Sirius Gives Stern Payment Of $220M In Company Stock
By Jeff Malester -- TWICE, 1/16/2006
New York— Strong Sirius Satellite Radio subscriber sales and a doubling of the company's stock price in just over a year are providing a big pay day for radio talk show personality Howard Stern and his agent.
According to an 8-K filing with the Securities and Exchange Commission Jan. 5, Stern and his agent, Don Buchwald, were to be issued 34.4 million shares of Sirius common stock, valued at $219.8 million, based on the $6.39 closing price on that day.
The filing said the shares were to be delivered in December 2010, or earlier, “if as of the end of any fiscal year we exceeded agreed upon subscriber targets.”
According to a subsequent SEC filing on Jan. 11, Stern's and Buchwald's shares are now eligible to be sold immediately. The filing also revealed that Buchwald's share of the 34.4 million shares was 10 percent.
The company said its end-of-2005 subscriber total exceeded the subscriber target agreed upon with Stern in October 2004 when Stern's five-year contract was announced. The share total number translates to about 2.5 percent of the company's outstanding stock.
In October 2004, Sirius said its obligations to Stern would total about $100 million annually, starting in 2006. The 34.4 million shares issued to Stern and Buchwald were valued at that time at about $110 million and were included as part of the fixed obligations under the agreement.
In the fourth quarter last year, Sirius posted 1.1 million new subscribers, more than doubling subscriber numbers registered in the same quarter a year earlier.
The stock was part of a $500 million deal including cash and stock. Value of the agreement has soared to more than $600 million due to the increase in Sirius' stock price in the ensuing 15 months.
