DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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CUMULUS MEDIA INC.
(Name of Registrant as Specified In Its Charter)
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Cumulus
Media Inc.
Annual
Meeting of Stockholders
May 14, 2009
Notice of
Meeting and Proxy Statement
CUMULUS
MEDIA INC.
3280 Peachtree Road, N.W.
Suite 2300
Atlanta, Georgia 30305
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To Be Held On May 14, 2009
To the Stockholders of Cumulus Media Inc.:
The 2009 Annual Meeting of Stockholders of Cumulus Media Inc., a
Delaware corporation, sometimes referred to as the
Company, we or us, will be held at
3280 Peachtree Road, N.W., Atlanta, Georgia 30305, in the
Boardroom located on the 23rd floor, on May 14, 2009
at 9:00 a.m., local time, for the following purposes:
(1) to reelect Ralph B. Everett as a director for a
one-year term;
(2) to ratify the appointment of PricewaterhouseCoopers LLP
as the Companys independent registered public accounting
firm for 2009; and
(3) to transact such other business as may properly come
before the annual meeting or any postponement or adjournment
thereof.
Only holders of record of shares of our Class A Common
Stock or our Class C Common Stock at the close of business
on March 20, 2009, are entitled to notice of, and to vote
at, the annual meeting or any postponement or adjournment
thereof. A list of such stockholders will be open for
examination by any stockholder at the time and place of the
meeting.
Holders of a majority of the outstanding shares of our
Class A Common Stock and our Class C Common Stock must
be present in person or by proxy in order for the meeting to be
held. Therefore, we urge you to date, sign and return the
accompanying proxy card in the enclosed envelope whether or not
you expect to attend the annual meeting in person. If you attend
the meeting and wish to vote your shares personally, you may do
so by validly revoking your proxy at any time prior to the
voting thereof.
Important Notice Regarding the Availability of Proxy
Materials for the Stockholder Meeting to Be Held on May 14,
2009
The proxy statement and the annual report on Form 10-K for the
year ended December 31, 2008 are available at
www.cumulus.com.
Lewis W. Dickey, Jr.
Chairman, President and Chief Executive Officer
April 21, 2009
TABLE OF
CONTENTS
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CUMULUS
MEDIA INC.
3280 Peachtree Road, N.W.
Suite 2300
Atlanta, Georgia 30305
April 21, 2009
PROXY
STATEMENT
GENERAL
MATTERS
Date,
Time and Place for the Annual Meeting
We are furnishing this proxy statement to the holders of our
Class A Common Stock and our Class C Common Stock in
connection with the solicitation of proxies by our Board of
Directors for the annual meeting of stockholders to be held on
Thursday, May 14, 2009, at 9:00 a.m., local time, at
3280 Peachtree Road, N.W., Atlanta, Georgia 30305 in the
Boardroom located on the 23rd floor, or any adjournment or
postponement of that meeting. This proxy statement and the
accompanying proxy card are being sent to our stockholders
commencing on or about April 21, 2009.
Record
Date; Quorum; Outstanding Common Stock Entitled to
Vote
All holders of record of our Class A Common Stock and our
Class C Common Stock at the close of business on
March 20, 2009, referred to as the record date, are
entitled to notice of, and to vote at, the annual meeting. The
presence, in person or by proxy, of holders of a majority of the
voting power represented by outstanding shares of our
Class A Common Stock and our Class C Common Stock,
voting together as a single class, is required to constitute a
quorum for the transaction of business. Abstentions and broker
non-votes (i.e., proxies from brokers or nominees
indicating that such persons have not received instructions from
the beneficial owners or other persons entitled to vote shares
as to a matter with respect to which brokers or nominees do not
have discretionary power to vote) will be treated as present for
purposes of determining a quorum. A list of stockholders of
record will be available for examination at the annual meeting.
As of the record date, there were 34,787,983 shares of our
Class A Common Stock outstanding and 644,871 shares of
our Class C Common Stock outstanding.
Voting
Rights; Vote Required for Approval
Holders of our Class A Common Stock are entitled to one
vote for each share of Class A Common Stock held as of the
record date. Holders of our Class C Common Stock are
entitled to ten votes for each share of Class C Common
Stock held as of the record date. Holders of shares of our
Class A Common Stock and our Class C Common Stock will
vote together as a single class on the matters to be voted upon
at the annual meeting. The director will be selected by a
plurality of the votes cast and, as a result, abstentions,
withheld votes and broker non-votes will have no effect on the
outcome of the election of the director. The affirmative vote of
a majority of the votes cast at the annual meeting is required
to ratify the appointment of our independent registered public
accounting firm for 2009. Abstentions, which will be counted for
purposes of determining shares present and entitled to vote at
the meeting, will have the effect of votes against the proposal
to ratify the appointment of our independent registered public
accounting firm.
Voting
and Revocation of Proxies
A proxy card for you to use in voting accompanies this proxy
statement. Subject to the following sentence, all properly
executed proxies that are received prior to, or at, the annual
meeting and not revoked will be voted in the manner specified.
If you execute and return a proxy card, and do not specify
otherwise, the shares represented by your proxy will be voted
FOR the election of the individuals nominated to serve as
directors and FOR ratification of the appointment of
PricewaterhouseCoopers LLP.
If you have given a proxy pursuant to this solicitation, you may
nonetheless revoke it by attending the annual meeting and voting
in person. In addition, you may revoke any proxy you give at any
time before the
annual meeting by delivering a written statement revoking the
proxy, or by delivering a duly executed proxy bearing a later
date, to Richard S. Denning, Corporate Secretary, at our
principal executive offices, 3280 Peachtree Road, N.W.,
Suite 2300, Atlanta, Georgia 30305, so that it is received
prior to the annual meeting, or at the annual meeting itself. If
you have executed and delivered a proxy to us, your attendance
at the annual meeting will not, by itself, constitute a
revocation of your proxy.
Solicitation
of Proxies
We will bear the cost of the solicitation of proxies. We will
solicit proxies initially by mail. Further solicitation may be
made by our directors, officers and employees personally, by
telephone, facsimile,
e-mail or
otherwise, but they will not be compensated specifically for
these services. Upon request, we will reimburse brokers,
dealers, banks or similar entities acting as nominees for their
reasonable expenses incurred in forwarding copies of the proxy
materials to the beneficial owners of the shares of common stock
they hold of record.
Other
Matters
Except for the votes on the proposals described in this proxy
statement, no other matter is expected to come before the annual
meeting. If any other business properly comes before the annual
meeting, the persons named in the proxy will vote in their
discretion to the extent permitted by law.
PROPOSALS YOU
MAY VOTE ON
1.
Election of a Director
Our Board of Directors is currently comprised of five members.
Pursuant to our certificate of incorporation, at the 2009 annual
meeting of stockholders, those directors whose terms expire at
that meeting (or such directors successors) will be
elected to hold office for a one-year term expiring at the 2010
annual meeting of stockholders. Two directors are currently in a
term of office that will expire at this annual meeting. One of
those directors, Holcombe T. Green, Jr., previously
informed us that he would be retiring at the conclusion of his
term and would not stand for reelection. Consequently, only one
director, Ralph B. Everett, is up for reelection at this annual
meeting. Following this annual meeting, our Board will be
comprised of four directors.
Mr. Everett, has been nominated for reelection by our
Board, upon the recommendation of a majority of our independent
directors. Accordingly, our Board urges you to vote FOR
the reelection of that nominee for director. If reelected,
Mr. Everett would serve until the 2010 annual meeting of
stockholders or until he is succeeded by another qualified
director who has been elected.
Detailed information about Mr. Everett is provided in
Members of the Board of Directors elsewhere in this
proxy statement. Our Board has no reason to believe that the
nominee will be unable to serve as director. If for any reason
the nominee becomes unable to serve, the persons named in the
proxy will vote for the election of such other person as our
Board may recommend.
Your Board recommends a vote FOR the election of the nominee
for Director.
2.
Ratification of the Appointment of PricewaterhouseCoopers LLP as
Independent Registered Public Accounting Firm
The Audit Committee of the Board of Directors is required by law
and applicable listing standards of the NASDAQ Global Select
Market to be directly responsible for the appointment,
compensation, and retention of our independent registered public
accounting firm.
On June 17, 2008, following an extensive review and
request-for-proposal process, the Audit Committee determined not
to renew its engagement of KPMG LLP as the Companys
independent auditors and dismissed them as the Companys
independent auditors. The Company appointed
PricewaterhouseCoopers LLP as the
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Companys independent auditors for the fiscal year ending
December 31, 2008, commencing on June 17, 2008.
KPMG LLPs audit reports on the Companys consolidated
financial statements as of and for the years ended
December 31, 2007 and 2006 did not contain any adverse
opinion or disclaimer of opinion and were not qualified or
modified as to uncertainty, audit scope, or accounting
principles, except as follows:
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KPMG LLPs report on the Companys consolidated
financial statements as of and for the year ended
December 31, 2006 contained a separate paragraph stating
that As discussed in Note 1 to the consolidated
financial statements effective January 1, 2006, the Company
adopted Statement of Financial Accounting Standards
No. 123R, Share Based Payment. KPMG LLPs
report on the Companys consolidated financial statements
as of and for the year ended December 31, 2007 contained
separate paragraphs stating that As discussed in
Note 1 to the consolidated financial statements, effective
January 1, 2006, the Company adopted Statement of Financial
Accounting Standards No. 123R, Share Based
Payment. and As discussed in Note 1 to the
consolidated financial statements, effective January 1,
2007, the Company adopted the Financial Accounting Standards
Board Interpretation No. 48, Accounting for Uncertainty
in Income Taxes an interpretation of FASB Statement
No. 109.
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KPMG LLPs reports on managements assessment of the
effectiveness of internal control over financial reporting and
the effectiveness of internal control over financial reporting
as of December 31, 2007 and 2006 did not contain any
adverse opinion or disclaimer of opinion and were not qualified
or modified as to uncertainty, audit scope or accounting
principles, except that KPMG LLPs 2006 report indicated
that the Company did not maintain effective internal control
over financial reporting as of December 31, 2006 because of
the effect of a material weakness, as further described below.
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During the two most recent fiscal years ended December 31,
2007, and through June 23, 2008, there were no:
(1) disagreements with KPMG LLP on any matter of accounting
principles or practices, financial statement disclosure, or
auditing scope or procedure, which, if not resolved to KPMG
LLPs satisfaction, would have caused KPMG LLP to make
reference to the subject matter of the disagreement(s) in
connection with its reports, or (2) reportable
events as defined in
Regulation S-K,
Item 304(a)(1)(v); except that in the Companys annual
report on
Form 10-K
for the year ended December 31, 2006, management concluded
in its report, and KPMG LLP concurred, that the Companys
internal control over financial reporting as of
December 31, 2006 was not effective as a result of a
material weakness (at that time, management concluded that the
Company did not maintain sufficient, adequately trained
personnel in its corporate accounting function). The Company has
authorized KPMG LLP to respond fully to any inquiries from
PricewaterhouseCoopers LLP regarding this matter.
KPMG LLP was provided with a copy of the above disclosures and
was requested to furnish a letter addressed to the Securities
and Exchange Commission stating whether it agrees with the above
statements. A letter from KPMG LLP confirming such agreement was
attached as Exhibit 16.1 to our current report on
Form 8-K
filed with the Securities and Exchange Commission on
June 23, 2008.
During the Companys two most recent fiscal years ended
December 31, 2007 and through June 17, 2008, the
Company did not consult with PricewaterhouseCoopers LLP
regarding any of the matters or events set forth in
Item 304(a)(2)(i) and (ii) of
Regulation S-K.
The Audit Committee has selected PricewaterhouseCoopers LLP as
our independent registered public accounting firm for the fiscal
year ending December 31, 2009, and urges you to vote FOR
ratification of the appointment. PricewaterhouseCoopers LLP
has served as our independent registered public accounting firm
since June 17, 2008. While stockholder ratification of the
selection of PricewaterhouseCoopers LLP as our independent
registered public accounting firm is not required by our bylaws
or otherwise, our Board is submitting the selection of
PricewaterhouseCoopers LLP to our stockholders for ratification.
