<Page>
Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
SIRIUS SALELLITE RADIO INC.
.................................................................
(Name of Registrant as Specified In Its Charter)
.................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction
applies:
............................................................
(2) Aggregate number of securities to which transaction
applies:
.......................................................
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was
determined):
.......................................................
(4) Proposed maximum aggregate value of transaction:
.......................................................
(5) Total fee paid:
.......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
.......................................................
(2) Form, Schedule or Registration Statement No.:
.......................................................
(3) Filing Party:
.......................................................
(4) Date Filed:
.......................................................
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[LOGO OF SIRIUS SATELLITE RADIO]
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
Tuesday, November 20, 2001
at 1:30 p.m.
at
THE McGRAW HILL BUILDING
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK
<Page>
[LOGO OF SIRIUS SATELLITE RADIO]
-------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 20, 2001
-------------------
You are cordially invited to attend our Annual Meeting of Stockholders,
which will be held on Tuesday, November 20, 2001, at 1:30 p.m. at The
McGraw-Hill Building, in the Auditorium, 2nd Floor, 1221 Avenue of the Americas,
New York, New York. The Annual Meeting is being held for the following purposes:
1. To elect six directors.
2. To ratify the appointment of Arthur Andersen LLP as our independent
accountants for the fiscal year ending December 31, 2001.
3. To transact any other business that may properly come before the
meeting.
These items are described in this Proxy Statement.
Only stockholders of record at the close of business on September 21, 2001
are entitled to vote at the Annual Meeting. A list of stockholders entitled to
vote will be available for examination for ten days prior to the Annual Meeting,
between the hours of 9:00 a.m. and 4:00 p.m., at our offices at 1221 Avenue of
the Americas, 36th Floor, New York, New York 10020.
IF YOU PLAN TO ATTEND
PLEASE NOTE THAT SPACE LIMITATIONS MAKE IT NECESSARY TO LIMIT ATTENDANCE TO
STOCKHOLDERS. ADMISSION TO THE MEETING WILL BE ON A FIRST-COME, FIRST-SERVED
BASIS. STOCKHOLDERS HOLDING STOCK IN BROKERAGE ACCOUNTS ('STREET NAME' HOLDERS)
WILL NEED TO BRING A COPY OF A BROKERAGE STATEMENT REFLECTING STOCK OWNERSHIP AS
OF THE RECORD DATE TO ENTER THE MEETING. CAMERAS, RECORDING DEVICES AND OTHER
ELECTRONIC EQUIPMENT WILL NOT BE PERMITTED IN THE MEETING.
YOUR VOTE IS IMPORTANT. WE ENCOURAGE YOU TO SIGN AND RETURN YOUR PROXY CARD
BEFORE THE MEETING SO THAT YOUR SHARES WILL BE REPRESENTED AND VOTED AT THE
MEETING, EVEN IF YOU CANNOT ATTEND.
This Proxy Statement and our 2000 Annual Report to Stockholders are being
distributed on or about October 19, 2001.
By Order of the Board of Directors,
PATRICK L. DONNELLY
PATRICK L. DONNELLY
Senior Vice President,
General Counsel and Secretary
New York, New York
October 19, 2001
<Page>
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
About the Meeting........................................... 1
Item 1 -- Election of Directors............................. 4
Nominees for the Board of Directors..................... 4
Board Governance and Operations............................. 5
Meetings of the Board of Directors...................... 5
Committees of the Board of Directors.................... 5
Report of Compensation Committee........................ 6
Performance Graph....................................... 8
Directors' Compensation................................. 9
Compensation Committee Interlocks and Insider
Participation.......................................... 9
Executive Compensation...................................... 9
Summary Compensation Table.............................. 9
Option Grants in Last Fiscal Year....................... 10
Employment Agreements................................... 10
Information about Our Common Stock Ownership................ 13
Voting Trust Agreement.................................. 15
Item 2 -- Ratification of Independent Accountants........... 15
Report of Audit Committee............................... 16
Arthur Andersen LLP Fees................................ 16
Other Matters............................................... 16
Appendix A -- Charter of the Audit Committee of the Board of
Directors................................................. A-1
</Table>
<Page>
ABOUT THE MEETING
WHAT AM I VOTING ON?
1. The election of six directors to our board of directors (Leon D. Black,
Lawrence F. Gilberti, James P. Holden, David Margolese, Peter G. Peterson
and Joseph V. Vittoria).
2. To ratify the appointment of Arthur Andersen LLP as our independent
accountants for the current fiscal year.
--------------------------------------------------------------------------------
HOW DO I VOTE?
If your shares are held in 'street name', through a broker, bank or other
nominee, that institution will send you separate instructions describing the
procedure for voting your shares.
STOCKHOLDERS OF RECORD can vote as follows:
By Mail: Stockholders should sign, date and return their proxy cards in the
pre-addressed, postage-paid envelope that is provided.
At the Meeting: If you attend the Annual Meeting, you may vote in person by
ballot, even if you have previously returned a proxy card.
--------------------------------------------------------------------------------
WHO IS ENTITLED TO VOTE AND HOW MANY VOTES DO THEY HAVE?
Holders of our common stock, 9.2% Series A Junior Cumulative Convertible
Preferred Stock, 9.2% Series B Junior Cumulative Convertible Preferred Stock
and 9.2% Series D Junior Cumulative Convertible Preferred Stock as of the
close of business on September 21, 2001 (the 'Record Date') are entitled to
vote at the Annual Meeting. Each share of our common stock is entitled to one
vote. Each share of our Series A Junior Preferred Stock and Series B Junior
Preferred Stock is entitled to three and one-third votes. Each share of our
Series D Junior Preferred Stock is entitled to 2.9412 votes. As of the Record
Date, the number of shares outstanding were as follows: 54,094,212 shares of
common stock; 1,595,707 shares of Series A Junior Preferred Stock; 715,703
shares of Series B Junior Preferred Stock; and 2,145,688 shares of Series D
Junior Preferred Stock.
--------------------------------------------------------------------------------
WHAT IS A PROXY?
A proxy is a person you appoint to vote on your behalf. We are soliciting
proxies so that all shares of our common stock, Series A Junior Preferred
Stock, Series B Junior Preferred Stock and Series D Junior Preferred Stock
may be voted at the Annual Meeting.
--------------------------------------------------------------------------------
WHO AM I DESIGNATING AS MY PROXY?
You will be designating Patrick L. Donnelly, our Senior Vice President,
General Counsel and Secretary, and Edward Weber, Jr., our Vice President and
Controller, as your proxies.
--------------------------------------------------------------------------------
HOW WILL MY PROXY VOTE MY SHARES?
Your proxy will vote according to your instructions. If you complete your
proxy instructions but do not indicate your vote on some or all of the
business matters, your proxy will vote 'FOR' these items. Also, your proxy is
authorized to vote on any other business that properly comes before the
Annual Meeting in accordance with the recommendation of the board of
directors.
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CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. You may change your vote at any time before your shares are voted at the
Annual Meeting by:
Notifying our Corporate Secretary, Patrick L. Donnelly, in writing at Sirius
Satellite Radio Inc., 1221 Avenue of the Americas, 36th Floor, New York, New
York 10020 that you are revoking your proxy;
Executing and delivering a later dated proxy card; or
Voting in person at the Annual Meeting.
However, if you have shares held through a brokerage firm, bank or other
custodian, and you vote by proxy, you may revoke your proxy instructions
only by informing the custodian in accordance with any procedures it has
established.
--------------------------------------------------------------------------------
WHAT IS A QUORUM OF STOCKHOLDERS?
Shares representing the majority of votes, present or represented by proxy,
constitute a quorum. If you vote, your shares will be considered part of the
quorum.
--------------------------------------------------------------------------------
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
Assuming a quorum of stockholders is present at the Annual Meeting, the
affirmative vote of a plurality of all votes cast is required to elect each
director and the affirmative vote of a majority of all votes cast is needed
to approve the appointment of Arthur Andersen LLP as our independent
accountants.
--------------------------------------------------------------------------------
HOW DO YOU COUNT SHARES THAT AREN'T VOTED FOR THE NOMINEES FOR DIRECTOR, OR
ABSTAIN ON ANY MATTER?
