So Long, and Thanks for All the Options

I’m such a fan of letters in SEC filings. Here is a new one, a love letter to XM Satellite Radio CEO Gary Roberts from ex-board member Pierce Roberts:

Gary M. Parsons
Chairman of the Board
XM Satellite Radio Holdings Inc.
1500 Eckington Place
Washington, DC 20002

Dear Gary:

It has been my pleasure to serve on the Board of Directors of XM for more than 5 years. The company has achieved many notable successes and overcome numerous seemingly-insurmountable obstacles during this period. It has been great fun to have a minor role in helping you, Hugh and the XM team as the company has grown from its founding concept to become a major firm with rapidly growing numbers of subscribers. There is much in which to be pleased.

That said, I have been troubled about the current direction of the company and do not believe that it is in the best interest of the company’s shareholders. For some time I have made my analyses and observations known in an increasingly vociferous manner to the Board and a number of senior managers of the Company. I am not having any useful effect and I care too much and believe in my own views too much to just “go along”.

Given current course and speed there is, in my view, a significant chance of a crisis on the horizon. Even absent a crisis, I believe that XM will inevitably serve its shareholders poorly without major changes now. It is clear to me that I cannot be part of the solution and I will not be part of the problem.

Therefore, after a lot of thought and with a great deal of sadness, I tender my resignation to be effective immediately. Thanks and best wishes to the entire XM family.


/s/ Pierce J. Roberts, Jr.

Pierce J. Roberts, Jr.

This raises an interesting point: Why do so few boardmembers resign over differences with management? I have seen it a handful of times, at best, in companies in which I’m involved.

A cynic would say it’s because management’s hand-picked  appointees are rarely going to be so rude as to differ “vociferously” (to use Roberts’ word above) with fine folks who put them where they are. Why appoint to the board someone who doesn’t agree with you? Why not, indeed.


  1. In his excellent book The Origins of the Crash, Roger Lowenstein identified several factors that contributed to the demise of tech and subsequent string of accounting scandals. One of the things he identified was the typically American institution of having a company’s CEO also be the chairman of its board. Perhaps this can explain this reluctance?
    Paul, is it your experience with pre-IPO companies that the CEO is typically also the chairman? How does that usually work in the VC space?

  2. Kyle — It varies, and the Chairman/CEO two-fer is less common that it used to be. Typically these days in venture-backed companies there is no chairman, and if there is one it’s increasingly often an appointee of the venture investors.
    More broadly, there is no doubt conflating the two roles has caused many governance problems in companies. Supervising yourself is rarely a good idea, even if you’re an all-singing, all-dancing CEO (ASAD, as venture investing colleague put it an email to me recently).