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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 Rule 14a-12
ECHOSTAR COMMUNICATIONS CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(5) Total fee paid:
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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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[ECHOSTAR LETTERHEAD]
April 6, 2001
DEAR SHAREHOLDER:
It is a pleasure for me to extend to you an invitation to attend the
2001 Annual Meeting of Shareholders of EchoStar Communications Corporation
("EchoStar" or the "Corporation"). The Annual Meeting will be held on Friday,
May 4, 2001, at 10:00 a.m. at EchoStar's headquarters located at 5701 South
Santa Fe Drive, Littleton, Colorado 80120.
The enclosed Notice of Meeting and Proxy Statement describe the
proposals to be considered and voted on at the Annual Meeting. During the Annual
Meeting, we also will review EchoStar's operations and other items of general
interest regarding the Corporation.
We hope that all shareholders will be able to attend the Annual
Meeting. Whether or not you plan to attend the Annual Meeting personally, it is
important that you be represented. To ensure that your vote will be received and
counted, please promptly complete, date and return your proxy card in the
enclosed return envelope.
On behalf of the Board of Directors and Management, I would like to
express our appreciation for your support and interest in EchoStar. I look
forward to seeing you at the Annual Meeting.
/s/ CHARLES W. ERGEN
CHARLES W. ERGEN
Chairman and Chief Executive Officer
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[ECHOSTAR LETTERHEAD]
NOTICE OF 2001 ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF ECHOSTAR COMMUNICATIONS CORPORATION:
Please take notice that the Annual Meeting of Shareholders of EchoStar
Communications Corporation ("EchoStar" or the "Corporation") will be held on
Friday, May 4, 2001, at 10:00 a.m. at EchoStar's headquarters located at 5701
South Santa Fe Drive, Littleton, Colorado 80120, to consider and vote upon:
1. The election of seven Directors of EchoStar;
2. A proposal to ratify the appointment of Arthur Andersen LLP as
the independent accountants of EchoStar for the fiscal year
ending December 31, 2001; and
3. Any other business that may properly come before the Annual
Meeting or any adjournment thereof.
Only shareholders of record at the close of business on March 22, 2001
will be entitled to notice of, and to vote at, the Annual Meeting or any
adjournment thereof.
By Order of the Board of Directors
/s/ DAVID K. MOSKOWITZ
DAVID K. MOSKOWITZ
Senior Vice President, General Counsel,
Corporate Secretary and Director
April 6, 2001
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PROXY STATEMENT
OF
ECHOSTAR COMMUNICATIONS CORPORATION
GENERAL
This Proxy Statement is being furnished to the shareholders of EchoStar
Communications Corporation ("EchoStar" or the "Corporation") in connection with
the 2001 Annual Meeting of Shareholders of EchoStar (the "Annual Meeting") to be
held on Friday, May 4, 2001, at 10:00 a.m. at EchoStar's headquarters located at
5701 South Santa Fe Drive, Littleton, Colorado 80120.
EchoStar's mailing address is 5701 South Santa Fe Drive, Littleton,
Colorado 80120. This Proxy Statement and the accompanying proxy are first being
sent or given on or about April 6, 2001, to shareholders of record as of the
close of business on March 22, 2001 of EchoStar's Class A Common Stock, $0.01
par value ("Class A Shares"), and EchoStar's Class B Common Stock, $0.01 par
value ("Class B Shares"), collectively (the "Shares").
The accompanying proxy is being solicited by EchoStar's Board of
Directors. It may be revoked by written notice given to the Corporate Secretary
at any time before being voted. The proxy card, which is attached to this form,
if properly executed, duly sent to EchoStar and not revoked will be voted for
the proposals described in this Proxy Statement, in accordance with the
instructions set forth on the proxy card. The Board of Directors is not aware of
any matters proposed to be presented at the Annual Meeting other than the
election of Directors of the Corporation and the ratification of the appointment
of Arthur Andersen LLP as EchoStar's independent accountants for the fiscal year
ending December 31, 2001. If any other proposal is properly presented, the
persons named in the accompanying form of proxy will have discretionary
authority to vote thereon in accordance with their best judgment. Presence at
the Annual Meeting does not of itself revoke the proxy.
SECURITIES ENTITLED TO VOTE
Shareholders of record on March 22, 2001 are entitled to notice of the
Annual Meeting and to vote their Shares at the Annual Meeting. On that date,
236,342,581 Class A Shares and 238,435,208 Class B Shares were issued and
outstanding. Each of the Class A Shares is entitled to one vote per share on
each proposal to be considered by shareholders. Each of the Class B Shares is
entitled to ten votes per share on each proposal to be considered by
shareholders.
VOTE REQUIRED
The presence at the Annual Meeting, in person or by proxy, of the
holders of a majority of the total voting power of all classes of EchoStar's
voting stock taken together shall constitute a quorum for the transaction of
business at the Annual Meeting.
The affirmative vote of a plurality of the total votes cast is
necessary to elect a Director. No cumulative voting is permitted. The
affirmative vote of the majority of the total votes cast at the Annual Meeting
is required to approve the proposal to ratify the appointment of Arthur Andersen
LLP as EchoStar's independent accountants for the fiscal year ending December
31, 2001.
The total number of votes cast "for" will be counted for purposes of
determining whether sufficient affirmative votes have been cast to approve each
proposal. Abstentions from voting on a proposal by a shareholder at the Annual
Meeting, as well as broker non-votes, will be considered for purposes of
determining the number of total votes present at the Annual Meeting. Abstentions
will have the same effect as votes against proposals, but will not affect the
election of Directors. Broker non-votes will not be considered as votes "for" or
"against" proposals, and will therefore not be considered in determining the
election of Directors or whether the proposal to ratify the appointment of
Arthur Andersen LLP has passed.
Through his ownership of Class B Shares, Charles W. Ergen, the
Chairman, Chief Executive Officer and President of EchoStar, possesses more than
90% of the total voting power of the Corporation. Mr. Ergen has stated that he
will vote in favor of the proposal to be considered at the Annual Meeting and
for the election of each of the nominee Directors. Accordingly, approval of the
proposals and the election of each of the Directors is assured notwithstanding a
negative vote by any or all shareholders other than Mr. Ergen.
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PROPOSAL NO. 1 - ELECTION OF DIRECTORS
NOMINEES
At the Annual Meeting, EchoStar's shareholders will elect seven
Directors, in each case to hold office until the next annual meeting of
shareholders of EchoStar or until their respective successors shall be duly
elected and qualified. The affirmative vote of a plurality of the total votes
cast is necessary to elect a Director. Each nominee has consented to their
nomination and has advised EchoStar that they intend to serve the entire term,
if elected. In connection with recent changes in the rules and regulations
governing the audit committees of public companies, in March 2001, EchoStar's
Board of Directors approved an increase in the size of the Board of Directors
from five Directors to seven Directors. Upon election to the Board of Directors,
it is expected that Michael Schroeder will immediately join and serve on the
Audit Committee of the Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION
OF THE NOMINEES NAMED HEREIN (ITEM NO. 1 ON THE ENCLOSED PROXY CARD).
The nominees for Director of EchoStar are as follows:
NAME AGE FIRST BECAME DIRECTOR POSITION WITH THE CORPORATION
---- --- --------------------- -----------------------------
O. Nolan Daines 41 1998 Director
James DeFranco 48 1980 Director and Executive Vice President
Cantey Ergen 46 -- Director Nominee
Charles W. Ergen 48 1980 Chairman of the Board of Directors and
Chief Executive Officer
Raymond L. Friedlob 56 1995 Director
David K. Moskowitz 42 1998 Director, Senior Vice President, General
Counsel and Secretary
C. Michael Schroeder 52 -- Director Nominee
The following sets forth the business experience of each of the
nominees over the last five years:
O. Nolan Daines. Mr. Daines is currently consulting for various
privately-held companies. In 1993, Mr. Daines founded DiviCom, Inc. ("DiviCom"),
where he held various executive officer positions from the formation of DiviCom
until October 1999. DiviCom is a global provider of standards-based MPEG-2
encoding product systems for digital video broadcasting. DiviCom's product lines
include audio/video/data encoding and networking systems, as well as integration
consulting and implementation services. Mr. Daines was appointed to EchoStar's
Board of Directors in March 1998.