With respect to the election of directors, votes withheld will be treated as
shares present for purposes of determining a quorum. Directors are elected by
a plurality vote, so the six persons receiving the greatest number of votes
will be elected and withheld votes will not affect the outcome of the
election.
With respect to the approval of Arthur Andersen LLP, or any other matter
properly brought before the meeting, abstentions will be treated as shares
present for purposes of determining a quorum. Because a majority of the
shares represented at the meeting and entitled to vote is required for
approval of these matters, abstentions will have the same effect as a vote
against approval.
--------------------------------------------------------------------------------
HOW DO YOU COUNT SHARES THAT ARE HELD BY BROKERS BUT NOT VOTED?
Valid proxies submitted by a broker or its nominee that are not voted on a
matter or that are marked 'abstain' will be counted for purposes of
determining a quorum at the Annual Meeting, but will not be considered as
having voted on that matter.
--------------------------------------------------------------------------------
WHO WILL COUNT THE VOTES?
A representative of The Bank of New York, our transfer agent, will tabulate
the votes and act as inspector of election.
--------------------------------------------------------------------------------
HOW DO I ATTEND THE ANNUAL MEETING?
If you are a registered stockholder, an admission ticket is enclosed with
your proxy card. If you wish to attend the Annual Meeting, please vote your
proxy but keep the admission ticket and bring it with you to the Annual
Meeting.
If your shares are held in the name of a bank, broker or other holder of
record and you wish to attend the Annual Meeting, you need to bring a copy of
a bank or brokerage statement to the Annual Meeting reflecting your stock
ownership as of the Record Date.
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WHO IS SOLICITING MY PROXY AND WHO PAYS THE COST?
Sirius is soliciting your proxy. The cost of soliciting proxies will be borne
by Sirius, which has engaged Georgeson Shareholder Communications Inc. to
assist in the distribution and solicitation of proxies. We have agreed to pay
Georgeson $5,000 plus their reasonable out-of-pocket expenses. Sirius will
also reimburse brokerage firms, banks and other custodians for their
reasonable out-of-pocket expenses for forwarding these proxy materials to
you. Directors, officers and regular employees of Sirius may solicit proxies
on our behalf by telephone or in writing.
--------------------------------------------------------------------------------
WHEN ARE THE STOCKHOLDER PROPOSALS DUE FOR NEXT YEAR'S ANNUAL MEETING?
To be eligible for inclusion in our proxy statement and form of proxy for
next year's annual meeting, stockholder proposals must be submitted in
writing by the close of business on June 12, 2002 to Patrick L. Donnelly,
Senior Vice President, General Counsel and Secretary, Sirius Satellite Radio
Inc., 36th Floor, 1221 Avenue of the Americas, New York, New York 10020.
If any proposal that is not submitted for inclusion in next year's proxy (as
described in the preceding paragraph) is instead sought to be presented
directly at next year's annual meeting, the proxies may vote in their
discretion if (a) we receive notice of the proposal before the close of
business on June 12, 2002 and advise stockholders in next year's proxy
statement about the nature of the matter and how management intends to vote
on such matter or (b) we do not receive notice of the proposal prior to the
close of business on June 12, 2002. Notices of intention to present proposals
at next year's annual meeting should be addressed to Patrick L. Donnelly,
Senior Vice President, General Counsel and Secretary, Sirius Satellite Radio
Inc., 1221 Avenue of the Americas, 36th Floor, New York, New York 10020.
3
<Page>
ITEM 1 -- ELECTION OF DIRECTORS
Six directors will be elected at this year's Annual Meeting. Directors serve
until the next annual meeting of stockholders or until the director is succeeded
by another qualified director who has been elected. Each of the nominated
directors has agreed to serve if elected. However, if for some reason one of
them is unable to accept nomination or election, proxies will be voted for the
election of a nominee designated by the board of directors. Biographical
information for each of the nominees is presented below.
NOMINEES FOR THE BOARD OF DIRECTORS
DAVID MARGOLESE, age 44, has served as Chairman of the Board of Sirius since
August 1993, and as a director since August 1991. From August 1993 to
October 16, 2001, Mr. Margolese also served as Chief Executive Officer of
Sirius. Prior to his involvement with Sirius, Mr. Margolese proposed and co-
founded Cantel Inc., Canada's national cellular telephone carrier, which was
acquired by Rogers Communications Inc. in 1989, and Canadian Telecom Inc.,
Canada's national paging company, serving as that company's president until its
sale in 1987.
LEON D. BLACK, age 50, has been a director of Sirius since June 2001. Mr.
Black is one of the founding principals of Apollo Advisors, L.P. and Lion
Advisors, L.P., which manage investment capital on behalf of institutions. He is
also the founder of Apollo Real Estate Advisors, L.P. From 1977 to 1990, Mr.
Black worked at Drexel Burnham Lambert Incorporated, where he served as Managing
Director, head of the Mergers & Acquisitions Group and co-head of the Corporate
Department. Mr. Black is a director of Samsonite Corporation, Vail Resorts,
Inc., Sequa Corporation, United Rentals, Inc., Allied Waste Industries, Inc.,
AMC Entertainment Inc. and Wyndham International, Inc. Mr. Black is a trustee of
The Museum of Modern Art, Mt. Sinai Hospital, The Metropolitan Museum, Lincoln
Center for The Performing Arts, Prep for Prep, The Jewish Museum, the Cardozo
School of Law, The Asia Society, Spence School and the Vail Valley Foundation.
LAWRENCE F. GILBERTI, age 50, has been a director of Sirius since September
1993 and served as our Secretary from November 1992 until May 1998. Since
December 1992, he has been the Secretary and sole director, and from December
1992 to September 1994 was the President of Satellite CD Radio, Inc., our
subsidiary which holds our FCC license. Since June 2000, Mr. Gilberti has been a
partner in the law firm of Reed Smith LLP; from May 1998 through May 2000, he
was of counsel to that firm. From August 1994 to May 1998, Mr. Gilberti was a
partner in the law firm of Fischbein Badillo Wagner & Harding. Mr. Gilberti has
provided legal services to Sirius since 1992.
JAMES P. HOLDEN, age 50, has been a director of Sirius since August 2001.
From October 1999 until November 2000, Mr. Holden was the President and Chief
Executive Officer of DaimlerChrysler Corporation, a subsidiary of
DaimlerChrysler AG, one of the world's largest automakers. Prior to being
appointed President in 1999, Mr. Holden held numerous senior positions within
DaimlerChrysler Corporation during his 19-year career at the company.
PETER G. PETERSON, age 75, has been a director of Sirius since June 2001.
Mr. Peterson has been chairman of The Blackstone Group L.P., an investment bank,
since 1985. Prior to his involvement with Blackstone, Mr. Peterson served as
chairman and chief executive officer of Lehman Brothers, Kuhn, Loeb, Inc., the
investment bank, for eleven years. He was Secretary of Commerce in 1972 and 1973
after serving as Assistant to the President for International Economic Affairs
and Executive Director of the Council on Economic Policy in 1971 and 1972. Prior
to his government service, Mr. Peterson was with Bell & Howell Company for
thirteen years, beginning as an executive vice president and director and later
as chief executive officer. Mr. Peterson is a director of Sony Corp. He is
chairman of the board of The Federal Reserve Bank of New York, the Council on
Foreign Relations and Institute for International Economics, founding president
of The Concord Coalition and a trustee of the Committee for Economic
Development, the National Bureau of Economic Research and The Museum of Modern
Art. Mr. Peterson has been a director of 3M, RCA, General Foods, Federated
Department Stores, Continental Group, Black & Decker and Cities Services.
4
<Page>
JOSEPH V. VITTORIA, age 66, has been a director of Sirius since April 1998.
From 1997 until February 2000, Mr. Vittoria was Chairman and Chief Executive
Officer of Travel Services International, Inc., a travel services distributor.
