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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Section 240.14a-11(c) or Section 240.14a-2. |
Loral Space & Communications Inc.
Payment of Filing Fee (Check the appropriate box):
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[ ] | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12. |
(1) | Title of each class of securities to which transaction applies: |
(2) | Aggregate number of securities to which transaction applies: |
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[ ] | 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. |
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1. | Electing to the Board three Class I Directors whose terms have expired; | |
2. | Acting upon a proposal to approve the amendment and restatement of the Loral Space & Communications Inc. 2005 Stock Incentive Plan; and | |
3. | Acting upon a proposal to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2007. |
Chief Executive Officer and Vice Chairman
of the Board
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600 Third Avenue
New York, New York 10016
Why did I receive this proxy statement? | We have sent you this Notice of Annual Meeting and Proxy Statement and proxy or voting instruction card because the Board of Directors of Loral Space & Communications Inc. (“Loral” or the “Company”) is soliciting your proxy to vote at our Annual Meeting of Stockholders on May 22, 2007 (the “Annual Meeting”). This Proxy Statement contains information about the items being voted on at the Annual Meeting and information about us. | |
Who is entitled to vote? | You may vote if you owned common stock as of the close of business on April 5, 2007. On April 5, 2007, there were 20,065,856 shares of our common stock, par value $.01 per share, outstanding and entitled to vote at the Annual Meeting. In addition, certain affiliated funds of MHR Fund Management LLC (“MHR Fund Management”) hold shares of our preferred stock that entitle them to vote together with the common stock. These funds are together entitled to 99 votes with respect to all of the preferred stock held by them at the Annual Meeting. | |
How many votes do I have? | Each share of our common stock that you own entitles you to one vote. | |
What am I voting on? | You will be voting on the following: | |
• To elect to the Board three Class I Directors whose terms have expired; | ||
• To approve the amendment and restatement of the Loral Space & Communications Inc. 2005 Stock Incentive Plan; and | ||
• To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2007. | ||
How do I vote? | You can vote in the following ways: | |
• By Mail: If you are a holder of record, you can vote by marking, dating and signing your proxy card and returning it by mail in the enclosed postage-paid envelope. If you hold your shares in street name, please complete and mail the voting instruction card. | ||
• By Telephone or Internet: If you hold your shares in street name, you may be able to vote by telephone or over the Internet. Please follow the instructions on your voting instruction card. | ||
• At the Annual Meeting: If you are planning to attend the Annual Meeting and wish to vote your shares in person, we will give you a ballot at the meeting. If your shares are held in street name, you need to bring an account statement or letter from your broker, bank or other nominee indicating that you were the beneficial owner of the shares on April 5, 2007, the record date for voting.Even if you plan to be present at the meeting, we encourage you to complete and mail the enclosed card to vote your shares by proxy. |
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What if I return my proxy or voting instructioncard but do not mark itto show how I am voting? | Your shares will be voted according to the instructions you have indicated on your proxy or voting instruction card. If no direction is indicated, your shares will be voted “FOR” the election of all Class I nominees to the Board of Directors and “FOR” proposals 2 and 3. | |
May I change my vote after I return my proxyor voting instructioncard? | You may change your vote at any time before your proxy is cast at the Annual Meeting in one of three ways: | |
• Notify our Corporate Secretary in writing before the Annual Meeting that you are revoking your proxy; | ||
• Submit another proxy card (or voting instruction card if you hold your shares in street name) with a later date; or | ||
• Vote in person at the Annual Meeting. | ||
What does it mean if I receive more than oneproxy or votinginstruction card? | It means you have multiple accounts at the transfer agentand/or with banks and stockbrokers. Please vote all of your shares. | |
What constitutes a quorum? | Any number of stockholders, together holding at least a majority in voting power of the capital stock of the Company issued and outstanding and generally entitled to vote in the election of directors, present in person or represented by proxy at any meeting duly called, shall constitute a quorum for the transaction of all business. Abstentions and “broker non-votes” are counted as “shares present” at the meeting for purposes of determining whether a quorum exists. A “broker non-vote” occurs when a bank, broker or other holder of record for a beneficial owner does not vote on a particular proposal because that holder does not have discretionary voting power for that particular matter and has not received instructions from the beneficial owner. | |
What vote is required in order to approve each proposal? | Proposal 1 (Election of Directors): The election of the three Class I nominees requires the affirmative vote of a plurality of the shares present at the Annual Meeting. This means that the director nominee with the most votes for a particular slot is elected for that slot. Votes withheld from one or more director nominees will have no effect on the election of any director from whom votes are withheld. If you do not want to vote your shares for a particular nominee, you may indicate that in the space provided on the proxy card or the voting instruction card or withhold authority as prompted during telephone or Internet voting. In the unanticipated event that any director nominee is unable or declines to serve, the proxy will be voted for such other person as shall be designated by the Board of Directors to replace such nominee, or in lieu thereof, the Board may reduce the number of directors. | |
Proposal 2 (Amended and Restated 2005 Stock Incentive Plan) and Proposal 3 (Ratification of appointment of Deloitte & Touche LLP): These proposals require the affirmative vote of a majority of shares present at the Annual Meeting. Abstentions and “broker non-votes” will be counted as shares present but will not be counted as either voting for or against either proposal. Abstentions and “broker non-votes” will, therefore, have the effect of votes against the proposal. | ||
How will voting on any other business beconducted? | We do not know of any business or proposals to be considered at the Annual Meeting other than those set forth in this Proxy Statement. If any other business is proposed and we decide to allow it to be presented at the Annual Meeting, the proxies received from our stockholders give the proxy holders the authority to vote on the matter according to their best judgment. | |
Who will count the votes? | Registrar & Transfer Company will act as the inspector of election and will tabulate the votes. |
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Michael B. Targoff | ||