James DeFranco. Mr. DeFranco, currently the Executive Vice President of
EchoStar, has been a Vice President and a Director of EchoStar since its
formation and, during the past five years, has held various executive officer
and director positions with EchoStar's subsidiaries. Mr. DeFranco, along with
Mr. Ergen and Mr. Ergen's spouse, was a co-founder of EchoStar in 1980.
Cantey Ergen. Mrs. Ergen, along with Charles Ergen and James DeFranco,
was a co-founder of EchoStar in 1980. Over the past 21 years, Mrs. Ergen has had
a variety of operational and administrative responsibilities at EchoStar. Since
2000, Mrs. Ergen has also served on the Board of Directors of The Children's
Hospital Foundation, a Denver, Colorado based non-profit organization dedicated
to improving the health of children in Denver, in Colorado, and in the region,
as well as the Advisory Board and Nominating Committee of the Girl Scouts USA
Mile Hi Council, also based in Denver, Colorado.
Charles W. Ergen. Mr. Ergen has been Chairman of the Board of Directors
and Chief Executive Officer of EchoStar since its formation and, during the past
five years, has held various executive officer and director positions with
EchoStar's subsidiaries. Mr. Ergen, along with his spouse and James DeFranco,
was a co-founder of EchoStar in 1980.
Raymond L. Friedlob. Mr. Friedlob has been a Director of EchoStar and a
member of its Audit and Executive Compensation Committees since October 1995.
Mr. Friedlob has been a member of the law firm of Friedlob Sanderson Paulson &
Tourttillott, LLC since 1995. Mr. Friedlob specializes in federal securities
law, corporate law, transportation and taxation.
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David K. Moskowitz. Mr. Moskowitz is the Senior Vice President,
Secretary and General Counsel of EchoStar. Mr. Moskowitz joined EchoStar in
March 1990 and is responsible for all legal and regulatory affairs and certain
business functions for EchoStar and its subsidiaries. Mr. Moskowitz was
appointed to EchoStar's Board of Directors in March 1998. During the past five
years, Mr. Moskowitz also has held various executive officer and director
positions with EchoStar's subsidiaries.
C. Michael Schroeder. Mr. Schroeder is currently retired. From February
1998 until April 1999, Mr. Schroeder served as President of National Programming
Service, a division of DSI Distributing where his responsibilities included
managing over 400,000 C-band satellite subscribers. From January 1981 until
January 1998, Mr. Schroeder founded and served as President and Chief Executive
Officer of Consumer Satellite Systems, Inc. where he was responsible for 10
regional distributor locations serving satellite and consumer electronics
dealers from Wisconsin to Florida representing C-band satellite equipment, RCA
consumer electronics, DBS satellite system sales and other related consumer
electronics equipment.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors currently has an Executive Compensation
Committee and an Audit Committee, both of which were established in October
1995. Mr. Friedlob and Mr. Daines were the sole members of both the Audit and
Executive Compensation Committees during 2000. The principal functions of the
Executive Compensation Committee are to approve compensation of Executive
Officers of EchoStar and to award grants to Executive Officers under EchoStar's
1995 Stock Incentive Plan (the "1995 Incentive Plan"), 1999 Incentive Plan and
Long Term Incentive Plan, collectively (the "Incentive Plans"). The principal
functions of the Audit Committee are to: (i) recommend to the Board of Directors
the selection of independent public accountants; (ii) review management's plan
for engaging EchoStar's independent public accountants during the year to
perform non-audit services and consider what effect these services will have on
the independence of the accountants; (iii) review the annual financial
statements and other financial reports which require approval by the Board of
Directors; (iv) review the adequacy of EchoStar's system of internal accounting
controls; and (v) review the scope of the independent public accountants' audit
plans and the results of the audit. The Audit Committee operates under an Audit
Committee Charter adopted by our Board of Directors, a copy of which is included
as Appendix A to this proxy statement.
During the fiscal year ended December 31, 2000, the Board of Directors
held 9 meetings and acted by unanimous written consent in lieu of a meeting on
12 occasions. The Compensation Committee held 10 meetings during 2000 and the
Audit Committee held three meetings during 2000. Each Director attended at least
75% of the aggregate of: (i) the total number of meetings of the Board of
Directors held during the period in which he was a Director, and; (ii) the total
number of meetings held by all committees of the Board of Directors on which he
served.
Directors are elected annually and serve until their successors are
duly elected and qualified. Officers serve at the discretion of the Board of
Directors.
EQUITY SECURITY OWNERSHIP
The following table sets forth, to the best knowledge of EchoStar, the
beneficial ownership of EchoStar's voting securities as of March 22, 2001 by:
(i) each person known by EchoStar to be the beneficial owner of more than five
percent of any class of EchoStar's voting Shares; (ii) each Director of
EchoStar; (iii) the six highest compensated persons acting as an Executive
Officer of EchoStar (collectively, the "Named Executive Officers"); and (iv) all
Directors and Executive Officers as a group. Unless otherwise indicated, each
person listed in the following table (alone or with family members) has sole
voting and dispositive power over the shares listed opposite such person's name.
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NUMBER OF PERCENTAGE OF
NAME (1) SHARES CLASS
-------- ------------ ------------
CLASS A COMMON STOCK (2):
Charles W. Ergen (3), (4), (19), (20) ........................................... 240,969,495 50.2%
FMR Corp. (5) ................................................................... 35,620,971 7.4%
Massachusetts Financial Services Company (6) .................................... 26,520,040 5.5%
The News Corporation Limited (7) ................................................ 26,021,168 5.4%
Putnam Investments, LLC (8) ..................................................... 12,156,551 2.5%
Morgan Stanley Dean Witter & Co. (9) ............................................ 10,716,836 2.2%
James DeFranco (10), (19), (20) ................................................. 7,763,509 1.6%
MCI WorldCom, Inc (11) .......................................................... 4,565,385 *
Michael T. Dugan (12), (19), (20) ............................................... 791,269 *
David K. Moskowitz (13), (19), (20) ............................................. 784,767 *
Soraya Hesabi-Cartwright (14), (19), (20) ....................................... 395,805 *
Steven B. Schaver (15), (19), (20) .............................................. 205,612 *
O. Nolan Daines (16), (20) ...................................................... 58,000 *
Raymond L. Friedlob (17), (20) .................................................. 38,000 *
All Directors and Executive Officers as a Group (14 persons) (18), (19), (20) ... 251,895,249 52.5%
CLASS B COMMON STOCK:
Charles W. Ergen ................................................................ 238,435,208 100.0%
All Directors and Executive Officers as a Group (14 persons) .................... 238,435,208 100.0%
----------
* Less than 1%.
(1) Except as otherwise noted below, the address of each such person is 5701
Santa Fe Drive, Littleton, Colorado 80120.
