This excerpt taken from the SIRI DEF 14A filed Nov 4, 2008.
Annual Bonus for Named Executive Officers
Purpose. Our compensation program provides for an annual bonus that is discretionary. Although our annual bonus compensation element is discretionary, the Compensation Committee attempts to award bonuses that incentivize individuals to achieve goals that are intended to correlate closely with growth of our business and stockholder value and to compensate individuals upon the achievement of such goals.
Considerations. Although our annual bonus awards are discretionary, during the past three years the Compensation Committee generally employed the three step process described below to assist it in shaping its decision and assist in evaluating appropriate bonuses for our named executive officers. The Compensation Committee may not employ the same process, or may adopt a modified or wholly different process in the future, in making bonus decisions.
In 2008, the Compensation Committee intends to determine the overall bonus funding by evaluating the companys performance against its 2008 business plan as approved by board of directors, including metrics such as total subscribers, cash, revenues, EBITDA, SAC per gross addition, churn, operating expense growth, and other factors that it determines are appropriate.
The Compensation Committee has discretion as to whether annual bonuses for our named executive officers will be paid in cash, restricted stock units or a combination thereof. In general, our practice is to pay these bonuses 50% in cash and 50% in restricted stock units. Any restricted stock units that are awarded are granted under a long-term incentive plan approved by our stockholders. The Compensation Committee also retains discretion, in appropriate circumstances, to grant a higher or lower bonus or no bonus at all.
Year 2007 Decisions. In 2007, the Compensation Committee approved bonuses that were intended to achieve two principal objectives:
At the end of the year, the Compensation Committee reviewed the companys performance, additional accomplishments and other factors it deemed relevant, and approved a bonus pool for employees.
The annual bonus for Mr. Karmazin is discussed below under Compensation of our Chief Executive Officer.
Mr. Greenstein was awarded a bonus for his contributions during the year, including his role in the continued enhancement of our programming and the marketing efforts which supported our brand awareness and customer satisfaction levels, and the addition of net new subscribers.
Mr. Meyer was a awarded a bonus for his contributions during the year, including his role in the company being cash flow positive in the second half of 2007, adding net new subscribers in 2007, containing operating expense growth, launching SIRIUS Backseat TV, improving our segment share, improving self-pay churn levels and customer save rates, controlling subscriber acquisition costs per gross addition, improving automaker penetration and negotiating extensions of our agreements with various automakers.
Mr. Donnelly was awarded a bonus for his contributions during the year, including his regular on-going contributions as our general counsel, and his role in our Copyright Royalty Board proceeding, raising additional funding on favorable terms, the negotiation, execution and pursuit of approval of our pending merger with XM Radio and negotiating extensions of our agreements with various automakers.
Mr. Frear was awarded a bonus for his contributions during the year, including his regular on-going contributions as our chief financial officer, and his role in the company being cash flow positive in the second
half of 2007, improvements in our subscriber acquisition costs per gross addition, containing operating expense growth, our Copyright Royalty Board proceeding, the negotiation, execution and pursuit of approval of our pending merger with XM Radio, and raising additional funding on favorable terms.
Based on the foregoing, the Compensation Committee approved the bonus amounts set forth in the Summary Compensation Table.
This excerpt taken from the SIRI DEF 14A filed Apr 23, 2007.
Annual Bonus for Named Executive Officers
Purpose. Our compensation program provides for an annual bonus determined based upon performance. The objective of this program is to incentivize individuals to achieve specific goals that are intended to correlate closely with growth of stockholder value and to compensate individuals upon the achievement of such goals.
Considerations. The annual bonus process for named executive officers typically involves three basic steps.
Under the bonus plan, the Compensation Committee has discretion as to whether annual bonuses for our named executive officers will be paid in cash, restricted stock units or a combination thereof. In general, our current practice is to pay bonuses 50% in cash and 50% in restricted stock units. Any restricted stock units that are awarded are granted under a long term incentive plan approved by our stockholders. The Compensation Committee also retains discretion, in appropriate circumstances, to grant a higher bonus, lower bonus or no bonus at all.