Mr. Vittoria has served as a member of the Board of Overseers of Columbia
Business School since 1988. From September 1987 to February 1997, Mr. Vittoria
was the Chairman and Chief Executive Officer of Avis Inc., one of the world's
largest rental car companies. Mr. Vittoria is a director of ResortQuest
International, Inc. and is Chairman of Transmedia Asia Pacific, Inc. and Puradyn
Filter Technologies, Inc.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE 'FOR' EACH OF THE NOMINEES.
BOARD GOVERNANCE AND OPERATIONS
The business and affairs of Sirius are managed by or under the direction of
your board of directors. The board includes a majority of non-employee
directors.
Your board reaffirms its management accountability to stockholders through
the annual election process. All directors stand for election annually.
Your board reviews and ratifies senior management selection and
compensation, monitors overall corporate performance and ensures the integrity
of our financial controls. The board also oversees our strategic and business
planning processes.
MEETINGS OF THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 2000, there were five meetings of
the board, and the board took action four times by written consent in lieu of
meetings. Each director attended more than 75% of the total number of meetings
of the board and meetings held by all committees on which he served.
COMMITTEES OF THE BOARD OF DIRECTORS
The board of directors maintains two standing committees, an Audit Committee
and a Compensation Committee. The board of directors does not maintain a
Nominating Committee. The following table shows the present members of each
committee, the number of committee meetings held during 2000 and the functions
performed by each committee:
<Table>
<Caption>
COMMITTEE FUNCTIONS
------------------------------------------------------------------------------------
AUDIT Recommends to the board the selection of independent
Meetings: Two accountants
Members: Reviews reports of independent accountants
Lawrence F. Gilberti Reviews and approves the scope and cost of all services
James P. Holden (including non-audit services) provided by the firm
Joseph V. Vittoria* selected to conduct the audit
Monitors the effectiveness of the audit process
Reviews adequacy of financial and operating controls
Monitors corporate compliance program
---------------------------------------------------------------------------------------
COMPENSATION Reviews and approves salaries and other compensation
Meetings: Four matters for executive officers
Members: Administers stock option program, including grants of
options to executive officers under our stock option plans
Lawrence F. Gilberti*
Peter G. Peterson
Joseph V. Vittoria
</Table>
* Chairperson
5
<Page>
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee of our board of directors (the 'Committee') is
comprised solely of directors who are not current or former employees. The
Committee is responsible for overseeing and administering our executive
compensation programs. The Committee also reviews, monitors and approves
executive compensation, establishes compensation guidelines for our officers,
reviews projected personnel needs and administers our long-term stock incentive
plan.
COMPENSATION PHILOSOPHY
Our compensation program for executive officers consists of three key
elements:
a base salary;
an annual bonus; and
grants of stock options.
The Committee believes that this three-part approach best serves the
interests of our stockholders. It enables us to meet the requirements of the
competitive environment in which we operate while ensuring that executive
officers are compensated in a way that advances both the short and long-term
interests of stockholders. Under this approach, compensation for our executive
officers involves a high proportion of pay that is 'at risk' -- namely, the
annual bonus and the value of stock options. The annual bonus is intended to be
based, in significant part, on individual performance. Stock options relate a
significant portion of long-term remuneration directly to stock price
appreciation realized by stockholders.
BASE SALARIES
The base salaries paid to each of our executive officers during 2000 were
paid pursuant to the written employment agreements described below, under the
heading 'Employment Agreements'. Changes in base salaries for our executive
officers, other than our Chief Executive Officer, are based upon recommendations
by our Chief Executive Officer, taking into account such factors as competitive
salaries, a subjective assessment of the nature of the position and the
contribution and experience of the officer and the length of the officer's
service. Neither the Committee nor the Chief Executive Officer assigned any
relative weight to the various factors they considered or set predetermined
performance targets for purposes of these base salary determinations. During
2000, Mr. Margolese reviewed all such salary recommendations with the Committee,
and all such recommendations were subject to approval or disapproval by the
Committee. At the recommendation of Mr. Margolese, the Committee approved a base
salary increase for Mr. Capobianco in March 2000 from $250,000 to $275,000 and
approved a base salary increase in December 2000 for Mr. Donnelly from $290,000
to $325,000. Mr. Capobianco's and Mr. Donnelly's base salaries were last
increased in June 1999.
Except as to the compensation reflected in the Employment Agreement entered
into by us and David Margolese as of January 1, 1999, we have not sought to
position executive compensation within any particular range as compared to any
stated peer group.
ANNUAL BONUS
In December 2000, the Committee awarded a cash bonus to Mr. Margolese of
$500,000, a cash bonus to Mr. Briskman of $310,000, a cash bonus to Mr.
Capobianco of $275,000, a cash bonus to Dr. Davidov of $162,500 and a cash bonus
to Mr. Donnelly of $323,000. The Committee awarded these bonuses after reviewing
the progress achieved during 2000 in completing our business plan, including the
successful launch of our satellite constellation, our progress in completing our
terrestrial repeater network and radio development effort and the performance of
our common stock during the year relative to other high-tech companies.
STOCK OPTIONS
We provide long-term incentives through stock options granted to our
executive officers under our long-term stock incentive plan. The Committee
believes that the potential for stock ownership by executives and other
employees is the most effective method by which the interests of management may
6
<Page>
be aligned with those of our stockholders. The options granted typically vest
over time, have a term of ten years and an exercise price equal to the fair
market value of our common stock on the grant date.
In January 2000, the Committee awarded Mr. Donnelly 25,000 stock options. In
December 2000, the Committee awarded Mr. Briskman 50,000 stock options, Mr.
Capobianco 50,000 stock options, Mr. Donnelly 50,000 stock options and Dr.
Davidov 50,000 stock options. These options have a ten year term and an exercise
price of $7.50. The number of options granted by the Committee to each executive
officer was based upon such criteria as anticipated achievement,
responsibilities, performance, experience and future potential, as well as an
awareness of the financial incentives required to retain the quality of
executive management essential to the attainment of our strategic and financial
objectives.
The Committee has authorized executive management to grant stock options to
employees below the executive officer level on an annual basis according to
guidelines intended to be competitive with comparable companies and to reward
individual achievement appropriately. Our executive officers do not receive
annual stock option grants under this program.
COMPENSATION OF OUR CHAIRMAN AND CHIEF EXECUTIVE OFFICER
In 1998, the Committee negotiated, and we entered into, an employment
agreement with Mr. Margolese, our Chairman and Chief Executive Officer,
effective as of January 1, 1999. The Committee engaged an independent
compensation consultant to assist it in the process of determining appropriate
compensation for Mr. Margolese. This consultant identified for the Committee
peer companies within the telecommunications and technologies industries whose
CEO compensation arrangements served as comparative compensation standards
against which the Committee measured the compensation package (comprised of
annual base salary and stock options) agreed to with Mr. Margolese. Mr.
Margolese's base salary structure under this agreement included annual increases
of $50,000 per year, with a base salary of $500,000 in 2000, over the five-year
term of the agreement. This stepped program of annual base salary increases fell
within the median parameter of the peer group data provided by the consultant.
The stock option grants included within this compensation package reflected the
upper end of the survey data for the peer companies. After due consideration of
this data, Mr. Margolese's performance in achieving our objectives and the level
of his management responsibilities, the Committee concluded that the stock
options granted to Mr. Margolese under this agreement constituted an appropriate
package. Mr. Margolese and Sirius terminated this employment agreement on
October 16, 2001.
POLICY WITH RESPECT TO INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code places a $1 million per person
limitation on the tax deduction we may take for compensation paid to our Chief
Executive Officer and our four other highest paid executive officers, except
that compensation constituting performance-based compensation, as defined by the
Internal Revenue Code, is not subject to the $1 million limit. The Committee
generally intends to grant awards under our long-term stock incentive plan
consistent with the terms of Section 162(m) so that such awards will not be
subject to the $1 million limit. In other respects, the Committee expects to
take actions in the future that may be necessary to preserve the deductibility
of executive compensation to the extent reasonably practicable and consistent
with other objectives of our compensation program. However, the Committee
reserves the discretion to pay compensation that does not qualify for exemption
under Section 162(m) where the Committee believes such action to be in our best
interest. The Committee believes that the payment to Mr. Margolese described
below under 'Employment Agreements -- Mr. Margolese' relating to his resignation
as Chief Executive Officer will qualify as a tax-deductible expense under
Section 162(m).
