XM Radio 2013 Annual Report Download - page 30

As part of the transactions with Liberty Media, in February 2009, we entered into an investment agreement
(the “Investment Agreement”) with Liberty Radio, LLC, an indirect wholly-owned subsidiary of Liberty Media.
Pursuant to the Investment Agreement, we issued to Liberty Radio, LLC 12,500,000 shares of convertible
preferred stock with a liquidation preference of $0.001 per share in partial consideration for the loan investments.
The preferred stock was convertible into approximately 40% of our outstanding shares of common stock (after
giving effect to such conversion).
In September 2012, Liberty Radio, LLC converted 6,249,900 shares of its preferred stock into
1,293,467,684 shares of our common stock. In January 2013, the Federal Communications Commission granted
Liberty Media approval to acquire de jure control of us and Liberty Radio, LLC converted its remaining
preferred stock into 1,293,509,076 shares of our common stock. As a result of these conversions of preferred
stock and additional purchases of our common stock, Liberty Media beneficially owned, directly and indirectly,
over 50% of our outstanding common stock as of March 17, 2014.
Two current Liberty Media executives and one Liberty Media director are members of our board of
directors. Gregory B. Maffei, the President and Chief Executive Officer of Liberty Media, is the Chairman of our
board of directors.
As a result, Liberty Media has the ability to control our affairs, policies and operations, such as the
appointment of management, future issuances of our common stock or other securities, the payment of dividends,
if any, on our common stock, the incurrence of debt by us, amendments to our certificate of incorporation and
bylaws and the entering into of extraordinary transactions, and their interests may not in all cases be aligned with
the interests of other stockholders. In addition, Liberty Media can determine the outcome of all matters requiring
general stockholder approval and has the ability to cause or prevent a change of control of our Company or a
change in the composition of our board of directors and could preclude any unsolicited acquisition of our
Company. The concentration of ownership could deprive stockholders of an opportunity to receive a premium for
their common stock as part of a sale of our Company and might ultimately affect the market price of our common
stock.
On October 9, 2013, we entered into an agreement with Liberty Media to repurchase $500 million of our
common stock from Liberty Media. Pursuant to that agreement with Liberty Media, we repurchased $160 million
of our common stock from Liberty Media as of December 31, 2013. On January 23, 2014, we entered into an
amendment to the agreement with Liberty Media to defer the previously scheduled $240 million repurchase of
shares of our common stock from Liberty Media from January 27, 2014 to April 25, 2014, the date of the final
purchase installment under the agreement. As a result of this deferral, we expect to repurchase $340 million of
our shares of common stock from Liberty Media on April 25, 2014 at a price of $3.66 per share. We entered into
this amendment at the request of the Special Committee of our board of directors that was formed to review and
evaluate the Liberty Media proposal described below. That Special Committee was comprised of independent
directors.
On January 3, 2014, our board of directors received a non-binding letter from Liberty Media proposing a
transaction pursuant to which all outstanding shares of our common stock not owned by Liberty Media would be
converted into the right to receive 0.0760 of a new share of Liberty Series C common stock, which would have
no voting rights. Our board of directors formed a Special Committee of independent directors, consisting of
Joan L. Amble, James P. Holden and Eddy W. Hartenstein, to consider the proposal. On March 13, 2014, Liberty
Media announced that its proposal was no longer applicable.
Does Sirius XM have corporate governance guidelines and a code of ethics?
Our board of directors adopted the Guidelines which set forth a flexible framework within which the board,
assisted by its committees, directs our affairs. The Guidelines cover, among other things, the composition and
functions of our board of directors, director independence, management succession and review, committee
assignments and selection of new members of our board of directors.
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