(2) The following table sets forth, to the best knowledge of the Corporation,
the actual ownership of the Corporation's Class A Common Stock (including
options exercisable within 60 Days) as of March 23, 2000 by: (i) each
person known by the Corporation to be the beneficial owner of more than
five percent of any class of the Corporation's voting Shares; (ii) each
Director or nominee of the Corporation; (iii) each Named Executive
Officers; and (iv) all Directors and Executive Officers as a group:
NUMBER OF PERCENTAGE OF
NAME SHARES CLASS
---- ------------ ------------
CLASS A COMMON STOCK:
FMR Corp. ..................................................... 35,620,971 14.7%
Massachusetts Financial Services Company ...................... 26,520,040 11.0%
The News Corporation Limited .................................. 26,021,168 10.8%
Putnam Investments, LLC ....................................... 12,156,551 5.0%
Morgan Stanley Dean Witter & Co. .............................. 10,716,836 4.4%
James DeFranco ................................................ 7,763,509 3.2%
Charles W. Ergen .............................................. 2,534,287 1.1%
Michael T. Dugan .............................................. 791,269 *
David K. Moskowitz ............................................ 784,767 *
Soraya Hesabi-Cartwright ...................................... 395,805 *
Steven B. Schaver ............................................. 205,612 *
O. Nolan Daines ............................................... 58,000 *
Raymond L. Friedlob ........................................... 38,000 *
All Directors and Executive Officers as a Group (14 persons) .. 13,460,041 5.6%
(3) Includes: (i) 17,825 Class A Shares held in the 401(k) Employee Savings
Plan (the "401(k) Plan"); (ii) the right to acquire 124,004 Class A Shares
within 60 days upon the exercise of employee stock options; (iii)
238,435,208 Class A Shares issuable upon conversion of Mr. Ergen's Class B
Shares, and (iv) 4,800 Class A Shares held as custodian for his minor
children.
(4) The percentage of total voting power held by Mr. Ergen is 90%, after
giving effect to the exercise of Mr. Ergen's options exercisable within 60
days.
(5) The address of FMR Corp. is 82 Devonshire Street, Boston, Massachusetts
02109.
(6) The address of Massachusetts Financial Services Company is 500 Boylston
Street, Boston, Massachusetts 02116.
(7) The address of The News Corporation Limited is 1211 Avenue of the Americas,
New York, New York 10036.
(8) The address of Putnam Investments, LLC is One Post Office Square, Boston,
Massachusetts 02109.
(9) The address of Morgan Stanley Dean Witter & Co. is 1585 Broadway, New York,
New York 10036.
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(10) Includes: (i) 17,825 Class A Shares held in the 401(k) Plan; (ii) the right
to acquire 178,824 Class A Shares within 60 days upon the exercise of
employee stock options; (iii) 56,008 Class A Shares held as custodian for
his minor children; and (iv) 2,200,000 Class A Shares controlled by Mr.
DeFranco as general partner of a partnership.
(11) The address of MCI WorldCom, Inc. is 1800 Pennsylvania Avenue, N.W.,
Washington, D.C. 20006.
(12) Includes: (i) 17,017 Class A Shares held in the 401(k) Plan; and (ii) the
right to acquire 663,912 Class A Shares within 60 days upon the exercise of
employee stock options.
(13) Includes: (i) 17,009 Class A Shares held in the 401(k) Plan; (ii) the right
to acquire 293,406 Class A Shares within 60 days upon the exercise of
employee stock options; (iii) 1,328 Class A Shares held as custodian for
his minor children; (iv) 8,184 Class A Shares held as trustee for Mr.
Ergen's children; (v) 176,543 Class A Shares held in trust for the
Moskowitz Family; and (vi) 38,835 Class A Shares held by a charitable
foundation for which Mr. Moskowitz is a member of the Board of Directors.
(14) Includes: (i) 2,129 Class A Shares held in the 401(k) Plan; and (ii) the
right to acquire 334,764 Class A Shares within 60 days upon the exercise of
employee stock options.
(15) Includes: (i) 15,969 Class A Shares held in the 401(k) Plan; and (ii) the
right to acquire 189,303 Class A Shares within 60 days upon the exercise of
employee stock options.
(16) Includes the right to acquire 58,000 Class A Shares within 60 days upon the
exercise of non-employee director stock options.
(17) Includes the right to acquire 38,000 Class A Shares within 60 days upon the
exercise of non-employee director stock options.
(18) Includes: (i) 100,092 Class A Shares held in the 401(k) Plan; (ii) the
right to acquire 2,268,565 Class A Shares within 60 days upon the exercise
of employee stock options; (iii) 2,200,000 Class A Shares held in a
partnership; (iv) 238,435,208 Class A Shares issuable upon conversion of
Class B Shares; (v) 246,863 Class A Shares held in the name of, or in trust
for, minor children and other family members; and (vi) 38,835 Class A
Shares held by a charitable foundation for which Mr. Moskowitz is a member
of the Board of Directors.
(19) Includes 1,529,918 Class A Shares over which Mr. Ergen has voting power as
Trustee for EchoStar's 401(k) Employee Savings Plan (the "401(k) Plan").
These shares also are beneficially owned through investment power by each
individual 401(k) Plan participant. The Class A Shares individually owned
by each of the Named Executives through their participation in the 401(k)
Plan are included in each respective Named Executive's information above.
(20) Beneficial ownership percentage was calculated assuming exercise or
conversion of all Class B Shares, Warrants and employee stock options
exercisable within 60 days (collectively, the "Derivative Securities") into
Class A Shares by all holders of such Derivative Securities. Assuming
exercise or conversion of Derivative Securities by such person, and only by
such person, the beneficial ownership of Class A Shares would be as
follows: Mr. Ergen, 50.7%; Mr. DeFranco, 3.3%, less than one percent for
Mr. Dugan, Mr. Moskowitz, Ms. Hesabi-Cartwright, Mr. Schaver, Mr. Daines
and Mr. Friedlob, and all Officers and Directors as a group, 52.8%.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires EchoStar's Executive Officers, Directors, and any
person who directly or indirectly owns more than ten percent of a registered
class of EchoStar's equity securities (collectively, "Reporting Persons") to
file with the Securities and Exchange Commission ("SEC") initial reports of
ownership and reports of changes in ownership of Class A Shares and other equity
securities of the Corporation. Reporting Persons are required by SEC regulations
to furnish EchoStar with copies of all Section 16(a) forms that are filed with
the SEC. Based solely on a review of the copies of such forms and amendments, if
any, thereto, furnished to EchoStar for the 2000 fiscal year and written
representations that no other reports were required, with the exception of
amended filings by Mr. Dugan, Mr. Moskowitz and Mrs. Hesabi Cartwright, all
Reporting Persons made all required filings in a timely manner. Mr. Moskowitz
filed one amended Form 4 report with the SEC in May 2000 with respect to a
transaction that occurred in January 2000. Mr. Dugan filed one amended Form 4
report with the SEC in September 2000 with respect to a transaction that
occurred in August 2000. None of the amended Form 4 reports filed for Mr.
Moskowitz or Mr. Dugan resulted in any change to the number of shares reported
in their original Form 4 filings. Mrs. Hesabi-Cartwright filed one amended Form
4 report with the SEC in July 2000 with respect to a transaction that occurred
during May 2000.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION SUMMARY
Executive Officers are compensated by certain subsidiaries of EchoStar.
