By Relmor Demitrius
Yesterday, Sirius XM Radio (NASDAQ:SIRI) released their annual proxy for their upcoming stockholder meeting. The stockholder meeting will take place in New York on May 25th. The biggest news was not what was on the proxy but what wasn’t on it. The poison pill and the reverse split will not be extended.
The reverse split was needed by the board in case it was needed to avoid delisting from being under $1 too long. According to NASDAQ rules they were almost in violation of the minimum bid rule. In 2009 and 2010 the board, as needed by NASDAQ, had to have a plan in place in case the stock couldn’t trade over $1 in time on its own. Also to get an extension on this a plan had to be in place to solve this. The reverse split option allowed Sirius XM the most time possible to get over on its own, which it did eventually. As Mel Karmazin (CEO of Sirius XM Radio) stated to interviewers a 100 times after they put in a reverse split option, the only use of the reverse split would be to avoid delisting. This exclusion from the proxy validates his comments.
Many journalists didn’t believe Mel or thought they knew better, thinking a reverse split might be a good thing and should be done. Well, this issue is now officially over. Mel was telling the truth and the only purpose for the reverse split vote was for delisting purposes only. The stock is instantly more valuable now that this has been removed.
The poison pill was initiated by the board and Liberty to protect the NOL’s from being reset until the August 2011 date passed. That is when the change of ownership from the merger, 3 years out, would reset and this could open the door finally for Liberty or another company to make an offer on the company. It also allows institutions who want to own more than 4.9% of the company the ability to do just that now without causing dilution due to the poison pill. As expected, it was only put in to protect the NOL’s and after August would not be needed again. With the expiration of the poison pill shares would immediately become more valuable.
Also on the proxy is the list of nominated board members for 2011. Not surprising as well, is that Liberty Media (NASDAQ:LINTA), is adding 2 more board members. They would be counted as independent board members and under those rules. This brings John Malone’s influence on the board to 5 members now. Greg Maffei of course and John Malone (pictured above) are on the board already, with Flowers, and these two additions.
The new additions are Vanessa A. Wittman and Carl Vogel. Here is what the proxy lists as Ms. Wittman’s credentials.
“Ms. Wittman has been a director since April 2011. Ms. Wittman is Executive Vice President and Chief Financial Officer of Marsh & McLennan Companies, Inc. (“MMC”), a professional services company providing advice and solutions in the areas of risk, strategy, and human capital. Prior to joining MMC in September 2008, Ms. Wittman was Chief Financial Officer and Executive Vice President of Adelphia Communications Corp., a cable television company, from 2003 to 2007. Prior to Adelphia, Ms. Wittman served as Chief Financial Officer of 360networks, a wholesale provider of telecommunications services. “She also has held positions with Microsoft, Metricom Inc. and Morgan Stanley & Co. Incorporated. Ms. Wittman serves as a director of kgb, an independent provider of directory assistance and enhanced information services. Ms. Wittman also served on the board of directors of Infospace, an internet search services company, from January 2003 to January 2008.”
The other Malone selection is very interesting indeed. Here is what the proxy says about Mr. Vogel.
“Mr. Vogel has been a director since April 2011. Mr. Vogel is currently a member of the board of directors of Dish Network Corporation, a satellite television provider, and a senior advisor to its Chairman, CEO and President. He served as President of Dish Network Corporation from September 2006 until February 2008 and served as Vice Chairman from June 2005 until March 2009. From October 2007 until March 2009, Mr. Vogel served as the Vice Chairman of the board of directors of, and as a Senior Advisor to, EchoStar Communications Corporation. From 2001 until 2005, Mr. Vogel served as the President and CEO of Charter Communications Inc., a cable television and broadband services provider. Prior to joining Charter, Mr. Vogel worked as an executive officer in various capacities for companies affiliated with Liberty Media. Mr. Vogel is a member of the boards of directors and audit committees of Shaw Communications, Inc., a diversified communications company providing broadband cable and direct-to-home satellite services in Canada, Universal Electronics, Inc., a provider of wireless control technology for connected homes, NextWave Wireless Inc., a wireless technology company that develops, produces, and markets mobile multimedia and consumer electronic solutions, and is a member of the board of directors, audit committee and executive committee of Ascent Media Corporation.”
His ties to Direct TV’s rival Dish Network is interesting. I wouldn’t have expected a Dish insider to be on our board, but here it is. This should lead to some interesting discussions on this board selection.
The other proxy votes involve voting for a non biding advisory in regards to compensation pay and how often that compensation pay should be reviewed. This one is getting the most media attention so far and it the least important of the issues on or not on this proxy.
This proxy has shed some light on what may happen with the company and its leadership going forward and puts to rest some long standing negatives of owning the stock as well.
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Disclosure: Long SIRI
