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This excerpt taken from the SIRI DEF 14A filed Apr 30, 2009. Supporting
Statement
Investors are increasingly concerned about mushrooming executive
compensation which sometimes appears to be insufficiently
aligned with the creation of stockholder value. Additionally,
recent media attention to questionable dating of stock options
grants by companies has raised related investor concerns.
The SEC has created a new rule, with record support from
investors, requiring companies to disclose additional
information about compensation and perquisites for top
executives. The rule has now been in effect for over a year. In
establishing the rule the SEC has made it clear that it is the
role of market forces, not the SEC, to provide checks and
balances on compensation practices.
We believe that existing U.S. corporate governance
arrangements, including SEC rules and stock exchange listing
standards, do not provide stockholders with enough mechanisms
for providing input to boards on senior executive compensation.
In contrast to U.S. practices, in the United Kingdom,
public companies allow stockholders to cast an advisory vote on
the “directors’ remuneration report,” which
discloses executive compensation. Such a vote isn’t
binding, but gives stockholders a clear voice that could help
shape senior executive compensation.
Currently, U.S. stock exchange listing standards require
stockholder approval of equity-based compensation plans; those
plans, however, set general parameters and accord the
compensation committee substantial discretion in making awards
and establishing performance thresholds for a particular year.
Stockholders do not have any mechanism for providing ongoing
feedback on the application of those general standards to
individual pay packages. (See Lucian Bebchuk & Jesse
Fried, Pay Without Performance 49 (2004)).
Similarly, performance criteria submitted for stockholder
approval to allow a company to deduct compensation in excess of
$1 million are broad and do not constrain compensation
committees in setting performance targets for particular senior
executives. Withholding votes from compensation committee
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members who are standing for reelection is a blunt and
insufficient instrument for registering dissatisfaction with the
way in which the committee has administered compensation plans
and policies in the previous year.
Accordingly, we urge Sirius XM Satellite Radio’s Board to
allow stockholders to express their opinion about senior
executive compensation at Sirius XM Satellite Radio by
establishing an annual referendum process. The results of such a
vote would, we think, provide Sirius XM Satellite Radio with
useful information about whether stockholders view the
company’s senior executive compensation, as reported each
year, to be in stockholders’ best interests.
We urge stockholders to vote “yes” for this proposal.
Company
Response in Opposition to the Stockholder Proposal
The board of directors recognizes that stockholders have a valid
interest in our executive compensation practices, and
understands the importance of administering our executive
compensation program in a manner that conforms to the highest
standards of corporate governance. The board of directors has
carefully considered the Stockholder Proposal, and it does not
believe that the adoption of the Stockholder Proposal is in the
best interests of stockholders. Accordingly, the board of
directors recommends that stockholders vote against the
Stockholder Proposal for the following reasons.
Our Compensation Committee, which consists entirely of
independent directors, is responsible for maintaining a
performance-based executive compensation program designed to
attract, motivate and retain high-quality executives in a
competitive market. As explained in greater detail under
“Executive Compensation — Compensation Discussion
and Analysis,” our executive compensation program takes a
three-part approach to best align stockholders’ interests
with our performance, compensating senior executives using three
key elements: base salary, an annual bonus and grants of
long-term, equity-based compensation. In making compensation
decisions with respect to each element of compensation, our
Compensation Committee considers the competitive market for
executives and compensation levels paid by comparable companies.
The Compensation Committee also reviews from time to time the
compensation practices at companies with which we compete for
talent. Other factors considered when making executive
compensation decisions include individual contribution and
performance, reporting structure, internal pay relationship,
complexity and importance of roles and responsibilities,
leadership and growth potential.
In its consideration and approval of executive compensation, the
Compensation Committee makes numerous, complicated and
interdependent decisions, all requiring judgment and analysis
after careful review of substantial data. The board of directors
believes that the Compensation Committee is in the best position
to make such decisions, and that in order to continue to attract
and retain executives of outstanding ability, the Compensation
Committee must continue to possess the flexibility to select
compensation incentives that effectively balance various
considerations. The board of directors believes that an advisory
resolution may negatively affect stockholder value, even if it
does not directly impinge upon the Compensation Committee’s
ability to set compensation levels, by creating the impression
among our senior executives and potential executive candidates
that the Compensation Committee’s flexibility to select
incentives was compromised.
The board of directors believes that the information disclosed
under “Executive Compensation — Compensation
Discussion and Analysis” and the executive compensation
tables provides a significant amount of detailed information as
to how the Compensation Committee sets compensation for senior
executives, and this information provides a solid foundation for
an informed discussion with stockholders. The board of directors
believes that an advisory resolution would not add meaningful
information to these disclosures, nor would it have any legal
consequence on any compensation arrangement. Unlike input we may
receive directly from a stockholder, an annual, backward-looking
“yes” or “no” vote on compensation practices
would not provide the Compensation Committee with any useful
insight into specific stockholder’s concerns regarding
executive compensation, nor would it provide any specific
information that the Compensation Committee could use to improve
our remuneration policies. On the other hand, we already have in
place corporate governance policies designed to ensure that the
board of directors is responsive to stockholder concerns
regarding all issues, including executive compensation issues.
Under these policies, any stockholder may communicate his or her
dissatisfaction with our compensation practices directly to any
individual on the
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Compensation Committee, or to the Compensation Committee as a
group, by sending an
e-mail to
nonmgmtdirectors@sirius-radio.com or by writing to any director
in
c/o Patrick
L. Donnelly, Executive Vice President, General Counsel and
Secretary, Sirius XM Radio Inc., 1221 Avenue of the Americas,
New York, New York 10020.
The board of directors exercises great care in determining and
disclosing executive compensation. The board of directors does
not believe the advisory vote will enhance governance practices
or improve communication with stockholders, nor is it in the
best interest of stockholders. Instead, it may very well
constrain the Compensation Committee’s efforts to recruit
and retain exceptional senior executives.
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