I suppose it's the sheer magnitude of dollars involved that gives me pause. I'm talking about Tuesday's announcement that Sirius Satellite Radio
So Stern's effective pay for his first year with Sirius was ... well, you can do the math. It appears that the bonus was agreed upon when the ribald Stern signed on with the company. Sirius then had roughly 600,000 subscribers, and analysts had predicted that its audience would expand to 3.5 million by the end of 2006. The company and Stern agreed to an extraordinary bonus should the actual count exceed that prognostication by at least 2 million subscribers. It further appears that Stern's deal includes additional stock-based bonus opportunities, although the "bogeys" for realizing those payments reportedly are progressively steeper and more difficult to achieve.
Sirius, like its head-to-head competitor XM Satellite Radio
What should we take away from the bonus payment? Perhaps nothing. But at the same time, it's a possibly outlandish payment to an individual by a still-struggling corporation whose shareholders have watched their stock price cut nearly in half over the past year. And while Stern is an entertainer, not an executive -- a talent, in the vernacular -- his bonus nevertheless comes against a backdrop of growing concern about exorbitant executive compensation.
That subject, which now has Congressman Barney Frank (D-MA) sponsoring a bill that would require shareholder approval in the awarding of executive pay packages, was covered admirably in a piece earlier this week by my Foolish colleague Rich Duprey.
Rich's mention of Home Depot's
I don't mean to imply that there is the slightest smell of malfeasance associated with Stern's bonus. It's simply a numbers thing: In a world where workers' pay barely matches the upward march of the cost of living, some top executives' compensation packages just seem out of whack at first glance. Case in point: former ExxonMobil
This clearly is an issue with legs, and as Rich notes, one that demands attention from corporations and their boards. With Congressman Frank already on the case, I don't want to imagine the ramifications of further federal oversight on anyone's pay.
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