In addition to Howard Stern’s account of his dispute with Sirius XM over how much he is owed, new court documents also include an affidavit of stern’s longtime agent, Don Buchwald. When it comes to why Stern hasn’t gotten additional stock bonuses, Buchwald points the finger right at Mel Karmazin.
Karmazin was Stern’s boss for many years as CEO of Infinity before and after its merger with CBS Radio. According to Buchwald, Stern was well paid, but treated as just an employee at Infinity. One thing Stern insisted on as both Sirius and XM bid for his services was that he be treated as a partner in the company and share in whatever success it achieved.
“Sirius and I always talked of Stern being a big part of the company who would be historically rewarded when it succeeded,” Buchwald told the court.
Buchwald said the contract for Stern’s first five years at Sirius, 2006-2010, included provisions for two stock awards – one for subscribers attracted by Stern himself and another payable if total subscribers in any given years exceeded Sirius’s internal estimates, “regardless of whether those subscribers were attributable to Stern.” Buchwald said the possibility of combining with XM was discussed and Sirius executives never sought to exclude counting XM subscribers from the count for the stock awards.
Stern received the stock award for 2006, but none thereafter. Buchwald said he and Stern didn’t press the issue because of the company’s precarious financial condition, even after the merger with XM. In the meantime, Karmazin had replaced Joe Clayton as CEO of Sirius and then the merged Sirius XM.
After Sirius XM was pulled back from the brink of a Chapter 11 filing with financing by Liberty Media in 2009, Buchwald had his attorney raise the issue of why Stern had not been paid his stock-based compensation for 2008 and 2009. The reply was that Stern had been paid a cash “merger bonus” as called for in his contract. “Sirius’s position is contrary to what we had agreed,” said Buchwald, insisting that the merger bonus had nothing to do with the required stock payments for exceeding subscriber projections.
“Sirius’s CEO, Mel Karmazin, was not at Sirius when I negotiated the Agreement with the company. The CEO at that time was Joseph Clayton. [Sirius XM President and Chief Content Officer] Scott Greenstein has told me a number of times that Karmazin has said that if he had been CEO at the time, he would have given Stern much less and not given into all our demands,” said Buchwald. “He might have tried to do that, but in that case, as I told Scott Greenstein more than once, Sirius would not have gotten Stern.”
Buchwald told the court he had attempted to discuss the stock-based compensation issue with Karmazin, but the CEO refused to discuss any resolution. So Buchwald went ahead and negotiated the new five-year deal between Stern and Sirius XM.
“Later, when Howard and I realized that we were not going to make any progress with Karmazin, we decided to bring this lawsuit,” Buchwald concluded.
Pictured: Stern and Karmazin in happier times