UPDATE 2-Karmazin leaves Sirius XM; Meyer named interim CEO

Wed Dec 19, 2012 12:35pm EST

* Meyer, 58, is also being considered to be permanent CEO

* Executive has been at Sirius XM since 2004

* Outgoing CEO Mel Karmazin stepped down Tuesday

* Liberty close to gaining control of company

By Liana B. Baker

Dec 19 (Reuters) - Sirius XM Radio Inc named Jim Meyer as interim chief executive officer on Wednesday and said a search committee was considering making the longtime executive the satellite radio company's full-time CEO.

Meyer, who most recently was president of sales and operations at Sirius XM, emerged in recent months as a leading contender to replace Mel Karmazin, Reuters had reported . His appointment takes effect immediately.

Karmazin quit as CEO on Tuesday and resigned from the board, Sirius XM said in a filing with the U.S. Securities and Exchange Commission.

"Given Jim's current position, we expect this will be a seamless transition," Sirius XM Chairman Eddy Hartenstein said in a statement.

Meyer will also join the company's board. He will receive a base salary of $1.3 million a year as well as an annual bonus that the compensation committee will determine later, the filing said.

Karmazin's base salary was $1.5 million in 2011, and he received $9.2 million in bonuses, according to Sirius XM's 2011 annual report.

If another executive takes over as CEO and Meyer leaves the company, the interim CEO will receive "an additional lump sum bonus," the company said, without providing a specific amount.

'ASSISTANT COACH'

Meyer, 58, oversees the company's auto industry relationships, which account for the bulk of its revenue. Former colleagues have described him as the "No. 2" executive who worked closely with Karmazin and helped bring all the components of the company together.

He joined Sirius XM in 2004, the same year as Karmazin.

"Meyer has been with Mel (Karmazin) and been like the assistant coach for eight years and involved in everything Mel was doing," said a source who knows Meyer but is not authorized to talk to the media about him. "This is a very smooth transition."

The timing of Meyer's appointment was unexpected since Karmazin was not scheduled to step down until February.

Gabelli & Co analyst Brett Harriss said Meyer would have to deal with Sirius XM's higher royalty payments to artists, price increases and product introductions.

Along with Hartenstein, the committee formed to search for a permanent CEO includes Sirius XM board member James Mooney and Greg Maffei, CEO of Liberty Media Corp, a major shareholder of the company.

Sirius XM said on Wednesday that the committee was considering internal and external candidates, including Meyer.

From his days working at Thomson Consumer Electronics, Meyer has had a strong relationship with Hartenstein, which may lead to the Sirius XM chairman's support for him as permanent CEO. Thomson had DirecTV as a client when Hartenstein was the satellite TV company's president, Reuters has reported.

However, people who have worked with Meyer say he lacks strong programming experience, which could hurt his chances. A large part of Sirius XM's business involves securing high-profile contracts with talent, such as radio host Howard Stern, and airing exclusive content to keep subscribers paying for the service.

Sirius XM President and Chief Content Officer Scott Greenstein oversees the company's programming.

LIBERTY'S ROLE

The executive shuffle at Sirius comes as Liberty Media tries to gain a controlling interest in the company. Liberty acquired a roughly 40 percent stake in 2009 as part of a deal in which it loaned Sirius XM $530 million to help the company avoid bankruptcy.

Liberty had to wait until last March before it could increase its stake, which it started doing almost immediately by acquiring shares on the open market. It now controls nearly 50 percent of the company and is awaiting the U.S. Federal Communications Commission's approval to take full control and potentially replace the board.

Even without that approval, Liberty already appears to be making the major decisions at Sirius XM.

For example, Sirius XM last week announced a $2 billion share buyback program and a special dividend that returns about $160 million to Liberty, which had been talking openly about a large stock repurchase at the satellite radio company for months.

Karmazin, who had been CEO since 2004, had previously said he did not want to work for a controlling shareholder, which may have been part of the reason he left Sirius XM.

With 23 million subscribers, Sirius is the largest U.S. satellite radio provider, but it faces competitors that include online music services Pandora and Spotify.

Sirius XM shares were down 0.3 percent to $2.95 in midday Nasdaq trading.

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