Why is Mel Karmazin getting a raise?

Posted Jul 2nd 2009 8:30AM by Zac Bissonnette
Filed under: Management, Sirius Satellite Radio (SIRI)

Over the past five years, shares of what is now Sirius XM Satellite Radio (NASDAQ: SIRI) have declined from a high of $9 per share to their current price of less than 50 cents per share. Granted, most of that hasn't been CEO Mel Karmazin's fault, and he was able to stave off bankruptcy by engineering an 11th-hour loan from Liberty Media.

But still, is that really a track record that entitles the CEO to a raise? Mr. Karmazin's salary went from $1.25 million to $1.5 million, but that isn't even the worst part. The Wall Street Journal (subscription required) reports that "He also gets options to purchase 120 million shares, which he can exercise at 43 cents a share."

Given that Karmazin was CEO a year ago when the stock was at $2 a share, why the heck should he be paid $120 million if the stock goes back to $1.43?

It's like you hire a guy to paint your house and instead he smashes a hole in a wall. Then he replaces part of the ruined drywall, still leaving some of the damage and not painting the house at all. Would you give that guy $120 million?

If not, then you apparently aren't smart enough to be on Sirius XM's compensation committee.

Tags: executive pay, inthenews, Mel Karmazin, SIRI, Sirius, XM

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Reader Comments (Page 1 of 1)

7-02-2009 @ 10:00AM

Sheldon L said...

The reason is that if you don't he will leave and you may have to pay more to someone else to stay with a sinking ship.

Are his options at 0.43 or 1.43??

7-02-2009 @ 1:02PM

Joe said...

Could have something to do with saving the companies (Sirius and XM) from bankruptcy. Could have have something to do with completing a merger that many thought was impossible to get through.

He deserves every penny.