Potential Payments or Benefits Upon Termination or Change in Control
Employment Agreements
We have entered into employment agreements with each of our named executive officers that contain provisions regarding payments or benefits upon a termination of employment. We do not have any provisions in any of our employment agreements for the named executive officers that provide
for any payments solely in the event of a change in control.
None of the employment agreements with our named executive officers provides for a so-called golden parachute excise tax gross up. Each of the employment agreements with our executive officers includes a compensation clawback provision, pursuant to which any incentive-based or other
compensation paid to an executive officer by us or any of our affiliates is subject to deductions and clawback as required by applicable law, regulation or stock exchange listing requirement.
James E. Meyer
In August 2015, we entered into a new employment agreement with Mr. Meyer to continue to serve as our Chief Executive Officer through April 30, 2018. The employment agreement provides for an increase in Mr. Meyers base salary from $1,550,000 to $1,800,000, subject to increases approved
by the Compensation Committee, and obligates us to offer Mr. Meyer a three-year consulting agreement upon the expiration of his employment agreement on April 30, 2018. Mr. Meyer is also entitled to participate in any bonus plans generally offered to our executive officers, with an annual target
bonus opportunity of 250% of his annual base salary.
If Mr. Meyers employment is terminated by us without cause or he terminates his employment for good reason (each as described in his employment agreement), then, subject to his execution of a release of claims and his compliance with certain restrictive covenants, we are obligated to (i)
continue his health benefits for eighteen months and his life insurance benefits for one year, (ii) pay him a lump sum equal to his annual base salary plus the amount of $6,600,000, as consideration for a loss of three-year consulting agreement, and (iii) pay him a lump sum equal to the greater of (x) a
bonus equal to 60% of his then annual base salary or (y) the prior years bonus actually paid to him. We are also obligated to pay Mr. Meyer any earned but unpaid bonus for the year prior to the year of his termination, and a prorated bonus for the year in which his employment is terminated. Further,
Mr. Meyers equity awards are subject to accelerated vesting.
David J. Frear
In July 2015, we entered into a new employment agreement with David J. Frear to continue to serve as our Senior Executive Vice President and Chief Financial Officer through May 31, 2018. The employment agreement provides for an annual base salary of $1,200,000, subject to increases
approved by the Compensation Committee. Mr. Frear is also entitled to participate in any bonus plans generally offered to our executive officers.
If Mr. Frears employment is terminated by us without cause or he terminates his employment for good reason (each as described in his employment agreement), subject to his execution of a release of claims, we are obligated to pay him a lump sum equal to his annual salary as of the date of
the termination and the cash value of the bonus last paid or payable to him in respect of the preceding calendar year and to continue his health and life insurance benefits for one year. Further, Mr. Fears equity awards are subject to accelerated vesting.
Dara F. Altman
In June 2015, we entered into a new employment agreement with Dara F. Altman to continue to serve as our Executive Vice President and Chief Administrative Officer through June 18, 2018. The agreement provides for an annual base salary of $600,000, subject to increases approved by the
Compensation Committee. Ms. Altman is also entitled to participate in any bonus plans generally offered to our executive officers.
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If Ms. Altmans employment is terminated by us without cause or she terminates her employment for good reason (each as described in her employment agreement), subject to an execution of a release of claims, we are obligated to pay her a lump sum payment equal to her then annual base
salary and the cash value of the bonus last paid or payable to her in respect of the preceding calendar year and to continue her health insurance benefits for eighteen months and her life insurance benefits for one year. Further, Ms. Altmans equity awards are subject to accelerated vesting.
James A. Cady
In June 2015, we entered into an employment agreement with James A. Cady to serve as our Executive Vice President, Operations, Products and Connected Vehicle, with an annual base salary of $600,000, subject to increases approved by the Compensation Committee. Mr. Cady is also entitled
to participate in any bonus plans generally offered to our executive officers, with an annual target bonus opportunity of 150% of his annual base salary.
In February 2016, we entered into an amendment to Mr. Cadys employment agreement. This amendment: increased his entitlement to severance from six months to twelve months of base salary; and extended our obligation to provide health benefits after termination from six months to twelve
months. In addition, this amendment required us to pay him an amount equal to the bonus last paid to him in respect of the calendar year immediately preceding the calendar year in which a qualifying termination occurs. In consideration for this amendment, Mr. Cady extended the length of time that
he is subject to the restrictive covenants in his employment agreement from six months to twelve months.
As a result, in the event Mr. Cadys employment is terminated by us without cause or he terminates his employment for good reason (each as described in his employment agreement), subject to his execution of a release of claims, we are obligated to pay him for one year his annual base
salary and an amount equal to the bonus last paid to him in respect of the calendar year immediately preceding the calendar year in which the termination occurs, and to continue his health insurance benefits for one year. Further, Mr. Cadys equity awards are subject to accelerated vesting.
Joseph A. Verbrugge
In December 2015, we entered into a new employment agreement with Joseph A. Verbrugge to serve as our Executive Vice President, Sales and Development, with an annual base salary of $500,000, subject to increases approved by the Compensation Committee. Mr. Verbrugge is also entitled
to participate in any bonus plans generally offered to our executive officers.
