Mel Karmazin Extends Contract Through 2012
Sirius XM announced today that Mel Karmazin’s employment agreement has been extended through December 31, 2012. The new deal gives Mr. Karmazin a raise in his base salary, as well as the options to buy 120 million shares at a price of $0.43 per share.
Karmazin, a long time radio industry guy, joined Sirius Satellite Radio in 2004. His deal was scheduled to expire in the fall of this year and could have been a potential worry for the street. Over his tenure, Mel was able to bring about a merger with XM, but has also been at the helm during a period where shareholder value has eroded. The new deal will likely be met with mixed emotions, as some have been critical of the share price as well as the merger.
The new options that Mel received will once again give him incentive to bring the share price of the stock upward. Karmazin recently donated back the options he had from the previous deal about a month ago, in a move that helped offset newly issued shares. Mel’s old options were so far under water that they would likely never provide the incentive for him to exercise his rights to the options. Instead, Mel had done a few purchases of stock on the open market.
With the new option price at $0.43, Mel once again has a huge incentive to make the stock price appreciate. He will effectively be able to buy 120 million shares over the next 3 years at what could promise to be a very attractive price point in the future.
Karmazin’s base salary will be heading north to the tune of $1,500,000. While it is a lot of money, it is not the level of pay that many big time CEO’s are accustomed to. The options represent the huge payday for Mel, and now that those options have a chance of becoming very valuable, all shareholders can rest a bit easier knowing that the CEO has a lot at stake in increasing shareholder value. Even shareholders who have previously felt that Karmazin was not on their side need to now acknowledge that the structure of the new deal has potential to be very shareholder friendly.
Yes, there are those that wanted a change in management. They may still feel that way, but clearly, the current board, which includes Liberty Media representation feels that Mel Karmazin represents the future of leadership for this company.
Position: Long Sirius XM
Tyler, the WSJ is reporting that:
“The options vest in four equal installments starting at the end of 2010.”
Absurd… Absolutely absurd.
This is great. Mel has worked very hard in making sure this company survives the long haul.
Now there is no question on the street, stable leadership and a Cash cow, sorry, cash flow story.
Watch the stock go back into free-fall.
There is absolutely no justification for this.
Mr. Malone clearly has more money than sense.
BahBah
Common now…you can do better than that…really…is that all you got!
1.5M is chicken feed for a CEO of a US company by today’s standards…especially when that co is a monopoly that grosses 2.4B per year and climbing!
Stock options are great way to insure that the CEO is doing his job. If he fails…he gets nada…If he succeeds…bingo…were all wealthy…sorry…forgot…you left your balls in your wife’s jewel box…my bad
Most guys with loads of money are dumb as hell, it’s the broke guys that are really sharp; Yes?
Very true- That is because alot of folks that have alot of money inherited it and never earned it. They have not been in the trenches and either been broke or wondered where next months rent will come from. This is part of our problem with congress. How many are broke? You must have money to run. Most of the smartest people want nothing to do with politics.
While I was on the fence with Mel, I can see how these options create incentive for him to increase shareholder value. If he brings the share price up to a buck he makes over 60 million. That’s an incentive even for Mel.
I believe Mel has always had shareholders in mind, although I times, I felt he could have been a better communicator (I still think that).
This new deal is good for investors.
james
do not forget…Mel already has about 120M(I think) tied up in this stock. He needs it to reach about $1.5 per share just to break even…This is a signal to me that the price will be significantly higher in the near future! DYODD
Tyler
Good article…shareholder friendly…you bet it is…I can think of 120M reasons for Mel to finally let the dog run! I will be along for the ride. Near term future(3-5 years)great potential. Just long enough for us suffering longs to get the payday that we deserve!
As a long suffering long…I for one am HAPPY about this news. Say what you will all you Monday morning quarterbacks of how Sirius wouldn’t be here if they merged and how Mel destroyed shareholder value BLAH BLAH BLAH!
But the truth is Mel MERGED Sirius and XM. He fought the NAB and won. He weathered the BK talk and refinanced the debt. He navigated the economic crash and complete car industry meltdown.
