XM Radio 2011 Annual Report Download - page 37

agreement to extend Ms. Altman’s employment, the Compensation Committee also approved an increase in her
base salary beginning in August 2011 from $446,332 to $500,000. The Compensation Committee believed that
these increases were appropriate given the competitive market for their services and their individual
performances.
We have entered into employment agreements with each of Messrs. Meyer, Greenstein and Donnelly that
include increases in their base salaries during the term of the respective agreements. Messrs. Meyer and Donnelly
waived the increase in their base salaries that each would have been entitled to in 2011 and 2012 under their
employment agreements. We did not solicit those waivers; rather Messrs. Meyer and Donnelly approached us
initially in 2010 and again in 2011 regarding the contractually required increases in their base salaries after
weighing factors important to each of them. We understand that Messrs. Meyer and Donnelly waived their
increases in base salaries principally as a demonstration of leadership and a signal to our employees that any
current increase in their compensation would be based on our performance in the form of bonuses and increases
in the value of their stock options.
In January 2011, Mr. Greenstein’s base salary increased from $925,000 to $1,000,000 as required by the
terms of his employment agreement. Mr. Greenstein waived the increase in his base salary that he would have
been entitled to in January 2012 under his employment agreement. Again, we did not solicit this waiver. We
understand that Mr. Greenstein waived the increase in his base salary for 2012 principally as a demonstration of
leadership and a signal to our employees that any current increase in his compensation would be based on our
performance in the form of bonuses and increases in the value of his stock options.
There was no base salary increase for Mr. Karmazin in 2011.
Payment of Performance-Based Discretionary Annual Bonuses for 2011
Following the end of 2011, the Compensation Committee met to determine whether to exercise its discretion
to pay bonuses to our named executive officers with respect to 2011 and whether to approve a general cash bonus
pool for our other employees. The Compensation Committee carefully reviewed our performance against
multiple key metrics in our budget and business plan for 2011, including the generation of EBITDA, as required
by the NEO Bonus Plan, our efforts to increase subscribers, revenue, adjusted EBITDA and free cash flow and to
control subscriber churn and operating expenses, as well as reviewing our performance in launching new
products and services.
Following its review of our 2011 performance, which the Compensation Committee determined to be
superior, the Compensation Committee:
• approved a cash bonus pool to be divided among our employees, other than the named executive officers;
• reviewed the NEO Bonus Plan pool and exercised its negative discretion and approved the individual
bonus amounts granted to each of the named executive officers under the NEO Bonus Plan; and
• reviewed and approved the bonus amount granted to our Chief Financial Officer whose bonus, pursuant
to Section 162(m), is not included in the NEO Bonus Plan.
The actual amount of the bonus paid to each named executive officer was based on a combination of factors,
including our 2011 corporate performance, his or her individual contributions and performance in his or her
functional areas of responsibility and, with respect to all named executive officers other than himself, upon
recommendations made by Mr. Karmazin, our Chief Executive Officer. The amount of Mr. Karmazin’s bonus
was approved by the board of directors following a recommendation from the Compensation Committee. Various
specific factors taken into consideration in determining the bonus amounts for the named executive officers are
set forth below, and the annual bonus for Mr. Karmazin is discussed below under the heading “Related Policies
and Considerations — Compensation of our Chief Executive Officer.”
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