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Old 01-09-2007, 09:39 AM   #1
CorporateSlave
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Default Sirius pays Howard Stern $83 million stock bonus

Reuters
Sirius pays Howard Stern $83 mln stock bonus
Tuesday January 9, 9:48 am ET
By Michele Gershberg


NEW YORK (Reuters) - Sirius Satellite Radio (NASDAQ:SIRI - News) paid shock jock Howard Stern a bonus worth nearly $83 million on Tuesday for surpassing subscriber goals set in a 2004 contract that had already turned heads with its $500 million compensation package.
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The freewheeling and ribald Stern joined Sirius one year ago, jumping from the FM dial where he rose to become one of radio's biggest stars but frequently bridled at government indecency regulations and ties with his corporate bosses.

His defection marked a turning point for the nascent business of satellite radio, with both Sirius and larger rival XM Satellite Radio (NASDAQ:XMSR - News) paying millions more to sign on other talent and attract listeners to their subscriber model.

Sirius had roughly 600,000 subscribers when it signed Stern in 2004 for a contract valued at $500 million over five years.

At the time, analysts had forecast the company would grow to about 3.5 million subscribers by the end of 2006. Sirius and Stern agreed to an added bonus in the event that the number of subscribers exceeded that forecast by more than 2 million.

Last week, the company reported that it ended 2006 with more than 6 million subscribers, at the middle of a forecast range made in December, triggering the bonus payment of about 22.1 million shares. Sirius closed at $3.76 on Tuesday.

"The decision to bring Howard Stern to Sirius required a very significant commitment and we are very pleased that our investment has dramatically paid off," Sirius Chief Executive Mel Karmazin said in a statement.

Sirius said the bonus to Stern would not increase its diluted share count and that expenses related to the payment have been reflected in operating results throughout 2006.

Both Sirius and XM are growing rapidly, but losing money as they aim to improve their technology and sign on top-shelf entertainment, from the largest U.S. sports leagues to celebrities like Stern, Oprah Winfrey and Martha Stewart.

Sirius and XM shares have also shed more than 40 percent of their value in the last year, compared with a 10 percent rise in the Standard & Poor's 500 Index, with investor concerns ranging from the ability to meet new subscriber targets to a weak retail sector.

Stern's contract with Sirius offers additional stock-based bonuses for exceeding subscriber targets on an annual basis, but the threshold grows increasingly higher over time and is substantially greater than 2 million.

That makes it less likely the radio host would qualify for another bonus going forward unless Sirius posts tremendous new growth.

Sirius shares were down slightly at $3.75 shortly after the Nasdaq's open on Tuesday.

http://biz.yahoo.com/rb/070109/sirius_stern.html?.v=4
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Old 01-09-2007, 09:46 AM   #2
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So much for CFBE.... hello dillution.

Stern is closing in on a Billion total comp!

Just remember XM offered far less ($30MM if I can remember) than the $100MM a year to begin with.

Not even taking into account these lucrative softball type numbers for the fat bonuses can any of you really defend this?

When you have two competitors in a market space and one overbids by so much + adds stock over the high salary it is hard to defend.
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Old 01-09-2007, 09:55 AM   #3
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"Not even taking into account these lucrative softball type numbers for the fat bonuses can any of you really defend this?"

Yes, it's VERY SIMPLE. Stern is responsible for 99% of the success Sirius is having and that's that. To say otherwise only serves to quickly write you off as a mental case that gave up on schooling and reality a LONG LONG TIME AGO.

There would be no Sirius if they didn't secure Stern and Sirius knew this when they signed him on.

It's pretty sad when Stern is realistically one of the few MULTI MULTI millionaires that actually worked for his money and not through rip-off government deals influenced by fear and scare tactics.
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Old 01-09-2007, 09:55 AM   #4
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2004 expectations for 2006 - 3.5M subscribers

2006 actual subscribers - 6M

"Stern Effect" (at least partial contribution) - 2.5M extra subscribers

Added income for Sirius - $375M

Stern Bonus - $83M (~22%)

Is it high? Sure. Was it in his contract two years ago? Yes. Is this anywhere near the fiasco that was Home Depot? No. Bottom line - even after giving $83M in stock options Sirius is left with $292M it had not counted on.
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Old 01-09-2007, 10:39 AM   #5
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I understand the gamble and the desperation of Sirius at the time.

