Howard Stern sues Sirius XM over stock
NEW YORK (Reuters) - Howard Stern and his agent are suing satellite radio provider Sirius XM Radio Inc for refusing to award the performance-based stock options it had promised the radio shock jock.
In a filing with the Supreme Court of the state of New York, Stern's lawyers say the satellite radio company offered Stern a series of escalating stock awards in 2004 that hinged on it beating its subscriber estimates by 2 million or more in any year of Stern's contract.
The complaint said that Stern helped the company surpass its targets by more than 2 million subscribers in 2006 and 2007. After Sirius' merger with XM in 2008, Sirius XM again beat its targets, as well as in 2009 and 2010, according to the filing.
"Now that Sirius has conquered its chief competitor and acquired more than 20 million subscribers, it has reneged on its commitment to Stern, unilaterally deciding that it has paid him enough," the complaint said.
In response, Sirius XM said it had "met all of our obligations under the terms of our 2004 agreement with Howard, his agent and production company." It added it was "surprised and disappointed" by the legal action.
Stern's production company, One Twelve, was paid stock awards only in the first year of Stern's contract. Sirius XM also was supposed to pay Stern's agent, Don Buchwald, a consulting fee of 10 percent, the court documents showed.
In December, Sirius XM struck a new contract with Stern that will have the host on air at least until 2015. Stern's previous contract was a five-year $500 million deal but terms of the new contract were undisclosed.
The satellite radio company has been steadily adding subscribers and distancing itself from years of huge losses and concerns about its business model. It ended the quarter with 20.2 million subscribers and expects to sign another 1.4 million next year.
(Reporting by Liana B. Baker, editing by Matthew Lewis)