XM Radio 2010 Annual Report Download - page 38

Perquisites and Other Benefits for Named Executive Officers
The Compensation Committee supports providing other benefits to named executive officers that, except
as to Mr. Meyer, are substantially the same as those offered to our other full time employees and are provided
to similarly situated executives at companies with which we compete for executive talent.
Mr. Meyer’s principal residence is in Indianapolis, Indiana. We reimburse Mr. Meyer for the reasonable
costs of an apartment in the New York metropolitan area and other incidental living expenses, up to a
maximum of $5,000 per month for rent. We also reimburse Mr. Meyer for the reasonable costs of coach class
air-fare from his home in Indianapolis, Indiana, to our offices in New York City. We also pay Mr. Meyer an
additional amount to hold him harmless as a result of any federal, state or New York City income taxes
imputed in respect of the expenses we reimburse him for.
Payments to Named Executive Officers Upon Termination or Change-in-Control
The employment agreements with our named executive officers provide for severance payments and, in
connection with a severance that occurs after a change-in-control, additional payments (including tax
“gross-up” payments to protect the named executive officers from so-called “golden parachute” excise taxes
that could arise in such circumstances). These arrangements vary from executive to executive due to individual
negotiations based on each executive’s history and individual circumstances.
We believe that these change-in-control arrangements mitigate some of the risk that exists for executives
working in our industry. These arrangements are intended to attract and retain qualified executives who could
have other job alternatives that may appear to them, in the absence of these arrangements, to be less risky.
There is a possibility that we could be acquired in the future. We believe that severance payments in
connection with a change-in-control transaction are necessary to enable key executives to evaluate objectively
the benefits to our stockholders of a proposed transaction, notwithstanding its potential effects on their own
job security.
Related Policies and Considerations
Compensation of our Chief Executive Officer
In November 2004, our board of directors negotiated, and we entered into, a five-year employment
agreement with Mel Karmazin to serve as our Chief Executive Officer. In June 2009, Mr. Karmazin’s
employment agreement was extended through the end of 2012. The material terms of Mr. Karmazin’s
employment agreement are described below under “Potential Payments Upon Termination and
Change-in-Control — Employment Agreements — Mel Karmazin.”
The terms of Mr. Karmazin’s employment were established by negotiations between Mr. Karmazin and
the Compensation Committee. The Compensation Committee did not retain an independent compensation
consultant to advise them in the negotiation of Mr. Karmazin’s compensation arrangements or to assess the
reasonableness of the compensation arrangements. The Compensation Committee concluded that, in its
business judgment, Mr. Karmazin’s qualifications and experience as chief executive officer, particularly in
radio, were uniquely suited to our needs, and that the compensation, including the base salary and stock option
components of his compensation, was, taken as a whole, appropriate under the circumstances.
Mr. Karmazin did not receive a bonus in respect of the year ended December 31, 2008. In February 2010,
with respect to his performance in 2009, the Compensation Committee awarded a cash bonus to Mr. Karmazin
of $7,000,000 in recognition of his performance and our corporate performance. In February 2011, the
Compensation Committee awarded a cash bonus to Mr. Karmazin of $8,400,000 in recognition of his
performance and our corporate performance in 2010, including:
• increasing our net subscribers additions by over 1.4 million, an increase of over 1.6 million net
subscriber additions over 2009;
• achieving adjusted EBITDA growth of 35% to over $626 million in 2010;
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