Age: | 62 | |
Director Since: | November 2005 | |
Class: | Class II | |
Business Experience: | Mr. Targoff has been Chief Executive Officer of Loral since March 1, 2006 and Vice Chairman of Loral since November 21, 2005. From 1998 to February 2006, Mr. Targoff was founder and principal of Michael B. Targoff & Co., a private investment company. | |
Other Directorships: | Chairman of the Board and Chairman of the Audit Committee of Communication Power Industries. Director and Chairman of the Audit Committee of Leap Wireless International, Inc. Director of ViaSat, Inc. | |
Sai S. Devabhaktuni | ||
Age: | 35 | |
Director Since: | November 2005 | |
Class: | Class III | |
Business Experience: | Mr. Devabhaktuni is currently a managing principal of MHR Fund Management, an investment manager of various private investment funds that invest in inefficient market sectors, including special situation equities and distressed investments. Mr. Devabhaktuni has served MHR Fund Management in various capacities since 1998. | |
Hal Goldstein | ||
Age: | 41 | |
Director Since: | November 2005 | |
Class: | Class III | |
Business Experience: | Mr. Goldstein is a co-founder of MHR Fund Management and is currently a managing principal of MHR Fund Management. Mr. Goldstein has served MHR Fund Management in various capacities since 1996. | |
Other Directorships: | Director of GF Health Products Inc. |
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John D. Harkey, Jr. | ||
Age: | 46 | |
Director Since: | November 2005 | |
Class: | Class I | |
Business Experience: | Mr. Harkey has been Chairman and Chief Executive Officer of Consolidated Restaurant Companies, Inc. since 1998. | |
Other Directorships: | Director and Chairman of the Audit Committee of Energy Transfer Equity, L.P. and Emisphere Technologies, Inc. Director and member of the Audit Committee of Leap Wireless International, Inc. and Energy Transfer Partners, LLC. | |
Dean A. Olmstead | ||
Age: | 51 | |
Director Since: | November 2005 | |
Class: | Class II | |
Business Experience: | Mr. Olmstead has been a consultant for Loral since May 2006. Mr. Olmstead is the founder of Satellite Development LLC and has been its Chairman since October 2004. From March 2005 to September 2006, Mr. Olmstead was President of Arrowhead Global Solutions, Inc. From November 2001 to September 2004, Mr. Olmstead was President and Chief Executive Officer of SES Americom and a member of the SES Global Executive Committee. Prior to that, he was a member of the SES Astra Management Committee. | |
Other Directorships: | Chairman of the Board of BBSat LLC and member of the Advisory Board of Arrowhead Global Solutions, Inc. | |
Mark H. Rachesky, M.D. | ||
Age: | 48 | |
Director Since: | November 2005 | |
Class: | Class III | |
Business Experience: | Dr. Rachesky has been non-executive Chairman of the Board of Directors of Loral since March 1, 2006. Dr. Rachesky is a co-founder of MHR Fund Management and has been its President since 1996. | |
Other Directorships: | Chairman of the Board of Leap Wireless International, Inc. Director of Neose Technologies, Inc., NationsHealth Inc. and Emisphere Technologies, Inc. | |
Arthur L. Simon | ||
Age: | 75 | |
Director Since: | November 2005 | |
Class: | Class I | |
Business Experience: | Mr. Simon is an independent consultant. Before his retirement, Mr. Simon was a partner at Coopers & Lybrand L.L.P., Certified Public Accountants, from 1968 to 1994. | |
Other Directorships: | Director and member of the Audit and Governance Committees of L-3 Communications Corporation. |
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John P. Stenbit | ||
Age: | 67 | |
Director Since: | June 2006 | |
Class: | Class I | |
Business Experience: | Mr. Stenbit is a consultant for various government and commercial clients. From 2001 to his retirement in March 2004, he was Assistant Secretary of Defense of Networks and Information Integration/Department of Defense Chief Information Officer. | |
Other Directorships: | Director and member of the Governance and Nominating and Audit Committees of SM&A Corporation. Director and member of the Nominating and Corporate Governance, Audit and Compensation Committees of Cogent, Inc. Director and member of the Corporate Governance and Compensation Committees of SI International, Inc. Director and member of the Nominating and Corporate Governance and Compensation and Human Resources Committees of ViaSat, Inc. Trustee of The Mitre Corp., a not-for-profit corporation, and member of the Defense Science Board, the Technical Advisory Group of the National Reconnaissance Office, the Advisory Board of the National Security Agency, the Science Advisory Group of the US Strategic Command and the Naval Studies Board. |
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• | Compensation should fairly pay directors for work required for a company of Loral’s size and scope; | |
• | Compensation should align directors’ interests with the long-term interests of shareholders; and | |
• | Compensation structure should be simple, transparent and easy to understand. |
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Telephonic | |||||||||||||||||||||
Meeting Fee | |||||||||||||||||||||
Annual | In-Person | (over | Annual | ||||||||||||||||||
Fee(1) | Meeting Fee(2) | 30 minutes)(3) | Stock Award(4) | Medical | |||||||||||||||||
Board of Directors | $ | 25,000 | $ | 1,500 | $ | 1,000 | 2,000 Shares of Restricted Stock; 5,000 Shares of Restricted Stock for non-executive Chairman (vesting over two years) | Eligible for Loral Medical Plan at Company’s expense if not otherwise employed full-time | |||||||||||||
Executive Committee | No extra fees unless set on an ad hoc basis by full Board of Directors | ||||||||||||||||||||
Audit Committee | |||||||||||||||||||||
Chairman | $ | 15,000 | $ | 1,000 | $ | 500 | |||||||||||||||
Member | $ | 5,000 | $ | 1,000 | $ | 500 | |||||||||||||||
Compensation Committee | |||||||||||||||||||||
Chairman | $ | 5,000 | $ | 1,000 | $ | 500 | |||||||||||||||
Member | $ | 2,000 | $ | 1,000 | $ | 500 | |||||||||||||||
Nominating Committee | |||||||||||||||||||||
Chairman | $ | 5,000 | $ | 1,000 | $ | 500 | |||||||||||||||
Member | $ | 2,000 | $ | 1,000 | $ | 500 | |||||||||||||||
(1) | Annual fees are payable to all directors, including employees and consultants. | |
(2) | In-person meeting fees are not paid to employees or consultants. | |
(3) | Telephonic meeting fees are not paid to employees or consultants. For meetings of less than 30 minutes in duration, per meeting fees may be paid if, in the discretion of the Chairman of the Board or Committee, as applicable, meaningful preparation was required in advance of the meeting. | |
(4) | The annual grant of restricted stock is not awarded to directors who are employees or consultants. |
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Change in | |||||||||||||||||||||||||||||||||
Pension | |||||||||||||||||||||||||||||||||
Value and | |||||||||||||||||||||||||||||||||
Fees | Nonqualified | ||||||||||||||||||||||||||||||||
Earned | Non-Equity | Deferred | |||||||||||||||||||||||||||||||
or Paid | Stock | Option | Incentive Plan | Compensation | All Other | ||||||||||||||||||||||||||||
Name | in Cash(1) | Awards | Awards | Compensation | Earnings | Compensation | Total | ||||||||||||||||||||||||||
Mark H. Rachesky, M.D. | $ | 44,500 | $ | 44,500 | |||||||||||||||||||||||||||||
Michael B. Targoff | $ | 30,500 | (2) | $ | 30,500 | ||||||||||||||||||||||||||||