The following table sets forth the cash and non-cash compensation for the fiscal
years ended December 31, 2000, 1999 and 1998 for the Named Executive Officers.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
AWARDS
------------
SECURITIES
UNDERLYING
OTHER ANNUAL OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (1) (#) COMPENSATION (2)
--------------------------- ---- ---------- ---------- ---------------- ------------ ----------------
Charles W. Ergen 2000 $ 250,000 $ 750,000 $ -- 500,000 $ 28,813
Chairman and Chief Executive 1999 250,007 500,000 -- 520,000 26,798
Officer 1998 248,082 -- -- 240,000 21,510
Michael T. Dugan 2000 $ 242,311 $ -- $ -- 500,000 $ 14,328
President and Chief Operating 1999 221,154 -- -- 520,000 15,303
Officer 1998 209,231 -- -- 120,000 14,235
Soraya Hesabi-Cartwright 2000 $ 216,365 $ -- $ -- 250,000 $ 14,328
Executive Vice President - 1999 196,971 -- -- 1,160,000 15,303
DISH Network 1998 129,231 4,050 -- 36,360 12,599
James DeFranco 2000 $ 200,000 $ -- $ -- -- $ 19,883
Executive Vice President and 1999 196,157 -- -- 680,000 18,908
Director 1998 178,860 -- -- 240,000 15,995
Steven B. Schaver 2000 $ 200,000 $ -- $ -- -- $ 14,413
President - EchoStar International 1999 196,932 -- 9,734 680,000 15,303
Corporation 1998 183,081 -- 15,074 312,720 13,765
David K. Moskowitz 2000 $ 192,307 $ -- $ -- -- $ 14,328
Senior Vice President 1999 194,789 500,000 -- 520,000 15,303
General Counsel and Director 1998 187,311 500,000 -- 240,000 14,235
----------
(1) With respect to Mr. Schaver, "Other Annual Compensation" includes housing
and car allowances related to his overseas assignments. While each Named
Executive Officer enjoys certain other perquisites, such perquisites do
not exceed the lesser of $50,000 or 10% of each Officer's salary and
bonus.
(2) "All Other Compensation" includes amounts contributed to EchoStar's
401(k) Plan on behalf of the Named Executive Officers. With respect to
Messrs. Ergen, DeFranco and Schaver for 2000, "All Other Compensation"
also includes payments made in connection with a tax indemnification
agreement between EchoStar and these individuals.
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The following table provides information concerning grants of options
to purchase Class A Shares made in 2000 to the Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS EXERCISE
UNDERLYING GRANTED TO PRICE PER
OPTIONS EMPLOYEES IN SHARE GRANT DATE
NAME GRANTED (#) (1) 2000 ($/SH) EXPIRATION DATE PRESENT VALUE (3)
---- --------------- ------------- --------- --------------- -----------------
Charles W. Ergen 500,000(2) 19.1% $36.419 June 30, 2005 $12,448,450
Michael T. Dugan 500,000(2) 19.1% $33.109 June 30, 2010 13,365,100
Soraya Hesabi-Cartwright 250,000(2) 9.6% $33.109 June 30, 2010 6,682,550
----------
(1) In March 2000, EchoStar adopted the 2000 Executive Bonus Plan which
provided, among other things, each Named Executive Officers with an option
to purchase up to 9,000 Class A Shares, depending upon EchoStar's
achievement of certain financial and other goals. EchoStar did not meet any
of the goals during 2000. Accordingly, all stock options granted pursuant
to the 2000 Executive Bonus Plan were cancelled.
(2) In June 2000, the Corporation granted options to Mr. Ergen, Mr. Dugan, and
Ms. Hesabi-Cartwright to purchase Class A Shares. The options vest at the
rate of 20% per year, commencing June 30, 2000 and generally expire ten
years from the date of grant, subject to early termination in certain
circumstances. See "- Stock Incentive Plan."
(3) Option values reflect the Black-Scholes model output for options. The
Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input
of highly subjective assumptions including the expected stock price
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect
the fair value estimate, in management's opinion, the existing models do
not necessarily provide a reliable single measure of the fair value of its
stock-based compensation awards. The assumptions used in the model were
expected volatility of 98%, risk free rate of return of 6.19%, dividend
yield of 0%, and time to exercise of six years.
The following table provides information as of December 31, 2000,
concerning unexercised options to purchase Class A Shares:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
NUMBER OF SECURITIES
NUMBER OF UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED DECEMBER 31, 2000 (#) DECEMBER 31, 2000 ($) (1)
ON EXERCISE VALUE REALIZED ----------------------------- -----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ -------------- ------------ ------------- ------------ -------------
Charles W. Ergen 342,628 $ 9,291,058 52,044 719,248 $ 963,304 $ 4,076,910
Michael T. Dugan 170,000 8,237,063 577,800 750,200 11,824,124 4,788,375
Soraya Hesabi-Cartwright 47,686 2,548,641 166,084 898,632 2,843,147 11,008,400
James DeFranco 562,128 20,353,758 74,824 320,000 1,326,245 5,732,000
Steven B. Schaver 202,785 12,356,336 23,703 457,744 488,874 8,545,700
David K. Moskowitz 390,490 15,502,550 221,406 203,992 4,544,021 3,835,335
----------
(1) The dollar value of each exercisable and unexercisable option was
calculated by multiplying the number of Class A Shares underlying the
option by the difference between the exercise price of the option and the
closing price (as quoted in the Nasdaq National Market) of a Class A Share
on December 31, 2000.
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EXECUTIVE COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to October 1995, EchoStar did not have an Executive Compensation
Committee, and its Board of Directors determined all matters concerning
executive compensation. During 2000, the Executive Compensation Committee
consisted of Messrs. Friedlob and Daines. Mr. Friedlob is a partner in the law
firm of Friedlob, Sanderson, Paulson & Tourtillot, LLC, which billed EchoStar
approximately $299,000 in fees related to legal services and securities
offerings in 2000, of which approximately $177,000 was ultimately paid by third
parties.
DIRECTOR COMPENSATION
EchoStar's Directors who are not also employees receive $500 for each
meeting of the Board of Directors attended and are reimbursed for reasonable
travel expenses related to attendance at Board meetings. EchoStar's Directors
who are employees are not compensated for their services as Directors.
EchoStar's Directors are elected annually by the shareholders of the
Corporation. Directors who are not also employees of EchoStar are granted
options under the 1995 Non-employee Director Stock Option Plan (the "Director
Plan") to acquire Class A Shares upon election to the Board.
Mr. Friedlob was granted an option to acquire 8,000 Class A Shares on
December 22, 1995 pursuant to the Director Plan. These options were 100% vested
upon issuance and had an exercise price of $2.53125 per share and a term of five
years. These options were repriced to $2.1250 per share during July 1997, as
discussed below. In February 1997, Mr. Friedlob was granted an option to acquire
40,000 Class A Shares. These options were 100% vested upon issuance and have an
exercise price of $2.1250 and a term of five years. In February 1999, Mr.
Friedlob was granted an option to acquire 40,000 Class A Shares. These options
were 100% vested upon issuance and have an exercise price of $6.00 and a term of
five years. Mr. Friedlob was granted an option to acquire an additional 10,000
Class A Shares during June 2000. These options were 100% vested upon issuance
and have an exercise price of $33.109 and a term of five years.
In March 1998, upon appointment to EchoStar's Board of Directors, Mr.
Daines was granted an option to acquire 8,000 Class A Shares. These options were
100% vested upon issuance, have an exercise price of $2.75, and a term of five
years. Additionally, in February 1999, Mr. Daines was granted an option to
acquire 40,000 Class A Shares. These options were 100% vested upon issuance,
have an exercise price of $6.00, and a term of five years. Mr. Daines was
granted an option to acquire an additional 10,000 Class A Shares during June
2000. These options were 100% vested upon issuance and have an exercise price of
$33.109 and a term of five years.
STOCK INCENTIVE PLANS
EchoStar adopted Incentive Plans to provide incentives to attract and
retain Executive Officers and other key employees. EchoStar's Executive
Compensation Committee administers the Incentive Plans. Key employees are
eligible to receive awards under the Incentive Plans at the Committee's
discretion.
Awards available under the Incentive Plans include: (i) common stock
purchase options; (ii) stock appreciation rights; (iii) restricted stock and
restricted stock units; (iv) performance awards; (v) dividend equivalents; and
(vi) other stock-based awards. EchoStar has reserved up to 160 million Class A
Shares for granting awards under the Incentive Plans. Under the terms of the
Incentive Plans, the Executive Compensation Committee retains discretion,
subject to plan limits, to modify the terms of outstanding awards and to reprice
awards.