The man deserves a little credit. If you sold and are bitter…perhaps nothing will change your mind.
But others who held on like me, and averaged down respect the hell out of the guy.
Especially now that the excuses the shorts used to bash the stock down….are slowly being eliminated. Bit by bit, the “uncertainty” that Wall Street hates so much is being replaced by certainty. It is now CERTAIN that Sirius XM is NOT going to declare BK.
Now that the uncertainty about wether or not Mel would renew his contract is not an issue, lets MOVE ON people. Get behind your CEO, and let’s kick some major short ass!
Seriously. Any long who isn’t excited by this turnaround should be ashamed. This is a GREAT time to be a Sirius shareholder. How long has it been since you could say that? We’ve been at the mercy of the longest merger in history and the shorts for over 3 years now. I don’t know about you, but this change feels GOOD!
Should Mel be held accountable going forward? Of COURSE. But he should also be celebrated for what he pulled off. Stop focusing on the share price plunge from last year. So much of that was totally out of his control.
True longs held, and even added to their position as we flirted with BK rumors in February. Smart longs are still adding to their position and smart shorts should see the writing on the wall and cover. Because the tide HAS turned.
Thanks Mel. I still have faith in you.
Ditto Friggin
I actually sold today at .473 and was going to wait for a decent dip, but got back in right away nearly where I sold once I heard Mel was resigned. Too risky to be on the sidelines right now.
This should be taken as alot more positive once it sinks in.
Mel deserves to man this ship after what he has been through. Let’s get Howard resigned now for another 3 years & unleash him to the ipod/iphone world.
I sold my stock for a loss and had to wait 31 days to buy it back. I don’t need a $37,000 wash sale on my 2009 tax return.
Kent
In 31 days…you might regret that decision!
Who cares about a wash sale, that is the dumbest reason for not buying!! Penny wise dollar dumb a$$!!!
The $37K loss would simply move into the cost basis of new shares.
What the %#$$^ does “I donβt need a $37,000 wash sale on my 2009 tax return” even mean!!!!
Mel Karmazin & his minions have caused what was one of the greatest advances in radio broadcasting in my lifetime to be diluted in to a medium that is only SLIGHTLY better than terra radio & not SUPERIOR to terra radio which XM was prior to the merger.
Oh yeah some of you will make some serious bucks when/if it gets to around $1-$2 but my the shares will have to increase over 1,400% before I break even.
You are cheering for basically a shell of what SatRad once was and I won’t cheer for that.
Not only do I want a good return on my investment but music & entertainment channels worth a damn which sadly that is not the case now.
two words.. average in
recondo,
average down- easier said then done but I wish you the best and hope you get your money back- I believe it will take some time but feel strongly that you will get there- good luck
Stop bashing the company cause you made a bad investment, and a terrible trade. Your bad.
Relmor2000:
I bought the stock with mad money from a merit bonus (maybe you don’t remember those or you never got one) so I haven’t lost a lot of sleep about that. I’m not bashing the company so much for the stock but the shitty programming and neutering of a lot of the channels since the merger.
Can’t you understand a simple concept like that? But of course as long as the stock keeps plodding along and you day traders make your money, quality & content are secondary to you making some bucks.
With Mel at the helm and his bunch of programmers who know nothing but the terra radio concept I ain’t buying another damn cent and don’t reccommend subscribing to the service to friends and associates nowhere I did prior merger.
The old way of word of mouth ain’t dead and word of mouth is that the service has deteriorated since Mel took over and used every bullshit method that he is a master of to get the acquisition approved.
If you approve of the new SiriusXM slogan “We ain’t what we used to be but we’re SLIGHTLY better than terra radio”—–help yourself.
The tide has turned? LOL!
It sure seems we’ve heard that time after time, ad nauseam, ad absurdum and look where we still are.
The de-listing is the horizon and the shorts will still rule.
not going to happen. If you think it is just take your loss and move on, but you will be screwing yourself
Profit taking before the July 4 break.