Sai Devabhaktuni | $ | 38,500 | $ | 38,500 | |||||||||||||||||||||||||||||
Hal Goldstein | $ | 42,000 | $ | 42,000 | |||||||||||||||||||||||||||||
John D. Harkey, Jr. | $ | 181,500 | $ | 181,500 | |||||||||||||||||||||||||||||
Dean A. Olmstead | $ | 32,000 | $349,219(3) | $ | 32,000 | ||||||||||||||||||||||||||||
Arthur L. Simon | $ | 182,500 | $ | 182,500 | |||||||||||||||||||||||||||||
John P. Stenbit | $ | 23,500 | $ | 23,500 | |||||||||||||||||||||||||||||
(1) | The column reports the amount of cash compensation for Board and Committee service paid in 2006 or earned with respect to meetings held in 2006 and paid in 2007. | |
(2) | For Mr. Targoff, includes an annual director’s fee of $25,000 and meeting fees of $5,500 for meetings held prior to March 1, 2006 when Mr. Targoff became Chief Executive Officer of the Company. Does not include compensation paid or options awarded to Mr. Targoff after March 1, 2006 in his capacity as Chief Executive Officer, which compensation is described in “Executive Compensation — Compensation Tables — Summary Compensation Table.” | |
(3) | For Mr. Olmstead, “All Other Compensation” includes a total amount earned during 2006 of $337,250 (consisting of $200,000 in consulting fees, a bonus of $120,000, $6,000 for life insurance premium reimbursement and $11,250 in lieu of retirement benefits). In addition, in 2006, the Company paid medical insurance premiums on behalf of Mr. Olmstead, the value of which was $11,969. See “Certain Relationships and Related Transactions — Consulting Agreement with Dean A. Olmstead.” |
Members: | Arthur L. Simon (Chairman), John D. Harkey, Jr., John P. Stenbit | |
Number of Meetings in 2006: | 11 |
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Members: | Mark H. Rachesky, M.D. (Chairman), John D. Harkey, Jr. | |
Michael B. Targoff was a member of the Compensation Committee from November 21, 2005 to March 1, 2006, when he resigned from the Committee after becoming Chief Executive Officer. Robert B. Hodes was a member of the Compensation Committee prior to his resignation from the Board of Directors on February 28, 2006. | ||
Number of Meetings in 2006: | 4 |
Members: | Michael B. Targoff (Chairman), Mark H. Rachesky, M.D. | |
Number of Meetings in 2006: | 6 |
Members: | John D. Harkey, Jr. (Chairman), Hal Goldstein | |
Number of Meetings in 2006: | 1 |
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LORAL SPACE & COMMUNICATIONS INC. 2005 STOCK INCENTIVE PLAN
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Name and Position | Dollar Value | Number of Units | ||||||||
Michael B. Targoff, Vice Chairman and Chief Executive Officer | N/A | 825,000 (stock options | ) | |||||||
Richard J. Townsend, Executive Vice President and Chief Financial Officer | N/A | 20,000 (stock options | ) | |||||||
Dean A. Olmstead, Director and Consultant | N/A | 120,000 (stock options | ) | |||||||
Non-Executive Directors | $ | 1,547,520 | (1) | 31,000 (restricted stock | ) | |||||
Non-Executive Employees | $ | 8,178,835 | (2) | 175,700 (restricted stock | ) | |||||
(1) | Dollar value is based on the $49.92 closing price of our common stock on March 20, 2007, the date of approval of the grant by our Board of Directors. | |
(2) | Dollar value is based on the $46.55 closing price of our common stock on February 28, 2007, the date of approval of the grant by our Board of Directors. |
2005 Stock Option Awards | |||||
Number of Shares | |||||
Underlying | |||||
Name and Position | Options Granted | ||||
Michael B. Targoff Vice Chairman and Chief Executive Officer | 106,952 | * | |||
Eric J. Zahler President and Chief Operating Officer | 120,000 | * | |||
Richard J. Townsend Executive Vice President and Chief Financial Officer | 85,000 | * | |||
C. Patrick DeWitt Vice President and Chief Executive Officer of Space Systems/Loral, Inc. | 75,000 | * | |||
Avi Katz Vice President, General Counsel and Secretary | 50,000 | ||||
Bernard L. Schwartz Chairman of the Board and Chief Executive Officer (retired) | 0 | ||||
All Current Executive Officers as a Group | 526,952 | * | |||
All Current Non-Executive Directors as a Group | 0 | ||||
All Employees, Including Current Officers Who Are Not Executive Officers as a Group | 1,390,452 | * | |||
* | Represents more than 5% of all awards under the Plan. |
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(as of December 31, 2006)
Number of | |||||||||||||||
Number of | Securities | ||||||||||||||
Securities to be | Remaining Available | ||||||||||||||
Issued Upon | Weighted Average | for Future Issuance | |||||||||||||
Exercise of | Exercise Price of | Under Equity | |||||||||||||
Outstanding | Outstanding | Compensation Plan | |||||||||||||
Options, Warrants | Options, Warrants | (Excluding Securities | |||||||||||||
Plan category | and Rights | and Rights | Reflected in Column (a)) | ||||||||||||
(a) | (b) | (c) | |||||||||||||
Equity compensation plans approved by security holders | |||||||||||||||
Equity compensation plans not approved by security holders(1) | 1,310,452 | $ | 28.441 | 80,000 | |||||||||||
Total | 1,310,452 | $ | 28.441 | 80,000 | |||||||||||
(1) | Our 2005 Stock Incentive Plan was approved in connection with the confirmation of our plan of reorganization on August 1, 2005 by the United States Bankruptcy Court for the Southern District of New York. |
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John D. Harkey, Jr.
John P. Stenbit
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• | Reviews and recommends to the Board the compensation of officers and other senior executives of the Company; | |
• | Proposes the adoption, amendment and termination of compensation plans and programs and oversees the administration of these plans and programs; | |
• | Reviews, approves and recommends to the Board the form and amount of all compensation awards provided to eligible executives pursuant to our compensation plans; and | |
• | Reviews and recommends to the Board the form and amount of compensation paid to the Company’s outside directors. |
• | Each executive officer’s role and responsibilities; | |
• | The total compensation of executives who perform similar duties at other companies; | |
• | The total compensation for the executive officer during the prior fiscal year; | |
• | How the executive officer may contribute to our future success; and | |
• | Other circumstances as appropriate. |
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• | Base salary; | |
• | Cash performance-based annual bonus; and | |
• | Equity incentive awards. |
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• | Each NEO’s level of responsibility; | |
• | Each NEO’s contributions to our financial results; | |
• | Retention considerations; and | |
• | Practices of companies in our peer group. |
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Target Annual | Shares | |||||||||||||||||
Bonus as a | Underlying | |||||||||||||||||
Annual | Percentage of | Initial Option | ||||||||||||||||
Executive | Position | Salary | Salary | Grant | ||||||||||||||
Eric J. Zahler | President and Chief Operating Officer | $ | 1,248,000 | 40.0 | % | 120,000 | ||||||||||||
Richard J. Townsend | Executive Vice President and Chief Financial Officer | $ | 575,000 | 69.6 | % | 85,000 | ||||||||||||
C. Patrick DeWitt | Vice President, and Chief Executive Officer of SS/L | $ | 502,020 | 50.0 | % | 75,000 | ||||||||||||
Avi Katz | Vice President, General Counsel and Secretary | $ | 438,048 | 40.0 | % | 50,000 | ||||||||||||
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John D. Harkey, Jr.
