NY Times Attacks Karmazin For Stock Abuse

RADIO ONLINE | Tuesday, January 3, 2012 | 8:19am CT

The New York Times has singled out SiriusXM CEO Mel Karmazin for what the paper calls a pattern of abuse of stock options by corporations to avoid federal income taxes. Using Karmazin as a prime example, the article cites the fact that in 2009 Karmazin was granted 120 million options at an exercise price of 43 cents each when his contract was extended and his base salary raised by $250K to $1.5 million, as of 2010.

The Times reports Karmazin's options are now worth $165 million, yet, because of the way the US tax law is structured, SiriusXM will get to claim another tax deduction when Karmazin actually exercises the options. They estimate that under that scenario, SiriusXM effectively reduces their federal tax bill by about $57 million.

No surprise that SiriusXM declined to comment for the story however it is worth noting that the NY Times failed to mention that Karmazin did give up all the options he was granted when he first took the job -- prior to the XM merger -- because they essentially became worthless due to the low stock price.