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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 8-K

 

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported)      November 18, 2009

 

THE DIRECTV GROUP, INC.

(Exact Name of Registrant as Specified in Charter)

 

Delaware

(State or Other Jurisdiction of Incorporation)

 

1-31945

 

52-1106564

(Commission File Number)

 

(IRS Employer Identification No.)

 

 

 

2230 East Imperial Highway

 

 

El Segundo, California

 

90245

(Address of Principal Executive Offices)

 

(Zip Code)

 

(310) 964-5000

(Registrant’s Telephone Number, Including Area Code)

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


 

ITEM 5.02.  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

 

Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

 

On November 18, 2009, The DIRECTV Group, Inc. (the “Company”) issued a press release announcing that the Board of Directors of the Company (the “Board”) appointed Michael D. White as President and Chief Executive Officer effective January 1, 2010 and elected him as a Director effective immediately.  A copy of the press release relating to such announcement, dated November 18, 2009, is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

Mr. White has been Vice Chairman of PepsiCo and a member of PepsiCo’s Board of Directors since March 2006 and Chief Executive Officer of PepsiCo International since February 2003. Prior to that, he served as President and Chief Executive Officer of Frito-Lay’s Europe/Africa/Middle East division from 2000 until February 2003. From 1998 to 2000, Mr. White was Senior Vice President and Chief Financial Officer of PepsiCo. Mr. White has also served as Executive Vice President and Chief Financial Officer of PepsiCo Foods International and Chief Financial Officer of Frito-Lay North America. He joined Frito-Lay in 1990 as Vice President of Planning. Mr. White is also a director of Whirlpool Corporation.  He is 57 years old.

 

The primary terms of Mr. White’s employment have been agreed to and documented in a term sheet which is attached hereto as Exhibit 10.1.  These terms are intended to be incorporated in an employment agreement that will be executed between the Company and Mr. White.  Initially, Mr. White will be employed for a three year term commencing on January 1, 2010, with an initial base salary of $1.5 million adjusted annually, a target cash bonus under the Company’s executive cash bonus plan of 200% of base salary and a stock grant valued at $25 million consisting of 50% of value in stock options with three-year installment vesting on each anniversary of grant and 50% of value in restricted stock units which vests over a three year period.  Other terms and conditions are to be commensurate with similar executive positions.  The agreement will include non-compete and non-solicitation provisions that will apply for two years following termination of employment with the Company.  The agreement will also contain severance provisions that are consistent with the arrangements for other senior management of the Company and are described in more detail in the attached term sheet.

 

Larry D. Hunter will continue to serve as Interim Chief Executive Officer until Mr. White assumes office.

 

ITEM 9.01             Financial Statements and Exhibits

 

 

Exhibit 10.1 DIRECTV CEO Contract Term Sheet

 

 

 

Exhibit 99.1 Press Release

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

THE DIRECTV GROUP, INC.

 

(Registrant)

 

 

 

 

Date: November 19, 2009

By:

/s/ LARRY D. HUNTER

 

Larry D. Hunter

 

Chief Executive Officer

 

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EXHIBIT INDEX

 

Exhibit No.

 

Exhibit

 

 

 

10.1

 

DIRECTV CEO Contract Term Sheet

 

 

 

99.1

 

Press Release, dated November 18, 2009

 

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Exhibit 10.1

 

DIRECTV CEO Contract Term Sheet

November 18, 2009

 

Category

 

Terms

1.               Position

 

·                  President & CEO of DIRECTV

·                  Reports to the Board of Directors

·                  Member of the Board of Directors

 

 

 

2.               Contract Term

 

·                  Three year term

·                  January 1, 2010 start date

·                  If Transformation Event occurs during final 14 months, the Contract Term will run until 14 months after the Transformation Event

 

 

 

3.               Location of Principal Office

 

·                  New York, NY / Los Angeles, CA

 

 

 

4.               Base Salary

 

·                  $1.5MM

·                  Salary adjusted annually based on New York CPI

 

 

 

5.               Annual Bonus Opportunity

 

·                  200% base salary, if a full bonus year

·                  Performance goals to be set by the Compensation Committee

 

 

 

6.               Long-Term Incentives/Equity

 

·                  Grant at hire of $25MM in present value to cover full 3 year term based on FAS 123R valuations.

·                  50% in stock options,

·                  exercise price equal to the stock price on date of grant

·                  three-year installment vesting on each anniversary of grant

·                  50% in performance restricted stock units

·                  performance based on the average of the achievement on a set of three one-year performance goals

·                  measures to be similar to those used for other DIRECTV participants (2009 measures include revenue growth, OPBDA (EBITDA) growth, and growth in cash flow before interest and taxes) but measures may change each year

·                  payout to range from 0% to 125% of the target grant, based on actual results

·                  dividend equivalents accrued and paid at earn out based on earned shares

 

 

 

7.               Benefits & Perquisites

 

·                  Commensurate with President & CEO position, but in no event less favorable than those offered to other senior executives

 


 

8.               Non-Solicitation/Non-Compete

 

·                  During employment and for two years after leaving the Company

 

 

 

9.               Confidentiality

 

·                  Standard confidentiality provisions

 

 

 

10.         Voluntary Resignation (other than Effective Termination) or Involuntary Termination with Cause before or after the Contract Term

 

·                  Base salary and accrued vacation through date of termination

·                  Nothing else paid, except as required by law

·                  Vested options exercisable for 3 years (or, if shorter, the expiration of the option term), if Voluntary Resignation after Contract Term

 

 

 

11.         Termination due to Death or Disability

 

·                  Lump sum payment of base salary through the end of the contract term (to the extent permitted by Section 409A)

·                  Prorated target bonus for the year

·                  100% acceleration of equity vesting. Assumes performance shares are earned at the target level.