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Change in | |||||||||||||||||||||||||||||||||||||||||||||
Pension | |||||||||||||||||||||||||||||||||||||||||||||
Value and | |||||||||||||||||||||||||||||||||||||||||||||
Non-Qualified | |||||||||||||||||||||||||||||||||||||||||||||
Non-Equity | Deferred | ||||||||||||||||||||||||||||||||||||||||||||
Stock | Option | Incentive Plan | Compensation | All Other | |||||||||||||||||||||||||||||||||||||||||
Salary(1) | Bonus | Awards | Awards(2) | Compensation(3) | Earnings(4) | Compensation(5) | Total | ||||||||||||||||||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||||||||||||||||
Michael B. Targoff Vice Chairman of the Board and Chief Executive Officer | 2006 | $ | 796,538 | $ | 181,923 | $1,286,458 | $ | 29,000 | $ | 358,859 | $ | 2,652,778 | |||||||||||||||||||||||||||||||||
Eric J. Zahler President and Chief Operating Officer | 2006 | $ | 1,248,000 | $ | 204,118 | $648,960 | $ | 186,000 | $ | 312,790 | $ | 2,599,868 | |||||||||||||||||||||||||||||||||
Richard J. Townsend Executive Vice President and Chief Financial Officer | 2006 | $ | 714,295 | $ | 144,583 | $520,260 | $ | 121,000 | $ | 222,696 | $ | 1,722,834 | |||||||||||||||||||||||||||||||||
C. Patrick DeWitt Vice President and Chief Executive Officer of Space Systems/ Loral, Inc. | 2006 | $ | 428,300 | $ | 127,574 | $257,000 | $ | 194,000 | $ | 184,789 | $ | 1,191,663 | |||||||||||||||||||||||||||||||||
Avi Katz Vice President, General Counsel and Secretary | 2006 | $ | 416,145 | $ | 85,049 | $262,829 | $ | 50,000 | $ | 134,610 | $ | 948,633 | |||||||||||||||||||||||||||||||||
Bernard L. Schwartz Chairman of the Board and Chief Executive Officer (retired) | 2006 | $ | 314,646 | $ | 299,235 | $ | 613,881 | ||||||||||||||||||||||||||||||||||||||
(1) | 2006 base salaries for Messrs. Targoff and Schwartz represent 10 months and two months of service, respectively. Mr. Schwartz retired effective March 1, 2006. | |
(2) | The Option Awards column represents the amounts expensed by us in 2006 relating to outstanding stock option awards under the 2005 Stock Incentive Plan granted in 2005. See “Grants of Plan-Based Awards” table and “Compensation Discussion and Analysis — Long-Term Incentive Compensation” for further discussion regarding the awards in 2006 and “Outstanding Equity Awards at Fiscal Year-End” table regarding all outstanding awards. In October 2005, we adopted Statement of Financial Accounting Standards No. 123(R),Share-Based Payment(SFAS No. 123(R)), which requires us to recognize compensation expense for stock options and other stock-related awards granted to our employees and directors based on the estimated fair value under SFAS No. 123(R) of the equity instrument at the time of grant. The compensation expense is recognized over the vesting period. The assumptions used to determine the valuation of the awards are discussed in note 15 to our consolidated financial statements included in our Annual Report onForm 10-K for the year ended December 31, 2006. | |
(3) | Amounts shown represent the annual incentive bonuses earned under our Management Incentive Bonus Plan. See “Compensation Discussion and Analysis — Annual Incentives” for further discussion regarding these bonuses. | |
(4) | Represents the increase in the actuarial present value of pension benefits between fiscal year-end 2005 and fiscal year-end 2006. See the “Pension Benefits” table below for further discussion regarding our pension plans. | |
(5) | All Other Compensation includes the value of life insurance premiums paid by the Company, Company 401(k) matching contributions for each NEO and the expense recognized by us for each NEO in 2006 with respect to his deferred compensation account as set forth below. Upon emergence from Chapter 11 in 2005, each NEO (other than Mr. Schwartz) received an award of a deferred compensation account valued at $9.441 per unit. Subject to earlier vesting upon a change in control or certain specified sale events as defined in our 2005 Stock Incentive Plan, the deferred compensation units vest at the rate of 25% of the units per year on the first, second, third and fourth anniversaries of the effective date of our plan of reorganization (November 21, 2005). The amounts in this column related to these deferred compensation accounts and represent the expense recognized by us for each NEO in 2006. |
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Value of | Company | Deferred | |||||||||||||||||||||||
Insurance | Matching 401(k) | Compensation | |||||||||||||||||||||||
Name | Premiums Paid | Contributions | Expense | Other | Total | ||||||||||||||||||||
Michael B. Targoff | $ | 34,901 | $ | 7,920 | $ | 252,332 | $ | 63,706 | $ | 358,859 | |||||||||||||||
Eric J. Zahler | $ | 21,746 | $ | 7,928 | $ | 283,116 | $ | 312,790 | |||||||||||||||||
Richard J. Townsend | $ | 14,235 | $ | 7,920 | $ | 200,541 | $ | 222,696 | |||||||||||||||||
C. Patrick DeWitt | $ | 7,841 | $ | 176,948 | $ | 184,789 | |||||||||||||||||||
Avi Katz | $ | 8,721 | $ | 7,924 | $ | 117,965 | $ | 134,610 | |||||||||||||||||
Bernard L. Schwartz (retired) | $ | 291,315 | $ | 7,920 | $ | 299,235 | |||||||||||||||||||
Estimated Possible Payouts under | All Other Option | |||||||||||||||||||
Non-Equity Incentive Plan Awards(1) | Awards: Number of | |||||||||||||||||||
Securities Underlying | ||||||||||||||||||||
Threshold | Target | Maximum | Options(2) | |||||||||||||||||
Name | ($) | ($) | ($) | (#) | ||||||||||||||||
Michael. B. Targoff | $ | 692,708 | $ | 989,583 | $ | 1,286,458 | ||||||||||||||
Eric J. Zahler | $ | 349,440 | $ | 499,200 | $ | 648,960 | ||||||||||||||
Richard J. Townsend | $ | 280,140 | $ | 400,200 | $ | 520,260 | ||||||||||||||
C. Patrick DeWitt | $ | 171,333 | $ | 214,167 | $ | 257,000 | ||||||||||||||
Avi Katz | $ | 131,414 | $ | 197,121 | $ | 262,829 | ||||||||||||||
Bernard L. Schwartz (retired) | ||||||||||||||||||||
(1) | Amounts represent the annual incentive opportunity available under the Company’s 2006 Management Incentive Bonus Plan. The annual incentive actually paid to each of the NEOs is set forth above in the “Summary Compensation Table” under the “Non-Equity Incentive Plan Compensation” column. Payouts under this program are made annually, dependent upon the achievement of certain pre-defined performance goals. Our targets relate to quantifiable financial performance — EBITDA. For 2006, the “threshold,” “target,” and “outstanding” adjusted EBITDA performance levels for the NEOs other than Mr. DeWitt were set at $48.4 million, $69.1 million and $89.8 million, respectively. Mr. DeWitt’s targets were set with respect to performance of the Company’s SS/L subsidiary, with the “threshold,” “target,” and “outstanding” adjusted EBITDA performance levels set at $32.3 million, $40.4 million and $48.5 million, respectively. See “Compensation Discussion and Analysis — Elements of Compensation — Annual Bonus Compensation” for further discussion of our Management Incentive Bonus Plan. | |
(2) | On March 28 and June 14, 2006, we approved grants of stock options to Messrs. Targoff and Townsend covering 825,000 and 20,000 shares of our common stock with exercise prices of $26.915 and $27.135 per share, respectively. Subject to earlier vesting upon a change in control as defined in our 2005 Stock Incentive Plan, Mr. Targoff’s options are scheduled to vest over a four-year period with the first 121/2% vesting immediately, an additional 25% vesting on the next three anniversaries of the grant date and the remaining 121/2% vesting on the fourth anniversary of the grant date; provided, however, that no portion of this option (whether vested or not) may be exercisable prior to the date of stockholder approval of the Amended and Restated 2005 Stock Incentive Plan. Mr. Townsend’s options are scheduled to vest over a four-year period, with 25% vesting on each of the first four anniversaries of the grant date, subject to earlier vesting upon a change in control as defined in our 2005 Stock Incentive Plan. These grants, however, are also subject to stockholder approval of our Amended and Restated 2005 Stock Incentive Plan (see Proposal 2). As such, we have not included these awards in the table for 2006. If the Amended and Restated 2005 Stock Incentive Plan is approved, we will disclose these grants in our 2007 Grants of Plan-Based Awards table. |