Pursuant to the Incentive Plans, EchoStar has granted options to its
Executive Officers and other key employees for the purchase of a total of
50,799,400 Class A Shares. Options to purchase 25,117,893 Class A Shares were
outstanding as of December 31, 2000. These options generally vest at the rate of
20% per year, commencing one year from the date of grant and 20% thereafter on
each anniversary of the date of grant. The exercise prices of these options,
which have generally been equal to or greater than the fair market value at the
date of grant, have ranged from $1.16625 to $79.00 per Class A Share. Certain of
these stock options were repriced as described below.
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Effective July 1, 1997, the Executive Compensation Committee voted to
reprice all outstanding options with an exercise price greater than $2.125 per
Class A Share to $2.125 per Class A Share. The price to which the options were
repriced exceeded the fair market value of a Class A Share as of the date of
repricing. The market value of Class A Shares on the date of repricing was
$1.90625 per Class A Share. The Executive Compensation Committee and the Board
of Directors indicated that they would not typically consider reducing the
exercise price of previously granted options. However, the Executive
Compensation Committee and the Board of Directors recognized that certain events
beyond the reasonable control of the employees of EchoStar had significantly
reduced the incentive those options were intended to create. It was the
expectation of the Executive Compensation Committee and the Board of Directors
that by reducing the exercise price of these options to $2.125, the intended
incentive would be restored in part.
The following table provides information concerning the repricing of
Incentive Plan stock options:
TEN-YEAR OPTION REPRICING
MARKET
NUMBER OF PRICE OF EXERCISE
SECURITIES STOCK AT PRICE AT LENGTH OF ORIGINAL
UNDERLYING TIME OF TIME OF NEW OPTION TERM
OPTIONS REPRICING REPRICING EXERCISE REMAINING AT DATE
NAME AND POSITION DATE REPRICED (#) ($) ($) PRICE ($) OF REPRICING
----------------- ---- ------------ --------- --------- --------- ------------------
Charles W. Ergen July 1, 1997 117,640 $1.90625 $2.3375 $2.125 3 years, 354 days
Chairman and Chief Executive July 1, 1997 136,240 1.90625 3.6700 2.125 5 years, 31 days
Officer
Michael T. Dugan July 1, 1997 79,016 1.90625 2.5313 2.125 4 years, 174 days
President, EchoStar Technologies July 1, 1997 149,880 1.90625 3.3359 2.125 5 years, 31 days
Corporation
Steven B. Schaver July 1, 1997 118,512 1.90625 2.5313 2.125 4 years, 174 days
Chief Operating Officer and Chief
Financial Officer
David K. Moskowitz July 1, 1997 118,512 1.90625 2.5313 2.125 4 years, 174 days
Senior Vice President, General July 1, 1997 59,960 1.90625 3.3359 2.125 5 years, 31 days
Counsel and Director
Mark W. Jackson July 1, 1997 79,016 1.90625 2.5313 2.125 4 years, 174 days
Senior Vice President - Satellite July 1, 1997 89,920 1.90625 3.3359 2.125 5 years, 31 days
Services
Michael S. Schwimmer July 1, 1997 59,960 1.90625 3.3359 2.125 5 years, 31 days
Vice President - Programming
LAUNCH BONUS PLAN
During 2000, in connection with the launch of EchoStar's sixth
satellite, EchoStar granted a performance award of ten Class A Shares to all
eligible employees. Eligible employees included full-time employees of EchoStar
or one of its subsidiaries, with a hire date on or before April 1, 2000, and
part-time employees of EchoStar or one of its subsidiaries with a hire date on
or before April 1, 2000 who had worked at least 1,000 hours prior to April 1,
2001. All eligible employees must have also been continuously employed with
EchoStar or one of its subsidiaries from April 1, 2000 through March 31, 2001.
Issuance of the Class A Shares is contingent upon the successful launch and
operation of EchoStar VI and is also contingent on there being no insurance
claims and no losses prior the issuance date related to EchoStar IV, including
in-orbit performance. EchoStar expects to distribute approximately 35,000 Class
A Shares pursuant to the EchoStar VI launch bonus plan. EchoStar may elect to
grant a similar performance award in connection with the launch of future
satellites, including the EchoStar VII and EchoStar VIII launches currently
scheduled for the fourth quarter of 2001 and first quarter of 2002,
respectively.
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401(k) PLAN
In 1983, EchoStar adopted a defined-contribution tax-qualified 401(k)
Plan. EchoStar's employees become eligible for participation in the 401(k) Plan
upon completing six months of service with EchoStar and reaching age 19. 401(k)
Plan participants may contribute between 1% and 15% of their compensation in
each contribution period, subject to the maximum deductible limit provided by
the Internal Revenue Code. EchoStar may make a 50% matching contribution up to a
maximum of $1,000 per participant per calendar year. EchoStar may also make an
annual discretionary profit sharing or employer stock contribution to the 401(k)
Plan with the approval of the Board of Directors. EchoStar has not yet
determined the amount to be contributed, if any, during 2001 relating to its
2000 discretionary contribution.
401(k) Plan participants are immediately vested in their voluntary
contributions, plus actual earnings thereon. The balance of the vesting in
401(k) Plan participants' accounts is based on years of service. A participant
becomes 20% vested after one year of service, 40% vested after two years of
service, 60% vested after three years of service, 80% vested after four years of
service, and 100% vested after five years of service.
PERFORMANCE GRAPH
The graph below sets forth the cumulative total return to EchoStar's
shareholders during the period from December 29, 1995 to December 29, 2000. The
graph appearing below assumes the investment on December 29, 1995 of $100 in
Class A Shares of the Corporation, the Nasdaq Stock Market Index, and an
industry peer group. The industry peer group consists of, Adelphia
Communications Corporation, Cablevision Systems Corporation, Comcast
Corporation, Cox Communications Inc., Hughes Electronics Corporation, Pegasus
Communications Corporation, AT&T Corp. and AOL Time Warner, Inc. ("Industry Peer
Group"). Although the companies included in the industry peer group were
selected because of similar industry characteristics, they are not entirely
representative of the Corporation's business.
[PERFORMANCE GRAPH]
TOTAL RETURN ANALYSIS
12/29/95 12/31/96 12/31/97 12/31/98 12/31/99 12/29/00
------------ ------------ ------------ ------------ ------------ ------------
ECHOSTAR COMMUNICATIONS $ 100.00 $ 90.72 $ 68.85 $ 198.86 $ 1,603.19 $ 748.16
PEER GROUP $ 100.00 $ 91.91 $ 178.26 $ 328.35 $ 587.74 $ 322.77
NASDAQ COMPOSITE $ 100.00 $ 122.71 $ 149.25 $ 209.25 $ 389.46 $ 236.44
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The preceding graph is not to be deemed incorporated by reference by
any general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent the Corporation specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
REPORT ON EXECUTIVE COMPENSATION
GENERAL
The purpose of EchoStar's compensation policy is to offer compensation
packages to attract, retain and motivate Executive Officers over the long term.
Since 1996, executive compensation has been reviewed by the Executive
Compensation Committee (the "Committee"). The primary components of EchoStar's
executive compensation program are base salary and bonuses, conditional
incentive-based bonuses and long-term incentive compensation in the form of
stock options and other awards offered under EchoStar's Incentive Plans.
BASE SALARIES AND BONUSES
Annual base salaries paid to EchoStar's Executive Officers have
historically been at levels significantly below those generally paid to
Executive Officers with comparable experience and responsibilities in the
telecommunications industry or other similarly sized companies. Because of the
levels of compensation, EchoStar may experience difficulty in attracting and
retaining Executives at the highest performance levels. The Committee reviews
all adjustments to annual base salaries paid to EchoStar's Executive Officers.