If our stockholders fail to ratify the selection, the Audit
Committee may, but is not required to, reconsider whether to
retain that firm. Even if the selection is ratified, the Audit
Committee in its discretion may direct the appointment of a
different independent registered public accounting firm at any
time during the year if it determines that such a change would
be in the best interests of us and our stockholders.
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Representatives of PricewaterhouseCoopers LLP are expected to be
present at the annual meeting to make any statement they may
desire and to respond to appropriate questions from
stockholders. Representatives of KPMG LLP will not be present at
the annual meeting.
Auditor
Fees and Services
Audit
Fees
PricewaterhouseCoopers LLP billed us $532,800, in the aggregate,
for professional services rendered to audit our annual financial
statements for the fiscal year ended December 31, 2008, to
evaluate the effectiveness of our internal control over
financial reporting as of December 31, 2008, and to review
the interim financial statements included in our quarterly
reports on
Form 10-Q
filed after June 16, 2008. PricewaterhouseCoopers LLP did
not render professional services for the fiscal year ended
December 31, 2007.
KPMG LLP has billed us $83,290, in the aggregate for
professional services rendered until June 16, 2008 and to
review the interim financial statements included in our
quarterly reports on
Form 10-Q
filed prior to June 16, 2008.
KPMG LLP has billed us $800,000, in the aggregate, for
professional services rendered to audit our annual financial
statements for the fiscal year ended December 31, 2007, and
to review the interim financial statements included in our
quarterly reports on
Form 10-Q
filed during the fiscal year ended December 31, 2007. In
2007, KPMG LLPs audit fees also included fees for
professional services rendered for the audits of
(1) managements assessment of the effectiveness of
our internal control over financial reporting and (2) the
effectiveness of our internal control over financial reporting.
Audit
Related Fees
PricewaterhouseCoopers LLP did not render audit-related services
for the fiscal year ended December 31, 2008.
KPMG LLP did not bill us for acquisition-advisory services and
tender offer-advisory services in 2008.
KPMG LLP has billed us $29,908 for acquisition-advisory services
and tender offer-advisory services in 2007.
Tax
Fees
PricewaterhouseCoopers LLP has billed us $45,211 in the
aggregate, for tax consulting and tax return preparation
services during 2008. PricewaterhouseCoopers LLP did not render
tax consulting or tax return preparation services for the fiscal
year ended December 31, 2007.
KPMG LLP has billed us $11,337, in the aggregate, for tax
consulting and tax return preparation services during 2008.
KPMG LLP has billed us $187,667, in the aggregate, for tax
consulting and tax return preparation services during 2007.
All
Other Fees
PricewaterhouseCoopers LLP has billed us $2,400 for access to
its on-line research library during 2008. PricewaterhouseCoopers
LLP did not render other services for the year ended
December 31, 2007.
KPMG LLP did not bill us for access to its on-line research
library during 2008.
KPMG LLP has billed us $51,500 for due diligence services
related to the terminated going private transaction and for
access to its on-line research library during 2007.
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Policy
on Pre-Approval of Services Performed by Independent Registered
Public Accounting Firm
The policy of the Audit Committee is to pre-approve all audit
and permissible non-audit services to be performed by the
independent registered public accounting firm during the fiscal
year. The Audit Committee regularly considers all non-audit fees
when reviewing the independence of our independent registered
public accounting firm.
Your Board recommends a vote FOR the ratification of the
appointment of PricewaterhouseCoopers LLP as our independent
registered public accounting firm.
INFORMATION
ABOUT THE BOARD OF DIRECTORS
The Board of Directors held four regularly-scheduled meetings
and four special meetings during 2008. Each director attended
100% of the meetings of the Board and the committees on which he
served.
Our Board has reviewed the independence of each of its members
and has determined that all directors (except for our Chairman,
Lewis W. Dickey, Jr., who also is our President and Chief
Executive Officer) are independent, as such term is
defined under the current listing standards of the NASDAQ Global
Select Market (the NASDAQ Rules).
It is primarily our Boards responsibility to oversee the
management of our business. To assist in carrying out this
responsibility, our Board has established the two standing
committees described below.
Committees
of the Board
The Audit Committee. The purpose of the Audit
Committee is to assist our Board in fulfilling its oversight
responsibilities with respect to: our accounting, reporting and
oversight practices; our compliance with legal and regulatory
requirements; our independent registered public accounting
firms qualifications and independence; and the performance
of our independent registered public accounting firms and
our own internal audit function. The Audit Committee is
responsible for overseeing our accounting and financial
reporting processes and the audits of our financial statements
on behalf of our Board. The Audit Committee is directly
responsible for the appointment, compensation, retention and
oversight of the work of our independent registered public
accounting firms (including resolution of any
disagreements between our management and independent registered
public accounting firms regarding financial reporting),
and our independent registered public accounting firms
report directly to the Audit Committee.
The Audit Committee met eight times in 2008. The current members
of the Audit Committee are Robert H. Sheridan, III
(Chairman), Ralph B. Everett, and Holcombe T. Green, Jr.
(who is not standing for reelection), none of whom is an
employee of ours. In connection with Mr. Greens retirement
from our Board, Eric P. Robison is being appointed to serve
on the Audit Committee. Our Board has determined that each Audit
Committee member is independent, as such term is
defined under the rules of the SEC and the NASDAQ Rules
applicable to audit committee members, and meets the NASDAQ
Rules financial literacy requirements. None of the
aforementioned members has participated in the preparation of
the financial statements of Cumulus or its subsidiaries at any
time during the past three years. Our Board has determined that
Mr. Sheridan (1) is an audit committee financial
expert, as such term is defined under the rules of the
SEC, and (2) meets the NASDAQ Rules professional
experience requirements.
The Audit Committee operates pursuant to a written charter,
which complies with the applicable provisions of the
Sarbanes-Oxley Act of 2002 and the related rules of the SEC, and
the NASDAQ Rules. A copy of our Audit Committee charter was
filed as Exhibit B to our proxy statement for the 2007
annual meeting of stockholders, filed with the SEC on
April 13, 2007.
The Compensation Committee. The Compensation
Committee oversees the determination of all matters relating to
employee compensation and benefits and specifically reviews and
approves salaries, bonuses and equity-based compensation for our
executive officers. The Compensation Committee met three times
in 2008. The current members of the Compensation Committee are
Eric P. Robison (Chairman) and Messrs. Sheridan and Green
(who is not standing for reelection), each of whom is
independent, as such term is defined under
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the NASDAQ Rules. In connection with Mr. Greens retirement
from our Board, Mr. Everett is being appointed to serve on the
Compensation Committee.
The Compensation Committee does not have a formal charter. Our
Board has delegated to the Compensation Committee the following
areas of responsibilities:
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performance evaluation, compensation and development of our
executive officers;
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establishment of performance objectives under the Companys
short- and long-term incentive compensation plans and
determination of the attainment of such performance
objectives; and
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oversight and administration of benefit plans.
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The Compensation Committee generally consults with management in
addressing executive compensation matters. The compensation of
our Chief Executive Officer is largely established by his
employment agreement, and the compensation of the other
executive officers is determined after taking into account
compensation recommendations made by the Chief Executive
Officer. Our Chief Executive Officer, based on the performance
evaluations of the other executive officers, recommends to the
Compensation Committee compensation for those executive
officers. The executive officers, including our Chief Financial
Officer, also provide recommendations to the Compensation
Committee from time to time regarding key business drivers
included in compensation program designs, especially incentive
programs, which may include defining related measures and
explaining the mutual influence on or by other business drivers
and the accounting and tax treatment relating to certain awards.
Our Chief Financial Officer also provides regular updates to the
Compensation Committee regarding current and anticipated
performance outcomes and their impact on executive compensation.
The Compensation Committee has the authority to retain a
compensation consultant.
Nomination
Process
Our Board does not have a standing nominating committee. Due to
the small size of our Board and the historically low turnover of
its members, we do not currently foresee the need to establish a
separate nominating committee or adopt a charter to govern the
nomination process. Similarly, we do not have a formal process
for identifying and evaluating nominees for director. Generally,
director candidates have been first identified by evaluating the
current members of our Board whose term will be expiring at the
next annual meeting and who are willing to continue in service.
If a member whose term is expiring no longer wishes to continue
in service, or if our Board decides not to re-nominate such
member, our Board would then commence a search for qualified
individuals meeting the criteria discussed below. Research may
also be performed to identify qualified individuals. To date, we
have not engaged third parties to identify or evaluate, or
assist in identifying or evaluating, potential director nominees.
In accordance with Company policy and the NASDAQ Rules, nominees
for director (other than Robert H. Sheridan, III, who is
nominated pursuant to certain contractual rights held by one of
our stockholders) must either be (1) recommended by a
majority of the independent directors for selection by our Board
or (2) discussed by the full Board and approved for
nomination by the affirmative vote of a majority of our Board,
including the affirmative vote of a majority of the independent
directors.
Historically, we have not had a formal policy with regard to the
consideration of director candidates recommended by our
stockholders. To date, our Board has not received any
recommendations from stockholders requesting that it consider a
candidate for inclusion among our Boards slate of nominees
in our proxy statement, other than pursuant to the exercise of
the aforementioned contractual rights. The absence of such a
policy does not mean, however, that a recommendation would not
have been considered had one been received, or will not be
considered, if one is received in the future. Our Board will
give consideration to the circumstances in which the adoption of
a formal policy would be appropriate.
Our Board evaluates all candidates based upon, among other
factors, a candidates financial literacy, knowledge of our
industry or other background relevant to our needs, status as a
stakeholder, independence (for purposes of
compliance with the rules of the SEC and the NASDAQ Rules), and
willingness, ability and availability for service. Other than
the foregoing, there are no stated minimum criteria for director
nominees,
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although our Board may also consider such other factors as it
may deem are in the best interests of us and our stockholders.
Our bylaws provide for stockholder nominations to our Board,
subject to certain procedural requirements. To nominate a
director to our Board, you must give timely notice of your
nomination in writing to our Corporate Secretary, not later than
90 days prior to the anniversary date of the annual meeting
of stockholders in the preceding year. All such notices must
include (1) your name and address, (2) a
representation that you are one of our stockholders, and will
remain so through the record date for the upcoming annual
meeting, (3) the class and number of shares of our common
stock that you hold (beneficially and of record), and (4) a
representation that you intend to appear in person or by proxy
at the upcoming annual meeting to make the nomination. You must
also provide information on your prospective nominee, including
such persons name, address and principal occupation or
employment, a description of all arrangements or understandings
between you, your prospective nominee and any other persons (to
be named), the written consent of the prospective nominee, and
such other information as would be required to be included in a
proxy statement soliciting proxies for the election of your
prospective nominee.
MEMBERS
OF THE BOARD OF DIRECTORS
Director
Nominated for Reelection to Serve until the 2010 Annual
Meeting
Ralph B. Everett, age 57, has served as one of our
directors since July 1998. Since January 2007, Mr. Everett
has served as the President and Chief Executive Officer of the
Joint Center for Political and Economic Studies, a national,
nonprofit research and public policy institution located in
Washington, D.C. Prior to 2007, Mr. Everett had been a
partner with the Washington, D.C. office of the law firm of
Paul, Hastings, Janofsky & Walker LLP, where he headed
the firms Federal Legislative Practice Group. In 1998,
Mr. Everett was appointed by President Clinton as United
States Ambassador to the 1998 International Telecommunication
Union Plenipotentiary Conference. He is a director and a member
of the Investment Committee of Shenandoah Life Insurance
Company. He is also a member of the Board of Visitors of Duke
University Law School.
Continuing
Directors with a Term Expiring at the 2010 Annual
Meeting
Eric P. Robison, age 49, has served as one of our
directors since August 1999. Mr. Robison is currently the
President of Lynda.com, an Internet-based software and education
training company, and President of IdeaTrek, a company that
provides business consulting services. From 1994 to 2002,
Mr. Robison worked for Vulcan Inc., the holding company
that manages all personal and business interests for investor
Paul G. Allen, as Vice President, Business Development, managing
various projects and investigating investment opportunities.
Robert H. Sheridan, III, age 46, has served as
one of our directors since July 1998. Mr. Sheridan has
served as a Senior Vice President and Managing Director of Banc
of America Capital Investors, or BACI, the principal investment
group within Bank of America Corporation since January 1998, and
is a Senior Vice President and Managing Director of BA Capital,
which was formerly known as NationsBanc Capital Corp. He has an
economic interest in the entities comprising the general
partners of BACI and BA Capital. He was a Director of
NationsBank Capital Investors, the predecessor of BACI, from
January 1996 to January 1998.
