XM Radio 2012 Annual Report Download - page 30

In connection with the review and approval or ratification of a related person transaction, management must:
• disclose to the committee or disinterested directors, as applicable, the material terms of the related person
transaction, including the approximate dollar value of the amount involved in the transaction, and all the
material facts as to the related person’s direct or indirect interest in, or relationship to, the related person
transaction;
• advise the committee or disinterested directors, as applicable, as to whether the related person transaction
complies with the terms of our agreements governing our material outstanding indebtedness that limit or
restrict our ability to enter into a related person transaction;
• advise the committee or disinterested directors, as applicable, as to whether the related person transaction
will be required to be disclosed in our SEC filings. To the extent required to be disclosed, management
must ensure that the related person transaction is disclosed in accordance with SEC rules; and
• advise the committee or disinterested directors, as applicable, as to whether the related person transaction
constitutes a “personal loan” for purposes of Section 402 of the Sarbanes-Oxley Act of 2002.
In addition, the related person transaction policy provides that the Compensation Committee, in connection
with any approval or ratification of a related person transaction involving a non-employee director or director
nominee, should consider whether such transaction would compromise the director or director nominee’s status
as an “independent,” “outside,” or “non-employee” director, as applicable, under the rules and regulations of the
SEC, NASDAQ and Internal Revenue Code.
In 2012, there were no related party transactions that are required to be disclosed pursuant to the SEC rules
and regulations.
What is the relationship between Sirius XM and Liberty Media Corporation?
In February and March 2009, we entered into several transactions to borrow up to $530 million from Liberty
Media Corporation and its affiliates. All of these loans were repaid in cash in 2009.
As part of the transactions with Liberty Media, in February 2009, we entered into an investment agreement
(the “Investment Agreement”) with Liberty Radio, LLC, an indirect wholly-owned subsidiary of Liberty Media.
Pursuant to the Investment Agreement, we issued to Liberty Radio, LLC 12,500,000 shares of convertible
preferred stock with a liquidation preference of $0.001 per share in partial consideration for the loan investments.
The preferred stock was convertible into approximately 40% of our outstanding shares of common stock (after
giving effect to such conversion).
In September 2012, Liberty Radio, LLC converted 6,249,900 shares of its preferred stock into
1,293,467,684 shares of our common stock. In January 2013, the Federal Communications Commission granted
Liberty Media approval to acquire de jure control of us and Liberty Radio, LLC converted its remaining
preferred stock into 1,293,509,076 shares of our common stock. As a result of these conversions of preferred
stock and additional purchases of our common stock, Liberty Media beneficially owned, directly and indirectly,
over 50% of our outstanding common stock as of February 28, 2013.
Five current Liberty Media executives are members of our board of directors, and Liberty Media has
designated three additional members of our board of directors.
As a result, Liberty Media has the ability to control our affairs, policies and operations, such as the
appointment of management, future issuances of our common stock or other securities, the payment of dividends,
if any, on our common stock, the incurrence of debt by us, amendments to our certificate of incorporation and
bylaws and the entering into of extraordinary transactions, and their interests may not in all cases be aligned with
the interests of other stockholders. In addition, Liberty Media can determine the outcome of all matters requiring
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