Mel Karmazin’s five-year contract as CEO of Sirius XM was due to expire later this year, but it’s now been extended through December 2012. He also gets a raise and new stock options.
Karmazin already had plenty of options – 30 million of them – but they have a strike price of $4.72. We wouldn’t want to bet on Sirius XM seeing that level again in the lifetime of anyone reading this story. The new options will give Karmazin the right to acquire 120 million shares at 43 cents each, the closing stock price on June 30, the day the amendment to his employment contract was signed. Of course, those strike prices will adjust in proportion to whatever reverse split the company announces, since that already has shareholder approval.
Since joining Sirius Satellite Radio, the predecessor to Sirius XM, in November 2004, Karmazin has been paid a base salary of $1.25 million. That will increase to $1.5 million effective January 1, 2010.
In addition to his options, Karmazin owns 2.7 million shares of Sirius XM outright, including those held in his 401(k) plan. He bought 1.5 million of those for around $7 million of his personal cash when he took the job. They’re now worth less than $650K (at 43 cents each) – and that’s after rebounding from a low of five cents per share a few months back.