Pursuant to our certificate of incorporation and a voting
agreement entered into by Cumulus, BA Capital (through its
predecessor entity) and the holders of our Class C Common
Stock, the holders of our Class C Common Stock have the
right, voting as a single class, to elect one director to our
Board, referred to as the Class C Director, and such
stockholders are obligated to elect a person designated by BA
Capital to serve as such director. The rights and obligations
under the voting agreement shall continue until such time that
BA Capital, together with its affiliates, no longer own at least
50% of the number of shares of our common stock as BA Capital
held on June 30, 1998. At such time, the term of the
Class C Director, and the right of the holders of our
Class C Common Stock to elect the Class C Director,
shall terminate. Mr. Sheridan has served as BA
Capitals designee for such position since July 1998.
7
Continuing
Director With a Term Expiring at the 2011 Annual
Meeting
Lewis W. Dickey, Jr., age 47, has served as our
Chairman, President and Chief Executive Officer since December
2000, and as a Director since March 1998. Mr. L. Dickey was
one of our founders and initial investors, and served as our
Executive Vice Chairman from March 1998 to December 2000.
Mr. L. Dickey is a nationally-regarded consultant on radio
strategy and the author of The Franchise-Building Radio
Brands, published by the National Association of
Broadcasters (the NAB), one of the industrys
leading texts on competition and strategy. Mr. L. Dickey
also serves as a member of the NABs Radio Board of
Directors. He holds Bachelor of Arts and Master of Arts degrees
from Stanford University and a Master of Business Administration
degree from Harvard University. Mr. L. Dickey is the
brother of John W. Dickey, our Executive Vice President and
Co-Chief Operating
Officer.
As previously announced, one of our current directors, Holcombe
T. Green, Jr., whose term expires at the 2009 annual
meeting, will not stand for reelection. Following his
retirement, our Board will be comprised of four directors.
STOCKHOLDER
COMMUNICATION WITH THE BOARD OF DIRECTORS
Any matter intended for our Board, or for any individual member
or members of our Board, should be directed to Richard S.
Denning, Corporate Secretary, at our principal executive
offices, with a request to forward the same to the intended
recipient. In the alternative, stockholders may direct
correspondence to our Board to the attention of the chairman of
the Audit Committee of the Board, in care of Richard S. Denning,
Corporate Secretary, at our principal executive offices. All
such communications will be forwarded unopened.
We do not have a formal policy regarding attendance by directors
at our annual meetings, but we encourage all incumbent
directors, as well as all nominees for election as director, to
attend the annual meeting. All incumbent directors and nominees
attended last years annual meeting of stockholders.
8
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists information concerning the
beneficial ownership of our common stock as of March 20,
2009 (unless otherwise noted) by (1) each of our directors
and each of our other executive officers who were employed as of
December 31, 2008, (2) all of our directors and
executive officers as a group, and (3) each person known to
us to own beneficially more than 5% of any class of our common
stock.
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Class A Common
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Stock(1)
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Class B Common Stock(1)
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Class C Common Stock(1)(2)
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Percentage
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Number of
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Number of
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Number of
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of Voting
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Name of Stockholder
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Shares
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Percentage
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Shares
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Percentage
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Shares
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Percentage
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Control
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Banc of America Capital Investors SBIC, L.P.(3)
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821,568
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2.4
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%
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4,959,916
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85.4
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%
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2.0
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%
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BA Capital Company, L.P.(3)
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853,584
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2.5
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%
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849,275
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14.6
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%
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2.1
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%
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Lewis W. Dickey, Sr.(4)
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9,828,785
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28.2
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%
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1,144,871
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100
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%
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46.0
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%
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Hawkeye Capital Master(5)
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3,238,885
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9.3
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%
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7.9
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%
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Dimensional Fund Advisors LP(6)
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3,103,934
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8.9
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%
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7.5
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%
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Cyrus Capital Partners, L.P.(7)
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2,726,463
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7.8
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%
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6.6
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%
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Wallace R. Weitz & Company(8)
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2,225,600
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6.4
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%
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5.4
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%
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Barclays Global Investors, NA(9)
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1,890,183
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5.4
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%
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4.6
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%
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Lewis W. Dickey, Jr.(10)
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9,828,785
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28.2
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%
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1,144,871
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100
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%
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46.0
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%
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John W. Dickey(11)
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1,982,397
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5.7
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%
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4.8
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%
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Martin R. Gausvik(12)
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169,325
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*
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*
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Jon G. Pinch(13)
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180,631
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*
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*
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Robert H. Sheridan, III(14)
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16,258
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*
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*
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Ralph B. Everett
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19,297
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*
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*
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Eric P. Robison
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31,549
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*
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*
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Holcombe T. Green, Jr.
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16,258
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*
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*
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All directors and executive officers as a group (8 persons)
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12,244,500
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35.1
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%
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1,144,871
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100
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%
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51.1
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%
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* |
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Indicates less than one percent. |
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(1) |
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Except upon the occurrence of certain events, holders of
Class B Common Stock are not entitled to vote, whereas each
share of Class A Common Stock entitles its holder to one
vote and, subject to certain exceptions, each share of
Class C Common Stock entitles its holders to ten votes. The
Class B Common Stock is convertible at any time, or from
time to time, at the option of the holder of the Class B
Common Stock (provided that the prior consent of any
governmental authority required to make the conversion lawful
has been obtained) without cost to such holder (except any
transfer taxes that may be payable if certificates are to be
issued in a name other than that in which the certificate
surrendered is registered), into Class A Common Stock or
Class C Common Stock on a share-for-share basis; provided
that our Board has determined that the holder of Class A
Common Stock at the time of conversion would not disqualify us
under, or violate, any rules and regulations of the FCC. |
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(2) |
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Subject to certain exceptions, each share of Class C Common
Stock entitles its holders to ten votes. The Class C Common
Stock is convertible at any time, or from time to time, at the
option of the holder of the Class C Common Stock (provided
that the prior consent of any governmental authority required to
make such conversion lawful has been obtained) without cost to
such holder (except any transfer taxes that may be payable if
certificates are to be issued in a name other than that in which
the certificate surrendered is registered), into Class A
Common Stock on a share-for-share basis; provided that our Board
has determined that the holder of Class A Common Stock at
the time of conversion would not disqualify us under, or
violate, any rules and regulations of the FCC. In the event of
the death of Mr. L. Dickey or in the event he becomes
disabled and, as a result, terminates his employment with us,
each share of Class C Common Stock held by him, or any
party related to or affiliated with him, will be automatically
be converted into one share of Class A Common Stock. |
9
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(3) |
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The address of BA Capital Company, L.P. and Banc of America
Capital Investors, SBIC, L.P. is 100 North Tryon Street, Floor
25, Bank of America Corporate Center, Charlotte, North Carolina
28255. Includes options to purchase 10,000 shares of
Class A Common Stock granted to BA Capital Company, L.P. in
connection with its designation of a member to serve on our
Board and exercisable within 60 days. This information is
based in part on a Schedule 13 D/A filed on July 23,
2007 and in part on a Form 4 filed on January 2, 2009. |
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(4) |
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Represents (i) direct ownership of 884,000 shares of
Class A Common Stock; (ii) indirect beneficial
ownership of 6,215,679 shares of Class A Common Stock
registered in the name of the Lewis W. Dickey,
Sr. Revocable Trust, by virtue of his position as trustee;
and (iii) in accordance with Regulation 13D of the
Exchange Act, indirect beneficial ownership of
2,729,106 shares of Class A Common Stock and
1,144,871 shares of Class C Common Stock beneficially
owned by his son, Lewis W. Dickey, Jr. (see footnote 11).
Mr. L. Dickey, Sr. disclaims beneficial ownership of all of
the shares owned or controlled by Mr. L. Dickey, Jr. The
address of Lewis W. Dickey Sr. and the Lewis W. Dickey, Sr.
Revocable Trust is 11304 Old Harbor Road, North Palm Beach,
Florida 33408. The information for Mr. L. Dickey,
Sr. and the Lewis W. Dickey, Sr. Revocable Trust is based
on a Form 4/A filed on January 27, 2009. |
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(5) |
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The address of Hawkeye Capital Master is One Capital Place,
P.O. Box 897GT, Georgetown, Grand Cayman E9 475. This
information is based on a Schedule 13G filed on
February 18, 2009. |
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(6) |
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The address of Dimensional Fund Advisors LP is Palisades
West Building One 6300 BeeCave Road, Austin, Texas 78746.
Dimension Fund Advisors LP was formerly Dimension
Fund Advisors Inc. This information is based on a
Schedule 13G/A filed on February 9, 2009. |
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(7) |
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The address of Cyrus Capital Partners, L.P. is 390 Park Avenue,
21st Floor, New York, New York 10022. This information is based
on a Schedule 13G filed on January 28, 2008. |
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(8) |
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The address of Wallace R. Weitz & Company is 1125
South 103rd Street, Suite 600, Omaha, Nebraska 68124. This
information is based on a Schedule 13G filed on
January 14, 2009. |
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(9) |
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The address of Barclays Global Investors, NA., is 400 Howard
Street, San Francisco, California 94105. This information
is based on a Schedule 13G filed on February 5, 2009. |
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(10) |
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Represents (i) direct ownership by Mr. L. Dickey, Jr.
of 2,689,106 shares of Class A Common Stock and
644,871 shares of Class C Common Stock;
(ii) indirect beneficial ownership of 10,000 shares of
Class A Common Stock registered in the name of DBBC, LLC,
by virtue of his controlling interest in that entity;
(iv) options to purchase 30,000 shares of Class A
Common Stock and 500,000 shares of Class C Common
Stock exercisable within 60 days; and (v) in
accordance with Regulation 13D of the Exchange Act,
indirect beneficial ownership 7,099,679 shares of
Class A Common Stock beneficially owned by his father,
Lewis W. Dickey, Sr. (see footnote 4). Mr. L. Dickey, Jr.
disclaims beneficial ownership of all of the shares held by
DBBC, LLC except to the extent of his pecuniary interest
therein, and disclaims beneficial ownership of all of the shares
owned or controlled by Mr. L. Dickey, Sr. |
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(11) |
|
Represents beneficial ownership attributable to Mr. J.
Dickey as a result of his direct ownership of
1,906,043 shares of Class A Common Stock and options
to purchase 76,354 shares of Class A Common Stock
exercisable within 60 days. |
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(12) |
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Represents beneficial ownership attributable to Mr. Gausvik
as a result of his direct ownership of 168,881 shares of
Class A Common Stock as well as 444 shares owned by
his daughter. |
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(13) |
|
Represents beneficial ownership attributable to Mr. Pinch
as a result of his direct ownership of 180,631 shares of
Class A Common Stock. |
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(14) |
|
Does not reflect any shares owned by BACI or by BA Capital.
Mr. Sheridan is a Senior Vice President and Managing
Director of each of BACI and BA Capital and a Managing Director
of Bank of America Capital Investors, one of the principal
investment groups within Bank of America Corporation. He has an
economic interest in the entities comprising the general
partners of BACI and BA Capital. As BA Capitals designee
to our Board, Mr. Sheridan disclaims beneficial ownership
of the options except to the extent of his pecuniary interest
therein. |
10
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of
1934, as amended, our directors and executive officers, and any
persons who beneficially own more than 10% of our common stock,
are required to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission
(SEC). Based upon our review of copies of such
reports for our 2008 fiscal year and written representations
from our directors and executive officers, except as described
below, we believe that our directors and executive officers, and
beneficial owners of more than 10% of our common stock, have
complied with all applicable filing requirements for our 2008
fiscal year.
Messrs. J. Dickey, Gausvik and Pinch each filed a late
report on August 22, 2008 regarding shares withheld for tax
purposes in connection with the vesting, on five dates during
2008, of portions of prior awards of restricted shares. Lewis W.
