People have the misconception that Mel Karmazin made $32,000,000 in 2007 and $31,000,000 in 2006. He did not.

His employment agreement gives him options on 30,000,000 shares at an exercise price of $4.72 cents per share.

This means that he has the right to buy 30,000,000 shares of the company for a price of $4.72 for each share.

Mel has not exercised that right, and in fact, it would be cheaper for him to buy shares on the open market as he has already done.

From an accounting perspective, because the right exists to Mel, the value of the vesting options needs to be shown on the statements of compensation to executives. However by no means does this mean that Mel was paid this money.

What Mel has is a right to buy stock at a specified price of $4.72 per share. Sirius’ SEC filings bear all of this out. You can clearly see that no options have been exercised by Mel.

Those thinking that Mel made $32,000,000 in 2007 and $31,000,000 in 2006 are doing so in error.

There is a substantial difference between owning an option and exercising it.

Mel needs to have a talk with those guys and ask them up front whether they are on board or not. Their actions show a lack of confidence in their employer. Maybe they would be happier working somewhere else. Send them all to CBS

Taxes are exactly what most of this is about. The only Sirius executive that has sold outside that scope is Frear, who typically has sales of stock every year.

If you read the SEC filings you will see this:

On 2-19 Greenstein “sold” shares. At the bottom of the SEC filing you will see, “Shares of common stock sold are equal to federal and state taxes due on February 20, 2008 as the result of the vesting of the restricted stock units and the related brokerage commission on the sale.”

http://investor.sirius.com/Edg.....;SID=08-00

After this transaction, Greenstein had 1,473,307 shares.

Now if wee look at Greenstein’s previous filing, we will see that he received restricted stock that was to vest on 2-20-08. He received 153,311 shares.

http://investor.sirius.com/Edg.....;SID=08-00

When the 153,311 shares vested, he had to sell 55,092 shares in order to cover the taxes. In this transaction he added to his position by 98,292 shares.

Now, with nearly 1.5 million shares owned, how prudent would it be for Greenstein to buy more shares in his personal account? The man has stock worth about $2,000,000 right now, which likely is a very substantial sum of money for him.

While he was negotiating the merger and subsequently after that, they were not allowed to buy or sell shares — as they all had insider information. Who this includes, I don’t know exactly… but I assume it would include all of their Board of Directors, Karmazin, Frear and several other of the senior staff.

But that is not to make an excuse for them — I expect all of them to buy now… but I also don’t think I’ll see it in this lifetime.

Taxable event selling is normal and really not considered “insider” in the grand scheme of things.

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I hear you, but during the past year ending in July 2008 there were only approximately 33K insider shares purchased, but 444K insider shares sold. That’s a 13.4 to 1 sell to buy ratio. It goes well beyond covering the tax liability. A lot of the board members are making at or close to seven figures. At 33,000 shares on the purchase side that is really on the low side. I would look for more of practicing what they they are preaching. Maybe Mel’s example will lead the way. Stern is not considered an insider, but his immediate sales of any awarded shares are not helping the overall cause. Thanks for bringing up another perspective on the matter.

These “sales” you speak of are typically not sales that have anything to do with sentiment in the company.

These executives have stock that vests over time. When that stock vests, they have a capital gain. That capital gain is a taxable event.

The investors have a choice of either coming in with cash (substantial sums to many of these executives), or to sell enough of the vested shares to cover the tax and commissions. Like most, they choose to sell enough to cover the taxes.

In most situations, they are actually adding to their position. If they sat back and did nothing, their options would expire worthless.

These sales are simply taking care of the taxes, and allowing the executive to keep their options.

I hope this makes sense.