Compensation adjustments are determined based on recommendations from the Chief
Executive Officer. Factors considered by Mr. Ergen in making his recommendation
to the Committee are typically based on his perception of the individual's
performance, success in achieving company and personal goals, and planned
changes in responsibilities. An individual's extraordinary efforts resulting in
tangible increases in corporate, division or department success are also
considered by Mr. Ergen in recommending increases in base salary and annual
bonuses.
INCENTIVE COMPENSATION
Stock option grants under EchoStar's Incentive Plans are designed to
provide an additional incentive to attract and retain Executive Officers. In
addition, stock options provide an incentive to Executive Officers to increase
shareholder value on a long-term and sustained basis. Management believes that
Executive Officers who are in a position to contribute to the long-term success
of EchoStar and to build incremental shareholder value, should have a stake in
EchoStar's future success. This focuses attention on managing EchoStar as an
owner with an equity position in EchoStar's business and seeks to align the
Executive Officer's interests with the long-term interests of shareholders.
Stock options represent an important part of EchoStar's compensation program for
Executive Officers, and, similar to other growing technology companies,
represents a significant component of overall compensation.
General Incentives
Awards under the 1995 Incentive Plan follow a review of the individual
employee's performance, years of service, position with EchoStar, and long-term
potential contribution to EchoStar. The number of options to be granted to an
employee are determined based upon the key employee's level of responsibility,
position in EchoStar and potential to contribute to the long-term success of
EchoStar and on the number of options previously granted to the employee.
Neither Management nor the Board of Directors assigns specific weights to these
factors, although the employee's position and a subjective evaluation of his
performance are considered most important.
Stock options were awarded under the 1995 Incentive Plan to certain
Executive Officers and certain key employees on March 31, June 30, September 30,
and December 31, 2000. To encourage Executive Officers to remain employed by
EchoStar or its subsidiaries, options granted under the 1995 Incentive Plan
generally vest at the rate of 20% per year and generally are granted at exercise
prices not less than fair market value.
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Conditional Incentives
On February 17, 1999, each of the Named Executives also was granted an
option to purchase 400,000 Class A Shares under the Corporation's Long Term
Incentive Plan. The plan, which provided key employees with stock options, the
exercise of which is contingent on the achievement of certain long-term goals,
was adopted by the Corporation during February 1999. As of the date of this
Proxy Statement the achievement of those goals and consequent exercisability of
the options, can not reasonably be predicted. Subject to the contingency, the
options vest at the rate of 20% per year, commencing March 31, 2000 and expire
ten years from the date of grant, subject to early termination in certain
circumstances.
In February 2000, EchoStar adopted the 2000 Executive Bonus Plan which
provided, among other things, each Named Executive Officers with an option to
purchase up to 9,000 Class A Shares, depending upon EchoStar's achievement of
certain financial and other goals. EchoStar did not meet any of the goals during
2000. Accordingly, all stock options granted pursuant to the 2000 Executive
Bonus Plan were cancelled.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Committee believes that the compensation paid to Charles W. Ergen,
EchoStar's Chief Executive Officer, has generally been at a level that is
substantially below amounts paid to Chief Executive Officers at other companies
of similar size and in comparable industries.
Mr. Ergen's base salary for each of fiscal 2000 and fiscal 1999 was
$250,000. Since 1996, changes in Mr. Ergen's base salary are reviewed annually
by the Committee based on recommendations from the Board of Directors. During
2000, Mr. Ergen was granted options to purchase 500,000 Class A Shares in
connection with the 1995 Incentive Plan. Mr. Ergen also received a bonus of
$750,000 during 2000 which was contingent upon the successful launch and
operation of EchoStar's sixth satellite, EchoStar VI, as the conclusion of the
1999 transaction with The News Corporation and MCI Telecommunications.
The report of the Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act or under the Exchange Act,
except to the extent that EchoStar specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
Respectfully submitted,
The EchoStar Executive Compensation Committee
Raymond L. Friedlob
O. Nolan Daines
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REPORT OF THE AUDIT COMMITTEE
We have reviewed and discussed the audited financial statements of
EchoStar for fiscal 2000 with management. We also have discussed the audited
financial statements with EchoStar's independent auditors. Our discussions with
the independent auditors included, among other things, discussions relating to
the auditor's responsibility under generally accepted auditing standards, the
processes used by our management in formulating accounting estimates,
significant adjustments made during the audit, any disagreements with our
management and any difficulties encountered by the independent auditors in
performing the audit. We also reviewed written disclosures from the independent
auditors relating to any and all relationships between them and EchoStar, and we
discussed with the auditors any relationship that might affect the objectivity
or independence of the independent auditors.
Based on those discussions, we are not aware of any relationship
between the independent auditors and EchoStar that affects the objectivity or
independence of the independent auditors. Based on the discussions and our
review discussed above, we recommended to the Board of Directors that the
audited financial statements for fiscal 2000 be included in EchoStar's 2000
Annual Report to shareholders.
Respectfully submitted,
The EchoStar Audit Committee
Raymond L. Friedlob
O. Nolan Daines
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 2000, the law firm of Friedlob, Sanderson, Paulson &
Tourtillott, LLC billed EchoStar approximately $299,000 in fees related to
certain of the Corporation's 2000 securities offerings and other corporate legal
advice, of which approximately $177,000 was ultimately paid by third parties.
Mr. Friedlob, a member of EchoStar's Board of Directors, is a member in that law
firm.
Arthur Andersen LLP served as our independent auditors for the fiscal
year ended December 31, 2000. A representative of Arthur Andersen LLP is
expected to attend the Annual Meeting and will have the opportunity to make a
statement. The representative will be available to answer appropriate
shareholder questions. During 2000 and 2001, Arthur Andersen billed EchoStar
approximately $200,000 in fees related to the audit of the Corporation's annual
financial statements for the year ended December 31, 2000 and for reviews of
EchoStar's quarterly financial statements issued during 2000. Arthur Andersen
LLP also billed EchoStar approximately $138,000 in fees related primarily to
certain of the Corporation's 2000 securities offerings and approximately $57,000
related to other non-audit services.
PROPOSAL NO. 2 - RATIFICATION OF INDEPENDENT ACCOUNTANTS
Since 1988, the firm of Arthur Andersen LLP, independent accountants,
has examined and reported on EchoStar's financial statements. The Board of
Directors has appointed, subject to the approval of its shareholders, Arthur
Andersen LLP as EchoStar's independent accountants for the fiscal year ending
December 31, 2001. Representatives of Arthur Andersen LLP are expected to be
present at the Annual Meeting and will have the opportunity to make any
statements they may desire. They also will be available to respond to
appropriate questions from shareholders.
If a quorum is present, the affirmative vote of a majority of the total
voting power of EchoStar present or represented by proxy and entitled to vote at
the Annual Meeting is required to approve the appointment of Arthur Andersen LLP
as independents accountants.
Charles W. Ergen, the Chairman, Chief Executive Officer and President
of EchoStar, possesses more than 90% of the total voting power of EchoStar. Mr.
Ergen has indicated his intention to vote in favor of Proposal No. 2.
Accordingly, approval of Proposal No. 2 is assured notwithstanding a negative
vote by shareholders other than Mr. Ergen.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION
OF THIS APPOINTMENT (ITEM NO. 2 ON THE ENCLOSED PROXY CARD).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
EchoStar's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000 filed with the SEC is incorporated herein by reference.
Shareholders should carefully review the Annual Report on Form 10-K prior to
deciding how to vote their shares in connection with the matters set forth in
this Proxy Statement.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be modified or superseded, for purposes
of this Proxy Statement, to the extent that a statement contained herein or in
any subsequently filed document that is deemed to be incorporated herein
modifies or supersedes any such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Proxy Statement.
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WHERE TO GET ADDITIONAL INFORMATION
EchoStar files annual, quarterly and current reports, proxy statements
and other information with the SEC. You may read and copy any reports,
statements, or other information EchoStar files at the SEC's public reference
rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference rooms.
