Karmazin Contract Extended, With Raise and Massive Options (SIRI)

SIRIUS XM Radio Inc. (NASDAQ: SIRI) has extended its contract with CEO Mel Karmazin.  Today, June 30, 2009, the company entered into an amendment to the amended employment agreement, dated November 18, 2004, with Karmazin.

The Amendment extends the term of the Employment Agreement through and until December 31, 2012.  The new agreement increases Karmazin’s base salary from $1,250,000 per year to $1,500,000 per year beginning on January 1, 2010.  It also provides for the grant of an option to purchase 120,000,000 shares of SIRIUS common stock at an exercise price of $0.430 per share.  Other than as provided in the amendment, the employment agreement will continue in accordance with its terms.

The option will vest in equal installments on each of December 31, 2010, December 31, 2011, June 30, 2012 and December 31, 2012; and the vesting of these options will accelerate upon the termination of Mr. Karmazin’s employment by us without cause, by him for good reason, upon his death or disability and in the event of a change of control.

ADDITIONS TERMS: The options will generally expire on December 31, 2014; provided that if the parties subsequently agree to extend the term of the Employment Agreement through December 31, 2013 or later, then the term of the Option will automatically extend until the later of December 31, 2015 and the date that is one year following the date that such new employment agreement expires.

Late last year, we noted that it seemed very possible that Mel Karmazin might not survive through all of 2009 if things continued.  The odds of Karmazin now being forced out probably went down to “very slim.”   But the company has its new financing, and is now under a much newer structure after recent Liberty deals.

Full details in the SEC FILING are here.  How you view this development will depend on whether you have owned shares for a couple months or if you have been a long-time holder.

Jon C. Ogg
July 1, 2009