Should Sirius XM Investors Be Worried About Mel’s Moves?
Sirius XM Radio (NASDAQ:SIRI) chief executive Mel Karmazin has made ample news over the past few months for dumping large quantities of stock options he held in the company. Karmazin will have sold almost 60 million units once his pre-declared and planned sales, which started in April, are complete. The actions of the chief executive, who has carried the company through its financially unstable days of 2009 to relative success today, have been much talked about, with critics accusing him of having a leave-when-you-can plan.
However, as SiriusBuzz, a blog that focuses on the radio, argues, Karmazin’s actions are probably just part of a strategy for personal financial planning in connection with his philanthropic efforts. To give credence to that theory is the fact that the CEO will still own approximately 70 million more shares as well as other options once he is done with the planned selling.
“Karmazin’s options expire at the end of 2014,” SiriusBuzz writes. “This gives him enough time to plan his finances, set up his family the way he needs to, and move into a direction of charity that is meaningful to him.” The chief executive, SiriusBuzz argues, has also invested more money into market purchases of Sirius stock than he has received in salary since the day he started.
The chief executive has also publicly battled with Sirius’ biggest shareholder, Liberty Media (NASDAQ:LMCA), over the latter’s efforts to take control of the company. Last week, for the second time, the radio opposed a petition from Liberty to the Federal Communications Commission that asked for approval to get effective control. Karmazin has already been credited with the turnaround since 2009, when it was forced to accept funding from Liberty in return for cheap stock options that the latter is now using to demand ownership. After several years of losses, the company is expected to generate $689 million in cash this year. Its subscriber count has also risen 15 percent to 21.9 million since 2008.
“Karmazin is not selling because he fears the future of Sirius XM … Karmazin is not running away … At the annual shareholder meeting Karmazin stated quite clearly that he believes in Sirius XM and that no matter who owns it that it will still produce impressive numbers,” the blog concludes.
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