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Option Awards | ||||||||||||||||||||||||||||||
Equity Incentive | ||||||||||||||||||||||||||||||
Number of | Number of | Plan Awards: | ||||||||||||||||||||||||||||
Securities | Securities | Number of | ||||||||||||||||||||||||||||
Underlying | Underlying | Securities | ||||||||||||||||||||||||||||
Unexercised | Unexercised | Underlying | Option | |||||||||||||||||||||||||||
Options | Options | Unexercised | Exercise | Option | ||||||||||||||||||||||||||
Option | Exercisable | Unexercisable | Unearned Options | Price(1) | Expiration | |||||||||||||||||||||||||
Name | Grant Date | (#) | (#) | (#) | ($) | Date | ||||||||||||||||||||||||
Michael. B. Targoff(2) | 12/21/05 | 26,738 | 80,214 | $ | 28.441 | 12/21/2012 | ||||||||||||||||||||||||
Eric J. Zahler | 12/21/05 | 30,000 | 90,000 | $ | 28.441 | 12/21/2012 | ||||||||||||||||||||||||
Richard J. Townsend(2) | 12/21/05 | 21,250 | 63,750 | $ | 28.441 | 12/21/2012 | ||||||||||||||||||||||||
C. Patrick DeWitt | 12/21/05 | 18,750 | 56,250 | $ | 28.441 | 12/21/2012 | ||||||||||||||||||||||||
Avi Katz | 12/21/05 | 12,500 | 37,500 | $ | 28.441 | 12/21/2012 | ||||||||||||||||||||||||
Bernard L. Schwartz (retired) | ||||||||||||||||||||||||||||||
(1) | These options have an exercise price per share equal to the fair market value of our common stock on the date of grant and vest in four equal annual installments beginning on the first anniversary of the effectiveness of our plan of reorganization (November 21, 2005). | |
(2) | On March 28 and June 14, 2006, we approved grants of stock options to Messrs. Targoff and Townsend covering 825,000 and 20,000 shares of our common stock with exercise prices of $26.915 and $27.135 per share, respectively. Mr. Targoff’s options are scheduled to vest over a four-year period with the first 121/2% vesting immediately, an additional 25% vesting on the next three anniversaries of the grant date and the remaining 121/2% vesting on the fourth anniversary of the grant date; provided, however, that no portion of this option (whether vested or not) will be exercisable prior to the date of stockholder approval of the Amended and Restated 2005 Stock Incentive Plan. Mr. Townsend’s options are scheduled to vest over a four-year period, with 25% vesting on each of the first four anniversaries of the grant date. These grants, however, are also subject to stockholder approval of our Amended and Restated 2005 Stock Incentive Plan (see Proposal 2). As such, we have not included these awards in the table for 2006. If the Amended and Restated 2005 Stock Incentive Plan is approved, we will disclose these grants in our 2007 Outstanding Equity Awards at Fiscal Year-End table. |
• | Pension Plan. Our pension plan is a funded and tax qualified retirement plan that covered 1,578 eligible employees as of December 31, 2006. As applicable to the NEOs, the plan provides benefits based primarily on a formula that takes into account the executive’s earnings for each year of service with us. The current contributory formula (meaning a required 1% post-tax contribution) effective July 1, 2006 for all eligible employees provides for an annual benefit accrual equal to 1.20% of the executive’s earnings, including base salary and management incentive bonus, for the year up to the Social Security Wage Base (SSWB) for the year ($94,200 for 2006) plus 1.45% of his earnings for the year in excess of the SSWB up to the IRS-prescribed limit for such year ($220,000 for 2006). This formula applies for the first 14 years of service. For years 15 and later, the formula provides for an |
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annual benefit accrual equal to 1.50% of earnings up the SSWB for each year plus 1.75% of earnings in excess of the SSWB up to the IRS limit for each year. Annual benefits under this formula are accruedyear-to-year during the years of credited service until retirement. At retirement, under the plan’s normal form of retirement benefit (life annuity) the aggregate of all annual benefit accruals becomes the annual retirement benefit payable on a monthly basis for life with a guaranteed minimum equal to the executive’s contributions. So, for example, if an individual accrued $1,000 per year for 15 years and then retired, his annual retirement benefit for life would be $15,000. In order to accrue benefits under this formula, effective July 1, 2006, NEOs must make an annual contribution from their earnings. In 2006, each NEO contributed $1,100, with the exception of Mr. Dewitt who contributed $2,200. Prior to July 1, 2006, with the exception of Mr. Dewitt, there was no contribution requirement for the NEOs to receive this formula. |
• | Supplemental Executive Retirement Plan. The Company provides the Supplemental Executive Retirement Plan, or SERP, to participants who earn in excess of the IRS-prescribed compensation limit in any given year to provide for full retirement benefits above amounts available under the Pension Plan because of IRS limits. The SERP is unfunded and is not qualified for tax purposes. For 2006, an employee’s annual SERP benefit was accrued under the same formulas as the Pension Plan, but was not limited to the $220,000 maximum noted above. Benefits under the SERP are generally payable at the same time and in the same manner as the Pension Plan. There is no policy or plan provision granting extra years of credited service with respect to the SERP. |
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Present Value of | ||||||||||||||||||
Number of Years of | Accumulated | Payments During | ||||||||||||||||
Credited Service(1) | Benefit(2) | Last Fiscal Year | ||||||||||||||||
Name | Plan Name | (#) | ($) | ($) | ||||||||||||||
Michael B. Targoff | Pension Plan | 18 | $ | 146,000 | $ | 2,812 | ||||||||||||
SERP | 18 | $ | 820,000 | $ | 16,355 | |||||||||||||
Eric J. Zahler | Pension Plan | 15 | $ | 209,000 | ||||||||||||||
SERP | 15 | $ | 1,162,000 | |||||||||||||||
Richard J. Townsend | Pension Plan | 8 | $ | 128,000 | ||||||||||||||
SERP | 8 | $ | 559,000 | |||||||||||||||
C. Patrick DeWitt | Pension Plan | 33 | $ | 535,000 | ||||||||||||||
SERP | 33 | $ | 732,000 | |||||||||||||||
Avi Katz | Pension Plan | 10 | $ | 91,000 | ||||||||||||||
SERP | 10 | $ | 171,000 | |||||||||||||||
Bernard L. Schwartz | Pension Plan | $ | 13,866 | |||||||||||||||
(retired) | SERP | $ | 250,000 | |||||||||||||||
(1) | The number of years of credited service is rounded to the nearest whole number as of December 31, 2006. | |
(2) | The accumulated benefit is based on service and earnings (base salary and bonus, as described above) considered by the plans for the period through December 31, 2006. It includes the value of contributions made by the NEOs throughout their careers. The present value has been calculated assuming the NEOs will remain in service until age 65, the age at which retirement may occur without any reduction in benefits, and that the benefit is payable under the available forms of annuity consistent with the assumptions as described in note 17 to the financial statements in our Annual Report onForm 10-K for the year ended December 31, 2006. As described in such note, the interest rate assumption is 6.0%. |
