Twenty-First Century Fox 2008 Annual Report Download - page 113

NEWSCORP
Notes to the Consolidated Financial Statements (continued)
In addition, during the fiscal years ended June 30, 2008 and June 30, 2007, certain employees and executives of NDS had the opportunity to
earn grants of NDS shares under the NDS LTIP conditioned upon the attainment of pre-determined operating income goals for the applicable fiscal
year (“Performance-Based Conditional Awards”). To the extent that it was determined that NDS’ actual operating income for the applicable fiscal
year fell within the performance goal range, the employees or executives received a percentage of his or her annualized base salary, ranging from
0% to 45% for the vast majority of recipients; however, the range for some recipients was from 0% to up to 187.5% for the fiscal year ended
June 30, 2008 and from 0% to up to 225% for the fiscal year ended June 30, 2007. The Performance-Based Conditional Awards are paid in time-
vested NDS shares. In August 2008, 436,394 NDS shares were awarded in satisfaction of the Fiscal 2008 Performance-Based Conditional
Awards. In August 2007, 286,841 NDS shares were awarded in satisfaction of the Fiscal 2007 Performance-Based Conditional Awards. The Fiscal
2008 Performance-Based Conditional Awards vest in four equal annual installments beginning on August 15, 2008 and the Fiscal 2007
Performance-Based Conditional Awards vest in four equal annual installments beginning on August 15, 2007, each subject to, among other
conditions, the individual’s continued employment with NDS. The grant date fair value of the Fiscal 2008 Performance-Based Conditional Awards
was $55.91 per share, and the grant date fair value of the Fiscal 2007 Performance-Based Conditional Awards was $51.57 per share.
The following table summarizes the Company’s equity-based compensation:
2008 2007 2006
For the years ended June 30, (in millions)
Equity-based compensation $153 $ 131 $ 132
Cash received from exercise of equity-based compensation $ 80 $366 $222
Total intrinsic value of options exercised $ 54 $208 $ 123
At June 30, 2008, the Company’s total compensation cost related to non-vested stock options, SARs and RSUs not yet recognized for all
plans presented was approximately $296 million, the majority of which is expected to be recognized over the next three fiscal years. Compensation
expense on all stock-based awards is recognized on a straight line basis over the vesting period of the entire award.
The Company recognized a tax benefit on stock options exercised of $13 million, $68 million and $35 million for the fiscal years ended June 30,
2008, 2007 and 2006, respectively.
Note 14 RELATED PARTIES
Director transactions
Mr. Stanley Shuman, who served as a Director of the Company through October 2005 and was named Director Emeritus effective October 2005, is a
Managing Director of Allen & Company LLC, a U.S. based investment bank, which provided investment advisory services to the Company. Total
fees paid to Allen & Company LLC were $7.5 million, nil and $6.1 million, in fiscal 2008, 2007 and 2006, respectively.
Mr. José María Aznar, a Director of the Company, holds a 50% interest in Famaztella S.L. (“Famaztella”), a private consulting firm, which
provided advisory services to the Company related to its global corporate strategy. Since September 1, 2004, Famaztella received €10,000 per
month for its services. The consultancy agreement between Famaztella and the Company was terminated on June 20, 2006, immediately
preceding Mr. Aznar’s appointment to the Board.
Freud Communications, which is controlled by Matthew Freud, Mr. K.R. Murdoch’s son-in-law, provided external support to the press and
publicity activities of the Company during fiscal years 2008, 2007 and 2006. The fees paid by the Company to Freud Communications were
approximately $669,000 in fiscal 2008 and $500,000 in each of fiscal 2007 and 2006. At June 30, 2008, there were no outstanding amounts due to
or from Freud Communications.
The Company has engaged Mrs. Wendi Murdoch, the wife of Mr. K.R. Murdoch, the Company’s Chairman and Chief Executive Officer, to
provide strategic advice for the development of the MySpace business in China. The fees paid to Mrs. Murdoch pursuant to this arrangement are
$100,000 per annum and Mrs. Murdoch received $100,000 and $83,333 in the fiscal year ended June 30, 2008 and 2007, respectively. Mrs. Murdoch
is a Director of MySpace China Holdings Limited (“MySpace China”), a joint venture in which the Company owns a 51.5% interest on a fully diluted
basis, which licenses the technology and brand to the local company in China that operates the MySpace China website. Similar to other Directors
of MySpace China, Mrs. Murdoch received options over 2.5% of the fully diluted shares of MySpace China, that will vest over four years under the
MySpace China option plan. There were no fees paid to Mrs. Murdoch in fiscal 2006.
The Shine Group (“Shine”), a television production and distribution company, is controlled by Ms. Elisabeth Murdoch, the daughter of Mr. K.R.
Murdoch. Through the normal course of business, certain subsidiaries of the Company have entered into various production and distribution
arrangements with Shine. Pursuant to these arrangements, the Company paid Shine an aggregate of approximately $453,000 and $300,000 in the
fiscal years ended June 30, 2008 and 2007, respectively. No amounts were paid to Shine in fiscal 2006.
Mr. Mark Hurd, a Director of the Company, is also the Chairman and Chief Executive Officer of Hewlett-Packard Company (“HP”). Through the
normal course of business, HP sells certain equipment and provides services to the Company and its subsidiaries pursuant to a worldwide
agreement entered into by the Company and HP in August 2007. Pursuant to this agreement, the Company paid HP approximately $68 million in
the fiscal year ended June 30, 2008.
112 NEWSCORP 2008 Annual Report