The Stern package includes $80 million each year for five years, which must cover the show's expenses as well as line Mr. Stern's pocket. In addition, he gets 34 million shares of Sirius stock, which were valued at just over $100 million when the deal was signed, and now are valued more than $200 million. The contract provides for further stock incentives if Sirius's performance continues to exceed expectations.
That's a lot of money. But since the contract was signed, Sirius's stock price has more than doubled, creating $5 billion of new shareholder value. During the same period, the stock of its competitor, XM Satellite Radio Holdings, has been roughly flat.
Moreover, when the Stern deal was signed in October 2004, Sirius had only 600,000 subscribers and was expecting to have slightly more than two million by the end of last year and 3.5 million by the end of 2006. Instead, it now has 3.3 million and is looking to have six million at year end. That will mean revenue for this year some $200 million higher than expected at the time the Stern deal was inked -- easily enough to cover his paycheck.
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