10 CEOs To Go For 2009: Mel Karmazin of SIRIUS XM (SIRI)
It is December, and it is time for many companies to review their existing plans and decide to make some major changes in 2009. SIRIUS XM Radio Inc. (NASDAQ: SIRI) now stands at a critical juncture, and this is a call which will not come about easily. It is also a call which may be one of the more controversial calls out there. It is time for a major change at SIRIUS XM, and that change needs to be the ouster of Mel Karmazin as CEO.
For a backgrounder on criteria, we do not name a CEO with the title of "one who needs to leave" just on share price alone. This call is also not just because the growth ahead will be less than many have hoped and less than what Karmazin had predicted. The call isn't even based upon the great possibility that even that lowered growth target may have to be reduced again. This is also not personal because we have had no dealings with the company nor with Mr. Karmazin. But there has been serious destruction of investor wealth here which cannot be ignored. The only recent investors who have made money are those who sold shares short.
If you go through the list of 2008 CEO's to go, almost all of those called out have moved on by now. If you go through our list of 2007 CEO's to go, you'll see that most have hit the road.
Mel was deemed a hero when he came over and was credited as the key reason that Howard Stern landed at SIRIUS. So he does deserve a large part of the credit for the company's early growth. But Stern's massive pay package came when shareholders were already feeling a major pinch, and that may have been the first straw putting pressure on the camel's back. That prior success was short-lived and has since turned into a shareholder disaster.
We predicted the path to merger in late 2006 and even suggested that either XM head Hugh Panero or Karmazin would go when the new company launches. Panero was the one who left. And Mel Karmazin either miscalculated the time that the merger would take or he just assumed that the merger would get approved since every other merger was approved. You can look through our "satellite" sector and see his comments we have noted over and over on this. The result was a disaster because the merger took so long and came at such a cost that now the company has some serious viability issues if it cannot secure ample financing. The company just wrote off enough value from the XM merger that the current numbers are now almost numbing.
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