XM Radio 2009 Annual Report Download - page 24

Base Salary
Objectives. The objective of base salary is to reflect job responsibilities, value to us and individual
performance with respect to market competitiveness. Salaries generally are reviewed annually and often are
reviewed in connection with the extension of an employment agreement.
Process. Base salaries for named executive officers are determined in accordance with the employment
agreements with those officers. The named executive officers are employed pursuant to agreements described
under “Potential Payments upon Termination or Change-in-Control — Employment Agreements” below. The
minimum salaries set forth in the employment agreements and the amount of any increase over these salaries
are determined by the Compensation Committee based on a variety of factors, including:
• the nature and responsibility of the position and, to the extent available, salary norms for persons in
similar positions at comparable companies;
• the expertise of the individual executive;
• the executives’ salary history;
• the competitiveness of the market for the executives’ services; and
• the recommendations of our Chief Executive Officer (except as to his own compensation).
In setting base salaries, the Compensation Committee also considers the importance of linking a high
proportion of each executive officer’s compensation to performance in the form of the discretionary annual
bonus as well as long-term stock-based compensation, which is tied to our stock price performance.
Year 2009 Decisions. During 2009, our Compensation Committee approved an increase in the base
salary of Mr. Karmazin for the first time since he joined us in 2004. Mr. Karmazin’s base salary was increased
to $1,500,000 from $1,250,000, effective January 1, 2010. The Compensation Committee believed the increase
was appropriate following the successful completion of the merger and integration of the two companies and
as part of an agreement to extend his employment.
Our Compensation Committee also approved increases in the base salaries of Messrs. Greenstein, Meyer
and Donnelly beginning in 2010 as part of agreements to extend their employment. The Compensation
Committee believed these increases were necessary to assist us in remaining competitive in the labor market
and to compensate the executives for increased responsibilities brought about by the merger and changing
economic conditions. Effective January 1, 2010, Mr. Greenstein’s base salary was increased to $925,000 from
$850,000, Mr. Meyer’s base salary was increased to $1,100,000 from $950,000, and Mr. Donnelly’s base
salary was increased to $575,000 from $525,000.
Annual Bonus
Objectives. Our compensation program contemplates a performance-based annual bonus that is com-
pletely discretionary. The Compensation Committee has the discretion to award any annual bonuses in cash,
restricted stock, restricted stock units or a combination thereof.
The bonuses approved by the Compensation Committee for 2009 were intended to achieve two principal
objectives:
• to link compensation with performance, as measured at the company and individual levels; and
• to reward and differentiate employees based on individual performance.
The Compensation Committee assessed our overall performance subsequent to year-end in the exercise of
its discretion. The Compensation Committee did not establish performance objectives for the year ended
December 31, 2009.
Process. Although our annual bonus awards are discretionary, the Compensation Committee employed
the process described below to assist in shaping its decision and assist in evaluating whether it was appropriate
to award bonuses to our named executive officers with respect to the year ended December 31, 2009. The
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