“Pay me more money”, says Howard Stern
March 25, 2011
Talk-radio “shock-jock” Howard Stern is suing Sirius-XM Satellite Radio over the alleged non-payment of a performance bonus. Stern’s original contract was with XM Radio, a company that was bought out of near-bankruptcy by rival Sirius in July 2008.
Stern’s original deal called for him to be paid the then staggering sum of $500m over five years. The show went on air in January 2006. Stern claims One Twelve, his production company, was to be paid “a series of escalating stock awards if Sirius exceeded its subscriber estimates in any year of Stern’s contract by 2m or more subscribers. It also promised to pay Stern’s agent Don Buchwald a consulting fee equal to 10 per cent of any compensation paid to One Twelve. “Sirius set the subscriber targets high with the idea that if Stem delivered, Sirius would more than recoup its investment in Stem. Stem delivered beyond expectations,” the complaint states. “Throughout the five years of his contract, Stern brought record numbers of new subscribers to Sirius and helped Sirius retain them. Sirius exceeded its internal subscriber estimates by a large margin in every year of Stern’s contract.”
Following an initial payment of 34.4m shares in early 2006 and another payment in 2007, Stern says, the company failed to make additional payments. Stern claims that he and Buchwald initially refrained from demanding the unpaid stock options, because of Sirius’ precarious financial health during the early years of the deal. In fact, the year it signed Stern, Sirius had a year-end deficit of a massive $1.9bn, according to the complaint, filed in the News York County Court.
It wasn’t until Sirius avoided bankruptcy by securing funding from a third party, Liberty Media, that Stern and Buchwald’s representatives asked about the performance-based compensation the two say they are owed for 2008 and 2009.
Today the position is that Sirius XM claims more than 20.2m subscribers. Sirius XM said in a statement that it has abided by the terms of the 2004 deal. Stern has also signed a fresh $400m contract with the company. “Sirius XM just signed a contract through 2015 with Howard Stern, and he is a valued part of our company,” the statement said. “We were thus surprised and disappointed by the subsequent legal action initiated by his production company and agent. We have met all of our obligations under the terms of our 2004 agreement with Howard, his agent and production company .