Suddenly, Howard Stern has declared war on Sirius XM (SIRI). And that could be a big problem for the company and its holders.
As my colleague Jeff Bercovici noted yesterday, Stern has sued Sirius over bonuses he says he should have earned by attracting new subscribers to the satellite radio service. According to the AP, Stern claims the company told him he was not awarded the bonuses because the subscribers it acquired by merging with XM, don’t count toward his incentive targets. Stern counters that it was his presence that made the merger possible.
This morning, Wunderlich Securities analyst Matthew Harrigan cut his rating on SIRI shares to Hold from Buy, reducing his target on the shares to $1.65, from $2, asserting that “SIRI’s current stock market valuation likely cannot accommodate the uncertainty engendered by the suit – even if it ends up being meritless.”
As Harrigan notes, the complaint alleges that for each 2 million subs above internal targets, Stern is supposed to get an incentive payment – and that the XM customers acquired in the merger should count under the agreement. Sirius said it was surprised by the suit, which comes just after Stern signed a new deal that keeps his at the satellite radio provider through 2015.
Harrigan notes that the complaint in the case asserts that Stern was largely responsible for the survival of Sirius and its ability to merge with XM Radio.
This morning, SIRI is down 4 cents, or 2.1%, to $1.67.
As my colleague Jeff Bercovici noted yesterday, Stern has sued Sirius over bonuses he says he should have earned by attracting new subscribers to the satellite radio service. According to the AP, Stern claims the company told him he was not awarded the bonuses because the subscribers it acquired by merging with XM, don’t count toward his incentive targets. Stern counters that it was his presence that made the merger possible.
This morning, Wunderlich Securities analyst Matthew Harrigan cut his rating on SIRI shares to Hold from Buy, reducing his target on the shares to $1.65, from $2, asserting that “SIRI’s current stock market valuation likely cannot accommodate the uncertainty engendered by the suit – even if it ends up being meritless.”
As Harrigan notes, the complaint alleges that for each 2 million subs above internal targets, Stern is supposed to get an incentive payment – and that the XM customers acquired in the merger should count under the agreement. Sirius said it was surprised by the suit, which comes just after Stern signed a new deal that keeps his at the satellite radio provider through 2015.
Harrigan notes that the complaint in the case asserts that Stern was largely responsible for the survival of Sirius and its ability to merge with XM Radio.
This morning, SIRI is down 4 cents, or 2.1%, to $1.67.
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