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Aggregate Earnings | Aggregate Balance | |||||||||
in Last FY(1) | at Last FYE(2) | |||||||||
Name | ($) | ($) | ||||||||
Michael B. Targoff | $ | 17,219 | $ | 1,009,734 | ||||||
Eric J. Zahler | $ | 19,320 | $ | 1,132,920 | ||||||
Richard J. Townsend | $ | 13,685 | $ | 802,485 | ||||||
C. Patrick DeWitt | $ | 12,075 | $ | 708,075 | ||||||
Avi Katz | $ | 8,050 | $ | 472,050 | ||||||
Bernard L. Schwartz (retired) | ||||||||||
(1) | At December 31, 2005, the closing price of our common stock was $28.28. Because this price was below the $28.441 limit mentioned above, the value of the deferred compensation accounts at December 31, 2005 was $9.28 per unit. At December 31, 2006, the closing price of our common stock was $40.72. Because this price was above the $28.441 limit, the deferred compensation accounts regained their original value. The value of this recovery is listed in the “Aggregate Earnings in Last FY” column. As noted above, the deferred compensation accounts cannot increase in value above the $9.441 per unit value we originally accrued to the accounts, regardless of how much our stock price increases over the $28.441 limit, unless and until the accounts are converted into interest-bearing accounts. | |
(2) | On November 21, 2006, 25% of the deferred compensation accounts vested. The vested balance for the NEOs is as follows: (i) Mr. Targoff ($252,433); (ii) Mr. Zahler ($283,230); Mr. Townsend ($200,621); Mr. DeWitt ($177,019); Mr. Katz ($118,013). During 2006, we recognized compensation expense with respect to the deferred compensation accounts for each NEO in the following amounts: (i) Mr. Targoff ($252,332); (ii) Mr. Zahler ($283,116); Mr. Townsend ($200,541); Mr. DeWitt ($176,948); Mr. Katz ($117,965). The amounts we recognized as a compensation expense for 2006 are disclosed in the “All Other Compensation” column of the Summary Compensation Table for 2006. |
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(As of December 31, 2006)
Early | Distribution | |||||||||||||||||||||||||||
Severance | Vesting of | of Deferred | Estimated Tax | |||||||||||||||||||||||||
Amounts | Stock Options(1) | Compensation | Other | Gross Up | Total | |||||||||||||||||||||||
Name | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||
Michael B. Targoff(2) | $ | 4,275,000 | $ | 984,948 | $ | 757,300 | $ | 2,098,119 | $8,115,367 | |||||||||||||||||||
Eric J. Zahler | $ | 2,158,000 | $ | 1,105,110 | $ | 849,690 | $4,112,800 | |||||||||||||||||||||
Richard J. Townsend | $ | 1,589,040 | $ | 782,786 | $ | 601,864 | $2,973,690 | |||||||||||||||||||||
C. Patrick DeWitt | $ | 425,040 | $ | 690,694 | $ | 531,056 | $1,646,790 | |||||||||||||||||||||
Avi Katz | $ | 809,838 | $ | 460,463 | $ | 354,038 | $1,624,339 | |||||||||||||||||||||
Bernard L. Schwartz (retired) | ||||||||||||||||||||||||||||
(1) | Does not include early vesting of options to acquire 825,000 and 20,000 shares of common stock granted to Messrs. Targoff and Townsend, respectively, which options are subject to stockholder approval of our Amended and Restated 2005 Stock Incentive Plan (see Proposal 2). | |
(2) | For Mr. Targoff, if the Amended and Restated 2005 Stock Incentive Plan has not been approved (see Proposal 2) and we undergo a change in control, as defined in his employment agreement, Mr. Targoff may terminate employment for good reason and receive a severance payment, which, as of December 31, 2006, would be equal to $8,550,000. In this event, amounts attributable to early vesting of stock options and distribution of deferred compensation would be the same as those in the table above, and the estimated tax gross up to which Mr. Targoff would be entitled would be $4,427,819, bringing the total payments to $14,720,067. |
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Amount and Nature | Percent | |||||||
of Beneficial | of | |||||||
Name and Address | Ownership | Class(1) | ||||||
Various funds affiliated with | ||||||||
MHR Fund Management LLC and Mark H. Rachesky, M.D.(2) | 17,130,749 | 57.1%(3) | ||||||
40 West 57th Street, 24th Floor, New York, NY 10019 | ||||||||
EchoStar Communications Corporation and Charles W. Ergen(4) | 1,401,485 | 7.0% | ||||||
9601 South Meridian Boulevard, Englewood, CO 80112 | ||||||||
BlackRock, Inc.(5) | 1,294,644 | 6.5% | ||||||
40 East 52nd Street, New York, NY 10022 | ||||||||
Various funds affiliated with | ||||||||
Highland Capital Management, L.P. and James Dondero(6) | 1,159,676 | 5.8% | ||||||
Two Galleria Tower, 13455 Noel Road, Suite 800, Dallas, TX 75420 | ||||||||
(1) | Percent of class refers to percentage of class beneficially owned as the term beneficial ownership is defined inRule 13d-3 under the Securities Exchange Act of 1934 and is based upon the 20,063,325 shares of Loral common stock outstanding as of March 1, 2007. | |
(2) | Information based on Amendment Number 4 to Schedule 13D filed with the SEC on March 23, 2007 relating to securities held for the accounts of each of MHR Capital Partners Master Account LP (“Master Account”), a limited partnership organized in Anguila, British West Indies, MHR Capital Partners (100) LP (“Capital Partners (100)”), MHR Institutional Partners, LP (“Institutional Partners”), MHRA LP (“MHRA”), MHRM LP (“MHRM”), MHR Institutional Partners II LP (“Institutional Partners II”), MHR Institutional Partners IIA LP (“Institutional Partners IIA”) and MHR Institutional Partners III LP (“Institutional Partners III”), each (other than Master Account), a Delaware limited partnership. MHR Advisors LLC (“Advisors”) is the general partner of each of Master Account and Capital Partners (100), and, in such capacity, may be deemed to beneficially own the shares of common stock held for the accounts of each of Master Account and Capital Partners (100). MHR Institutional Advisors LLC (“Institutional Advisors”) is the general partner of each of Institutional Partners, MHRA and MHRM, and, in such capacity, may be deemed to beneficially own the shares of common stock held for the accounts of each of Institutional Partners, MHRA and MHRM. MHR Institutional Advisors II LLC (“Institutional Advisors II”) is the general partner of each of Institutional Partners II and Institutional Partners IIA, and, in such capacity, may be deemed to beneficially own the shares of common stock held for the accounts of each of Institutional Partners II and Institutional Partners IIA. MHR Institutional Advisors III LLC (“Institutional Advisors III”) is the general partner of Institutional Partners III, and, in such capacity, may be deemed to beneficially own the shares of common stock held for the account of Institutional Partners III. MHR Fund Management is a Delaware limited liability company that is an affiliate of and has an investment management agreement with Master Account, Capital Partners (100), Institutional Partners, MHRA, MHRM, Institutional Partners II, Institutional Partners IIA and Institutional Partners III, and other affiliated entities, pursuant to which it has the power to vote or direct the vote and to dispose or to direct the disposition of the shares of common stock reported herein and, accordingly, MHR Fund Management may be deemed to beneficially own the shares of common stock reported herein which are held for the account of each of Master Account, Capital Partners (100), Institutional Partners, MHRA, MHRM, Institutional Partners II, Institutional Partners IIA and Institutional Partners III. Mark H. Rachesky. M.D. (“Dr. Rachesky”) is the managing member of Advisors, Institutional Advisors, Institutional Advisors II, Institutional Advisors III and MHR Fund Management, and, in such capacity, may be deemed to beneficially own the shares of common stock held for the accounts of each of Master Account, Capital Partners (100), Institutional Partners, MHRA, MHRM, Institutional Partners II, Institutional Partners IIA and Institutional Partners III. | |
