XM Radio 2012 Annual Report Download - page 29

GOVERNANCE OF THE COMPANY
How does the board of directors oversee our risk management process?
The board executes its oversight responsibility for risk management directly and through its committees, as
follows:
• The Audit Committee has primary responsibility for monitoring our internal audit, corporate, financial
and risk management processes and overseeing our system of internal controls and financial reporting.
The Audit Committee discusses specific risk areas throughout the year, including those that may arise
from time to time and the measures taken by management to monitor and limit risks.
• The Audit Committee receives regular reports throughout the year on matters related to risk management.
At each regularly scheduled meeting, the Audit Committee receives reports from our (i) external auditor
on the status of audit activities and findings and (ii) executive in charge of internal audit (who reports
directly to the Audit Committee) on the status of the internal audit plan, audit results and any corrective
action taken in response to internal audit findings.
• We have a Compliance Officer who is in charge of our compliance with FCC related laws and regulations
and training and monitoring compliance with those laws and regulations. Our Executive Vice President,
General Counsel and Secretary reports to the Audit Committee throughout the year on calls to our
compliance hotline and any changes or developments in compliance matters. Each quarter, our Chief
Financial Officer reports to the board of directors on our performance and discusses how actual
performance compares to our business plan and budget. Our executive officers report regularly to the
board about the risks and exposures related to our business.
• The other committees of the board of directors oversee risks associated with their respective areas of
responsibility. For example, the Compensation Committee assesses risks associated with our
compensation policies and programs for executives.
• The committees report to the board of directors at every regular board meeting on the topics discussed
and actions taken at the most recent committee meeting. Our board of directors discusses the risks and
exposures, if any, involved in the matters or recommendations of the committees, as necessary.
• Our board of directors also considers specific risk topics throughout the year, including risks associated
with our business plan, operational efficiency, government regulation, physical facilities, information
technology infrastructure and capital structure, among many others. The board is informed about and
regularly discusses our risk profile, including legal, regulatory and operational risks to our business.
What are our policies and procedures for related party transactions?
We have adopted a written policy and written procedures for the review, approval and monitoring of
transactions involving the Company or its subsidiaries and “related persons.” For the purposes of the policy,
“related persons” include executive officers, directors or their immediate family members, or stockholders
owning five percent or greater of our common stock.
Our related person transaction policy requires:
• that any transaction in which a related person has a material direct or indirect interest and which exceeds
$120,000 (such transaction referred to as a “related person” transaction) and any material amendment or
modification to a related person transaction, be reviewed and approved or ratified by a committee of the
board composed solely of independent directors who are disinterested or by the disinterested members of
the board; and
• that any employment relationship or transaction involving an executive officer and the Company must be
approved by the Compensation Committee of the board or recommended by the Compensation
Committee to the board for its approval.
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