Dickey, Sr., father of Messrs. L. Dickey and J. Dickey and the
beneficial owner of more than 10% of our common stock, filed
late reports on Form 3 and Form 4 covering purchases made
between June 2, 2008 and August 11, 2008.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
This compensation discussion and analysis provides an overview
of our compensation objectives and policies, the elements of
compensation that we provide to our top executive officers, and
the material factors that we considered in making the decisions
to pay such compensation. Following this analysis, we have
provided a series of tables containing specific information
about the compensation earned or paid in 2008 to the following
individuals, whom we refer to as our named executive officers:
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Lewis W. Dickey, Jr., our Chairman, President and Chief
Executive Officer;
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Martin R. Gausvik, our Executive Vice President, Treasurer and
Chief Financial Officer;
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|
Jon G. Pinch, our Executive Vice President and Co-Chief
Operating Officer; and
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|
John W. Dickey, our Executive Vice President and Co-Chief
Operating Officer.
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The discussion below is intended to help you understand the
information provided in those tables and put that information in
context within our overall compensation program.
Executive
Compensation Program Objectives
Our executive compensation program has three primary and related
objectives:
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to provide a total compensation package that allows us to
compete effectively in attracting, rewarding and retaining
executive leadership talent,
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to reward executives for meaningful performance that contributes
to enhanced long-term stockholder value and our general
long-term financial health, and
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to align the interests of our executives with those of our
stockholders.
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In accordance with these goals, we provide a significant portion
of each executives compensation in the form of at-risk
incentive awards that measure individual performance and our
success as a company in achieving our business strategy and
objectives. With respect to our performance, we focus primarily
on the performance and results of our stations, as measured by
station operating income, which is a financial measure
11
that isolates the amount of income generated solely by our
stations and assists our management in evaluating the earnings
potential of our station portfolio, and the cash flow generated
by our business.
Our compensation program is implemented by the Compensation
Committee of our Board. Information about the Compensation
Committee and its composition, responsibilities and operations
can be found in Committees of the
Board The Compensation Committee.
Compensation
Program Elements and Their Purpose
Our executive compensation program consists primarily of the
following integrated components: base salary, annual incentive
awards, and long-term incentive opportunities. The program also
contains elements relating to retirement, severance, and other
employee benefits.
Base salary. Base salary is the fixed portion
of an executives annual compensation and is intended to
recognize fundamental market value for the skills and experience
of the individual relative to the responsibilities of his
position with us. Changes to base salary are intended to
reflect, among other things, the executives performance as
indicated through functional progress, career and skill
development, and mastery of position competency requirements.
Base salary is the foundational element of the total
compensation package to which most other elements relate.
Annual incentive. Unlike base salary, which is
fixed, annual incentive compensation is intended to vary as a
direct reflection of company and individual performance over a
twelve-month period. The incentive opportunity is typically
expressed as a percent of base salary and is paid in the form of
a cash bonus. In addition to amounts that may be awarded
pursuant to annual incentive performance awards, the
Compensation Committee has the authority to make discretionary
bonus awards, including awards based on Company or individual
performance.
Long-term incentives. Long-term incentives,
which have been made in the form of grants of options
exercisable for our common stock or awards of restricted shares
of our common stock, are granted with the intent to reward
performance over a multi-year period with clear links to
performance criteria and long-term stockholder value. For
Mr. L. Dickey, the incentive opportunity through May 2013
has been set pursuant to the terms of his current employment
agreement, which took effect on December 20, 2006, and was
designed to maintain a desired balance between short- and
long-term compensation over the term of the agreement, as
discussed further below. The incentive opportunity for our other
named executive officers, determined on an annual basis by the
Compensation Committee, is designed to maintain a similar
balance. The realized compensation from these incentives will
vary as a reflection of stock price or other financial
performance over time. For 2008, we used awards of restricted
stock exclusively to deliver long-term incentive opportunity to
our named executive officers.
On December 30, 2008, we consummated an exchange offer (the
option exchange offer), unrelated to our regular
compensation structure, to our employees and non-employee
directors (or a designated affiliate of one of the foregoing) to
exchange their outstanding options to purchase our Class A
Common Stock that were granted on or after October 2, 2000
for a combination of restricted shares of our Class A
Common Stock and replacement options to purchase Class A
Common Stock. The option exchange offer was intended to
accomplish a number of important objectives. First, by providing
long-term incentives in the form of both restricted shares and
new options, we believe we have reinforced the ownership
culture among our employees and more closely aligned
employees interests with those of our stockholders.
Second, by reintroducing vesting restrictions on restricted
shares and new options, where the vast majority of the old
options were fully vested, we believe we have significantly
improved the retention effects of our long-term incentives to
ensure the continuity of our employees. Finally, upon completion
of the option exchange offer, we terminated all remaining share
availability under our currently existing equity incentive plans
(other than the 2008 Equity Incentive Plan), and do not intend
to make any further awards under those plans. As a result, we
believe that the option exchange offer has significantly reduced
overhang and decreased the potential dilution that could result
from the exercise of currently outstanding or future awards of
equity incentive grants.
12
Employee retirement/health and welfare benefit
plans. These benefits are intended to provide
competitive levels of medical, retirement and income protection,
such as life and disability insurance coverage, for the
executives and their families. Our executives generally
participate in the same programs pertaining to medical coverage
(active employee and retiree), life insurance, disability, and
retirement offered to all of our eligible employees. In
addition, our executives participate in an executive life
insurance program. We believe that our benefits and retirement
programs are comparable to those offered by the companies in our
industry and, as a result, are needed to ensure that our
executive compensation remains competitive.
Severance and other termination payments. Each
named executive officer is party to an employment agreement
under which he may receive severance benefits upon his
termination of employment in various circumstances, including
following a change of control. The severance-related agreements
available to the named executive officers are described in more
detail under Potential Payments upon
Termination or Change of Control. We believe that our
severance arrangements, including the amount of the severance
benefit, are comparable to those offered by the companies in our
peer groups and, as a result, are needed to ensure that our
executive compensation remains competitive.
Executive perquisites. We provide a car
allowance to each of our named executive officers. We do not
provide perquisites such as financial planning or country club
memberships.
Determining
the Amount of Each Element
Base salary. We are party to employment
agreements with each of our named executive officers. Each of
these agreements provides for a contractual level of base
salary. The agreements with Messrs. Gausvik, Pinch and J.
Dickey provide for discretionary annual increases within certain
parameters, and the Compensation Committee seeks to set base
salaries at levels that we and the executive deem fair, given
the executives responsibilities and individual performance.
Annual incentive. Like base salary, the
parameters of the cash bonus also are set forth in the
employment agreements with each of the named executive officers,
and are based on achievement of annual performance goals
established by the Compensation Committee. Within those
parameters, however, the Compensation Committee maintains a
level of discretion and flexibility, including the ability to
make cash bonus awards to executives even in circumstances where
pre-established performance targets are not satisfied. The
decision to increase or decrease cash bonuses from year to year
is generally based on a variety of factors the Compensation
Committee deems appropriate, including our overall performance,
the executives individual performance, the business
environment over the course of the prior year, and any
extraordinary accomplishments during the prior year. These
factors are discussed more thoroughly under
Long-term incentives, immediately
below. We believe this flexibility, coupled with a history of
appropriately rewarding performance, provide an effective
incentive for the continued superior performance of our
executives.
For 2008, the Compensation Committee, after review and
consideration of our overall and relative financial performance
and an assessment of the individual and relative performance of
our named executive officers, approved discretionary cash
bonuses for each of our named executive officers, including our
Chief Executive Officer.
Long-term incentives. In connection with
determining the equity incentive compensation for each of our
named executive officers in 2008, the Compensation Committee
considered a number of factors, including:
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|
Year-over-year performance. Our 2008
same-station station operating income decreased 8.0% from that
in 2007. The Compensation Committee feels that station operating
income is a meaningful measure of our performance, as it
isolates the amount of income generated solely by our stations
and assists our management in evaluating the earnings potential
of our station portfolio. Our management has observed that
station operating income is commonly employed by firms that
provide appraisal services to the broadcasting industry in
valuing radio stations. Further, in each of the more than 140
radio station acquisitions we have completed since our
inception, we have used station operating income as the primary
metric to evaluate and negotiate the purchase price to be paid.
Given its relevance to the estimated value of a radio station,
we believe, and our experience indicates, that investors
consider the
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13
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measure to be extremely useful in order to determine the value
of our portfolio of stations. We believe that station operating
income is the most commonly used financial measure employed by
the investment community to compare the performance of radio
station operators.
|
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Performance relative to our peers in the
industry. Although our 2008 results were
generally lower than our results for 2007, the Compensation
Committee also examined our results as compared to similarly
situated competitors in our industry, noting that on a relative
basis, our operating performance was stronger than several of
our competitors.
|
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Cumulus Media Partners. When setting
compensation levels for 2008, the Compensation Committee gave
considerable weight to the additional responsibilities placed on
by our named executive officers in managing Cumulus Media
Partners, LLC (CMP), a private partnership created
by Cumulus and affiliates of Bain Capital Partners LLC, The
Blackstone Group and Thomas H. Lee Partners, L.P. The
Compensation Committee recognizes, and in making compensation
decisions took into account, the fact that our named executive
officers now manage an enterprise that has nearly doubled in
size as a result of the CMP partnership, based on station
operating income. We expect that future compensation
determinations, especially over the next several years, will
continue to reflect the increased responsibilities of our named
executive officers relating to CMP.
|
As noted earlier, for 2008 we used awards of restricted stock to
deliver long-term incentives. These awards generally are
designed to vest over four years (half of Mr. L.
Dickeys awards are contingent on meeting a performance
goal as well, described below). The purpose of these awards is
to focus the executives on total stockholder return, with a
substantial risk of forfeiture in the first four years, and to
provide retention value during the service period. In addition,
because the per share grant date value of restricted shares is
effectively greater than the per share grant date value of stock
options, fewer shares are awarded compared to stock options. The
Compensation Committee believes that these awards provide
significant performance incentive and retention value while
aligning the applicable compensation with stockholder interests.
The realized compensation value from long-term incentives is
ultimately determined by our stock price performance over the
term of the awards and the executives decision as to when
to sell shares.
The decision to rely solely on awards of restricted stock (as
opposed to stock options, other forms of equity, or cash) as
long-term incentive compensation was determined based upon
industry trends in equity compensation, by balancing factors
that included the cost of equity awards and projected impact on
stockholder dilution, and as a result of our adoption of
SFAS No. 123R, Share Based Compensation, which
requires the measurement and recognition of compensation expense
for all share-based awards to employees and directors based on
estimated fair values.
Compensation of the Chief Executive
Officer. Mr. L. Dickey is compensated
pursuant to the terms of his Employment Agreement, which was
entered into on December 20, 2006. See
Employment Agreements.
Allocating
Between Long-term and Annual Compensation
We seek to maintain an executive compensation program that is
balanced in terms of each element of pay relative to competitive
practices, with the incentive emphasis placed on long-term
results. The overall program is intended to balance business
objectives for executive pay for performance, retention,
competitive market practices and stockholder interests. Based on
the fair value of equity awards granted to named executive
officers in 2008 and the 2008 base salary of the named executive
officers, approximately 55.5% of the annual total direct
compensation target opportunity was subject to performance risk
for named executive officers through the annual and long-term
incentive plans. Annual cash-incentive awards, which constitute
short-term incentives, accounted for approximately 14.0% of
annual target compensation for the named executive officers.
Long-term incentive awards made up approximately 41.5% of the
annual target compensation mix for the named executive officers.
The Compensation Committee developed target total direct
compensation and these relative divisions between short- and
long-term incentives for 2008 based upon its own analysis of
general compensation practices at similar companies.
14
When
Long-term Grants are Made
The Compensation Committee typically grants long-term incentive
awards annually at a regularly-scheduled meeting of our Board,
usually in the first or second quarter of the fiscal year. The
meeting date is scheduled well in advance and without regard to
potential stock price movement. On February 26, 2009, the
Compensation Committee awarded Mr. L. Dickey a grant of
restricted shares, pursuant to the terms of his employment
agreement, and awarded J. Dickey, M. Gausvik and J. Pinch grants
of restricted shares.
The
Role of Executive Officers in Determining Executive
Compensation
Our Chief Executive Officer develops recommendations regarding
executive compensation, including proposals relative to
compensation for individual executive officers, using internal
and external resources. These resources include such things as
compensation surveys, external data and reports from consultants
and data, reports and recommendations from internal staff.
