XM Radio 2012 Annual Report Download - page 32

At our annual meeting in May 2011, we held an advisory “say on pay” vote on the compensation of our
named executive officers. Our stockholders overwhelmingly approved the compensation of our named executive
officers, with over 98% of the voting power casting votes in favor of our say-on-pay resolution. In making
compensation decisions for 2012, the Compensation Committee considered the strong support our stockholders
expressed for our pay for performance compensation philosophy and therefore did not make changes to the core
elements of our compensation programs. We intend to include an advisory “say on pay” vote on the
compensation of our named executive officers every three years. Accordingly, the next such vote will be held at
our 2014 annual meeting of stockholders.
Fiscal Year 2012 Performance Summary
We had an extremely successful year in 2012. In the face of intense competition for our products, our
financial results, as reflected by a 59% increase in our year-over-year stock price, exceeded our projections. The
following highlights our financial and operating results for 2012:
• achieving adjusted EBITDA growth of 26% to over $920 million in 2012;
• increasing our revenues by 13%;
• increasing our free cash flow by 71% to $709 million;
• beginning a return of capital to our stockholders through a special cash dividend in December 2012 of
$0.05 per share of common stock and preferred stock; and
• announcing a $2 billion stock buyback program.
In addition, 2012 was marked by key subscriber and content-based achievements and other measures that
contributed to our continued growth and success, including:
• adding approximately 2 million net new subscribers, resulting in a total of nearly 23.9 million
subscribers, an increase of over 9% as compared to 2011;
• executing an agreement with Nissan North America to become the exclusive provider of telematics
services for Nissan branded vehicles;
• launching SiriusXM On Demand, which provides online subscribers the ability to choose from among
a catalog of more than 300 shows and over 3,000 hours of content to listen to whenever they want;
• expanding our relationships with automakers and large independent resellers, including AutoNation,
America’s largest automotive retailer, to provide subscriptions to purchasers and lessees of pre-owned
vehicles; and
• launching the SiriusXM Internet Radio App on Google TV, which for the first time allows for
SiriusXM 2.0 to be available on any connected television.
In this CD&A, we use certain financial performance measures that are not calculated and presented in
accordance with generally accepted accounting principles in the United States of America (“Non-GAAP”). These
Non-GAAP financial measures include adjusted EBITDA and free cash flow. We also use in this CD&A
subscriber churn, a performance metric which management uses in measuring our business. We use these Non-
GAAP financial measures and other performance metrics to manage our business, set operational goals and, in
certain cases, as a basis for determining compensation for our employees. Please refer to the glossary contained
in our Annual Report for the year ended December 31, 2012 which accompanies this proxy statement for a
discussion of such Non-GAAP financial measures and reconciliations to the most directly comparable GAAP
measure and a discussion of these other performance metrics.
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