XM Radio 2013 Annual Report Download - page 32

• increasing our revenues by 12%;
• increasing our free cash flow by 31% to $927 million;
• negotiating and consummating the acquisition of Agero, Inc.’s connected vehicle services business for
$530 million, establishing Sirius XM as one of the leading providers of telematics services;
• retiring on attractive terms $1.5 billion of debt; and
• managing our stock buyback program.
In addition, 2013 was marked by key subscriber and content-based achievements and other measures that
contributed to our growth and success, including:
• adding approximately 1.66 million net new subscribers, resulting in a total of approximately
25.6 million subscribers, an increase of almost 7% as compared to 2012;
• launching MySXM, an innovative feature allowing subscribers to personalize our existing commercial-
free music and comedy channels to create a more tailored listening experience;
• expanding our relationships with automakers and large independent resellers, including surpassing
10,000 franchise and independent auto dealers nationwide that provide trial subscriptions to purchasers
and lessees of pre-owned vehicles; and
• entering into an agreement with Ford to allow, for the first time, subscribers to have access to MySXM
and SiriusXM On Demand in their vehicles by using voice commands, steering wheel or radio controls.
In this CD&A, we use certain financial performance measures that are not calculated and presented in
accordance with generally accepted accounting principles in the United States of America (“Non-GAAP”). These
Non-GAAP financial measures include adjusted EBITDA and free cash flow. We also use in this CD&A
subscriber churn, a performance metric which management uses in measuring our business. We use these Non-
GAAP financial measures and other performance metrics to manage our business, set operational goals and, in
certain cases, as a basis for determining compensation for our employees. Please refer to the glossary contained
in our Annual Report for the year ended December 31, 2013 which accompanies this proxy statement for a
discussion of such Non-GAAP financial measures and reconciliations to the most directly comparable GAAP
measure and a discussion of these other performance metrics.
Overall Program Objectives and Processes
Program Objectives
We strive to attract, motivate and retain highly qualified executives with the skills and experience necessary
to provide leadership for our success in dynamic and competitive markets and enhance stockholder value by
providing total compensation that is largely performance-based and competitive with the various markets and
industries in which we compete for talent. We strive to provide incentives to align the interests of our executives
with those of our stockholders and deliver levels of compensation that we believe are commensurate with
performance.
We achieve these objectives through three primary compensation elements:
• a base salary;
• a performance-based discretionary annual bonus that constitutes the short-term incentive element of
our program; and
• equity-based awards that constitute the long-term incentive element of our program.
The Compensation Committee believes that a program comprised principally of the above-described three
elements is consistent with programs adopted by companies with which we compete for executive talent. The
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