Year 2006 Decisions. At the beginning of 2006, the Compensation Committee established performance goals for 2006 bonuses based on: (1) end of period subscribers, and (2) cash flow from operations with capital expenditures. For 2006, the Compensation Committee gave equal weight to each of these measures.
In setting these measures and determining the extent to which they were satisfied, the Compensation Committee excluded the impact of items (such as long term capital expenditures not anticipated in the original plan and subsequently approved by the board of directors) that it believed were not driven by the current performance of executives or that, in the Compensation Committees judgment, otherwise had a distorting positive or negative impact relative to the performance of executives and the established performance goals.
After the end of the year, the Compensation Committee determined that the weighted performance for these metrics exceeded the goals set at the beginning of the year.
In approving the individual awards for Messrs. Karmazin, Greenstein, Meyer, Donnelly and Frear, the Compensation Committee also took into account the following 2006 accomplishments:
As a result of these determinations, the Compensation Committee approved the bonus amounts set forth in the Summary Compensation Table.
Long-term Incentive Compensation
Purpose. Our long-term incentive program provides a periodic award (typically annual) that is performance based. The objective of the program is to align compensation for named executive officers over a multi-year period directly with the interests of our stockholders by motivating and rewarding actions that create or increase long-term stockholder value. The level of long-term incentive compensation is determined based on an evaluation of competitive factors in conjunction with total compensation provided to named executive officers and the goals of the compensation program described above.
Mix of Restricted Stock Units and Stock Options. Our long-term incentive compensation generally takes the form of stock options and restricted stock units. The two forms of awards reward stockholder value creation in different ways. Stock options (which have exercise prices equal to the market price at the date of grant) reward named executive officers only if the stock price increases. Restricted stock units are affected by all stock price changes, so the value to named executive officers is affected by both increases and decreases in stock price.
In the case of normal annual grants, 100% of the total value of a long-term compensation award typically takes the form of stock options. In the case of new hire grants or contract renewals, some portion of the total value may also be in the form of restricted stock units.
Stock Options. Our long-term incentive program calls for stock options to be granted with exercise prices of not less than fair market value of our stock on the date of grant and to vest proportionally over four years, if the employee is still employed by us, with rare exceptions made by the Compensation Committee. We define fair market value as the stock price on the close of business on the day of grant for existing employees and close of business the day before hire for new hires. The Compensation Committee does not expect to grant stock options with exercise prices below the market price of our common stock on the date of grant. New option grants to named executive officers normally have a term of ten years.
Vesting of Restricted Stock Units. Restricted stock units granted as long-term incentive compensation to named executive officers generally either (1) vest proportionately on each anniversary of the grant for the first four or five years if the employee is still employed by us, or (2) vest on the fifth anniversary if the employee is still employed by us, with accelerated vesting proportionately over the first four years based on achievement of specific performance criteria. These performance-based requirements and vesting schedules do not relate to restricted stock units granted in lieu of cash under our annual bonus program because these bonus awards are already granted based on performance under the annual bonus program. Restricted stock units granted under the annual bonus program vest approximately one year after the grant date.
Stock Ownership and Holding Policy. We do not require specific ownership or holding requirements for named executive officers.
Year 2006 Decisions. In 2006, the long-term compensation awarded by the Compensation Committee to named executive officers under the programs described above is identified in the Grants of Plan-Based Awards Table for 2006.
Periodic Review. The Compensation Committee intends to review both the annual bonus program and long-term incentive program annually to ensure that their key elements continue to meet the objectives described above. In determining the annual grants of restricted stock units and options, the Compensation Committee considered any contractual requirements, market data on total compensation packages and, except in the case of the Chief Executive Officer, the recommendations of the Chief Executive Officer.