Showing why their company is hemmoraging money, Sirius Satellite Radio (SIRI) paid Howard Stern an $83 million stock bonus based upon an agreement when they signed him on. Talk about giving away the company. You can't blame Stern, if a company is stupid enough to do this, he might as well take advantage of it.
I hope that XM Satellite (XMSR) keeps this in mind as Sirius continually courts them for the purpose of merging the two companies. What a disaster to take on management that frivolously throws money away like this. Evidently $500 million wasn't enough to offer for Stern. It shows that the company was built upon being desperate in a negative sense of the word. These type of one-sided deals that benefit only one person are outrageous for others that have a vested interest in the profitability of a publicly traded company.
The details of Stern's contract offered him incentives if the company exceeded certain subscriber goals. The bonus was connected to the number of subscribers exceeding estimates by over 2 million. The problem is that the company had such low forecasts that it almost guaranteed that Stern would achieve it. There wasn't even a real stretch to make it happen.
In a bizarre statement Sirius Chief Executive Mel Karmazin said, "The decision to bring Howard Stern to Sirius required a very significant commitment and we are very pleased that our investment has dramatically paid off." Saying that their investment has dramatically paid off is a joke at a minimum, and irresponsible.
This company has no interest in creating value for its shareholders, which a publically traded company must have as its chief goal. To negotiate these types of deals shows that there is absolutely no concern for shareholders.
Any company can grow and not make money. How hard can that be? Spending money is one of the easiest things in the world to do. Management that exercises fiscal responsibility and self-control is much more hard to find.
Sirius has lost over 40 percent of its value in the last year, when the market was going great. They need an entire new management team in there if it's not already too late.
» CC Chaiman Says Sirius Satellite Radio and XM Satellite Radio Merger Prohibited from BizofShowBiz
With the speculation that has be swirling around the possible mergers of Sirius Satellite Radio (SIRI) and XM Satellite Radio (XMSR), it may have been put to rest by FCC chairman Kevin Martin when he said that FCC rules prohibit... [Read More]
Tracked on: January 18, 2007 3:10 PM | Permalink to Trackback