However this is an investor board.

How many more of these bonuses are coming?

Actually those 24,000 subs over the 6 Million Target Subs cost Sirius and the shareholders $83 Million. Probably 24,000 cars on dealer lots. Seems to easy for such a large bonus. Especially when the guy is pulling down more money than all of the individual Fortune 500 CEO's in base pay.

Since 1/2004 here are the adds..

XM - Then 1,360,228... Now 7,627,873 -- Net 6.3 Million Subs

SIRI - Then 261,061... Now 6,024,000 -- Net 5.8 Million Subs

I would argue that these were softball numbers... because since 2004 XM still has outpaced Sirius.

Even in 2006 Sirius beat XM by 1.1 Million subs... is that worth $83 Million in bonus... not to mention the base salary?

It is starting to make the XM numbers look great from a business perspective!

Taking into account the $183 Million compensation pkg owed to Mr. Stern.
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Old 01-09-2007, 10:55 AM   #6
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I'm thinking you who were bashing FlagRiot (now banned for telling it like it is) ought to weigh in on this about now....
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Old 01-09-2007, 10:57 AM   #7
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Quote:
Originally Posted by Crashed
I'm thinking you who were bashing FlagRiot (now banned for telling it like it is) ought to weigh in on this about now....
Hey FlagRiot, welcome back!
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Old 01-09-2007, 10:58 AM   #8
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Quote:
Hey FlagRiot, welcome back!
I can assure you, Crashed will be gone in the blink of an eye.
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Old 01-09-2007, 11:02 AM   #9
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Quote:
Originally Posted by CorporateSlave
So much for CFBE.... hello dillution.

Stern is closing in on a Billion total comp!

Just remember XM offered far less ($30MM if I can remember) than the $100MM a year to begin with.

Not even taking into account these lucrative softball type numbers for the fat bonuses can any of you really defend this?

When you have two competitors in a market space and one overbids by so much + adds stock over the high salary it is hard to defend.
From Mel:

"Sirius said the bonus to Stern would not increase its diluted share count and that expenses related to the payment have been reflected in operating results throughout 2006."
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Old 01-09-2007, 11:12 AM   #10
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BMF

Wasn't it you telling FlagRiot he was all wrong about this?
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Old 01-09-2007, 11:19 AM   #11
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BMF

Wasn't it you telling FlagRiot he was all wrong about this?
I called FlagRiot an idiot for many things, I'm not sure which you're talking about here. I don't remember him saying anything about this bonus.
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Old 01-09-2007, 11:28 AM   #12
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Lots of people here called him an idiot. Problem is, he was right about every damned thing he posted. Do you remember this gem you posted?

[/quote]
The reason people don't like you here is because you are stating bullshit "facts". Fact is, Sirius does NOT have to buy a new satellite every year, like they did this year. Fact is, many parts of Howard's contract are very public, especially that which has included the stock payments. That stock "bonus" he got wasn't a bonus at all, it was an accelerated payment and part of the $500 million over 5 years. Beyond that, Sirius stated in the 1Q conference call that they were intentionally paying off a large chunk of Stern's contract this year because they just wanted to take one big hit initially. Go read some articles about satellite radio if you want to sit here and spew your XM-biased opinions.[/quote]

You were wrong about the satellite. Sirius didn't pay for a satellite.

You were wrong about Stern. The total is now at $700 Million after one year at Sirius, with 4 years to go.

Yes, you guys called FlagRiot an idiot, but it seems he is one of a very few around here that knew WTF he was talking about.

Wish he would come back. LOL.
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Old 01-09-2007, 11:48 AM   #13
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Can we keep the thread on topic instead of talking about old members/topics not relevant to this thread?

Interesting quote from Mel. Thanks for posting!
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Old 01-09-2007, 11:49 AM   #14
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heres why Stern is worth whatever he signed for-
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Old 01-09-2007, 11:50 AM   #15
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right on homey.
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