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SUMMARY
The Committee believes that our compensation programs are well structured to
encourage attainment of objectives and foster a stockholder perspective in
management through the potential for employee stock ownership. The Committee
believes, further, that the bonuses granted and stock option awards made in 2000
were competitive, appropriate and in our stockholders' long-term interests.
Compensation Committee
LAWRENCE F. GILBERTI
PETER G. PETERSON
JOSEPH V. VITTORIA
PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative performance of our
common stock with the Standard & Poor's Composite-500 Stock Index (the 'S&P
500') and the Nasdaq Telecommunications Index from December 31, 1995 to
December 31, 2000. The graph assumes that $100 was invested on December 31, 1995
in each of our common stock, the S&P 500 and the Nasdaq Telecommunications Index
and that all dividends were reinvested.
CUMULATIVE TOTAL RETURN
BASED UPON AN INITIAL INVESTMENT OF $100 ON DECEMBER 31, 1995
WITH DIVIDENDS REINVESTED
[PERFORMANCE GRAPH]
TOTAL SHAREHOLDER RETURNS
<Table>
<Caption>
NASDAQ
DATE SIRIUS S&P 500 TELECOMMUNICATIONS INDEX(1)
---- ------ ------- ---------------------------
December 31, 1995.................................. $ 100 $100 $100
December 31, 1996.................................. $ 93 $123 $102
December 31, 1997.................................. $ 382 $164 $149
December 31, 1998.................................. $ 772 $211 $247
December 31, 1999.................................. $1,003 $255 $438
December 31, 2000.................................. $ 675 $232 $188
</Table>
---------
(1) The Nasdaq Telecommunications Index is a capitalization weighted index
designed to measure the performance of all Nasdaq-traded stocks in the
telecommunications sector, including satellite technology.
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<Page>
DIRECTORS' COMPENSATION
During 2000, Mr. Margolese received no additional compensation for serving
on the board of directors.
Mr. Vittoria received an option to purchase up to 40,000 shares of our
common stock upon becoming a director. Mr. Holden received an option to purchase
up to 30,000 shares of common stock upon becoming a director. Each non-employee
director is entitled to receive options to purchase 10,000 shares of common
stock on the business day following our annual meeting of stockholders. The
exercise price for such options is the fair market value of our common stock on
the date of grant. Non-employee directors are also reimbursed for reasonable
travel expenses incurred in attending meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Gilberti, a director, is a partner in the law firm of Reed Smith LLP and
has provided legal services to us since 1992.
EXECUTIVE COMPENSATION
The table below shows the compensation for the last three years for our
Chairman and Chief Executive Officer and the four next highest paid executive
officers at the end of 2000.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM COMPENSATION
-------------------------
NUMBER OF
ANNUAL COMPENSATION RESTRICTED SECURITIES
-------------------------------- STOCK UNDERLYING ALL OTHER
SALARY BONUS OTHER ANNUAL AWARDS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) COMPENSATION ($) (#) ($)(1)
--------------------------- ---- --- --- ------------ --- --- ------
David Margolese (2) ................... 2000 500,000 500,000(3) -- -- -- 10,500
Chairman of the Board and 1999 450,000 -- -- -- 2,500,000 10,000
Chief Executive Officer 1998 400,000 -- -- -- -- 10,000
Robert D. Briskman (4) ................ 2000 310,000 310,000(3) 398,512(8) -- 50,000 10,500
Executive Vice President, 1999 280,000 40,000(5) -- -- 150,000 10,000
Engineering 1998 260,000 25,000(5) -- -- 57,500 10,000
Joseph S. Capobianco .................. 2000 269,135 275,000(3) -- -- 50,000 10,500
Senior Vice President, 1999 241,667 -- -- -- 100,000 10,000
Content 1998 218,125 -- -- -- 25,000 9,200
Dr. Mircho Davidov (6) ................ 2000 216,667 312,500 -- 1,245,000(9) 300,000 --
Senior Vice President, 1999 -- -- -- -- -- --
Engineering 1998 -- -- -- -- -- --
Patrick L. Donnelly (7) ............... 2000 310,417 323,000(3) -- -- 75,000 10,500
Senior Vice President, 1999 277,500 -- -- -- 215,000 10,000
General Counsel and Secretary 1998 162,500 -- -- -- 110,000 --
</Table>
---------
(1) Represents matching contributions by us under our 401(k) Savings Plan. These
amounts were paid in the form of common stock.
(2) Mr. Margolese resigned as Chief Executive Officer on October 16, 2001.
Mr. Margolese remains a director and Chairman of the board of directors.
(3) In February 2000, we also paid Mr. Margolese a bonus of $500,000, Mr.
Briskman a bonus of $100,000, Mr. Capobianco a bonus of $150,000 and Mr.
Donnelly a bonus of $290,000. Each of these bonuses was awarded by our board
of directors in recognition of the executive's efforts in securing our
alliances with DaimlerChrysler and BMW.
(4) Mr. Briskman retired as Executive Vice President, Engineering, and a
director in March 2001.
(5) Amount represents bonus award for obtaining patents.
(6) Dr. Davidov became an executive officer in April 2000.
(7) Mr. Donnelly became an executive officer in May 1998.
(8) Represents amount realized by Mr. Briskman in connection with his exercise
of incentive stock options.
(9) Represents an award of 40,000 shares of restricted stock made on April 17,
2000, calculated based on the closing price per share of our common stock on
the Nasdaq National Market on that date. Restrictions with respect to 35,000
of these shares lapsed on May 1, 2001. Restrictions with respect to 3,500 of
these shares will lapse on May 1, 2002, and restrictions with respect to
1,500 of these shares will lapse on May 1, 2003.
9
<Page>
The following table sets forth certain information for the fiscal year ended
December 31, 2000, with respect to options granted to individuals named in the
Summary Compensation Table above.
OPTION GRANTS IN LAST FISCAL YEAR 2000
<Table>
<Caption>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE
NUMBER OF APPRECIATION
OPTIONS % OF TOTAL EXERCISE --------------------------
GRANTED OPTIONS GRANTED PRICE EXPIRATION 5% 10%
NAME (#) TO EMPLOYEES ($/SHARE)(1) DATE ($) ($) ($)
---- --------- --------------- ------------ ---------- ----------- ------------
David Margolese............. -- -- -- -- -- --
Robert D. Briskman.......... 50,000 2.5% 21.500 12/18/10 676,062 1,713,273
Joseph S. Capobianco........ 50,000 2.5% 21.500 12/18/10 676,062 1,713,273
Dr. Mircho Davidov.......... 250,000 14.8% 31.875 05/15/10 5,011,504 12,700,135
50,000 21.500 12/18/10 676,062 1,713,273
Patrick L. Donnelly......... 25,000 3.7% 40.875 01/12/10 642,652 1,628,606
50,000 21.500 12/18/10 676,062 1,713,273
</Table>
---------
(1) On April 9, 2001, the Compensation Committee of our board of directors
changed the exercise price for these stock options to $7.50 per share.
The following table sets forth certain information with respect to the
number of shares covered by both exercisable and unexercisable stock options
held by the individuals named in the Summary Compensation Table as of December
31, 2000. Also reported are the values for 'in-the-money' stock options that
represent the positive spread between the respective exercise prices of
outstanding stock options and the fair market value of our common stock as of
December 29, 2000 ($29.9375 per share).
<Table>
<Caption>
NUMBER OF SECURITIES
NO. OF UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL YEAR END IN-THE-MONEY OPTIONS AT
ACQUIRED ON (#) FISCAL YEAR END ($)
EXERCISE VALUE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------------- ----------- ------------- ----------- -------------
David Margolese............ -- -- 2,370,000 830,000 16,031,250 --
Robert D. Briskman......... 11,678 398,512(1) 256,322 182,000 5,754,758 793,125
Joseph S. Capobianco....... -- -- 87,000 163,000 1,232,813 1,033,438
Dr. Mircho Davidov......... -- -- -- 300,000 -- 421,875
Patrick L. Donnelly........ -- -- 100,000 300,000 92,813 885,938
</Table>
---------
(1) Represents amount realized by Mr. Briskman in connection with his exercise
of incentive stock options.