Recommendations from our Chief Executive Officer include and
consider all aspects of the compensation program
philosophy, design, compliance and competitive
strategy as well as specific actions regarding
individual executive officer compensation. The Compensation
Committee reviews these recommendations, and decides whether to
accept, reject, or revise the proposals.
Our Chief Executive Officer and our Chief Financial Officer
assist the Compensation Committee in understanding key business
drivers included in program designs, especially incentive
programs. This may include defining related measures and
explaining the mutual influence on or by other business drivers
and the accounting and tax treatment relating to certain awards.
Our Chief Executive Officer also provides regular updates to the
Compensation Committee regarding current and anticipated
performance outcomes and their impact on executive compensation.
Our general counsel, with the assistance of our outside counsel,
ensures that appropriate plan documentation and approvals are
received in order to keep executive pay programs in compliance
with applicable laws and stock exchange listing requirements.
Our general counsel and outside counsel also advise the
Compensation Committee and our Board regarding compliance with
appropriate governance standards and requirements.
Discretion
to Modify Awards
As previously noted, annual incentive awards are based on our
performance and that of each individual executive officer over
the most recently completed fiscal year. The Compensation
Committee reserves the right to adjust individual goals during
the course of the year in order to reflect changes in our
business.
Under our equity incentive plans, the Compensation Committee has
limited discretion to extend an award that would otherwise be
forfeited, but not beyond the original term of the award. The
Compensation Committee generally does not have the authority to
unilaterally rescind an award. Each award defines the terms
under which it would be forfeited according to the terms of the
applicable equity incentive plan.
Impact
of Restated Earnings on Previously Paid or Awarded
Compensation
We have not had to restate earnings in a manner that would
impact incentive award payments. If future restatements are
necessary, the Compensation Committee and the Board will
consider the facts and circumstances relating to the cause of
the restatement, as well as the requirements under
Section 304 of the Sarbanes-Oxley Act of 2002, in
determining whether any payments based upon the financial
results were made unjustly and the materiality and methods for
recovering such payments.
Accounting
and Tax Treatment of Direct Compensation
For executives, all compensation is subject to federal, state
and local taxes as ordinary income or capital gains as various
tax jurisdictions provide. Section 162(m) of the
U.S. tax code places a limit of $1,000,000 on the amount of
compensation that we may deduct in any one year with respect to
any one of our named executive officers. However, qualifying
performance-based compensation will not be subject to the
deduction limit if certain requirements are met. The
Compensation Committee anticipates that awards under our long-
15
term incentive programs will continue to qualify as
performance-based compensation. To maintain flexibility in
compensating our executives, however, the Compensation Committee
reserves the right to use its judgment to authorize compensation
payments that may be subject to the limit when the Compensation
Committee believes that such payments are appropriate.
Accordingly, certain components of our executive compensation
program are designed to be qualifying performance-based
compensation under Section 162(m) while others are not.
With the adoption of FAS 123R, we do not expect accounting
treatment of differing forms of equity awards to vary
significantly and, therefore, accounting treatment is not
expected to have a material effect on the selection of forms of
compensation.
Compensation
Committee Report
The Compensation Committee of the Company has reviewed and
discussed the Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with management and, based on this review and discussions, the
Compensation Committee recommended to the Board that the
Compensation Discussion and Analysis be included in this proxy
statement.
The Compensation Committee of the Board of Directors:
Eric P. Robison, Chairman
Holcombe T. Green, Jr.
Robert H. Sheridan, III
Summary
Compensation Table
We have employment agreements with each of our executive
officers, as described under Employment
Agreements below. The following table summarizes the total
compensation paid or earned by each of the named executive
officers for the fiscal years ended December 31, 2008,
December 31, 2007, and December 31, 2006.
Based on the fair value of equity awards granted to named
executive officers in 2008 and the 2008 base salary of the named
executive officers, approximately 43.4% of the annual total
direct compensation was base salary. Cash-incentive awards,
which constitute short-term incentives, accounted for
approximately 14.0% of annual target compensation and restricted
share grants, which constitute long-term incentives, made up
approximately 41.5% of the annual compensation mix for the named
executive officers.
16
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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(g)
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(h)
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(i)
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(j)
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Change in
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Pension
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Non-
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Value and
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Equity
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Non-
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Incentive
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Qualified
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Plan
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Deferred
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Stock
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Option
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Compen-
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Compensation
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All Other
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Salary
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Bonus
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Awards
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Awards
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sation
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Earnings
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Compensation
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Total
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Name and Principal Position
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Year
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($)
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($)(1)
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($)(2)
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($)
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($)(1)
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($)
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($)
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($)
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Lewis W. Dickey, Jr.,
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2008
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$
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941,171
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$
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500,000
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$
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1,942,400
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$
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0
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n/a
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n/a
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$
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16,366
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(3)
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$
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3,399,937
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Chairman, President and
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2007
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901,250
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n/a
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8,560,300
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(4)
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0
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700,000
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n/a
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12,976
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(5)
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10,174,526
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Chief Executive Officer
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2006
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825,000
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n/a
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3,395,000
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(6)
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0
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800,000
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n/a
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13,476
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(7)
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5,033,476
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Martin R. Gausvik,
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2008
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500,000
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50,000
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75,600
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0
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n/a
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n/a
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15,876
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(8)
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641,476
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Executive Vice President,
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2007
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495,000
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n/a
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147,600
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0
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100,000
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n/a
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17,519
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(9)
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760,119
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Treasurer and Chief
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2006
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485,100
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n/a
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174,300
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0
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175,000
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n/a
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18,645
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(10)
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853,045
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Financial Officer
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Jon G. Pinch,
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2008
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510,000
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100,000
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100,800
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0
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n/a
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n/a
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12,276
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(11)
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723,076
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Executive Vice President
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2007
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505,000
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n/a
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196,800
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0
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120,000
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n/a
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13,687
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(12)
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835,487
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and Co-Chief Operating
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2006
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486,675
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n/a
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232,400
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0
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200,000
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n/a
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14,556
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(13)
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933,631
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Officer
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John W. Dickey,
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2008
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580,001
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165,000
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302,400
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0
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n/a
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n/a
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15,876
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(14)
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1,063,277
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Executive Vice
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2007
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570,000
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n/a
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590,400
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0
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185,000
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n/a
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14,572
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(15)
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1,359,972
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President and
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2006
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548,372
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n/a
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697,200
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0
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250,000
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n/a
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15,072
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(16)
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1,510,644
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Co-Chief Operating Officer
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(1) |
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We consider the bonuses paid in a given fiscal year as being
earned in the prior fiscal year. The amounts reported in this
column for reflect the bonus earned in the year indicated. |
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(2) |
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The amounts in column (e) reflect the dollar amount of
awards pursuant to the 1998 Stock Incentive Plan, 2004 Equity
Incentive Plan and 2008 Equity Incentive Plan recognized for
financial statement reporting purposes for the fiscal years
ended December 31, 2008, December 31, 2007 and
December 31, 2006, respectively, in accordance with
FAS 123R. Assumptions used in the calculation of these
amounts are included in note 11 to the consolidated
financial statements included in our annual report on
Form 10-K
for the year ended December 31, 2008. These amounts do not
include awards dated December 30, 2008 made pursuant to an
exchange offer to our employees and non-employee directors to
exchange outstanding options granted after October 2, 2000
for a combination of restricted shares and replacement options. |
|
(3) |
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Reflects an automobile allowance of $12,000 and employer-paid
life insurance premiums of $4,366. |
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(4) |
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Includes a one-time grant of deferred shares issued as an
inducement to Mr. L. Dickey to enter into his employment
agreement. |
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(5) |
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Reflects an automobile allowance of $11,500 and employer-paid
life insurance premiums of $1,476. |
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(6) |
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In March 2006 Mr. L. Dickey received an award of restricted
shares of our Class A Common Stock that was valued at
$3,395,000, as recognized for financial statement reporting
purposes for the fiscal year ended December 31, 2006, in
accordance with FAS 123R. See note (2) above. However,
on December 20, 2006, we repurchased those shares, at their
then-current market value, as part of a previously disclosed
share and option repurchase arrangement that was part of
Mr. L. Dickeys employment agreement that took effect
in December 2006. |
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(7) |
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Reflects an automobile allowance of $12,000 and employer-paid
life insurance premiums of $1,476. |
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(8) |
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Reflects an automobile allowance of $12,000 and employer-paid
life insurance premiums of $3,876. |
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(9) |
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Reflects an automobile allowance of $11,500, employer-paid life
insurance premiums of 3,072, and a 401(k) contribution of $2,947. |
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(10) |
|
Reflects an automobile allowance of $8,050, employer-paid life
insurance premiums of 3,072, and a 401(k) contribution of $3,573. |
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(11) |
|
Reflects an automobile allowance of $8,400 and employer-paid
life insurance premiums of $3,876. |
17
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(12) |
|
Reflects an automobile allowance of $8,050, employer-paid life
insurance premiums of 3,072, and a 401(k) contribution of $2,565. |
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(13) |
|
Reflects an automobile allowance of $8,400, employer-paid life
insurance premiums of 3,072, and a 401(k) contribution of $3,084. |
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(14) |
|
Reflects an automobile allowance of $12,000 and employer-paid
life insurance premiums of $3,876. |
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(15) |
|
Reflects an automobile allowance of $11,500 and employer-paid
life insurance premiums of 3,072. |
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(16) |
|
Reflects an automobile allowance of $12,000 and employer-paid
life insurance premiums of 3,072. |
Grants of
Plan-Based Awards
The Compensation Committee approved awards of restricted common
stock, pursuant to our 2004 Equity Incentive Plan and our 2008
Equity Incentive Plan, to each of our executive officers in
2008. Awards dated December 30, 2008 were made pursuant to
an exchange offer to our employees and non-employee directors to
exchange outstanding eligible options granted after
October 2, 2000 for a combination of restricted shares and
replacement options.
The restricted share and option grants to Messrs. Gausvik,
Pinch and J. Dickey on May 23, 2008 and to Messrs. L.
Dickey, Gausvik, Pinch and J. Dickey on December 30, 2008
were of time-vested shares or options: one-half of each grant
will vest on the second anniversary of the grant date, with the
remainder to vest one-quarter at each of the third and fourth
anniversaries. The grants are conditioned on the continuous
employment of the grant recipients.
With regard to the grant to Mr. L. Dickey on
February 8, 2008, half of the grant was of time-vested
restricted shares, which will vest according to the same
schedule as the grants to the other executive officers, as
described above. The remaining portion of the grant was for
performance-based restricted stock awards, which will vest upon
achievement of a Compensation Committee-approved target average
annual Adjusted EBITDA (calculated on a same-station basis) for
the three-year period ending December 31, 2011.
The table below summarizes the grants of plan-based awards to
each of the named executive officers for the fiscal year ended
December 31, 2008.