Sirius-XM does not ever get close to $1.00 per share in 2009.
The only thing that will stop the de-listing at this point is extending the deadline, yet again.
Blah blah blah…
What I hear from you. LOL
LOL
Thats it.
Maybe this means that Howard will also sign; perhaps through 2012. That would be good news.
Who F#*N Cares about Mel contract and his side kick Howard. The only two people that made money form SIRI. God had to go to Howard for a loan at 25%.
I have been long for 6 years. It’s all over next year you watch.
If Steve Job’s had run this company the stock price would have be 250.00 three year ago NOt .43cents
Wow, steve jobs can actually force people to subscribe to sat. radio, amazing. Is he a magician? He can pull 350 million dollars sats out his butt too i suppose. Damn, hes good.
Recondo. I understand how you feel, and I am sorry you either didn’t have the funds or the nerve to “average down” at the lowest of the lows in Feb/March. I am no rich dude by any stretch. And I FEEL your pain. But when we hit the Feb lows, I bit the bullet and bought what I could. It was scary and thrilling at the same time. Because the shorts were out in FULL force, and on the one hand, it felt like I was committing financial suicide by throwing more money into a stock that was pennies away from wiping me out completely. And yet on the other hand, for a few hundred dollars at a time, I was able to buy thousands of more shares then I ever could when I originally bought at $6.50 a share!
I was literally at the end of my rope in more ways than one, like a lot of the country. But us Sirius shareholders kind of had a 2 year head start on the rest of the world. So in a way, I was already beaten senseless. It made it easier to pull the trigger, because I had lived in fear for so long with the shorts constant onslaught. I figured I had nothing to lose at that point. A few hundred bucks more and I had averaged down to a buck and change.
As the stock rose from it’s February lows, my financial situation was still in the pits, but I was inspired to keep adding to my position when I could. I was literally living pay check to pay check and at one point actually had to borrow money from my boss to make it to work! But that was because my temp agency was delaying my checks.
ANYWAY….long story short(too late I know)….I don’t BLAME Mel for the stock price drop over the past couple of years like you do.
Don’t you blame the NAB? And the shorts?
And who is to say if the merger never went thru that Sirius would even have survived??? Oh sure, it’s easy to say yes. But WHO KNOWS!?
Nobody.
But I am happy Mel is still in control. To remove him out of spite, because you failed to take advantage of the drop in price is stupid. I don’t know what your financial situation is now, but it is DEFINITELY NOT too late to add to your position now while it is still under .50 cents.
You could still lower your pps average considerably if you do. I still think there is alot of volatility in the stock and could pull back considerably at any time. I also think it could stay in the .40s for a bit. Who knows. But I am also convinced that this thing is gonna move.
Why be a defeatist and resign yourself to complaining that Sirius would have to go up 1,400% just for you to break even??? Why dontcha buy what you can now in small chunks? Buy as much as you can afford. It’s only .45 cents for crying out loud. You can more than DOUBLE any money you put in now should it go to a $1 soon! And if it dips into the .30s again before it starts it’s run you’d more than TRIPLE your money.
Chances are once it breaks $1, it’ll go much higher. Imagine if it goes to $1.50 by years end? Or higher? You just DO NOT KNOW.
But once it reaches those levels, and if more and more good news comes out, even you right now with the shares you have might be very happy.
Anyway dude. I know how you feel. Hell…I’m only HALF way there now at .45 cents. My pps average is at .90 cents just to break even. But that is alot better than $6.50!!! Or losing all my shares in a BK!!! So yeah, I am happy.
I’ve got $2,000 coming to me, and if the price stays where it is, or dips, I fully intend to add another 5,000 shares and lower my pps even more. π
Good luck.
I averaged down when the bankruptcy talked reared its ugly head lowering my cost basis from $4.16 to $1.12. I recieved a partial payment inheritence check in January but didn’t have the tallons to drop the $100,000 on SIRI when it was trading for under 10 cents a share. I guess I ran out of cuourage after already losing $60,000 on SIRI and there were so many good stocks trading at reduced prices. I was estactic to get out at 60 cents a share only losing half my investment and have ssince made that money up two times over since Feb/March investments. I am still looking to get back in at some point but feel I have still have time.
