XM Radio 2012 Annual Report Download - page 34

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In determining compensation element levels, including the annual grants of equity-based awards, if any, for
each named executive officer (other than the Chief Executive Officer), the Compensation Committee also
consults with and considers the recommendations and input of our Chief Executive Officer.
Total Compensation for Named Executive Officers
The Compensation Committee’s goal is to award compensation that incentivizes our named executive
officers to enhance value for our stockholders and is not considered excessive when all elements of potential
compensation are considered. In making decisions with respect to any single element of a named executive
officer’s compensation, the Compensation Committee considers the officer’s level of responsibility, experience
and contributions, and the total compensation that may be awarded to the officer, including salary, annual bonus,
long-term incentives, perquisites and other benefits. In addition, the Compensation Committee considers the
other benefits to which the officer is entitled under his or her employment agreement, including compensation
payable upon termination of employment. (The named executive officers are employed pursuant to agreements
described under “Potential Payments upon Termination or Change-in-Control — Employment Agreements”
below.)
Executive Compensation Elements
Our practices with respect to the key compensation elements identified above, as well as other elements of
compensation, are described below, followed by a discussion of the specific factors considered in determining
the levels of these compensation elements for the named executive officers for 2012.
Base Salary
Base salaries for the named executive officers are determined consistent with the terms of their employment
agreements. The minimum amount of base salaries set forth in the employment agreements and any increases
over these amounts 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 and deemed relevant, salary
trends for persons in similar positions at comparable companies;
• the expertise, demonstrated leadership and management ability, and past performance of the individual
executive;
• the executive’s salary history and his or her total compensation, including other cash bonus and stock-
based awards;
• the competitiveness of the market for the executive’s 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 amount of base salary as a
percentage of total compensation with the goal that a substantial percentage of each executive officer’s total
compensation should be performance-based.
Annual Bonus
The Compensation Committee may award annual bonuses in cash, restricted stock, restricted stock units,
stock options or a combination thereof. The Compensation Committee believes that bonuses should take into
consideration all factors relevant to the Company’s and an executive’s performance, including numerous
financial and operational metrics, without being limited by a purely formulaic approach. None of our named
executive officers is entitled to a guaranteed or minimum bonus.
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