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Estimated
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Estimated
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Future
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All Other
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All Other
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Future
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Payouts
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Stock
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Option
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Payouts Under
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Under
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Awards:
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Awards:
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Exercise
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Grant Date
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Non-Equity
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|
|
|
|
Equity
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
or Base
|
|
|
Fair
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
Shares of
|
|
|
Securities
|
|
|
Price of
|
|
|
Value of
|
|
|
|
|
|
|
|
|
Plan Awards
|
|
|
|
|
|
|
|
|
Plan Awards
|
|
|
|
|
|
Stock or
|
|
|
Underlying
|
|
|
Option
|
|
|
Stock and
|
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units
|
|
|
Options
|
|
|
Awards
|
|
|
Option
|
|
Name
|
|
Grant Date(1)
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
Awards(2)
|
|
(a)
|
|
(b)
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
(k)
|
|
|
(l)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lewis W. Dickey, Jr.,
|
|
February 8, 2008
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
320,000
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
$
|
1,942,400
|
|
Chairman, President and
|
|
December 30, 2008
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
69,244
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
$
|
175,880
|
|
Chief Executive Officer
|
|
December 30, 2008
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
67,896
|
|
|
|
2.79
|
|
|
$
|
69,254
|
|
|
|
December 30, 2008
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
67,895
|
|
|
|
2.92
|
|
|
$
|
66,537
|
|
|
|
December 30, 2008
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
67,895
|
|
|
|
3.30
|
|
|
$
|
60,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin R. Gausvik,
|
|
May 23, 2008
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
15,000
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
$
|
75,600
|
|
Executive Vice President,
|
|
December 30, 2008
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
53,856
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
$
|
136,794
|
|
Treasurer and Chief
|
|
December 30, 2008
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
55,902
|
|
|
|
2.54
|
|
|
$
|
60,933
|
|
Financial Officer
|
|
December 30, 2008
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
55,902
|
|
|
|
2.92
|
|
|
$
|
54,784
|
|
|
|
December 30, 2008
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
55,901
|
|
|
|
3.30
|
|
|
$
|
49,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jon G. Pinch,
|
|
May 23, 2008
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
20,000
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
$
|
100,800
|
|
Executive Vice President
|
|
December 30, 2008
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
20,433
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
$
|
51,900
|
|
and Co-Chief Operating
|
|
December 30, 2008
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
20,975
|
|
|
|
2.54
|
|
|
$
|
22,863
|
|
Officer
|
|
December 30, 2008
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
20,975
|
|
|
|
2.92
|
|
|
$
|
20,556
|
|
|
|
December 30, 2008
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
20,974
|
|
|
|
3.30
|
|
|
$
|
18,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Dickey,
|
|
May 23, 2008
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
60,000
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
$
|
302,400
|
|
Executive Vice President
|
|
December 30, 2008
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
58,985
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
$
|
149,822
|
|
and Co-Chief Operating
|
|
December 30, 2008
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
61,847
|
|
|
|
2.79
|
|
|
$
|
63,084
|
|
Officer
|
|
December 30, 2008
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
61,846
|
|
|
|
2.92
|
|
|
$
|
60,609
|
|
|
|
December 30, 2008
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
61,846
|
|
|
|
3.30
|
|
|
$
|
55,043
|
|
|
|
|
(1) |
|
Includes awards made pursuant to the option exchange offer,
consummated on December 30, 2008. |
18
|
|
|
(2) |
|
The amounts in column (l) reflect the dollar amount of
awards pursuant to the 1998 Stock Incentive Plan, 2004 Equity
Incentive Plan and 2008 Equity Incentive Plan recognized for
financial statement reporting purposes for the fiscal year ended
December 31, 2008, in accordance with FAS 123R.
Assumptions used in the calculation of these amounts are
included in note 11 to the consolidated financial
statements included in our annual report on
Form 10-K
for the year ended December 31, 2008. |
Outstanding
Equity Awards at Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards*
|
|
|
Stock Awards*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Payout
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Unearned
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number
|
|
|
Value of
|
|
|
Shares,
|
|
|
Unearned
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Securities
|
|
|
|
|
|
|
|
|
of
|
|
|
Shares or
|
|
|
Units or
|
|
|
Shares,
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Units of
|
|
|
Other
|
|
|
Units or
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Units of
|
|
|
Stock
|
|
|
Rights
|
|
|
Other
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Option
|
|
|
Stock That
|
|
|
That
|
|
|
That Have
|
|
|
Rights That
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Options
|
|
|
Price
|
|
|
Expiration
|
|
|
Have Not
|
|
|
Have Not
|
|
|
Not Vested
|
|
|
Have Not
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
Vested (#)
|
|
|
Vested ($)
|
|
|
(#)
|
|
|
Vested ($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
Lewis W. Dickey, Jr.,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
709,244
|
|
|
$
|
1,766,018
|
|
Chairman, President and
|
|
|
0
|
|
|
|
67,896
|
|
|
|
0
|
|
|
$
|
2.79
|
|
|
|
12/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Executive Officer
|
|
|
0
|
|
|
|
67,895
|
|
|
|
0
|
|
|
$
|
2.92
|
|
|
|
12/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
67,895
|
|
|
|
0
|
|
|
$
|
3.30
|
|
|
|
12/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
27.875
|
|
|
|
8/30/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
27.875
|
|
|
|
8/30/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin R. Gausvik,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,712
|
|
|
$
|
230,852
|
|
Executive Vice President,
|
|
|
0
|
|
|
|
55,902
|
|
|
|
0
|
|
|
$
|
2.54
|
|
|
|
12/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasurer and Chief
|
|
|
0
|
|
|
|
55,902
|
|
|
|
0
|
|
|
$
|
2.92
|
|
|
|
12/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Officer
|
|
|
0
|
|
|
|
55,901
|
|
|
|
0
|
|
|
$
|
3.30
|
|
|
|
12/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jon G. Pinch,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69,806
|
|
|
$
|
173,817
|
|
Executive Vice President
|
|
|
0
|
|
|
|
20,975
|
|
|
|
0
|
|
|
$
|
2.54
|
|
|
|
12/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Co-Chief
|
|
|
0
|
|
|
|
20,975
|
|
|
|
0
|
|
|
$
|
2.92
|
|
|
|
12/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Officer
|
|
|
0
|
|
|
|
20,974
|
|
|
|
0
|
|
|
$
|
3.30
|
|
|
|
12/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Dickey,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
206,067
|
|
|
$
|
513,107
|
|
Executive Vice President
|
|
|
0
|
|
|
|
61,847
|
|
|
|
0
|
|
|
$
|
2.79
|
|
|
|
12/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Co-Chief Operating
|
|
|
0
|
|
|
|
61,846
|
|
|
|
0
|
|
|
$
|
2.92
|
|
|
|
12/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer
|
|
|
0
|
|
|
|
61,846
|
|
|
|
0
|
|
|
$
|
3.30
|
|
|
|
12/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,354
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
27.875
|
|
|
|
8/30/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Includes awards made pursuant to the option exchange offer,
consummated on December 30, 2008. |
19
Option
Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares
|
|
|
|
|
|
Shares
|
|
|
|
|
|
|
Acquired
|
|
|
Value Realized
|
|
|
Acquired
|
|
|
Value Realized
|
|
|
|
on Exercise
|
|
|
on Exercise
|
|
|
on Vesting
|
|
|
on Vesting
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
Lewis W. Dickey, Jr.,
|
|
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
$
|
0
|
|
Chairman, President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin R. Gausvik,
|
|
|
0
|
|
|
$
|
0
|
|
|
|
18,645
|
|
|
$
|
86,569
|
|
Executive Vice President, Treasurer and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jon G. Pinch,
|
|
|
0
|
|
|
$
|
0
|
|
|
|
20,002
|
|
|
$
|
95,151
|
|
Executive Vice President and Co-Chief
Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Dickey,
|
|
|
0
|
|
|
$
|
0
|
|
|
|
57,918
|
|
|
$
|
276,901
|
|
Executive Vice President and Co-Chief
Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential
Payments upon Termination or Change of Control
The following analyses reflect the amount of compensation
payable to each of the named executive officers in the event of
termination of employment under the following scenarios:
resignation for good reason, termination without cause,
termination for cause, resignation without reason (voluntary
resignation), termination in connection with a change of
control, and termination due to death or disability. The
analyses assume that the date of termination was
December 31, 2008, (the last business day of fiscal year
2008) and the dollar value of any equity is calculated
using a per share price of $2.49, which was the reported closing
price of our Class A Common Stock on that date. In
addition, the analyses assume the sale, on that date, of all
restricted stock whose vesting is accelerated as a result of
termination and all Class A Common Stock issuable upon
exercise (and payment of the exercise price) of options whose
vesting is accelerated as a result of termination and whose
exercise price is less than $2.49, but not the sale of existing
holdings of Class A or Class C Common Stock or
Class A or Class C Common Stock issuable upon exercise
of already vested options.
Upon termination or resignation for any reason, the named
executive officers are entitled to any earned but unpaid base
salary and bonus, as well as reimbursement of any unreimbursed
business expenses and payments due under the terms of our
benefit plans. Our analyses assume that all such amounts have
been paid as of the date of termination and thus are not
otherwise reflected.
Unless otherwise specified, all cash payments are lump-sum
payments.
Lewis W. Dickey, Jr. The following
analysis describes the potential payments upon termination of
employment for Lewis W. Dickey, Jr., our Chairman,
President and Chief Executive Officer. Other than the
accelerated vesting of certain awards of options and restricted
stock awarded to Mr. L. Dickey in connection with prior
employment agreements, all potential payments to Mr. L.
Dickey upon termination of his employment or upon a change of
control are governed by his current employment contract,
described under Employment Agreements.
According to Mr. L. Dickeys current employment
agreement, he would be entitled to compensation upon resignation
for good reason termination without
cause, or by death or disability. He would be
eligible for additional compensation upon termination without
cause during the six-month period preceding a change of control.
According to his current employment agreement:
|
|
|
|
|
good reason means the assignment of duties
inconsistent with Mr. L. Dickeys position, authority,
duties or responsibilities, or any adverse change in reporting
responsibilities, other than isolated or insubstantial actions
we take not in bad faith and that we correct;
|
20
|
|
|
|
|
cause means Mr. L. Dickeys conviction of
a felony, conviction of a crime involving Cumulus, willful
misconduct or failure to substantially perform his duties in an
way that materially adversely affects us, or willful fraud or
material dishonesty; and
|
|
|
|
change of control means the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or
other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of
all or substantially all of our assets taken as a whole to any
person or group of related persons (as
such terms are used in Section 13(d)(3) of the Securities
Exchange Act of 1934), (ii) the adoption of a plan relating
to our liquidation or dissolution, (iii) the consummation
of any transaction (including, without limitation, any purchase,
sale, acquisition, disposition, merger or consolidation) the
result of which is that any Person or Group becomes the
beneficial owner (as such term is defined in
Rule 13d-3
and Rule
13d-5 under
the Securities Exchange Act of 1934) of more than 50% of
the aggregate voting power of all classes of our capital stock
having the right to elect directors under ordinary
circumstances, or (iv) the first day on which a majority of
the members of the Board are not Continuing Directors (as
defined in the employment agreement).
|
Any severance payment payable to Mr. L. Dickey would be
payable in four equal consecutive installments, provided that if
the payment would constitute a deferral of
compensation under Section 409A of the Internal
Revenue Code of 1986, as amended, and Mr. L. Dickey were to
be a specified employee under Section 409A,
then the payment would be payable upon the earlier of
6 months from the date of termination or death. Any bonus
payment payable to Mr. L. Dickey would be payable upon the
final preparation of audited financial statements for the year
of termination.
Mr. L. Dickeys current employment agreement contains
a confidentiality provision, an
18-month
non-compete covenant, an
18-month
prohibition on the solicitation of employees, customers or
suppliers, and a covenant of confidentiality.
Assuming a termination had occurred on December 31, 2008,
Mr. L. Dickey would have been entitled to receive:
|
|
|
|
|
for resignation for good reason or termination without cause,
$2,505,081, representing a severance payment equal to two
years base salary, plus his bonus amount for 2008, plus
$8,930 (the value of 12 months continued coverage
under the Companys employee benefit plans);
|
|
|
|
for termination without cause during the six-month period
preceding a change of control, $3,287,672, representing a
severance payment of two years base salary, plus his bonus
amount for 2008, plus the market value on the date of
termination of a grant of 360,000 shares of Class A Common
Stock (payable in a lump-sum cash payment in lieu of shares of
Class A Common Stock, at our option), plus $8,930 (the
value of 12 months continued coverage under the
Companys employee benefit plans); and
|
|
|
|
for termination upon death or disability, $1,950,101,
representing one years salary continuation, plus his bonus
amount for 2008, plus 8,930 (the value of 12 months
continued coverage under the Companys employee benefit
plans) and a benefit of $500,000 under his executive life
insurance policy.
|
Assuming Mr. L. Dickeys employment was terminated for
cause or he resigned without good reason, Mr. L. Dickey
would have received no severance payments, forfeited any bonus
for 2008 and, pursuant to the terms of his current employment
agreement, would have been obligated to promptly pay a
$4.5 million retention plan payment to us in cash.
Martin R. Gausvik, Jon G. Pinch and John W.
Dickey. The following analysis describes the
potential payments upon termination of employment for Martin R.