Friggin
Very well said my friend…We were in the same boat…yours had alittle more water in it than mine…Avg down from about $3 something down to .505. almost whole again. Don’t feel too sorry for recondo…he has been spewing the same crap for about 6 months now…same song…different verse. glad to see you back!!
frigginregan,
well said
Thanks.
See my reply a few inches up the page to another poster.
It’s not so much the stock but the disgraceful way the SatRad business has turned since the merger and the way Mel has taken what was the most exciting thing in radio broadcasting since the old days of “Underground FM” and basically turned it into SatRad “lite” and only SLIGHTLY better than commercial terra radio. I know of several independant Classic Rock radio stations (one in nearby Charlotte,NC that I can pick up on my home stereo and fairly well on car radio – others received by ‘puter streaming)that have SUPERIOR programming to anything that SiriusXM has to offer. If I could pick up the Charlotte station all the time in every receiver I would cancel what’s left of my subscription and tell everyone I know to cancel their subscriptions IMMEDIATELY and move on to better choices. As a amtter of fact, I am sitting on the fence now on whether to renew my sub when it runs our next year.
That’s my main heartburn……………
I never would hold it against anyone to make a buck. I’m a big a capitalist as they come but when a service that I used to be a RABID fan about and now see it deteriorating into a version only a bit better than terra radio I can’t sit on the sidelines.
FYAHH
What’s particularly irritating about this announcement is that they found the money to give Mel a raise but they couldn’t find the money to get Howard Stern on the iPhone app.
Sirius-XM is ALWAYS crying poverty when it comes to getting good talent.
However, when they have someone who has taken the stock from over $5.00 a share to a low of 5 cents a share, they give that man a raise!?
Watch the stock now because it’s very clear there will continue to be manipulations.
You’ll see a ride up to 50 cents and then back down to 35 cents it’s been very comfortable at.
De-listing, here we come. π
Howard signs for less or he is gone. Party is over. If Howards agent is smart and he is….he will get a new 100 million a year deal that is 50 million in cash and 50 million in stock.
If this is your attitude when you are in the green, I would hate to see you in the red.
Check in with me in one month. See if your right. If you are, I will come on here and praise your wisdom. If im write, please return the favor, and then just go. Actually I do that too, if your right, ill never come back here again.
One month. But you have to leave too if im right. Never come back, and never return using another log in.
so 50 cents, back to .35. Ok got it.
I mean right, not write. LOL
Wat a ‘hater’………………………….
After a good night’s rest, I awoke this morning with a new worry – or rather a concern. I am still happy about Mel being kept on and the recent upturn in SiriusXm….HOWEVER….I had a terrible thought…..
What if Mel waits to do a 1 for 50 reverse split before he exercises his 120 million options????!!!
Sure, it’d be GREAT for him, but a HUGE SLAP in the face for longs. The ULTIMATE insult.
My question is would such a move even be legal? Could Mel be sued for doing such a thing after putting loyal shareholders thru hell only to take away most of their shares while giving himself millions of shares at todays cheap prices?
In my gut, I don’t see Mel doing this after all his talk about shareholder value. For him to break such a promise would surely result in a mass outrage that would create make Hartlieb’s look pale in comparison.
Anyway….just thinking. This is my last worry. Otherwise, I feel VERY confident about Sirius turning the corner now and us long suffering longs FINALLY seeing some daylight.
That would give him ownership, doubt that could happen. im sure an rs affects his options.
Why is Mel Karmazin getting a raise?
http://www.bloggingstocks.com/.....g-a-raise/
Great, that means my satellite radio is going to be terrible for another 3 years. Come from XM radio since 2002 and having to listen to this drab radio since 08 I’m not impressed at all. Good to know all they really care about is shareholders and screw the listener.