Pursuant to a Securities Purchase Agreement, which was originally executed on October 17, 2006, and which was amended and restated on February 27, 2007 (the “Purchase Agreement”), certain affiliated funds of MHR Fund Management purchased 136,526 shares ofSeries A-1 Cumulative 7.50% Convertible Preferred Stock (the“Series A-1 Preferred Stock”) and 858,486 shares of Series B-1 Cumulative 7.50% Convertible Preferred Stock (the“Series B-1 Preferred Stock” and, together with theSeries A-1 Preferred Stock, the “Preferred Stock”). Each share ofSeries A-1 Preferred Stock is convertible, at the option of the holder, into ten shares of common stock at an initial conversion price of $30.1504 per share. Prior to the Majority Ownership Date (as defined below), each share ofSeries B-1 Preferred Stock is convertible, at the option of the holder, into ten shares ofClass B-1 Nonvoting Stock, par value $0.01, of the Company (the“Class B-1 Non-Voting Stock”), at an initial conversion price of $30.1504 per share, which is not currently authorized. After the Majority Ownership Date, each share ofSeries B-1 Preferred Stock is convertible, at the option of the holder, into ten shares of common stock at an initial conversion price of $30.1504 per share. |
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The terms of both series of Preferred Stock are designed so that, prior to the Majority Ownership Date, any shares of common stock issuable in the aggregate to MHR Fund Management or any of its affiliates (together, “MHR”) upon conversion of the Preferred Stock, when taken together with MHR’s current holdings of shares of common stock, will not represent more than 39.999% of the aggregate voting power of the securities of the Company (the “Voting Limitation”). The “Majority Ownership Date” means the earlier of the date that (i) MHR’s beneficial ownership of shares of common stock, not including any of the shares of common stock issuable upon the conversion of the Preferred Stock, represents more than 50% of the shares of common stock of the Company, or (ii) a third party has acquired a majority of the shares of common stock on a fully diluted basis other than pursuant to certain prohibited transfers of theSeries A-1 Preferred Stock from MHR. After the Majority Ownership Date, this restriction will no longer apply, and all shares of Preferred Stock will be convertible into shares of common stock. | ||
(3) | In all circumstances, the conversion or exchange of the Preferred Stock reported as being beneficially owned by MHR into shares of common stock will be subject to the Voting Limitation (as described in footnote 2 above). The number of shares that MHR will be entitled to vote at the Annual Meeting will be 7,180,629 shares of common stock and 995,012 shares of preferred stock which have 99 votes and are entitled to vote as a single class with the common stock such that the total number of shares held by MHR will represent, in the aggregate, 35.8% of all shares entitled to vote at the meeting. MHR is contractually obligated to either (i) vote the shares ofSeries A-1 Preferred Stock (representing 13 of the 99 votes) in accordance with the recommendation of our Board of Directors or (ii) abstain from voting such shares. | |
(4) | Information based solely on a Schedule 13G, filed with the SEC on December 19, 2005, by EchoStar Communications Corporation (“EchoStar”) and Charles W. Ergen. The Schedule 13G provides that Mr. Ergen is the beneficial owner of 1,401,485 shares, of which EchoStar owns 1,350,532 of such shares. According to the Schedule 13G, each reporting person has sole voting and dispositive power with respect to the shares of common stock indicated to be held by such person. | |
(5) | Information based solely on a Schedule 13G, filed with the SEC on February 13, 2007, by BlackRock, Inc. BlackRock, Inc. is a parent holding company for a number of investment management subsidiaries. BlackRock Advisors LLC, BlackRock Investment Management LLC and BlackRock (Channel Islands) Ltd. are certain investment advisory subsidiaries which hold shares of common stock. | |
(6) | Information based on Amendment No. 3 to Schedule 13D, filed with the SEC on March 15, 2007 relating to securities held for the accounts of Highland Capital Management, L.P., a Delaware limited partnership (“Highland Capital”), Strand Advisors, Inc., a Delaware corporation (“Strand”), James Dondero, a citizen of the United States, Highland Multi-Strategy Onshore Master SubFund, L.L.C., a Delaware limited liability company (“Multi-Strategy SubFund”), Highland Multi-Strategy Master Fund, L.P., a Bermuda limited partnership (“Master Fund”), Highland Multi-Strategy Fund GP, L.P., a Delaware limited partnership (“Multi-Strategy GP”) and Highland Multi-Strategy Fund GP, L.L.C., a Delaware limited liability company (“Multi-Strategy GP LLC”). Information is also given in the Schedule 13D with respect to Highland Crusader Offshore Partners, L.P., a Bermuda limited partnership (“Crusader”), Highland Crusader Fund GP, L.P., a Delaware limited partnership (“Crusader Fund GP”), Highland Crusader Fund GP, LLC, a Delaware limited liability company (“Crusader Fund GP LLC”), Highland Credit Strategies Master Fund, L.P., a Bermuda limited partnership (“Credit Strategies”), Highland General Partner LP, a Delaware limited partnership (“General Partner”) and Highland GP Holdings LLC, a Delaware limited liability company (“GP Holdings”). According to the Schedule 13D and pursuant to management agreements, Highland Capital exercises all voting and dispositive power with respect to securities held by Crusader and Credit Strategies. |
Amount and Nature | ||||||
of Beneficial | Percent | |||||
Name and Address | Ownership | of Class | ||||
Series A-1 Preferred Stock(1) | ||||||
Various funds affiliated with MHR Fund Management LLC and Mark H. Rachesky, M.D. | 136,526 | 100% | ||||
40 West 57th Street, 24th Floor, New York, NY 10019 | ||||||
Series B-1 Preferred Stock(2) | ||||||
Various funds affiliated with | ||||||
MHR Fund Management LLC and Mark H. Rachesky, M.D. | 858,486 | 100% | ||||
40 West 57th Street, 24th Floor, New York, NY 10019 | ||||||
(1) | Each share ofSeries A-1 Cumulative 7.50% Convertible Preferred Stock (the“Series A-1 Preferred Stock”) entitles the holder thereof to vote on all matters voted on by holders of common stock, and the shares ofSeries A-1 Preferred Stock vote together with shares of common stock as a single class. With respect to any such vote, each share ofSeries A-1 Preferred Stock entitles its holder to a number of votes equal to one ten thousandth (1/10,000) of one vote for each share ofSeries A-1 Preferred Stock. Each share ofSeries A-1 Preferred Stock is convertible, at the option of the holder, into ten shares of common stock at an initial conversion price of $30.1504 per share. In all circumstances, the conversion or exchange of theSeries A-1 Preferred Stock reported as being beneficially owned by MHR into shares of common stock will be subject to the Voting Limitation (as described in footnote 2 to “Ownership of Voting Stock — Principal Holders of Stock — Common Stock”). MHR is contractually obligated to either (i) vote the shares ofSeries A-1 Preferred Stock (representing 13 of the 99 votes) in accordance with the recommendation of our Board of Directors or (ii) abstain from voting such shares. |
