued pursuant to Section 8(b) and 8(c) and payable
within ten business days after such date.

 

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 military service, 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 only if reemployment upon the expiration of such leave is required by contract
or law, or such leave is for a period of not more than 90 days.

 

12. Limitations on Acceleration; Reduction in Benefits.

 

(a) Limitation on Acceleration. Notwithstanding anything contained herein or in
the Plan or any other agreement to the contrary, in no event shall the vesting
of the Award be accelerated pursuant to Section 14 of the Plan to the extent
that DIRECTV would be denied a federal income tax deduction for such vesting
because of Section 280G of the Code and, in such circumstances, the Award will
continue to vest in accordance with and subject to the other provisions hereof.

 

(b) Reduction in Benefits. If Executive would be entitled to benefits, payments
or coverage hereunder and under any other plan, program or agreement which would
constitute “parachute payments,” then notwithstanding any other provision hereof
or of any other existing agreement to the contrary, Executive may by written
notice to the Secretary of DIRECTV designate the order in which such “parachute
payments” shall be reduced or modified so that DIRECTV is not denied federal
income tax deductions for any “parachute payments” because of Section 280G of
the Code.

 

5

--------------------------------------------------------------------------------

(c) Determination of Limitations. The term “parachute payments” shall have the
meaning set forth in and be determined in accordance with Section 280G of the
Code and regulations issued thereunder. All determinations required by this
Section 12, including without limitation the determination of whether any
benefit, payment or coverage would constitute a parachute payment, the
calculation of the value of any parachute payment and the determination of the
extent to which any parachute payment would be nondeductible for federal income
tax purposes because of Section 280G of the Code, shall be made by an
independent accounting firm (other than DIRECTV’s outside auditing firm) having
nationally recognized expertise in such matters selected by the Committee. Any
such determination by such accounting firm shall be binding on DIRECTV and
Executive.

 

13. Executive not a Stockholder. 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 Common Stock subject to the
Award until the issuance and delivery to him or such other person of a
certificate 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.

 

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. Employment for any period of time (including a substantial period of
time) after the Award Date 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 if the express conditions to vesting
pursuant to this Agreement have not been satisfied.

 

15. Non-Transferability of Award. The Award and any other rights of Executive
under this Agreement or the Plan are nontransferable except as provided in
Section 15(h) of the Plan.

 

16. Notices. Any notice to be given under the terms of this Agreement shall be
in writing and addressed to DIRECTV at 2250 East Imperial Highway, El Segundo,
California 90245, to the attention of the Corporate Secretary and to Executive
at the address given beneath Executive’s signature hereto, or at such other
address as either party may hereafter designate in writing to the other.

 

17. 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.

 

18. Entire Agreement; Governing Law. The Plan is incorporated herein and made a
part hereof by this reference. Subject to Section 20 below, the Plan and this
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and

 

6

--------------------------------------------------------------------------------

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.

 

19. 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.

 

20. 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.

 

21. Tax Withholding. Upon the distribution of shares of the Common Stock in
respect of the Stock Units (including Dividend Equivalents, if any) or payment
of cash in lieu thereof pursuant to Section 8(e) 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 and/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.

 

22. 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.

 

23. 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 Award may not be restricted or limited by any amendment of
this Agreement or the Plan without Executive’s consent.

 

7

--------------------------------------------------------------------------------

24. 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.

 

25. 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 a duly authorized member of its Compensation Committee and Executive
has hereunto set his hand as of the date and year first above written.

 

THE DIRECTV GROUP, INC.,

a Delaware corporation

By:      

Chase Carey

President and Chief Executive Officer

EXECUTIVE:  

Mitchell Stern

27 Sandune Court

P. O. Box 258

Sagaponack, N.Y. 11962

 

8

--------------------------------------------------------------------------------

 

EXHIBIT A

PERFORMANCE MEASURES

 

The Committee shall determine the Performance Factor for each Performance
Measure on the basis of the following table, which shall be determined based
solely on the performance of DIRECTV Holdings LLC and its Subsidiaries for owned
and operated subscribers of DIRECTV, Inc.:

 

Performance Measure

--------------------------------------------------------------------------------

 

Level of Performance

--------------------------------------------------------------------------------

 

Performance

Factor

--------------------------------------------------------------------------------

Net Annual Subscriber Growth  

1.5MM or more

1.0MM

0.5MM

0 or less

 

1.5

1.0

0.5

0.0

Average Annual Churn  

13% or less

17%

21%

25% or more

 

1.2

1.0

0.8

0.6

Average Annual ARPU Growth  

6% or more

4%

2%

0% or less

 

1.2

1.0

0.8

0.6

Average Annual SAC  

$450 or less

$650

$850

$1,050 or more

 

1.2

1.0

0.8

0.6

Average Annual Profit Margin Improvement  

2.25% or more

1.25%

0.25%

-0.75% or less

 

1.2

1.0

0.8

0.6

 

For Levels of Performance for each Performance Measure between the specified
levels of performance, the Committee shall determine the corresponding
Performance Factor by pro-ration. For example, if the Net Annual Subscriber
Growth is 750,000, then the corresponding Performance Factor shall be .75.

 

Average Annual Margin is determined by dividing (a) OPBDA for such year plus the
aggregate amount of Subscriber Acquisition Costs for such year, by (b) Revenues
for such year.