EMPLOYMENT AGREEMENTS
We are a party to an employment agreement with each of Messrs. Margolese,
Capobianco, Donnelly, Ledford and Scelfo and Dr. Davidov (the 'Employment
Agreements').
MR. MARGOLESE
Effective January 1, 1999, we entered into a agreement to employ David
Margolese as our Chairman and Chief Executive Officer for a term of five years.
The employment agreement provided for an annual base salary of $500,000 in 2000.
We also granted to Mr. Margolese options to purchase 1,800,000 shares of common
stock at $31.25 per share, all of which were fully vested and exercisable as of
January 1, 2001. Under the terms of the employment agreement, Mr. Margolese may
not disclose any of our proprietary information or, during his employment with
us and for two years thereafter, engage in any business involving the
transmission of radio entertainment programming in North America.
Mr. Margolese resigned as our Chief Executive Officer on October 16, 2001.
As a result of his resignation, he is entitled to receive a severance payment of
$5,000,000.
On October 16, 2001, Sirius entered into an agreement with Mr. Margolese in
connection with his continuing responsibilities as non-executive Chairman of the
board of directors. Under this agreement:
Mr. Margolese will receive, at the discretion of the board, a fee of
$200,000 per year;
10
<Page>
The termination date of stock options currently held by Mr. Margolese will
be extended until April 16, 2007, provided that Mr. Margolese remains
Chairman of the board of directors and complies with his duties and
obligations under the agreement; and
Mr. Margolese's existing employment agreement was cancelled.
The agreement also contains non-competition and confidentiality provisions
similar to those contained in Mr. Margolese's existing employment agreement.
MESSRS. CAPOBIANCO AND DONNELLY
On March 28, 2000, we entered into employment agreements with Joseph S.
Capobianco to serve as our Senior Vice President, Content, and Patrick L.
Donnelly, to serve as our Senior Vice President, General Counsel and Secretary.
The agreement with Mr. Capobianco replaced an employment agreement expiring on
April 16, 2000, and the agreement with Mr. Donnelly replaced an employment
agreement expiring on May 18, 2001. Both of these agreements expire on March 28,
2003.
Pursuant to these agreements, in 2000 we paid Mr. Capobianco an annualized
base salary of $275,000 and Mr. Donnelly an annualized base salary of $290,000.
These base salaries are subject to increase from time to time by our board of
directors. Pursuant to these agreements, if the executive's employment is
terminated, except by us for 'Cause' (as defined in the employment agreements)
or by the executive voluntarily, we are obligated to pay him an amount equal to
the sum of his annual salary and the annual bonus last paid to him. Under these
agreements, neither Mr. Capobianco nor Mr. Donnelly may disclose any of our
proprietary information or, for two years following the termination of his
employment (or, in the event he has been terminated without Cause or has
resigned for 'Good Reason' (as defined in the employment agreements), for one
year following such termination without Cause or resignation for Good Reason),
enter into the employment of, render services to or otherwise assist certain of
our competitors.
DR. DAVIDOV
On April 17, 2000, we entered into an employment agreement with Dr. Mircho
Davidov to serve as our Senior Vice President, Engineering, for three years.
This agreement provides for an annual base salary of $325,000, subject to
increase from time to time by our board of directors. In connection with this
agreement, we granted Dr. Davidov options to purchase 250,000 shares of our
common stock at $7.50 per share. Options with respect to 62,500 shares became
exercisable on May 15, 2001. The remaining options become exercisable in
increments of 62,500 shares on each of May 15, 2002, May 15, 2003 and May 15,
2004. We also granted Dr. Davidov 40,000 restricted shares of common stock to
replace unvested stock options from his previous employer which terminated as a
result of his becoming employed by us. The restrictions applicable to 35,000
shares of common stock lapsed on May 1, 2001, the restrictions applicable to
3,500 shares of common stock lapse on May 1, 2002 and the restrictions
applicable to the remaining 1,500 shares of common stock lapse on May 1, 2003.
Any unvested stock options will vest and become exercisable, and any
restrictions applicable to the restricted stock will lapse, upon the termination
of Dr. Davidov's employment for any reason other than 'Cause' (as defined in the
employment agreement) or if Dr. Davidov voluntarily terminates his employment.
If Dr. Davidov's employment is terminated, except by us for Cause or by
Dr. Davidov voluntarily, we are obligated to pay him an amount equal to the sum
of his annual salary and the annual bonus last paid to him.
Pursuant to this agreement, we have also agreed to provide Dr. Davidov
retirement payments in certain circumstances related to the value of his stock
options. Under the agreement, if the gross value of Dr. Davidov's vested stock
options (assuming none of these options have been exercised) does not equal or
exceed $10,000,000 on at least one day during the 365 days preceding Dr.
Davidov's 57th birthday (December 6, 2003), then, if Dr. Davidov is an employee
of the company on his 57th birthday, we are obligated to pay him a pension equal
to 70% of his base salary on his retirement. In addition, if the gross value of
Dr. Davidov's vested stock options (assuming none of these options have been
exercised) does not equal or exceed $15,000,000 on at least one day during the
365 days preceding
11
<Page>
Dr. Davidov's 65th birthday (December 6, 2011), we are obligated to pay him a
pension equal to 100% of his base salary on his retirement.
Under this agreement, Dr. Davidov may not disclose any of our proprietary
information during or after his employment with us or, for a period of one year
following the date of termination (even if he has been terminated without Cause
or has resigned for Good Reason), enter into the employment of, render services
to, or otherwise assist, certain of our competitors.
MR. SCELFO
On March 7, 2001, we entered into an employment agreement with John J.
Scelfo to serve as our Senior Vice President and Chief Financial Officer for
three years. This agreement provides for an annual base salary of $300,000,
subject to increase from time to time by our board of directors. In connection
with this agreement, we granted Mr. Scelfo options to purchase 300,000 shares of
our common stock at $6.91 per share. Options with respect to 75,000 shares
became exercisable on October 4, 2001. The remaining options become exercisable
in increments of 75,000 on April 4, 2002, October 4, 2002 and April 4, 2003.
Pursuant to this agreement, if Mr. Scelfo's employment is terminated, except
by us for 'Cause' (as defined in the employment agreement) or by Mr. Scelfo
voluntarily, we are obligated to pay him an amount equal to the sum of his
annual salary and the annual bonus last paid to him. Under this agreement, Mr.
Scelfo may not disclose any of our proprietary information or, for two years
following the termination of his employment (or, in the event he has been
terminated without Cause or has resigned for 'Good Reason' (as defined in the
employment agreement), for one year following such termination), enter into the
employment of, render services to or otherwise assist our competitors.
MR. LEDFORD
On August 29, 2001, we entered into an employment agreement with Michael S.
Ledford to serve as our Senior Vice President, Engineering, for three years.
This agreement provides for an annual base salary of $340,000, subject to
increase from time to time by our board of directors. In connection with this
agreement, we granted Mr. Ledford options to purchase 300,000 shares of our
common stock at $4.00 per share. These options become exercisable in increments
of 100,000 shares on each of September 17, 2002, September 17, 2003 and
September 17, 2004. We also granted Mr. Ledford 50,000 restricted shares of
common stock. The restrictions applicable to increments of 12,500 shares of
common stock lapse on September 17, 2002, September 17, 2003, September 17, 2004
and September 17, 2005.
Pursuant to this agreement, if Mr. Ledford's employment is terminated,
except by us for 'Cause' (as defined in the employment agreement) or by Mr.
Ledford voluntarily, we are obligated to pay him an amount equal to the sum of
his annual salary. Under this agreement, Mr. Ledford may not disclose any of our
proprietary information or, for three years following the termination of his
employment, enter into the employment of, render services to or otherwise assist
our competitors.
12
<Page>
INFORMATION ABOUT OUR COMMON STOCK OWNERSHIP
The table below shows, as of August 31, 2001, each person we know to be a
beneficial owner of more than 5% of our common stock. In general, 'beneficial
ownership' includes those shares a person has the power to vote or transfer, and
options to acquire our common stock that are exercisable currently or become
exercisable within 60 days. Except as otherwise noted, the persons named in the
table below have sole voting and sole investment power with respect to all
shares shown as beneficially owned by them.
