XM Radio 2014 Annual Report Download - page 50

ITEM 2—APPROVAL OF THE SIRIUS XM HOLDINGS INC. 2015
LONG-TERM STOCK INCENTIVE PLAN
Our board of directors has adopted the 2015 Plan, subject to the approval of our stockholders.
If the 2015 Plan is approved by our stockholders, no future equity awards will be made pursuant to
the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan (the “2009 Plan”). All existing
outstanding awards will remain subject to the plans they were issued under. In the event that our
stockholders do not approve the 2015 Plan, it will not become effective, no awards will be granted
under the 2015 Plan, and the 2009 Plan will continue in accordance with its terms as previously
approved by our stockholders.
Summary of the 2015 Plan
Set forth below is a summary of the principal features of the 2015 Plan. This summary is
qualified in its entirety by reference to the terms of the 2015 Plan, a copy of which is included in
this proxy statement as Appendix A.
Why We Believe You Should Vote for this Item
The Plan permits the granting of (i) stock options, including incentive stock options (or ISOs)
entitling the optionee to favorable tax treatment under Section 422 of the Internal Revenue Code of
1986, as amended (the “Code”), (ii) stock appreciation rights (“SARs”), (iii) restricted stock,
(iv) RSUs, (iv) performance awards, and (v) other awards valued in whole or in part by reference to
or otherwise based on our common stock (“Other Stock-Based Awards”). Each type of award is
described below under “Types of Awards Under the 2015 Plan.” Each of the awards will be
evidenced by an award document setting forth the terms and conditions of the grants. Some of the
key features of the 2015 Plan that reflect our commitment to effective management of equity and
incentive compensation are set forth below.
We believe our future success depends in part on our ability to attract, motivate and retain high
quality employees, directors and consultants and that the ability to provide equity-based and/or
incentive-based awards under the 2015 Plan is critical to achieving this success. We would be at a
significant competitive disadvantage if we could not use stock-based awards to recruit and
compensate our non-employee directors and officers and other employees.
The use of our stock as part of our compensation program is also important to our continued
success because we believe it fosters a pay-for-performance culture that is an important element of
our overall compensation philosophy. Equity compensation aligns the compensation interests of our
directors, employees and consultants with the investment interests of our stockholders and
promotes a focus on long-term value creation because our equity compensation awards can be
subject to vesting and/or performance criteria.
As of February 28, 2015, 20,382,926 shares remained available for issuance under the 2009
Plan. In 2014, we granted awards under the 2009 Plan to 1,359 individuals covering 67,960,246
shares of our common stock. If the 2015 Plan is not approved, we will be compelled to increase
significantly the cash component of our employee compensation, which may not align employee
compensation interests with the investment interests of our stockholders as well as the alignment
provided by equity-based awards. Replacing equity awards with cash would also increase our cash
compensation expense and use cash that could be better utilized if reinvested in our businesses or
returned to our stockholders.
If the 2015 Plan is approved, subject to adjustment as provided in the 2015 Plan, 400 million
shares will be available to grant under the 2015 Plan. If the 2015 Plan is approved, no future
awards will be granted under the 2009 Plan, and the remaining shares reserved for issuance under
the 2009 Plan will no longer be available. Based on the closing price for our common stock on
February 27, 2015 of $3.89 per share, the aggregate market value as of February 28, 2015 of the
400 million shares proposed to be issued under the 2015 Plan was $1.556 billion.
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