Gausvik, our Executive Vice President, Treasurer and Chief
Financial Officer, Jon G. Pinch, our Executive Vice President
and Co-Chief Operating Officer, and John W. Dickey, our
Executive Vice President and Co-Chief Operating Officer. All
potential severance payments are governed by their current
employment contracts, described under
Employment Agreements. All potential
accelerated vesting of equity awards are governed by the
applicable award agreements, and provide for full acceleration
upon a change of control and an additional 12 months
vesting upon termination for death or disability.
21
According to their respective current employment agreements,
each of Messrs. Gausvik, Pinch and J. Dickey would be
entitled to compensation upon resignation for good
reason, termination without cause or by death
or disability. They each would be eligible for additional
compensation upon termination in connection with a change of
control. According to their current employment agreements:
|
|
|
|
|
good reason means the assignment of duties
materially inconsistent with their respective positions
(including status, offices, titles or reporting relationships),
authority, duties or responsibilities, any material adverse
change in their respective reporting responsibilities, or any
action by us that results in a material diminution in their
respective positions, authority, duties or responsibilities, but
excluding an action not taken in bad faith that we correct;
(ii) any failure by us to comply in a material respect with
the compensation and benefits provisions their respective
employment agreements, but excluding a failure or action not
taken in bad faith that we correct; or relocation of their
respective job locations by more than a specified amount;
|
|
|
|
cause means the gross negligence or willful
misconduct in the performance of their respective duties;
commission of any felony or act of fraud or material dishonesty
involving the Company that is likely to have a material adverse
effect upon our business or reputation or their respective
abilities to perform their duties for the Company; material
breach of any agreement with us concerning noncompetition or the
confidentiality of proprietary information; or any material
breach of their respective fiduciary duties to the
Company; and
|
|
|
|
change of control means (a) the sale or other
disposition (other than by way of merger or consolidation) of
all or substantially all of our assets to any person or group
other than Lewis W. Dickey, Jr. or a pre-existing
controlling stockholder (or their affiliates); (b) the
adoption of a plan relating to our liquidation or dissolution;
(c) the consummation of any transaction the result of which
is that any person or group becomes the beneficial owner of more
than 35% of our voting capital stock; or (d) the first day
on which a majority of the members of our Board are not
continuing directors. According to the 2004 Equity
Incentive Plan, which governs the accelerated vesting of any
equity incentives under such plan change of control
means (e) the acquisition by any person of beneficial
ownership of 35% or more of the voting power of our common stock
(other than any acquisition directly by or from us or an
employee benefit plan or related trust we sponsor or maintain);
(f) under certain circumstances, a change in a majority of
the members of the Board; (g) consummation of a business
combination transaction, unless, following such transaction, no
person beneficially owns, directly or indirectly, 35% or more of
the voting power of the entity resulting from such transaction
and at least half of the members of the board of directors of
the surviving entity were members of our Board at the time we
agreed to the transaction; (h) approval by the stockholders
of the Company of our complete liquidation or dissolution; or
(i) such other event as the Board may determine by express
resolution to constitute a change in control. According to the
2008 Equity Incentive Plan, which governs the accelerated
vesting of any equity incentives under such plan, change
of control means (v) the sale or other disposition
(other than by way of merger or consolidation) of all or
substantially all of our assets to any person or group of
related persons; (w) the adoption of a plan relating to our
liquidation or dissolution; (x) the consummation of any
transaction the result of which is that any person or group
becomes the beneficial owner of more than 50% of the aggregate
voting power of all classes of capital stock of the Company
having the right to elect directors under ordinary
circumstances; (y) the first day on which a majority of the
members of our Board are not continuing directors;
or (z) such other event as the Board may determine by
express resolution to constitute a change in control.
|
Any severance payment payable to Mr. Gausvik would be
payable over the course of the year following the date of
termination, in accordance with the regular payroll schedule
then in effect. For Messrs. Pinch or J. Dickey, any
such severance payment would be payable in four equal
consecutive quarterly installments, with the first such payment
to be made within 15 days following the date of termination.
Each of their respective current employment agreements contain a
confidentiality provision, a
12-month
non-compete covenant, a
12-month
prohibition on the solicitation of employees, customers or
suppliers, and a covenant of confidentiality.
22
Assuming a termination had occurred on December 31, 2008,
Messrs. Gausvik, Pinch and J. Dickey would each have been
entitled to receive:
|
|
|
|
|
for resignation for good reason or termination without cause,
$500,000, $510,000 and $580,001, respectively, representing a
severance payment equal to one years base salary.
|
|
|
|
for termination in connection with a change of control,
$671,451, $610,678 and $876,274, respectively, representing a
severance payment of one years base salary, plus the
accelerated vesting of all of their respective, as-yet-unvested
restricted shares.
|
|
|
|
for termination upon death or disability, $1,171,451, $1,110,678
and $1,376,274, respectively, representing one years
salary continuation, plus an additional 12 months of
vesting of their respective as-yet-unvested restricted shares,
plus proceeds from their respective executive life insurance
policies.
|
Assuming termination of employment for cause or voluntary
resignation, Messrs. Gausvik, Pinch and J. Dickey
would have received no severance payments and would have
forfeited any bonus for 2008. In addition, upon termination for
cause due to an intentional act by any of them that was adverse
to us, the Board would have the right to declare all of such
executives unvested restricted shares forfeited.
In addition to the benefits described above, according to their
respective current employment agreements, upon resignation for
good reason, termination without cause, death or disability,
unvested options that would have vested in the 12 months
after the date of termination will immediately vest, and upon
termination within one year following a change of control, all
unvested options will immediately vest. As of the assumed date
of termination, none of Messrs. Gausvik, Pinch or J. Dickey
had unvested options with an exercise price less than $2.49.
Director
Compensation
We use a combination of cash and stock-based incentive
combination to attract and retain qualified candidates to serve
on our Board. In setting director compensation, we consider the
significant amount of time that directors expend in fulfilling
their duties as directors as well as the expertise and knowledge
required. Generally, non-employee directors receive a fee of
$7,500 per quarter ($30,000 annually). Additionally, each
non-employee director receives an additional $2,500 per quarter
($10,000 annually) for each committee membership he holds. Each
non-employee director also receives a $1,500 fee for each
in-person meeting of our Board (or for each in-person meeting of
a committee, if not conducted in connection with a Board
meeting) and $300 for each telephonic meeting of our Board or a
committee thereof. Finally, each non-employee director receives
reimbursement of out-of-pocket expenses incurred in connection
with attendance at each such meeting.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Deferred
|
|
|
All Other
|
|
|
|
|
|
|
Paid in Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total
|
|
Name(1)
|
|
($)
|
|
|
($)
|
|
|
($)(2)
|
|
|
($)
|
|
|
Earnings
|
|
|
($)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
Ralph B. Everett
|
|
$
|
48,100
|
|
|
|
27,720
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
$
|
75,820
|
|
Holcombe T. Green, Jr.
|
|
$
|
59,900
|
|
|
|
30,240
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
$
|
90,140
|
|
Eric P. Robison
|
|
$
|
45,400
|
|
|
|
27,720
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
$
|
73,120
|
|
Robert H. Sheridan, III
|
|
$
|
59,900
|
|
|
|
30,240
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
$
|
90,140
|
|
|
|
|
(1) |
|
Lewis W. Dickey, Jr., our Chairman, President and Chief
Executive Officer, is not included in this table as he is an
employee and thus receives no compensation for his services as a
director. The compensation Mr. L. Dickey received as an
employee is shown in the Summary Compensation Table elsewhere in
this proxy statement. |
23
Employment
Agreements
As discussed more particularly below, we have entered into
employment agreements with each of our named executive officers.
Subject to certain exceptions, these employment agreements
prohibit each of our named executive officers from competing
with us for a specified period of time after a termination of
employment.
Lewis W. Dickey, Jr., serves as our Chairman, President and
Chief Executive Officer. On December 20, 2006, we entered
into a Third Amended and Restated Employment agreement with
Mr. L. Dickey. The agreement has an initial term through
May 31, 2013, and is subject to automatic extensions of
one-year terms thereafter unless terminated by advance notice by
either party in accordance with the terms of the agreement.
Mr. L. Dickey shall receive an initial base salary of
$900,000 per year with annual increases of $40,000, subject to
further merit increases as the Compensation Committee deems
appropriate. Mr. L. Dickey is also eligible for an annual
bonus of between 75% and 100% of his base salary upon
achievement of annual performance goals set by the Compensation
Committee each year.
The agreement also provides for grants of 160,000 shares of
time-vested restricted Class A Common Stock and
160,000 shares of performance restricted Class A
Common Stock in each fiscal year during his employment term. The
time-vested restricted shares shall vest in three installments,
with one-half vesting on the second anniversary of the date of
grant, and one-quarter vesting on each of the third and fourth
anniversaries of the date of grant, in each case contingent upon
Mr. L. Dickeys continued employment. Vesting of
performance restricted shares is dependent upon achievement of
Compensation Committee-approved criteria for the three-year
period beginning on January 1 of the fiscal year of the date of
grant, in each case contingent upon Mr. L. Dickeys
continued employment. Any performance-restricted shares that do
not vest according to this schedule will be forfeited. In the
event that we undergo a change of control, as defined in the
agreement, then any issued but unvested portion of the
restricted stock grants held by Mr. L. Dickey will become
immediately and fully vested. In addition, upon such a change of
control, we will issue Mr. L. Dickey a predetermined award
of shares of Class A Common Stock, such number of shares
decreasing by 70,000 shares upon each of the first five
anniversaries of the date of the agreement (currently
290,000 shares). Mr. L. Dickey may not transfer any
restricted shares, except to us, until they vest. In addition to
the specified grants of restricted stock, Mr. L. Dickey
remains eligible for the grant of stock options or other equity
incentives as determined by the Compensation Committee.
As an inducement to entering into the agreement, the agreement
provided for a signing bonus grant of 685,000 deferred shares of
Class A Common Stock, issued on December 20, 2007. The
agreement also provides that, should Mr. L. Dickey resign
his employment or we terminate his employment, in each case
other than under certain permissible circumstances, Mr. L.
Dickey shall pay to the Company, in cash, a predetermined amount
(such amount decreasing by $1.0 million on each of the
first six anniversaries of the date of the agreement;
$4.5 million currently). This payment is automatically
waived upon a change of control.
As further inducement, the agreement provided for our
repurchase, as of the effective date of the agreement, of all of
Mr. L. Dickeys rights and interests in and to
(a) options to purchase 500,000 shares of Class A
Common Stock, previously granted to him at an exercise price per
share of $6.4375, options to purchase 500,000 shares of
Class A Common Stock, previously granted to him at an
exercise price per share of $5.92, and options to purchase
150,000 shares of Class A Common Stock, previously
granted to him at an exercise price per share of $14.03, for an
aggregate purchase price of $6,849,950, and
(b) 500,000 shares of Class A Common Stock,
previously awarded to him as restricted stock, for an aggregate
purchase price of $5,275,000, each purchase price paid in a
lump-sum cash payment at the time of purchase.
Mr. L. Dickeys agreement further provides that in the
event we terminate his employment without cause, or
if he terminates his employment for good reason (as
these terms are defined in the agreement), then we must pay an
amount equal to two times his annual base salary then in effect,
payable in four equal quarterly installments. We must also pay
to Mr. L. Dickey a lump-sum amount equal to the sum of
(A) his earned but unpaid base salary through the date of
termination, (B) any earned but unpaid annual bonus for any
completed fiscal year, and (C) any unreimbursed business
expenses or other amounts due from us as of the
24
date of termination. Finally, we must pay to Mr. L. Dickey,
upon the final preparation of our audited financial statements
for the year of termination, a prorated bonus to reflect the
partial year of service.
In the event Mr. L. Dickey voluntarily terminates his
employment for good reason, he will forfeit all unvested
time-vested restricted shares and performance restricted shares.
In the event we terminate Mr. L. Dickeys
employment without cause, 50% of any unvested time-vested
restricted shares and performance restricted shares will become
immediately and fully vested, and the remaining 50% of any
time-vested restricted shares and performance restricted shares
will be forfeited. However, if we terminate his employment
without cause within six months prior to a
change-in-control,
then 100% of any issued but unvested restricted shares will
become immediately and fully vested.
In the event Mr. L. Dickeys employment is terminated
with cause, or if he terminates his employment without good
reason, then we are obligated to pay him only for compensation,
bonus payments or unreimbursed expenses that were accrued but
unpaid through the date of termination or resignation. Further,
Mr. L. Dickey will forfeit all unvested restricted shares.
