The top bananas at XM Satellite Radio ( XMSR) enjoyed major raises last year as the satellite operator's stock price zoomed skyward.

Chairman Gary Parsons received a salary and bonus of $750,000, a 50% rise from the $500,000 bonus he received as compensation one year earlier, according to the XM proxy statement filed with the Securities and Exchange Commission Wednesday. President and CEO Hugh Panero received $824,000, up 18% from his salary and bonus in 2003.

Additionally, the men received stock option grants valued -- when they were made -- in the range of $1.2 million to $3 million for Panero and $1.8 million to $3.4 million for Parsons, depending on one's assumptions about XMSR's stock-price appreciation.

The options, which vest over three years, have an exercise price per share of $5.34. XMSR, which restructured its finances in early 2003, saw its stock rise from $2.69 to $26.29 over the course of the year, a nearly 10-fold increase.

XMSR's shares were trading at $27.28 Wednesday, down 21 cents.

Parsons and Panero have already received more options this year. Panero received options for 200,000 shares, with a strike price of $22, in February, compared to the 350,000 options he got last year. Parsons received a 250,000-option grant this year at the same strike price, down from the 400,000 options in his 2003 grant.

Neither of the men exercised any options last year; as of Dec. 31, Parsons had $7.5 million of unexercised, in-the-money options and Panero had $9.1 million worth.

In its report in the proxy statement, XM's compensation committee says executive bonuses were based on attainment of operating targets in certain categories, including subscriber growth, revenue and expense control. Stock option grants, says the committee, reflect "significant individual contributions" to the company's operations and implementation of the company's "development and growth programs."

XMSR, which is slated to report first-quarter financials on May 6, added more than a million subscribers to its satellite radio service in 2003, ending the year with 1.4 million subscribers. The company reported revenue of $91.8 million in 2003, up from $21.2 million in the prior year. The net loss for common shareholders last year was $604.9 million, or $4.83 per share, compared to a year-earlier loss of $515.9 million, or $5.95 per share.

Shares in XM and rival Sirius ( SIRI) surged last year as investors leaped aboard the satellite radio bandwagon. The companies charge $10 and up for monthly subscriptions to their mostly commercial-free radio broadcasts. The programming is broadcast from satellites to special receivers mounted in vehicles or homes.

Bulls believe the medium has nearly unlimited growth potential, and seize on the companies' fast-expanding subscriber rolls as evidence. But bears note these outfits' cash-consuming ways and wonder if the business can ever expand to the point where either company -- let alone both -- is consistently profitable.

Earlier Wednesday, Sirius reported disappointing first-quarter subscriber additions, sending its shares 8% lower. In midday action, it was off 30 cents at $3.50.

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