The SEC filings of EchoStar are also available to the public from commercial
document retrieval services and on the Internet through the website maintained
by the SEC at http://www.sec.gov. EchoStar Class A Shares are traded on the
NASDAQ National Market System and reports and other information concerning
EchoStar can also be inspected at the NASDAQ National Market, 1735 K Street, NW,
Washington, D.C. 20546.
COST OF PROXY STATEMENT
The cost of the solicitation of proxies will be borne by EchoStar. In
addition to the use of the mail, proxies may be solicited personally, by
telephone or by a few regular employees of EchoStar without additional
compensation. EchoStar does not expect to pay any compensation for the
solicitation of proxies but will reimburse brokerage firms, custodians,
nominees, fiduciaries and other persons holding stock in their names, or in the
names of nominees, at approved rates, for their expenses in forwarding proxy
materials to beneficial owners of securities held of record by such persons and
obtaining their proxies.
SUBMISSION OF SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Shareholders who intend to have a proposal considered for inclusion in
EchoStar's proxy materials for presentation at the 2002 Annual Meeting of
Shareholders must submit the proposal to EchoStar no later than December 26,
2001. EchoStar reserves the right to reject, rule out of order or take other
appropriate action with respect to any proposal that does not comply with these
and other applicable requirements.
OTHER BUSINESS
Management knows of no other business that will be presented to the
Annual Meeting of Shareholders other than that which is set forth in this Proxy
Statement.
By Order of the Board of Directors
/s/ DAVID K. MOSKOWITZ
DAVID K. MOSKOWITZ
Senior Vice President, General Counsel,
Corporate Secretary and Director
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APPENDIX A
AMENDED AND RESTATED CHARTER OF
THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS OF
ECHOSTAR COMMUNICATIONS CORPORATION
JUNE 14, 2000
The board of directors (the "Board of Directors") of EchoStar
Communications Corporation (the "Corporation") hereby establishes an audit
committee (the "Audit Committee"), as a standing committee of the Board of
Directors, which shall have the responsibilities described below and shall use
the means described below to carry out such responsibilities.
STATEMENT OF POLICY
Primary responsibility for the Corporation's financial reporting and
internal controls is vested in the management of the Corporation, as overseen by
the Board of Directors. The Audit Committee shall provide assistance to the
Board of Directors in fulfilling their responsibility to the shareholders,
potential shareholders and the investing community relating to corporate
accounting, reporting practices, and the quality and integrity of the financial
reports of the Corporation. In so doing, it is the responsibility of the Audit
Committee to maintain free and open means of communication between the Board of
Directors, the independent auditors, the internal auditors and the financial
management of the Corporation. The Audit Committee shall provide oversight and
review of the Corporation's accounting and financial services, internal
operating controls and its ethical standards in consultation with the
independent auditors and the General Counsel of the Corporation.
The Audit Committee shall be the Board of Directors' principal agent in
ensuring the independence of the independent auditors, the integrity of
management, and the adequacy of disclosures to shareholders. In performing its
designated functions, described herein, the Audit Committee shall not assume or
diminish management's responsibility for the content of the information
disseminated by the Corporation.
COMPOSITION OF THE AUDIT COMMITTEE
The Audit Committee shall be composed of at least two members (and,
effective June 14, 2001, at least three members), comprised solely of
Independent Directors (as defined below), each of whom is able to read and
understand fundamental financial statements, including a company's balance
sheet, income statement, and cash flow statement or will become able to do so
within a reasonable period of time after his or her appointment to the Audit
Committee. In addition to the foregoing, at least one (1) member of the Audit
Committee must have past employment experience in finance or accounting,
requisite professional certification in accounting, or any other comparable
experience or background that results in the individual's financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities. Without limitation of the foregoing, members of the Audit
Committee are not expected to be nor held to be experts in the fields of
accounting, finance, auditing or SEC disclosure requirements. Notwithstanding
the foregoing, one member of the Board of Directors who is not an Independent
Director, and is not a current employee or an Immediate Family (as defined
below) member of an employee, may be appointed to the Audit Committee, if the
Board of Directors, under exceptional and limited circumstances, determines that
membership on the Audit Committee by the individual is required by the best
interests of the Corporation and its shareholders, and the Board of Directors
discloses, in the next annual proxy statement subsequent to such determination,
the nature of the relationship and the reasons for that determination. The
members of the Audit Committee shall be appointed by the Board of Directors and
shall serve until each annual meeting of the shareholders of the Corporation and
until their successors are duly appointed.
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APPENDIX A
For purposes of this Charter, "Independent Director" means a person
other than an officer or employee of the Corporation or its subsidiaries or any
other individual having a relationship which, in the opinion of the Board of
Directors, would interfere with the exercise of independent judgment in carrying
out the responsibilities of a member of the Board of Directors. In furtherance
and without limitation of the foregoing, the following persons shall not be
considered independent:
(a) a member of the Board of Directors who is employed by the
Corporation or any of its affiliates for the current year or any
of the past three years;
(b) a member of the Board of Directors who accepts any compensation
from the Corporation or any of its affiliates in excess of Sixty
Thousand Dollars ($60,000.00) during the previous fiscal year,
other than compensation for service on the Board of Directors,
benefits under a tax-qualified retirement plan, or
non-discretionary compensation;
(c) a member of the Board of Directors who is a member of the
Immediate Family of an individual who is, or has been in any of
the past three years, employed by the Corporation or any of its
affiliates as an executive officer. For purposes of this
Subsection (c), "Immediate Family" includes a person's spouse,
parents, children, siblings, mother-in-law, father-in-law,
brother-in-law, sister-in-law, daughter-in-law, and anyone who
resides in such person's home;
(d) a director who is a partner in, or a controlling shareholder or an
executive officer of, any for-profit business organization to
which the Corporation made, or from which the Corporation received
payments (other than those arising solely from investments in the
Corporation's securities) that exceed five percent (5%) of the
Corporation's or business organization's consolidated gross
revenues for that year, or Two Hundred Thousand Dollars
($200,000.00), whichever is more, in any of the past three years;
or
(e) a member of the Board of Directors who is employed as an executive
of another entity where any of the Corporation's executives serve
on that entity's compensation committee.
ACCESS AND RESOURCES
The Audit Committee shall have unrestricted access to the Corporation's
personnel and records and to the independent auditors and will be given or have
available to it the resources necessary to discharge its responsibilities.
MEETINGS
The Audit Committee shall meet on a regular basis, but no less than
four (4) times per year, and call special meetings, as required.
Members of the Audit Committee are encouraged to be present at all
meetings of the Audit Committee. A quorum for action by the Audit Committee
shall be one-half (and, effective June 14, 2001, two-thirds) of the total
members of the Audit Committee.
The members of the Audit Committee shall elect a Chairman to preside at
all meetings of the Audit Committee. As necessary or desirable, the Chairman of
the Audit Committee may request that members and representatives of the
independent auditors, management or others be present at a meeting of the Audit
Committee and provide pertinent information as necessary.
Compensation shall be Five Hundred Dollars ($500.00) per meeting for
members in attendance, unless there is a meeting of the Board of Directors on
the same day as the relevant Audit Committee meeting, in which case there will
be no additional consideration for attendance at such Audit Committee meeting.
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APPENDIX A
MINUTES
Minutes of each meeting of the Audit Committee are to be prepared and
approved by the Audit Committee and thereafter provided to the Board of
Directors. Such minutes shall be filed with the Secretary of the Corporation and
retained in the minute book of the Board of Directors.
GENERAL POLICIES AND PROCEDURES
In carrying out its responsibilities, the Audit Committee's policies
and procedures will remain flexible, to best react to changing conditions and to
ensure to the Board of Directors and shareholders that the corporate accounting
and reporting practices of the Corporation are in accordance with all
requirements and are of the highest quality.
