XM Radio 2008 Annual Report Download - page 131

benchmarks compensation. The businesses chosen for comparison may differ from one executive to the next
depending on the scope and nature of the business for which the particular executive is responsible.
The Compensation Committee does not attempt to set each compensation element for each executive
within a particular range related to levels provided by peers. Instead, the Compensation Committee uses
market comparison as one factor in making compensation decisions. Other factors considered when making
individual executive compensation decisions include individual contribution and performance, reporting
structure, internal pay relationship, complexity and importance of roles and responsibilities, leadership and
growth potential.
In determining compensation element levels, including the annual grants of restricted stock units and
stock options, for each named executive officer (other than the Chief Executive Officer), the Compensation
Committee considers the recommendations of the Chief Executive Officer.
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 key compensation elements for the named executive officers for 2008.
Base Salary
The objective of base salary is to reflect job responsibilities, value to us, and individual performance with
respect to market competitiveness. Salaries are generally reviewed annually and are often reviewed in
connection with the extension of an employment agreement.
Base salaries for named executive officers are determined in accordance with employment agreements
with those officers. The minimum salaries set forth in the employment agreements and the amount of any
increase over these salaries 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, salary norms for persons in
similar positions at comparable companies;
• the expertise of the individual executive;
• the executives’ salary history;
• the competitiveness of the market for the executives’ 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 importance of linking a high
proportion of each executive officer’s compensation to performance in the form of the annual bonus as well as
long-term stock-based compensation, which is tied to our stock price performance. As noted above, the
Compensation Committee from time to time reviews peer data of similar executives at comparable companies,
depending on the executive, in the radio, television, cable, film, software development, consumer electronics
and other publicly held businesses with a scope and complexity similar to ours.
In 2008, all of the named executive officers were employed pursuant to agreements described under
“Potential Payments upon Termination or Change-in-Control — Employment Agreements” below.
Mr. Karmazin’s base salary of $1,250,000 has not changed since he joined the company in 2004.
In September 2008, Ms. Dara Altman became our Executive Vice President and Chief Administrative
Officer and we entered into an employment agreement with her. Ms. Altman was formerly an Executive Vice
President of XM. Ms. Altman is paid a base salary of $446,332 under the employment agreement, the same
base salary she was paid in her former position with XM.
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