<Table>
<Caption>
NAMES AND ADDRESS OF NUMBER OF SHARES
BENEFICIAL OWNER(1) BENEFICIALLY OWNED PERCENT OF CLASS(2)
------------------- ------------------ -------------------
OppenheimerFunds, Inc. (3) ................................ 8,363,300 15.5
Two World Trade Center, 34th Floor
New York, New York 10048
Apollo Investment Fund IV, L.P. (4) ....................... 8,704,700 14.1
Apollo Overseas Partners IV, L.P.
Two Manhattanville Road
Purchase, New York 10577
David Margolese (5) ....................................... 6,451,375 11.3
1221 Avenue of the Americas
36th Floor
New York, New York 10020
Blackstone Management Associates III L.L.C (6) ............ 6,310,847 10.4
345 Park Avenue
New York, New York 10154
Janus Capital Corporation (7) ............................. 4,574,640 8.5
100 Fillmore Street
Denver, Colorado 80206
Everest Capital Master Fund, L.P. (8)(9). ................. 3,809,450 6.8
Everest Capital Limited
The Bank of Butterfield Building
65 Front Street
6th Floor
Hamilton MMJX, Bermuda
Prime 66 Partners, L.P. (10) .............................. 3,485,375 6.4
201 Main Street, Suite 3200
Forth Worth, Texas 76102
</Table>
---------
(1) This table is based upon information supplied by directors, officers and
principal stockholders. Percentage of ownership is based on shares of
common stock outstanding on August 31, 2001.
(2) Determined as provided by Rule 13d-3 under the Exchange Act. Under this
rule, a person is deemed to be the beneficial owner of securities that can
be acquired by this person within 60 days from the date of determination
upon the exercise of options, and each beneficial owner's percentage
ownership is determined by assuming that options that are held by this
person (but not those held by any other person) and that are exercisable
within 60 days from the date of determination have been exercised.
(3) This information is based upon a 13F filed on August 15, 2001 by
OppenheimerFunds, Inc. On March 9, 2001, a Schedule 13G filed by
OppenheimerFunds, Inc. ('OFI') and Oppenheimer Global Growth & Income Fund,
indicated that Oppenheimer Global Growth & Income Fund has the sole power
to vote or to direct the vote with respect to 5,500,000 shares of our
common stock, OFI has shared power to dispose or to direct the disposition
of 8,262,000 shares of our common stock and Oppenheimer Global Growth &
Income Fund has shared power to dispose or to direct the disposition of
5,500,000 shares of our common stock. OFI is an investment adviser
registered under the Investment Advisers Act of 1940 and Oppenheimer Global
Growth & Income Fund is an investment company registered under the
Investment Company Act of 1940.
(4) Represents 1,595,707 shares of 9.2% Series A Junior Cumulative Convertible
Preferred Stock, 715,703 shares of 9.2% Series B Junior Cumulative
Convertible Preferred Stock, which entitle the holder to vote as if the
shares had been converted to common stock, and 1,000,000 shares of common
stock. Each share of 9.2% Series A Junior Cumulative Convertible Preferred
Stock and 9.2% Series B Junior Cumulative Convertible Preferred Stock is
entitled to three and one-third votes per share.
(5) Includes 1,375 shares of common stock acquired under our 401(k) Savings
Plan, 2,850,000 shares of common stock issuable under stock options that
are exercisable within 60 days and 1,600,000 shares owned by Mr. Margolese.
Under a voting trust agreement entered into by Darlene Friedland, as
grantor, David Margolese, as trustee, and us, Mr. Margolese has the power
to vote in his discretion all shares of common stock owned or acquired in
the future by Darlene Friedland and some of her affiliates (2,000,000
shares as of August 31, 2001) until November 20, 2002. Does not include
1,850,000 shares issuable under stock options that are not exercisable
within 60 days.
(6) Represents 2,145,688 shares of 9.2% Series D Junior Cumulative Convertible
Preferred Stock, which entitles the holder to vote as if the shares had
been converted to common stock. Each share of 9.2% Series D Junior
Cumulative Convertible Preferred Stock is entitled to 2.9412 votes per
share. This information is based upon the Schedule 13D dated June 6, 2001
filed by Blackstone Management Associates III L.L.C. with the SEC.
(footnotes continued on next page)
13
<Page>
(footnotes continued from previous page)
(7) This information is based upon a 13F filed on August 14, 2001 by Janus
Capital Corporation ('Janus Capital'). Janus Capital, Janus Enterprise Fund
and Thomas H. Bailey filed a Schedule 13G on March 9, 2001, indicating that
Janus Capital and Thomas H. Bailey have sole voting power and sole
dispositive power with respect to 5,384,190 shares of our common stock and
Janus Enterprise Fund has sole voting power and sole dispositive power with
respect to 2,885,530 shares of our common stock. Janus Capital is a
registered investment adviser which furnishes investment advice to several
investment companies registered under Section 8 of the Investment Company
Act of 1940 and individual and institutional clients. As a result of its
role as investment adviser or sub-adviser, Janus Capital may be deemed to
be the beneficial owner of the shares of our common stock held by such
individuals and clients. However, Janus Capital does not have the right to
receive any dividends from, or the proceeds from the sale of, the
securities held by such individuals and clients and disclaims any ownership
associated with such rights. Mr. Bailey owns approximately 6.2% of Janus
Capital. In addition to being a stockholder of Janus Capital, Mr. Bailey
serves as President and Chairman of the Board of Janus Capital and filed
the Schedule 13G as a result of such stock ownership and positions which
may be deemed to enable him to exercise control over Janus Capital. Mr.
Bailey has reported that he does not own of record any shares of our common
stock and he has not engaged in any transactions in our common stock.
However, as a result of his position, Mr. Bailey may be deemed to have the
power to exercise or to direct the exercise of such voting and/or
dispositive power that Janus Capital may have with respect to our common
stock held by individual and institutional clients of Janus Capital. Mr.
Bailey has disclaimed beneficial ownership over any shares of our common
stock that he or Janus Capital may be deemed to beneficially own. Janus
Enterprise Fund is an investment company registered under the Investment
Company Act of 1940 and is one of the portfolios to which Janus Capital
provides investment advice.
(8) Represents 1,941,211 shares of common stock and $3,650,000 in aggregate
principal amount of our 8 3/4% Convertible Subordinated Notes due 2009.
This information is based upon the Form 13G dated March 31, 2001 filed by
Everest Capital Limited with the SEC.
(9) Includes shares of common stock issuable under warrants to purchase
1,740,000 shares of common stock at a purchase price of $50.00 per share.
These warrants are exercisable from June 15, 1998 through and including
June 15, 2005.
(10) This information is based upon the Form 13G filed June 8, 2001 by Prime 66
Partners, L.P. with the SEC.
The following table shows the number of shares of our common stock
beneficially owned by each director, our Chief Executive Officer and the four
other most highly compensated executive officers as of August 31, 2001. The
table also shows common stock beneficially owned by all of our directors and
executive officers as a group on August 31, 2001:
<Table>
<Caption>
SHARES
NAME OF NUMBER OF SHARES PERCENT ACQUIRABLE
BENEFICIAL OWNER BENEFICIALLY OWNED (1) OF CLASS WITHIN 60 DAYS
---------------- ---------------------- -------- --------------
David Margolese (2)................................. 6,451,375 11.3% 2,850,000
Leon D. Black (3)................................... -- * --
Lawrence F. Gilberti................................ 55,000 * 55,000
James P. Holden..................................... 30,000 * 30,000
Peter G. Peterson (4)............................... -- * --
Joseph V. Vittoria.................................. 55,000 * 55,000
Joseph S. Capobianco................................ 113,708 * 112,000
Dr. Mircho Davidov.................................. 102,933 * 62,500
Patrick L. Donnelly................................. 345,320 * 344,000
John J. Scelfo (5).................................. 75,500 * 75,000
All Directors and Executive Officers as a Group
(10 persons) (6).................................. 7,228,836 12.5% 3,583,500
</Table>
---------
* Less than 1% of our outstanding shares of common stock.