The agreement cancels and supersedes the Companys prior
employment agreement with Mr. L. Dickey, except with
respect to provisions relating to the grant of equity incentives
previously granted and with respect to provisions relating to
the reduction of Mr. L. Dickeys February 2000 loan
(since repaid), each as previously disclosed. Those provisions,
which were set forth in the employment agreement entered into by
the Company and Mr. L. Dickey in July 2001, remain in
effect according to their original terms and conditions with no
changes.
Martin R. Gausvik serves as our Executive Vice President,
Treasurer and Chief Financial Officer. Under the terms of his
Employment Agreement, dated May 12, 2000, he was entitled
to receive an initial annual base salary of $275,000, subject to
annual increases of not less than 5.0% during each year of the
term of his employment agreement. The agreement provides that
Mr. Gausvik may receive an annual bonus of up to 50% of his
base salary, half of which is based upon the achievement of
Board-approved budgeted revenue and cash flow targets, and half
of which is based upon the discretion of our Chief Executive
Officer and the Compensation Committee. Mr. Gausviks
employment agreement had an initial three-year term, which,
since that date, has been automatically renewed for successive
one-year periods.
Mr. Gausviks employment agreement provides that in
the event we terminate his employment without cause, or if he
terminates his employment for good reason, then, in addition to
amounts that he is owed through the date of termination, he will
also receive a severance payment equal to his annual base salary
as in effect at the time of termination. In addition, any
unvested time-vested stock options that would otherwise vest
within one year of the date of termination will become
exercisable. Finally, in the event that we undergo a change of
control, then, in addition to being entitled to receive the
severance payments and equity rights that would be due upon a
termination without cause, all unvested stock options held by
Mr. Gausvik will become immediately exercisable.
Jon G. Pinch serves as our Executive Vice President and Co-Chief
Operating Officer. Under the terms of his Employment Agreement,
dated December 1, 2000, he was entitled to receive an
initial annual base salary of $425,000, subject to merit
increases, as the Compensation Committee deems appropriate. The
agreement provides that Mr. Pinch may receive an annual
bonus of up to $200,000, based upon the achievement of
Board-approved budgeted revenue and cash flow targets as
adjusted by our Chief Executive Officer and the Compensation
Committee in their collective discretion. Mr. Pinchs
employment agreement had a three-year term, which expired on
December 1, 2003, and since that date has been
automatically renewed for successive one-year periods.
Mr. Pinchs employment agreement also provides that in
the event we terminate his employment without cause, or if he
terminates his employment for good reason, then, in addition to
amounts that he is owed through the date of termination, he
shall also receive a severance payment equal to the greater of
(1) two-thirds of his aggregate base salary (at the rate in
effect at the time of termination), which would remain payable
until the expiration of the employment agreement term, or
(2) the amount equal to his annual base salary in effect at
the time of termination. In addition, any unvested time-vested
stock options that would
25
otherwise vest within one year of the date of termination will
become exercisable. Finally, in the event that we undergo a
change of control, then, in addition to being entitled to
receive the severance payments and equity rights that would be
due upon a termination without cause, all unvested stock options
held by Mr. Pinch will become immediately exercisable.
John W. Dickey serves as our Executive Vice President and
Co-Chief Operating Officer. Under the terms of Mr. J.
Dickeys Employment Agreement, dated January 1, 2001,
he was entitled to receive an annual base salary of $375,000 for
2001. Such base salary since been subject to merit increases, as
the Compensation Committee has deemed appropriate. The agreement
provides that Mr. J. Dickey may receive a bonus of up to
50% of his base salary, half of which is based upon the
achievement of Board-approved budgeted revenue and cash flow
targets, and half of which is based upon the collective
discretion of our Chief Executive Officer and the Compensation
Committee. The initial term of Mr. J. Dickeys
employment agreement expired on January 1, 2003, and since
that date has been automatically renewed for successive one-year
periods.
Mr. J. Dickeys agreement also provides that in the
event we terminate his employment without cause, or if he
terminates his employment for good reason, then, in addition to
amounts that he is owed through the date of termination, he
shall also receive a severance payment equal to the greater of
(1) two-thirds of the aggregate base salary payments (at
the rate in effect at the time of termination) that would remain
payable until the expiration of the employment agreement term,
or (2) the amount equal to his annual base salary in effect
at the time of termination. In addition, any unvested
time-vested stock options that would otherwise vest within one
year of the date of termination will become exercisable.
Finally, in the event we undergo a change of control, then, in
addition to being entitled to receive the severance payments and
equity rights that would be due upon a termination without
cause, all unvested stock options held by Mr. J. Dickey
will become immediately exercisable.
On December 31, 2008, we entered into amendments to the
employment agreements of each of our named executive officers
for the purpose of ensuring the compliance of such employment
agreements with section 409A of the Internal Revenue Code.
Compensation
Committee Interlocks and Insider Participation
During 2008, Eric P. Robison (Chairman), Robert H.
Sheridan, III, and Holcombe T. Green, Jr., none of
whom is an officer or employee of us, were members of the
Compensation Committee of our Board, which determines, or makes
recommendations with respect to, compensation matters for our
executive officers. None of the Compensation Committee members
serve as members of the board of directors or compensation
committee of any entity that has one or more executive officers
serving as a member of our Board or Compensation Committee.
26
AUDIT
COMMITTEE REPORT
The Audit Committee of the Board offers this report regarding
the Companys audited financial statements contained in its
annual report on
Form 10-K
for the year ended December 31, 2008, and regarding certain
matters with respect to PricewaterhouseCoopers LLP, the
Companys independent registered public accounting firm for
the fiscal year ended December 31, 2008. This report shall
not be deemed to be incorporated by reference by any general
statement incorporating by reference this proxy statement into
any filing with the SEC by the Company, except to the extent
that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed to be filed with
the SEC.
The Audit Committee has reviewed and discussed with the
Companys management and with PricewaterhouseCoopers LLP,
its independent registered public accounting firm for the fiscal
year ended December 31, 2008, the Companys audited
financial statements contained in its annual report on
Form 10-K
for the year ended December 31, 2008. The Audit Committee
has also discussed with PricewaterhouseCoopers LLP the matters
required to be discussed pursuant to SAS No. 61,
Codification of Statements on Auditing Standards,
Communication with Audit Committees, as amended.
The Audit Committee has received the written disclosures and the
letter from PricewaterhouseCoopers LLP required by PCAOB Rule
3526, Auditor Independence, and has discussed with
PricewaterhouseCoopers LLP its independence. The Audit Committee
has also considered whether the provision of certain non-audit
services to the Company by PricewaterhouseCoopers LLP is
compatible with maintaining its independence.
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors of the Company
that the audited financial statements be included in the
Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008, filed with the
Securities and Exchange Commission.
The Audit Committee of the Board of Directors:
Robert H. Sheridan, III, Chairman
Ralph B. Everett
Holcombe T. Green, Jr.
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Our Board recognizes that related person transactions present a
heightened risk of conflicts of interest. The Audit Committee
has been delegated the authority to review and approve all
related party transactions involving directors or executive
officers of the Company. Generally, a related person
transaction is a transaction in which we are a participant
and the amount involved exceeds $120,000, and in which any
related person had or will have a direct or indirect material
interest. Related persons include (a) our
executive officers, directors, and holders of more than 5% of
our common stock, and any of their immediate family members.
Under the policy, when management becomes aware of a related
person transaction, management reports the transaction to the
Audit Committee and requests approval or ratification of the
transaction. Generally, the Audit Committee will approve only
related party transactions that are on terms comparable to those
that could be obtained in arms length dealings with an
unrelated third person. The Audit Committee will report to the
full Board all related person transactions presented to it.
The related party transactions described in
Transactions with Management and Others
below were approved by a special committee of independent
directors (which included all of the members of the Audit
Committee), formed expressly for the consideration of the
described transactions:
Transactions
with Management and Others
Agreement
and Plan of Merger
On May 11, 2008, we, Cloud Acquisition Corporation, a
Delaware corporation (Parent), and Cloud Merger
Corporation, a Delaware corporation and wholly owned subsidiary
of Parent (Merger Sub), entered into a Termination
Agreement and Release (the Termination Agreement) to
terminate the Agreement and Plan of Merger, dated July 23,
2007, among us, Parent and Merger Sub (the Merger
Agreement), pursuant to which Merger Sub would have been
merged with and into us, and as a result we would have continued
as the surviving corporation and a wholly owned subsidiary of
Parent.
Parent is owned by an investor group consisting of Lewis W.
Dickey, Jr., the Companys Chairman, President and
Chief Executive Officer, his brother John W. Dickey, the
Companys Executive Vice President and Co-Chief Operating
Officer, other members of their family, and an affiliate of
Merrill Lynch Global Private Equity.
As a result of the termination of the Merger Agreement, and in
accordance with its terms, the investor group paid us a
termination fee of $15 million in May 2008. In addition,
our voting agreements regarding the merger with L. Dickey, J.
Dickey and other members of the Dickey family, and with two Bank
of America N.A. affiliates, were terminated upon the termination
of the Merger Agreement in accordance with their terms.
CODE OF
ETHICS
We have adopted a Code of Business Conduct and Ethics, referred
to as our Code of Ethics, that applies to all of our employees,
executive officers and directors and meets the requirements of
the rules of the SEC and the NASDAQ Rules. The Code of Ethics is
available on our website, www.cumulus.com, or can be
obtained without charge by written request to Richard S.
Denning, Corporate Secretary, at our principal executive
offices. If we make any substantive amendments to this Code of
Ethics, or if our Board grants any waiver, including any
implicit waiver, from a provision thereof to our executive
officers or directors, we will disclose the nature of such
amendment or waiver, the name of the person to whom the waiver
was granted and the date of the waiver in a current report on
Form 8-K.
28
SUBMISSION
OF STOCKHOLDER PROPOSALS
In accordance with the rules of the Securities and Exchange
Commission, if you wish to submit a proposal to be brought
before the 2010 annual meeting of stockholders, we must receive
your proposal by not later than January 8, 2010, in order
to be included in our proxy materials relating to that meeting.
Stockholder proposals must be accompanied by certain information
concerning the proposal and the stockholder submitting it.
Proposals should be directed to Richard S. Denning, Corporate
Secretary, at our principal executive offices, 3280 Peachtree
Road, N.W., Suite 2300, Atlanta, Georgia 30305. To avoid
disputes as to the date of receipt, it is suggested that any
stockholder proposal be submitted by certified mail, return
receipt requested.
In addition, for any proposal to be submitted by a stockholder
for a vote at the 2010 annual meeting of stockholders, whether
or not submitted for inclusion in our proxy statement, we must
receive advance notice of such proposal not later than
February 13, 2010. The proxy to be solicited on behalf of
our Board for the 2010 annual meeting of stockholders may confer
discretionary authority to vote on any such proposal received
after that date.
29
CUMULUS MEDIA INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Lewis W. Dickey, Jr. and Martin R. Gausvik, and each of them, as proxies,
each with the power to appoint his substitute, and authorizes each of them to represent and vote,
as designated below, all of the shares of stock of Cumulus Media Inc. held of record by the
undersigned on March 20, 2009, at the annual meeting of stockholders of Cumulus Media Inc. to be
held on May 14, 2009, and at any and all adjournments or postponements thereof.
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Dated:
, 2009 |
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Signature
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Signature |
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Please sign exactly as name appears hereon. When
shares are held by joint tenants, both should
sign. When signing in a fiduciary or
representative capacity, give full title as
such. |
Please vote, sign, date and return the proxy card promptly using the enclosed envelope.
MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF PROPOSALS 1 AND 2. THIS PROXY, WHEN PROPERLY EXECUTED,
WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
1. |
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Proposal to reelect Ralph B. Everett as director for a
one-year term. |
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o FOR Ralph B. Everett
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o WITHHOLD authority to vote for Ralph B. Everett |
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Proposal to ratify the appointment of PricewaterhouseCoopers
LLP as the Companys independent registered public accounting
firm for 2009: |
o FOR o AGAINST o ABSTAIN
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In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting or any
adjournments or postponements of the meeting. |
(Continued, and to be signed, on the other side)