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(2) | Each share ofSeries B-1 Cumulative 7.50% Convertible Preferred Stock (the“Series B-1 Preferred Stock”) entitles the holder thereof to vote on all matters voted on by holders of common stock, and the shares of Series B-1 Preferred Stock vote together with shares of common stock as a single class. With respect to any such vote, each share ofSeries B-1 Preferred Stock entitles its holder to a number of votes equal to one ten thousandth (1/10,000) of one vote for each share ofSeries B-1 Preferred Stock.. Prior to the Majority Ownership Date (as defined above in footnote 2 to “Ownership of Voting Stock — Principal Holders of Stock — Common Stock”), each share ofSeries B-1 Preferred Stock is convertible, at the option of the holder, into ten shares ofClass B-1 Nonvoting Stock, par value $0.01, of the Company (the“Class B-1 Non-Voting Stock”), at an initial conversion price of $30.1504 per share, which is not currently authorized. After the Majority Ownership Date, each share ofSeries B-1 Preferred Stock is convertible, at the option of the holder, into ten shares of common stock at an initial conversion price of $30.1504 per share. In all circumstances, the conversion or exchange of theSeries B-1 Preferred Stock reported as being beneficially owned by MHR into shares of common stock will be subject to the Voting Limitation (as described in footnote 2 to “Ownership of Voting Stock — Principal Holders of Stock — Common Stock”). |
Amount and Nature | ||||||||
of Beneficial | Percent of | |||||||
Name of Individual | Ownership(1) | Class(2) | ||||||
C. Patrick DeWitt | ||||||||
Sai S. Devabhaktuni | ||||||||
Hal Goldstein | ||||||||
John D. Harkey, Jr. | ||||||||
Avi Katz | 12,500 | (3) | * | |||||
Dean A. Olmstead | ||||||||
Mark H. Rachesky, M.D. | 17,130,749 | (4) | 57.1% | |||||
Bernard L. Schwartz(5) | ||||||||
Arthur L. Simon | 72 | * | ||||||
John P. Stenbit | ||||||||
Michael B. Targoff | 52,699 | (6) | * | |||||
Richard J. Townsend | 21,250 | (7) | * | |||||
Eric J. Zahler | 30,000 | (8) | * | |||||
All directors, NEOS and other executive officers as a group (15 persons) | 17,269,770 | (9) | 57.3% | |||||
* | Represents holdings of less than one percent. | |
(1) | Includes shares which, as of March 1, 2007, may be acquired within sixty days pursuant to the exercise of options (which shares are treated as outstanding for the purposes of determining beneficial ownership and computing the percentage set forth). | |
(2) | Percent of class refers to percentage of class beneficially owned as the term beneficial ownership is defined inRule 13d-3 under the Securities Exchange Act of 1934 and is based upon the 20,063,325 shares of Loral common stock outstanding as of March 1, 2007. | |
(3) | Consists of options to acquire 12,500 shares under the Company’s 2005 Stock Incentive Plan. | |
(4) | Includes 7,180,629 shares of common stock, 1,365,260 shares upon conversion of the Company’sSeries A-1 Preferred Stock and 8,584,860 upon conversion of the Company’sSeries B-1 Preferred Stock. In all circumstances, the conversion or exchange of theSeries A-1 Preferred Stock reported as being beneficially owned by MHR into shares of common stock will be subject to the Voting Limitation (as described in footnote 2 to “Ownership of Voting Stock — Principal Holders of Stock — Common Stock”). Dr. Rachesky is deemed to be the beneficial owner of 17,130,749 shares of Loral common stock by virtue of his status as the managing member of Advisors, Institutional Advisors, Institutional Advisors II, Institutional Advisors III and MHR Fund Management. See “Ownership of Voting Stock — Principal Holders of Stock — Common Stock” above. | |
(5) | Mr. Schwartz retired as Chairman and Chief Executive Officer of the Company effective March 1, 2006. |
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(6) | Includes options to acquire 26,738 shares under the Company’s 2005 Stock Incentive Plan. Does not include options to acquire 309,375 shares, which will be vested if stockholders approve the Company’s Amended and Restated 2005 Stock Incentive Plan (see Proposal 2). | |
(7) | Consists of options to acquire 21,250 shares under the Company’s 2005 Stock Incentive Plan. | |
(8) | Consists of options to acquire 30,000 shares under the Company’s 2005 Stock Incentive Plan. | |
(9) | Includes options to acquire 112,988 shares under the Company’s 2005 Stock Incentive Plan, 1,365,260 shares upon conversion of the Company’sSeries A-1 Preferred Stock and 8,584,860 upon conversion of the Company’sSeries B-1 Preferred Stock. “Ownership of Voting Stock — Principal Holders of Stock” above. Does not include options to acquire 309,375 shares, which will be vested if stockholders approve the Company’s Amended and Restated 2005 Stock Incentive Plan (see Proposal 2). |
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• | Not later than December 24, 2007, if the proposal is submitted for inclusion in our proxy materials for that meeting pursuant toRule 14a-8 under the Securities Exchange Act of 1934; or | |
• | No earlier than January 23, 2008 but no later than February 22, 2008, if the proposal is submitted pursuant to our bylaws, in which case we are not required to include the proposal in our proxy |
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materials. The written notice must satisfy certain requirements specified in our Bylaws, a copy of which will be sent to any stockholder upon written request to the Vice President, General Counsel and Secretary. |
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2005 STOCK INCENTIVE PLAN
(Amended and Restated as of April 16, 2007)
1. | PURPOSE. |
2. | DEFINITIONS. |
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3. | ADMINISTRATION. |
4. | SHARES AVAILABLE UNDER THE PLAN. |
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5. | ELIGIBILITY; LIMITATIONS ON AWARDS. |
6. | OPTIONS. |
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7. | STOCK APPRECIATION RIGHTS. |
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8. | RESTRICTED STOCK. |
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9. | RESTRICTED STOCK UNITS |
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10. | BONUS STOCK AND AWARDS IN LIEU OF OBLIGATIONS. |
11. | OTHER STOCK-BASED AWARDS. |
12. | ADJUSTMENT FOR RECAPITALIZATION, MERGER, ETC. |
13. | CHANGE IN CONTROL |
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14. | USE OF PROCEEDS. |
15. | RIGHTS AND PRIVILEGES AS A STOCKHOLDER. |
16. | EMPLOYMENT OR SERVICE RIGHTS. |
17. | COMPLIANCE WITH LAWS. |
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18. | WITHHOLDING OBLIGATIONS. |
19. | AMENDMENT OF THE PLAN OR AWARDS. |
20. | TERMINATION OR SUSPENSION OF THE PLAN. |
21. | EFFECTIVE DATE OF THE PLAN. |
22. | MISCELLANEOUS. |
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PLEASE MARK VOTES AS IN THIS EXAMPLE | REVOCABLE PROXY LORAL SPACE & COMMUNICATIONS INC. |
MAY 22, 2007
Please be sure to sign and date this Proxy in the box below. | Date |
With- | For All | |||||||
For | hold | Except | ||||||
1. | ELECTION OF THREE CLASS I DIRECTORS- Nominees: Class I: | o | o | o |
For | Against | Abstain | ||||||
2. | Acting upon a proposal to approve the amendment and restatement of the Loral Space & Communications Inc. 2005 Stock Incentive Plan. | o | o | o | ||||
3. | Acting upon a proposal to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2007. | o | o | o |
SIGN, DATE & MAIL YOUR PROXY CARD TODAY