| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On March 28, 2022, iHeartMedia, Inc. (“iHeartMedia”) and its subsidiary, iHeart Management Services, Inc. (together with iHeartMedia, the “Company”) entered into amended and restated employment agreements (the “A&R Employment Agreements”) with Robert W. Pittman (Chairman and Chief Executive Officer) and Richard J. Bressler (President, Chief Operating Officer and Chief Financial Officer) (each, an “Executive”). The A&R Employment Agreements extend each Executive’s employment term until June 1, 2026, at which time the A&R Employment Agreements will terminate unless the Executive and the Company have mutually agreed to extend the term.
In connection with entering into the A&R Employment Agreements, the Compensation Committee of iHeartMedia’s board of directors (the “Committee”) also approved the grant to each Executive of an award of performance-vesting restricted stock units (the “PSUs”), which have grant-date fair values of $6,500,000 (Mr. Pittman) and $6,000,000 (Mr. Bressler) (the “Sign-On Awards”). Vesting of the Sign-On Awards is conditioned on the Company’s achievement of rigorous absolute total shareholder return goals and continued service, creating a meaningful incentive to drive growth in shareholder value over the Executives’ extended employment terms.
In approving the A&R Employment Agreements and the Sign-On PSU Awards, the Committee considered the unique role each Executive plays in setting the strategic direction of the Company, their strong history of leadership and significant responsibilities with the Company, and their productive partnership and shared vision for the future of the Company. In particular, the Committee believes that the Executives’ compensation packages over the term of the A&R Employment Agreements are key to maintaining the focus of the Executives’ visionary drive and leadership in our operations, strategy and growth.
Amended and Restated Employment Agreements
The A&R Employment Agreements amend and restate the employment agreements that Messrs. Pittman and Bressler previously entered into with iHeartMedia, which were scheduled to expire in 2023. The material changes under the A&R Employment Agreements are as follows:
| | • | | Effective as of January 1, 2023, each Executive’s annual base salary will increase to $1,800,000, and his annual target performance bonus opportunity will be equal to 225% of his annual base salary rate for the applicable calendar year. |
| | • | | For each year during the employment term, it is expected that the Company will grant each Executive an annual equity award with a target a grant-date fair value equal to $8,000,000; provided, that any annual equity award (and the terms and amount of such award) will be subject to Committee approval. |
| | • | | If the Executive retires on or after June 1, 2026 (or later, if the term is extended), he will remain eligible to receive a pro-rated annual cash bonus based on achievement of applicable performance goals for that year. |
The foregoing description of the A&R Employment Agreements is qualified in its entirety by reference to the full text of such agreements, which are filed as Exhibits 10.1 and 10.2 to this Current Report on Form 8-K and incorporated by reference herein.
Performance Stock Unit Awards
The Sign-On PSU Awards were granted under iHeartMedia’s 2021 Long-Term Incentive Award Plan, and will become earned based on the Company’s achievement of absolute total shareholder return (“Absolute TSR”) goals calculated over the five-year performance period beginning on the grant date, as set forth in the table below:
| | |
Absolute TSR Goal | | Earned PSUs |
| 50% | | 20% |
| 75% | | 40% |
| 100% | | 60% |
| 125% | | 80% |
| 150% | | 100% |
