"Wow!" That is the first thing many investors will say when they read the Sirius XM (SIRI) press release issued after the bell on Thursday. It would appear that Sirius XM CEO Mel Karmazin will be selling an additional 30 million shares as early as September. This time the sale is not tied to philanthropic efforts. It is a plain and simple sale.
Let the speculation begin. On the one hand, there will be some who say that it is simply a sale by an executive who deserves to cash in some of his stake after years of hard work in satellite radio. Others will speculate this is perhaps a sign that the long-time radio icon is making his way toward the exit door because Liberty Media (LMCA) is waltzing in to take control. There will also be a small contingent who will say that Karmazin is doing this in order to increase the share count, thereby making Liberty Media buy even more shares, and to decrease the ownership position on a percentage basis. What we know for a fact is that each of these paths is pure speculation, some of it more valid than others.
What we do know is that Karmazin's contract expires this year and as yet we have not seen any indication that a new deal is happening. Yes, it is quite possible that he will be singing his swan song when Q3 earnings are reported. It is also possible that he could sign a short-term transition deal, as it seems apparent that Liberty Media will gain the control it seeks.
What we also know is that the price to exercise the 30 million options shares is $0.43. This means the shares will cost Karmazin $12,900,000. If he were to sell them all at $2.50 the price would be a cool $75,000,000, delivering a profit of $62,100,000.
I can imagine that the news relating to an insider at Sirius XM selling 30,000,000 shares will not be well received by the market. Be prepared, because this news is going to cause some wild speculation and debate. I would not be surprised to see the stock price move down on this news. Between the Liberty cloud and now the Karmazin cloud, the uncertainty is building for Sirius XM.