(1) These amounts include shares of common stock which the individuals hold and
shares of common stock they have a right to acquire within the next 60 days
as shown in the last column through the exercise of stock options. Also
included in the table are the number of shares of common stock acquired
under our 401(k) Savings Plan as of August 31, 2001: Mr. Margolese -- 1,375
shares; Mr. Capobianco -- 1,708 shares; Dr. Davidov -- 433 shares and Mr.
Donnelly -- 1,320 shares.
(2) Pursuant to the Voting Trust Agreement, until November 20, 2002, David
Margolese, as trustee, has the power to vote in his discretion all shares of
common stock owned or hereafter acquired by Darlene Friedland and certain of
her affiliates (2,000,000 shares as of August 31, 2001).
(3) Apollo Advisors IV, L.P. ('Advisors IV'), the managing general partner of
Apollo Investment Fund IV, L.P. ('AIF IV'), is also the managing general
partner of Apollo Overseas Partners IV, L.P. ('Overseas IV'). Apollo Capital
Management IV, Inc. ('Capital Management IV') is the general partner of
Advisors IV. Leon D. Black and John J. Hannan are the directors and
principal executive officers of Capital Management IV. Apollo Management IV,
L.P. ('Management IV') serves as manager to AIF IV and to Overseas IV. AIF
IV Management, Inc. ('AIF IV Management') is the general partner of
Management IV. Each of Advisors IV, AIF IV, Overseas IV, Capital Management
IV, Management IV, AIF IV Management and Messrs. Black and Hannan and their
respective affiliates disclaims beneficial ownership of all shares of Sirius
in excess of their respective pecuniary interest, if any.
(4) Blackstone CCC Capital Partners L.P. ('BCP CCC'), Blackstone CCC Offshore
Capital Partners L.P. ('BCP CCC Offshore') and Blackstone Family Investment
Partnership III L.P. ('BFIP III'), acting through their sole general partner
Blackstone Management Associates III L.L.C. ('BMA III'), have the sole power
to vote or to direct the vote, and to dispose or to direct the disposition
of, the Junior Preferred Stock respectively owned by them. As a result, for
purposes of Section 13(d) of the Exchange Act, BMA III may be deemed to
beneficially own the shares of Junior Preferred Stock directly owned by the
respective Blackstone partnerships of which it is the general partner. Peter
G. Peterson and Stephen A. Schwarzman are the founding members and managing
members of BMA III. Messrs. Peterson and Schwarzman have shared power to
vote or to direct the vote of, and to dispose or to direct the disposition
of, the shares of Junior Preferred Stock that may be deemed to be
beneficially owned by BMA III. As a result, each of Messrs. Peterson and
Schwarzman may be deemed to beneficially own the
(footnotes continued on next page)
14
<Page>
(footnotes continued from previous page)
shares of Junior Preferred Stock that BMA III may be deemed to beneficially
own. Each of BMA III and Messrs. Peterson and Schwarzman disclaims
beneficial ownership of such shares.
(5) Mr. Scelfo became Senior Vice President and Chief Financial Officer in April
2001.
(6) Does not include 2,606,500 shares of common stock issuable pursuant to stock
options that are not exercisable within 60 days.
VOTING TRUST AGREEMENT
We are a party to a voting trust agreement dated August 26, 1997 by and
among Darlene Friedland, as grantor, David Margolese, as the voting trustee, and
us. The following summary description of the Voting Trust Agreement does not
purport to be complete and is qualified in its entirety by reference to the
complete text of the agreement.
The Voting Trust Agreement provides for the establishment of a trust (the
'Trust') into which (i) there has been deposited all of the shares of common
stock owned by Mrs. Friedland on August 26, 1997 and (ii) there shall be
deposited any shares of common stock acquired by Mrs. Friedland, her spouse
Robert Friedland, any member of either of their immediate families or any entity
directly or indirectly controlled by Mrs. Friedland, her spouse or any member of
their immediate families (the 'Friedland Affiliates') between the date shares
are initially deposited and the termination of the Trust. The Voting Trust will
terminate on November 20, 2002.
The Voting Trust Agreement does not restrict the ability of Mrs. Friedland
or any of the Friedland Affiliates to sell, assign, transfer or pledge any of
the shares deposited into the Trust, nor does it prohibit Mrs. Friedland or the
Friedland Affiliates from purchasing additional shares of our common stock,
provided those shares become subject to the Trust.
Under the Voting Trust Agreement, the trustee has the power to vote shares
held in the Trust in relation to any matter upon which the holders of such stock
would have a right to vote, including without limitation the election of
directors. For so long as David Margolese remains trustee of the Trust, he may
exercise such voting rights in his discretion. Any successor trustee or trustees
of the Trust must vote as follows:
on the election of directors, the trustee(s) must vote the entire number of
shares held by the Trust, with the number of shares voted for each director
(or nominee for director) determined by multiplying the total number of
votes held by the Trust by a fraction, the numerator of which is the number
of votes cast for such person by other stockholders of Sirius and the
denominator of which is the sum of the total number of votes represented by
all shares casting any votes in the election of directors;
if the matter under Delaware law or our Certificate of Incorporation or our
Bylaws requires at least an absolute majority of all outstanding shares of
common stock in order to be approved, the trustee(s) must vote all of the
shares in the Trust in the same manner as the majority of all votes that
are cast for or against the matter by all other stockholders of Sirius; and
on all other matters, including, without limitation, any amendment of the
Voting Trust Agreement for which a stockholder vote is required, the
trustee(s) must vote all of the shares in the Trust for or against the
matter in the same manner as all votes that are cast for or against the
matter by all other stockholders of Sirius.
The Voting Trust Agreement may not be amended without our prior written
consent, acting by unanimous vote of the board of directors, and approval of our
stockholders, acting by the affirmative vote of two-thirds of the total voting
power of Sirius, except in certain limited circumstances where amendments to the
Voting Trust Agreement are required to comply with applicable law.
ITEM 2 -- RATIFICATION OF INDEPENDENT ACCOUNTANTS
The board of directors has selected Arthur Andersen LLP ('Arthur Andersen')
as our independent accountants for 2001. As such, Arthur Andersen will audit and
report on our financial statements for the fiscal year ending December 31, 2001.
Representatives of Arthur Andersen are expected to be present at the Annual
Meeting. They will have an opportunity to make a statement if they desire to do
so and are expected to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE 'FOR' THIS ITEM.
15
<Page>
REPORT OF AUDIT COMMITTEE
The Audit Committee of the board of directors is comprised of the three
directors named below. Each member of the Audit Committee is an independent
director as defined by the rules of The Nasdaq National Market. The Audit
Committee has adopted a written charter which has been approved by the board of
directors and is set forth in Appendix A.
The Audit Committee has reviewed and discussed with management our audited
financial statements. Arthur Andersen, our auditor for 2000, is responsible for
expressing an opinion on the conformity of our audited financial statements with
generally accepted accounting principles. The Audit Committee has discussed with
Arthur Andersen the matters that are required to be discussed by Statement on
Auditing Standards No. 61. Arthur Andersen has provided to the Audit Committee
the written disclosures and the letter required by Independence Standards Board
Standard No. 1, and the Audit Committee discussed with Arthur Andersen that
firm's independence. The Audit Committee also considered whether Arthur
Andersen's provision of non-audit services, including financial information
systems design and implementation services to us, is compatible with Arthur
Andersen's independence.
On the basis of these reviews and discussions, the Audit Committee
recommended to the board of directors that the board approve the inclusion of
our audited financial statements in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2000 for filing with the SEC.
Audit Committee
LAWRENCE F. GILBERTI
JAMES P. HOLDEN
JOSEPH V. VITTORIA
ARTHUR ANDERSEN FEES
The following table sets forth the fees billed to us for the fiscal year
ended December 31, 2000 by Arthur Andersen, our principal accounting firm:
<Table>
Audit Fees:................................................. $113,750
Financial Information Systems Design and Implementation
Fees:..................................................... $335,797
All Other Fees*:............................................ $932,084
</Table>
---------
* Includes fees for tax planning and compliance, review of SEC registration
statements, statutory audits, business consulting and other non-audit
services.
