Sirius XM Radio (SIRI)

      We provide long-term incentives through stock options and restricted stock units granted to our executive officers under our long-term stock incentive plan. The Compensation Committee believes that stock ownership by executives and other employees is the most effective method by which the interests of management may be aligned with those of our stockholders.

      In connection with the amendment to his employment agreement in August 2005, Mr. Greenstein was awarded 1,250,000 options to purchase our common stock at an exercise price of $6.60 per share and 400,000 restricted stock units. Mr. Greenstein was also awarded 62,222 restricted stock units in recognition of meeting an equity accumulation requirement.

      In March 2005, we also entered into an amended employment agreement with Mr. Meyer. As part of this agreement, we accelerated the vesting of 450,000 stock options from April 15, 2007 to April 15, 2006 and accelerated the vesting of 317,000 restricted stock units from April 15, 2007 to April 15, 2006. Mr. Meyer was also awarded 148,067 restricted stock units in 2005; 48,067 of these restricted stock units were awarded to Mr. Meyer in recognition of meeting an equity accumulation requirement.

      In August 2005, we entered into an amended employment agreement with Mr. Frear. Pursuant to this agreement, Mr. Frear was awarded 700,000 options to purchase our common stock at an exercise price of $6.61 and 300,000 restricted stock units.

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      The size and terms of each of these equity-based awards, particularly the vesting provisions, was the product of negotiations between Messrs. Greenstein, Meyer and Frear and the Compensation Committee. In general, the awards were designed to compensate Messrs. Greenstein, Meyer and Frear based upon future performance. The Compensation Committee considered the size of the equity awards to the individuals; the expected dollar value of these individual equity awards, calculated based on a binomial lattice model; the reasonableness of the awards in light of current market conditions and competitive practices; and the importance of motivating these executives to achieve our objectives.

      No stock options or restricted stock units were awarded to Messrs. Karmazin or Donnelly during 2005, other than the restricted stock units Mr. Donnelly received as part of our bonus program described above.

      The Compensation Committee has also authorized executive management to grant stock options to employees below the senior management level on an annual basis according to guidelines intended to be competitive with comparable companies and to reward individual achievement appropriately. Our executive officers do not receive annual stock option grants under this program.

      We provide long-term incentives through stock options and restricted stock units granted to our executive officers under our long-term stock incentive plan. The Compensation Committee believes that stock ownership by executives and other employees is the most effective method by which the interests of management may be aligned with those of our stockholders.

      In connection with the execution of his employment agreement in May 2004, Mr. Greenstein was awarded 2,800,000 options to purchase our common stock at an exercise price of $3.14 per share and 1,575,000 restricted stock units. In connection with the execution of his employment agreement in May 2004, Mr. Meyer was awarded 2,800,000 options to purchase our common stock at an exercise price of $3.14 per share and 1,200,000 restricted stock units. The terms and other conditions of these awards are described below under “Employment Agreements—Scott A. Greenstein” and “—James E. Meyer,” respectively.

      The size and terms of each of these equity-based awards, particularly the vesting provisions, were the product of negotiations between Messrs. Greenstein and Meyer and the Compensation Committee. In general, the awards were designed to compensate Messrs. Greenstein and Meyer for future performance and align their interests with our stockholders. The Compensation Committee

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considered the size of the equity awards to both individuals; the expected dollar value of these individual equity awards, calculated based on a binomial lattice model; the reasonableness of the awards in light of current market conditions and competitive practices; the importance of motivating these executives to achieve our objectives; and the expected perception of the awards in the marketplace. The Compensation Committee was advised by Frederick W. Cook, Inc., independent compensation consultants, as to the reasonableness of these equity awards and consulted with other members of our board of directors in recommending these awards.

      No stock options or restricted stock units were awarded to Messrs. Donnelly or Frear during 2004, other than the restricted stock units each received as part of our bonus program described above. The stock options, restricted shares of common stock and restricted stock units awarded to Messrs. Karmazin and Clayton during 2004 are described below.

      The Compensation Committee has also authorized executive management to grant stock options to employees below the senior management level on an annual basis according to guidelines intended to be competitive with comparable companies and to reward individual achievement appropriately. Our executive officers do not receive annual stock option grants under this program.