REGULAR FUNCTIONS
A. Selection of Independent Auditors.
The Audit Committee shall review with the Chief Financial Officer of
the Corporation and approve the engagement of the independent auditors for each
audit and for non-audit services requested, including the fee, scope and timing
of the audit or non-audit services requested, the nature and magnitude of the
services actually performed compared to earlier approvals for the procedure (if
applicable), the range and proportion of audit and non-audit fees and the effect
of any engagement on the independence of the auditors.
The Audit Committee shall be responsible for ensuring that it receives
from the independent auditors a formal written statement delineating all
relationships between the independent auditors and the Corporation, consistent
with Independence Standards Board Standard 1, and the Audit Committee shall
further be responsible for actively engaging in a dialogue with the independent
auditors with respect to any disclosed relationships or services that may impact
the objectivity and independence of the auditors and for taking, or recommending
that the full Board of Directors of the Corporation take, appropriate action to
oversee the independence of the independent auditor. The audit committee shall
be responsible for confirming and assuring the objectivity of the internal
auditor.
The independent auditors are ultimately accountable to the Board of
Directors and Audit Committee, and the Board of Directors and Audit Committee
shall have the ultimate authority and responsibility to recommend the nomination
of the independent auditors by the Board of Directors for shareholder approval
in any proxy statement.
B. Review of Annual Audit Plan.
The Audit Committee shall review the annual audit plan submitted by the
independent auditors. The Audit Committee shall discuss with the independent
auditors the overall approach to and scope of the audit examination with
particular attention focused on those areas where either the Audit Committee,
the Board of Directors, management or the independent auditors believe special
emphasis is desirable.
C. Review Results of the Annual Audit.
Upon completion of any audit and periodically throughout each fiscal
year as requested by the independent auditors or management or as deemed
advisable by the Audit Committee, the Audit Committee shall review and discuss
the audited financial statements, the results of the audit and the independent
auditors' report or opinion on matters related to the performance of such audit.
The following illustrates, but is not limited to, the topics which may
be discussed with the independent auditors and management:
(a) the quality of the financial statements,
(b) any significant auditor or management adjustments,
reclassifications, disclosures, accounting estimates, new or
changed accounting policies or principles and disagreements with
management,
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APPENDIX A
(c) the reasons for major fluctuations in financial statement balances
(current year compared to prior years),
(d) the clarity and adequacy of the Corporation's financial
disclosures,
(e) the quality and degree of aggressiveness or conservatism of
accounting policies and principles, underlying estimates and other
significant decisions made in preparing financial disclosures,
(f) unusual circumstances or situations reflected in the financial
statements, including identification of any loss or marginal
operation,
(g) the nature of any unusual or significant commitments or contingent
liabilities, together with the underlying assumptions and
estimates of management,
(h) significant differences in format or disclosure from others in the
industry,
(i) significant differences between the annual report and other
reports, such as the reports to any regulatory agencies,
(j) the independent auditors' observations on internal accounting
controls presented in the management letter,
(k) the adequacy of the Corporation's system of internal accounting
controls,
(l) any change in key personnel, operations or systems which may
affect the continuing functioning and effectiveness of the
Corporation's accounting and operating controls,
(m) the performance of the independent auditors, and
(o) to the extent not otherwise covered above, the matters required by
Statement on Auditing Standards No. 61.
D. Review of Other Quarterly and Annual Reports.
The Audit Committee shall review any other financial statements or
reports, as requested by management or determined by the Audit Committee, which
are required to be filed with any Federal, State or local regulatory agency
prior to filing with the appropriate regulatory body, and the Company shall
promptly provide the members of the Audit Committee with final copies of all
such reports after filing with the appropriate regulatory body. As a part of
such review, the following illustrates, but does not limit, the topics which may
be covered:
(a) the accounting principles employed in reporting any large or
unusual transactions and the possible need to make specific
disclosures of material developments,
(b) developments in accounting polices and procedures since the
previous filing of such financial statement or report and the
effect of these developments may have on the Corporation's
financial reporting, and
(c) significant fluctuations in financial statement balances, ratios
or statistics.
E. Review Charter.
The Audit Committee Shall review and reassess the adequacy of this
Charter on an annual basis.
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APPENDIX A
F. Other Oversight Functions.
The Audit Committee shall perform such other oversight functions as
requested by the Board of Directors. In addition, the Audit Committee is
authorized to and shall have the power to perform the following functions:
(a) conduct or authorize investigations into any matters within the
Audit Committee's scope of responsibilities. The Audit Committee
shall be empowered to retain independent counsel and other
professionals to assist in the conduct of any investigation, after
consultation with the General Counsel of the Corporation, and
(b) review legal and regulatory matters that may have a material
impact on the financial statements, related company compliance
policies, and programs and reports received from regulators.
EXCULPATORY PROVISION
The Audit Committee is responsible for the duties set forth in this
charter but is not responsible for either the preparation of the financial
statements or the auditing of the financial statements. Management has the
responsibility for preparing the financial statements and implementing internal
controls and the independent accountants have the responsibility for auditing
the financial statements and monitoring the effectiveness of the internal
controls. The review of the financial statements by the Audit Committee is not
of the same quality as the audit performed by the independent accountants.
*************
In accordance with the rules and regulations of the SEC, the above
Audit Committee Charter shall not be deemed to be "soliciting material" or to be
"filed" with the SEC or subject to Regulations 14A or 14C of the Securities
Exchange Act of 1934 or to the liabilities of Section 18 of the Exchange Act and
shall not be deemed to be incorporated by reference into any filing under the
Securities Act of 1933 or the Exchange Act, notwithstanding any general
incorporation by reference of this Proxy Statement into any other filed
document.
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PROXY PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Charles W. Ergen and David K.
Moskowitz, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote as designated below, all Class A Shares of
EchoStar Communications Corporation held of record by the undersigned on March
22, 2001, at the Annual Meeting of Shareholders to be held on May 4, 2001, or
any adjournment thereof.
1. ELECTION OF SEVEN DIRECTORS.
[ ] FOR all nominees listed below (except as marked to the contrary)
[ ] WITHHOLD AUTHORITY to vote for all the nominees listed below
O. Nolan Daines James DeFranco Cantey Ergen Charles W. Ergen
Raymond L. Friedlob David K. Moskowitz C. Michael Schroeder
(INSTRUCTION: To withhold authority to vote for any individual
nominee, cross out that nominee's name above.)
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE
INDEPENDENT PUBLIC ACCOUNTANTS OF THE CORPORATION FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
ANNUAL MEETING OR ANY ADJOURNMENT THEREOF.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE THIS PROXY WILL
BE VOTED FOR THE ELECTION OF EACH OF THE SEVEN (7) DIRECTORS SET FORTH ABOVE AND
FOR THE RATIFICATION OF ARTHUR ANDERSEN AS THE CORPORATION'S INDEPENDENT
ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2001. THIS PROXY CONFERS
DISCRETIONARY AUTHORITY WITH RESPECT TO PROPOSALS NOT KNOWN OR DETERMINED AT THE
TIME OF THE MAILING OF THE NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO THE
UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement furnished herewith.
Dated: , 2001
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Signature
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Signature if held jointly
Signatures should agree with the name(s)
stenciled hereon. Executors, administrators,
trustees, guardians and attorneys should
indicate when signing. Attorneys should
submit powers of attorney.
PLEASE SIGN AND RETURN THIS PROXY IN THE ENCLOSED PRE-ADDRESSED ENVELOPE.
THE TENDER OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND
THE MEETING OR TO SUBMIT A LATER DATED REVOCATION OR AMENDMENT TO THIS PROXY ON
ANY OF THE ISSUES SET FORTH ABOVE.