OTHER MATTERS
The board of directors does not intend to present, or have any reason to
believe others will present, any items of business other than those stated
above. If other matters are properly brought before the Annual Meeting, the
persons named in the accompanying proxy will vote the shares represented by it
in accordance with the recommendation of the board of directors.
By Order of the Board of Directors,
PATRICK L. DONNELLY
PATRICK L. DONNELLY
Senior Vice President,
General Counsel and Secretary
New York, New York
October 19, 2001
16
<Page>
APPENDIX A
CHARTER OF THE AUDIT COMMITTEE
PURPOSE
The primary purpose of the Audit Committee is to assist the Board of
Directors (the 'Board') in fulfilling its responsibility to oversee management's
conduct of the company's financial reporting process, including the development
and maintenance of systems of internal accounting and financial controls and the
outside auditor's annual audit of the Company's financial statements.
COMPOSITION
The Committee shall consist of at least three directors, and the Committee's
composition will meet the requirements for audit committees of the Nasdaq:
No member may have a relationship to the Company that may interfere with
the exercise of his or her independence from management and the Company;
Each member shall be financially literate or will become financially
literate within a reasonable period of time after his or her appointment to
the Committee; and
At least one member shall have accounting or related financial management
expertise.
The determination of any member's qualification to serve on the audit
committee, including assessments of financial literacy and of past accounting or
financial management expertise, shall be made by the Board in keeping with the
applicable requirements and definitions of the Nasdaq.
RESPONSIBILITIES, INCLUDING STRUCTURE AND PROCESSES
The Committee's job is one of oversight, recognizing that the Company's
management is responsible for preparing the Company's financial statements and
for developing and maintaining systems of internal accounting and financial
controls and that outside auditors are ultimately accountable to the Committee
and the Board for their review of the financial statements and internal controls
of the Company. The Committee also recognizes that the financial management and
the internal and outside auditors have more knowledge and information about the
Company than do Committee members. Consequently, in carrying out its oversight
responsibilities, the Committee is not providing any expert or special assurance
as to the Company's financial statements or internal controls or any
professional certification as to the outside auditor's work.
The following functions shall be the common recurring activities of the
Committee in carrying out its oversight responsibilities, and the Committee may,
as it deems appropriate, act as a whole, through subcommittees or through the
Committee chair. In discharging its oversight role, the Committee shall have
full access to all books, records, facilities and personnel of the Company and
the authority to retain outside counsel, auditors or other experts.
1. The Committee shall review and reassess the adequacy of this Charter on
an annual basis and shall make recommendations to the Board, as
conditions dictate, to update this Charter.
2. The Committee shall have the responsibility to evaluate the outside
auditor annually and to make recommendations to the Board concerning its
appointment. The Board shall have the ultimate authority and
responsibility to select, evaluate and, where appropriate, replace the
outside auditor.
3. The Committee shall review and approve the appointment or termination of
the Company's Controller and any internal auditor.
4. The Committee shall meet regularly with the Company's Controller and
outside auditors independent of management.
5. The Committee shall review and discuss with management the audited
financial statements to be included in the Company's Annual Report on
Form 10-K (or the Annual Report to Stockholders if distributed prior to
the filing of Form 10-K) and shall discuss with the outside
A-1
<Page>
auditor the matters required to be discussed by Statement of Auditing
Standards ('SAS') No. 61, as amended or supplemented.
6. In connection with the review by the outside auditors of the financial
information included in the Company's Quarterly Reports on Form 10-Q,
the Committee shall, prior to the release of earnings or the filing of
the Form 10-Q, discuss with the outside auditors the matters required to
be discussed by SAS No. 61, as amended or supplemented.
7. The Committee shall review any significant disagreement between
management and the internal or outside auditors in connection with the
preparation of the financial statements.
8. The Committee shall:
receive from the outside auditors, at least annually, a formal written
statement delineating all relationships between the auditor and the
Company consistent with Independence Standards Board Standard Number 1;
review and discuss with the outside auditors any relationships or
services that may impact the objectivity and independence of the outside
auditor; and
recommend, if necessary, that the Board take appropriate action in
response to the outside auditor's report to satisfy itself of the
auditor's independence.
9. Based on the review and discussions referred to in paragraphs 5
through 8, the Committee shall determine whether to recommend to the
Board that the Company's audited financial statements be included in the
Company's Annual Report on Form 10-K.
10. The Committee shall prepare its report required by the rules of the
Securities and Exchange Commission to be included in the Company's
annual proxy statement.
11. The Committee shall discuss with management, the Company's Controller,
and the outside auditor the quality and adequacy of the Company's
internal controls.
12. The Committee shall receive reports on legal compliance and litigation
matters and review the significant reports as well as management's
responses thereto.
13. The Committee shall review and make recommendations to the Board
concerning the Company's policies with regard to affiliate transactions
and officers' expense accounts and perquisites.
14. The Committee shall maintain minutes or other record of its meetings and
make reports on its meetings to the Board.
A-2
<Page>
Appendix 1
SIRIUS SATELLITE RADIO
ADMISSION TICKET
2001 ANNUAL MEETING OF STOCKHOLDERS
TUESDAY,NOVEMBER 20, 2001
1:30 P.M.
TO BE HELD AT
THE McGRAW-HILL BUILDING
THE AUDITORIUM, 2ND FLOOR
1221 AVENUE OF THE AMERICAS
NEW YORK,NEW YORK
THIS TICKET MUST BE PRESENTED TO ENTER THE MEETING
Detach Proxy Card Here
[ ]
The Board of Directors recommends a vote "FOR" each item.
1. To elect six (6) members FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] *Exceptions [ ]
to the Board of Directors: listed below for all nominees listed below
Nominees: Leon D. Black, Lawrence F. Gilberti, James P. Holden, David Margolese, Peter G. Peterson and Joseph V. Vittoria
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the "Exceptions" box and write that nominee's
name in the space provided below.)
*Exceptions
-------------------------------------------------------------------
2. Approval of Arthur Andersen LLP as independent auditors. FOR [ ] AGAINST [ ] ABSTAIN [ ]
Attending [ ]
meeting
Change of Address and
or Comments Mark Here [ ]
The signature on this Proxy
should correspond exactly with
stockholder's name as printed to
the left. In the case of joint
tenancies, co-executors, or
co-trustees, both should sign.
Persons signing as Attorney,
Executor, Administrator, Trustee
or Guardian should give their
full title.
Dated: ___________________________________, 2001
------------------------------------------------
Please print name of Stockholder here.
------------------------------------------------
Please sign here.
Votes must be indicated
(x) in Black or Blue ink. [X]
(Please sign, date and return this proxy in the enclosed postage prepaid envelope.)
You Must Detach This Portion of the Proxy Card
Before Returning it in the Enclosed Envelope
3785
SIRIUS SATELLITE RADIO INC.
Proxy Solicited on behalf of the Board of Directors of
Sirius Satellite Radio Inc.
The undersigned hereby appoints Patrick L. Donnelly and Edward Weber,
Jr., and each of them, proxies, with full power of substitution in each of them,
for and on behalf of the undersigned to vote as proxies, as directed and
permitted herein to vote your shares of Sirius Satellite Radio Common Stock
(including any shares of Common Stock which you have the right to direct the
proxies to vote under the Sirius Satellite Radio Inc. 401(k) Savings Plan) and
Preferred Stock, at the Annual Meeting of Stockholders of SIRIUS SATELLITE RADIO
INC. to be held on Tuesday, November 20, 2001, at 1:30 p.m., in the Auditorium
on the second floor of The McGraw-Hill Building, 1221 Avenue of the Americas,
New York, New York, and at any adjournments thereof upon matters set forth in
the Proxy Statement and, in their judgment and discretion, upon such other
business as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed
on the reverse hereof by the Stockholder. If no direction is made, this proxy
will be voted FOR all nominees listed and for Item 2.
(Continued and to be dated and signed on the reverse side.)
SIRIUS SATELLITE RADIO INC.
P.O. BOX 11492
NEW YORK, N.Y. 10203-0492