·                  Options exercisable until the end of the ten-year term

 

 

 

12.         Involuntary Termination Without Cause or an Effective Termination after the Contract Term

 

·                  Position, base salary, bonus opportunity and location continue after expiration of Contract Term

·                  Non-Solicitation/Non-Compete and Confidentiality covenants continue after expiration of Contract Term

·                  After the expiration of the contract term, Executive will still be eligible for severance in accordance with the senior executive policy as then in effect (currently 1 times base plus target bonus)

·                  Vested options exercisable until the end of the ten-year term

 


 

13.         Involuntary Termination without Cause or an Effective Termination*

 

·                  Cash severance of 1.5 times sum of base salary plus target bonus

·                  100% vesting acceleration of performance shares, at target performance level

·                  Option vesting acceleration on a pro-rata schedule, after adding another 18 months of service credit (actual service plus 18 months will be divided by 36 months to compute the pro-rating); vested options exercisable until the end of the ten-year term

·                  Continuation of welfare benefits during the severance period; no continuation of perquisites

·                  If a Transformation Event causes part or all of the severance package to be subject to the golden parachute rules of Section 280G, the Executive will be responsible for paying any excise taxes which might apply.

·                  Executive’s equity awards will: (i) allow for equity acceleration above the 280G limit and (ii) provide that, except as may be determined by the Compensation Committee, no acceleration of equity vesting shall occur except in connection with Items 11 or 13 herein.

 

 

 

14.         Effective Termination Definition

 

·                  Reduction in base salary or target bonus opportunity;

·                  Reduction in responsibilities, titles, powers, duties at the Company or assignment of duties inconsistent with President & CEO position (if a Transformation Event occurs and Executive remains the senior most executive corporate officer of the Company, he must remain through the first anniversary of a Transformation Event to claim severance for any of these reasons);

·                  Relocation of principal office more than 50 miles from either New York or Los Angeles; or

·                  Voluntary resignation within 60 days of the first anniversary of a Transformation Event

 

 

 

15.         Transformation Event Definition

 

·                  The occurrence during the Contract Term of an event which results in: (i) the Company no longer having publicly-traded equity shares, or (ii) an acquisition, whether directly or indirectly, of at least 30% of the voting power of the Company, unless the directors prior to the acquisition continue to constitute at least 75% of the directors.

 

*  Executive cannot claim an Effective Termination due to a reduction of his duties or responsibilities, or assignment of duties inconsistent with President and CEO position, if, in any event, he remains the senior most executive corporate officer of the Company until the anniversary of a Transformation Event. After a Transformation Event, Executive can declare an Effective Termination for any reason in the 60 days following the anniversary of such Transformation Event.

 


Exhibit 99.1

 

 

Contact:

Darris Gringeri

 

DIRECTV

 

(212) 205-0882

 

DIRECTV Names Michael White as New President and CEO

 

EL SEGUNDO, Calif., Nov. 18, 2009 — DIRECTV, the world’s leading provider of digital television services, today named Michael White as its new President and CEO.  White announced in September that he will retire later this year from his current position as CEO of PepsiCo International and vice chairman of PepsiCo.  He will assume his new role at DIRECTV beginning Jan. 1, 2010, and has also joined DIRECTV’s Board of Directors.  John Malone, Chairman of the DIRECTV Board, made the announcement today.

 

“After a very thorough search, we have found an exceptional leader with a sustained track record of success, profitably growing businesses and a reputation for making the impossible possible,” said Malone.  “Mike also brings the highest degree of leadership, innovation and passion to the table — all qualities that will help drive DIRECTV’s performance in the coming years.  I look forward to watching him build on DIRECTV’s success and lead the company to an exciting new future.”

 

Malone added, “I’d also like to thank Larry Hunter for filling the role of interim CEO since June.  He and the entire management team have done an incredible job of keeping the business running smoothly during the past six months and we are lucky to have such an experienced executive team.”

 

Since joining PepsiCo in 1990 as vice president of planning for Frito-Lay North America (FLNA), White has held many senior positions there, including CFO of FLNA, executive vice president and CFO of Frito-Lay International, CFO of Pepsi-Cola Company worldwide and CFO of PepsiCo.

 

-more-

 


 

During that time he led a transformation of PepsiCo’s international business and has helped engineer numerous acquisitions, including the pending agreements to acquire the company’s two largest bottlers, the Pepsi Bottling Group and PepsiAmericas.  Prior to PepsiCo, White also held executive positions at Avon Products, Inc., Bain & Company and Arthur Andersen & Co.

 

“This is an exciting time to be taking the reins at DIRECTV,” said White.  “It’s a great company with the best television service and a strong brand, offering plenty of opportunities and challenges and I can’t wait to meet both head on. I look forward to working with the talented management team and employees as we continue to grow the business, delight the customer and further distance DIRECTV’s leadership position.”

 

About DIRECTV Group

 

The DIRECTV Group (DTV) is the world’s leading provider of digital television entertainment services. Through its subsidiaries and affiliated companies in the United States, Brazil, Mexico and other countries in Latin America, the DIRECTV Group provides digital television service to more than 18.4 million customers in the United States and over 6.1 million customers in Latin America.

 

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