Sirius XM Registers Shares – Karmazin Donates To The Cause
Sirius XM Radio announced today that they are registering 148 million shares for use in stock incentive plans. Offerings such as this have happened each year. Until registered, these shares are not in the outstanding share count used in the calculation of market cap or the companies quarterly and annual reports. Once registered they do become part of that count. For clarity, it should be understood that reserved shares such as these are and were counted in the “fully diluted” share count.
In addition to the registration, Sirius XM announced that CEO Mel Karmazin has, in effect, donated his rights on options to 30 million shares. The options carried an exercise price of $4.72 per share. Of the 30 million shares, 24 million had been vested. Over the years, these options have been used in error many times in determining the take home pay of Mr. Karmazin. While some may look at this as a meaningless gesture given the current stock price, the move does have the effect of cleaning up the books of the reserve established, and does make the dilution of the employee incentive plans less than it would have been otherwise. In point of fact, the move shows a commitment to the employees of Sirius XM Radio.
From The Filing:
“Mr. Karmazin’s choice to forfeit these options will allow us to more efficiently use the shares authorized under the Plan to meet the Plan’s purpose to attract, motivate and retain key employees.”
“Mr. Karmazin did not receive any consideration in exchange for the forfeiture of these stock options.”
As a result of these filings, the fully diluted share count was raised by 148 million shares, then lowered by 30 million shares. The NET impact was an addition of 118 million shares.
Position: Long Sirius XM Radio
Speculation question any thoughts would be great. When a company is looking to sell, first thing they do is try to clean up the books, cut costs, and clean up waste hence to look more attrative. Is sirius gearing up to be bought, my opinion yes, anybody else? Honestly I just cannot get Apple and Sirius out of my head.
you can get it out of your head . . . can’t happen; Liberty Radio, LLC has our hands completely tied for the next 3 years . . .
Tyler — when a company registers shares via an S-8 filing… while the shares are registered, they still are not a part of the outstanding sharecount.
Even after being issued to an employee via Restricted Stock Grants or stock option grants or whatever — the employee still hasn’t taken direct ownership of the shares yet, so they are still not a part of the outstanding sharecount until the shares actually vest and the employee owns them outright.
I can see this being confusing. Yes, Sirius registered 148MM shares today, but the outstanding sharecount won’t go up by that amount. It won’t go up until the shares are issued and they vest — and the employee takes ownership of them.
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Slight correction (I just read what I wrote) — I should add, until they are issued to the employee, they won’t be counted in the float.
Typically just registering the shares and holding them in the plan, they are not counted.
But after issuance, they will be counted (whether vested or not).
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“The options carried an exercise price of $4.72 per share.”
I assume this means that Karmazin would only be able to profit from these shares if the share price reached or exceeded $4.72. I guess we know Karmazin’s belief on the odds the stock will increase 1,242%.
. . . more like Mel cleaning-out his desk; don’t take the swingline stapler Mel . . . shareholders paid for that; it’s company property . . . good luck with your next venture.
Hope to hear that Mel will get an extension & stay on through 2010 to complete the merger synergies, to implement his plan while Malone gets the marketing machine going with some out of the box thinking.
Not to mention the fact they are rushing the new satellites into the air…could be taking care of business…cleaning up loose ends…
definitely lots of action going on…
Yet another example of the futility of keeping Karmazin as CEO.
One has to wonder what incentive is left for Melvin to perform at all? Certainly, and in My Opinion, a bit of conscious is beginning to play on the man.
That being said, a more appropriate move would have Melvin actually PURCHASING the shares at the exercise price of $4.72 per share. Only then could he possibly know just how badly his tenure has hurt common shareholders, and maybe, just maybe he would get the message that it is indeed time to leave.
Next step: Lose the compensation package, then, out-the-door!