In the event Mr. Verbrugges employment is terminated by us without cause or he terminates his employment for good reason (each as described in his employment agreement), subject to his execution of a release of claims, we are obligated to pay him for one year his annual base salary and
an amount equal to the bonus last paid to him in respect of the calendar year immediately preceding the calendar year in which the termination occurs and to continue his health insurance benefits for one year. Further, Mr. Verbrugges equity awards are subject to accelerated vesting.
2003 Long-Term Stock Incentive Plan
Messrs. Meyer and Frear also have outstanding options as of December 31, 2015 that were granted under our 2003 Long-Term Stock Incentive Plan. Under the 2003 Long-Term Stock Incentive Plan, the outstanding equity awards granted to these named executive officers are subject to potential
accelerated vesting upon a change of control. All of the outstanding options granted under the 2003 plan were vested as of December 31, 2015, and, therefore, are not included in the table of potential payments and benefits below.
2009 Sirius XM Radio Inc. Long-Term Stock Incentive Plan and 2015 Sirius XM Holdings Inc. Long-Term Stock Incentive Plan
All of our named executive officers had outstanding equity awards as of December 31, 2015 that were granted under the 2009 Sirius XM Radio Inc. Long-Term Stock Incentive Plan and the
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2015 Sirius XM Holdings Inc. Long-Term Stock Incentive Plan. Under the terms of these Plans, the outstanding unvested equity awards granted to the named executive officers are subject to potential accelerated vesting upon termination without cause by the company or termination by the executive
for good reason during a two year period following a change of control (each as defined in the Plans), to the extent outstanding awards granted under these Plans are either assumed, converted or replaced by the resulting entity in the event of a change of control.
Potential Payments and Benefits
The following table describes the potential payments and benefits under the named executive officers agreements and our stock incentive plans to which they would have been entitled if a termination of employment or change in control had occurred as of December 31, 2015:
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Name
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Triggering Event
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Severance
Payment
(1)
($)
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Accelerated
Equity
Vesting
(2)
($)
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Continuation of
Insurance
Benefits
($)
(3)
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Total
($)
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James E. Meyer
(4)
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Termination due to death or disability
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6,600,000
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12,693,382
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19,293,382
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Termination without cause or for good
reason
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14,400,000
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12,693,382
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28,072
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27,121,454
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Termination without cause or for good
reason following a change in control
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14,400,000
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12,693,382
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28,072
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27,121,454
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David J. Frear
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Termination due to death or disability
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1,710,000
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1,710,000
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Termination without cause or for good
reason
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2,800,000
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1,710,000
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27,395
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4,537,395
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Termination without cause or for good
reason following a change in control
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2,800,000
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1,710,000
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27,395
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4,537,395
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Dara F. Altman
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Termination due to death or disability
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2,466,251
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2,466,251
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Termination without cause or for good
reason
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1,650,000
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2,466,251
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40,612
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4,156,863
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Termination without cause or for good
reason following a change in control
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1,650,000
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2,466,251
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40,612
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4,156,863
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James A. Cady
(5)
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Termination due to death or disability
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738,704
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738,704
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Termination without cause or for good
reason
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300,000
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738,704
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9,104
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1,047,808
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Termination without cause or for good
reason following change-in-control
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300,000
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1,407,907
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9,104
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1,717,011
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Joseph A. Verbrugge
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Termination due to death or disability
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1,514,448
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1,514,448
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Termination without cause or for good
reason
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925,000
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1,514,448
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26,568
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2,466,016
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Termination without cause or for good
reason following a change in control
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925,000
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3,110,336
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26,568
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4,061,904
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(1)
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Any severance payments dues to Messrs. Meyer and Frear and Ms. Altman are required to be paid in a lump sum. The employment agreements with Messrs. Cady and Verbrugge require us to pay any severance in the form of salary continuation and to pay any amounts due on account of their
bonus on the date that bonuses are customarily paid to other employees.
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(2)
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Amounts were calculated based on the closing price on NASDAQ of our common stock on December 31, 2015 of $4.07. The accelerated vesting of options is valued at (a) the difference between the closing price and the exercise price of the options multiplied by (b) the number of shares of
common stock underlying the options. The accelerated vesting of RSUs is valued at the closing price multiplied by the number of shares of RSUs.
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(3)
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Assumes that health benefits would be continued under COBRA for eighteen months for Mr. Meyer and Ms. Altman, twelve months for Messrs. Frear and Verbrugge and six months for Mr. Cady.
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(4)
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Mr. Meyer is also eligible to receive a prorated bonus for the year in which his employment is terminated. Payment is based on actual performance for such year and payable at such time as
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the bonuses for such year are paid to other senior executives of the Company. This potential payment is not determinable and is not reflected in the table above.
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(5)
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The amounts do not give effect to the February 2016 amendment to Mr. Cadys employment agreement which is described under Potential Payments or Benefits Upon Termination or Change in ControlEmployment AgreementsJames A. Cady.
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