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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
SPANISH BROADCASTING SYSTEM, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Not Applicable
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
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[SBS LOGO]
2601 SOUTH BAYSHORE DRIVE
COCONUT GROVE, FLORIDA 33133
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
February 12, 2001
Dear Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Spanish Broadcasting System, Inc. (the "Company"). The Annual Meeting will be
held on Monday, March 5, 2001, at 11:30 a.m., in the Continental Ballroom of the
Wyndham Grand Bay, 2669 South Bayshore Drive, Miami, Florida 33133.
At the meeting, stockholders of the Company will be asked to consider and
act upon the election of directors and ratification of auditors. These matters
are described in detail in the attached Proxy Statement and Notice of Annual
Meeting of Stockholders.
We recommend that you vote in favor of each proposal. Your vote is
important regardless of the number of shares you own. We strongly encourage you
to participate by voting your shares whether or not you plan to attend the
meeting. Please complete, sign, date and return the accompanying proxy in the
enclosed postage-paid envelope. Returning the proxy does NOT deprive you of your
right to attend the meeting and to vote your shares in person for the matters
acted upon at the meeting.
Included with the attached Proxy Statement is a copy of the Company's
Annual Report for fiscal year 2000. We encourage you to read the Annual Report.
It includes information on the Company's operations, markets and services, as
well as the Company's audited financial statements.
We look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ Raul Alarcon, Jr.
Raul Alarcon, Jr.
Chairman of the Board of Directors,
President
and Chief Executive Officer
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[SBS LOGO]
2601 SOUTH BAYSHORE DRIVE
COCONUT GROVE, FLORIDA 33133
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
MARCH 5, 2001
Dear Stockholders:
The Annual Meeting of Stockholders of Spanish Broadcasting System, Inc.
(the "Company") will be held on Monday, March 5, 2001, at 11:30 a.m., in the
Continental Ballroom of the Wyndham Grand Bay, 2669 South Bayshore Drive, Miami,
Florida 33133, for the following purposes:
1. To elect the board of directors to serve for the current fiscal year.
2. To ratify the appointment of KPMG LLP as independent public accountants
for the Company for the current fiscal year.
3. To transact any other business that may properly come before the
meeting.
Stockholders of record at the close of business on January 9, 2001 are
entitled to notice of, and to vote at, the Annual Meeting and at any
continuation or adjournment thereof.
By Order of the Board of Directors
/s/ Joseph A. Garcia
Joseph A. Garcia
Chief Financial Officer,
Executive Vice President and Secretary
Coconut Grove, Florida
February 12, 2001
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PROXY STATEMENT
February 12, 2001
The accompanying proxy is solicited on behalf of the Board of Directors of
Spanish Broadcasting System, Inc., a Delaware corporation (the "Company" or
"SBS"), for use at the Annual Meeting of Stockholders of the Company (the
"Annual Meeting"). The Annual Meeting will be held on Monday, March 5, 2001, at
11:30 a.m., in the Continental Ballroom of the Wyndham Grand Bay, 2669 South
Bayshore Drive, Miami, Florida 33133. All holders of record of Class A Common
Stock, par value $0.0001 per share (the "Class A Common Stock") and Class B
Common Stock, par value $0.0001 per share (the "Class B Common Stock"), at the
close of business on January 9, 2001 (the "Record Date") will be entitled to
vote at the Annual Meeting. At the close of business on the Record Date, the
Company had 36,856,305 shares of Class A Common Stock outstanding and entitled
to vote and 27,801,900 shares of Class B Common Stock outstanding and entitled
to vote. A majority of the aggregate votes entitled to be cast by the Class A
Common Stock and Class B Common Stock, voting together as a single class, will
constitute a quorum for the transaction of business at the Annual Meeting. This
Proxy Statement, the accompanying proxy, and the Company's Annual Report for the
year ended September 24, 2000, containing audited financial statements for such
year, were first mailed to stockholders on or about February 12, 2001. The
Company's Annual Report contains the information required by Rule 14a-3 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
VOTING RIGHTS AND SOLICITATION OF PROXIES
Stockholders are entitled to one vote for each share of Class A Common
Stock and ten votes for each share of Class B Common Stock held, on each matter
presented. Shares of Class A Common Stock and Class B Common Stock may not be
voted cumulatively.
The presence, in person or represented by proxy, of the holders of a
majority of the aggregate votes entitled to be cast by the Class A Common Stock
and Class B Common Stock, voting together as a single class, shall constitute a
quorum at the Annual Meeting. If a quorum is not present, the stockholders
entitled to vote who are present in person or represented by proxy at the Annual
Meeting have the power to adjourn the Annual Meeting from time to time, without
notice other than announcement at the Annual Meeting, until a quorum shall be
present or represented.
Stockholders are requested to complete, date, and sign the accompanying
proxy, and return it promptly to the Company. A proxy that is properly submitted
to the Company may be revoked at any time before it is exercised by written
notice to the Company. Any stockholder attending the Annual Meeting may vote in
person and by doing so revokes any proxy previously submitted by him or her.
Subject to such revocation, all proxies duly executed and received prior to, or
at the time of, the Annual Meeting will be voted in accordance with the
specification on the proxy card. If no specification is made, proxies will be
voted in favor of the proposals therein. As to other matters, if any, to be
voted upon at the Annual Meeting, the persons designated as proxies will take
such actions as they, in their discretion, may deem advisable. The persons named
as proxies were selected by the Board of Directors of the Company.
The Company will bear the cost of the solicitation of proxies, including
the charges and expenses of brokerage firms and others forwarding the
solicitation material to beneficial owners of the Company's common stock. In
addition to the solicitation of proxies by mail, solicitation may be made by
directors, officers, and other employees of the Company by personal interview,
telephone, or facsimile. No additional compensation will be paid for such
solicitation. The Company has retained Morrow & Co., Inc. to aid in the
solicitation of proxies from brokers, nominees and institutional holders for a
fee of $1,500, plus out-of-pocket expenses.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the beneficial
ownership of the Company's Class A Common Stock and Class B Common Stock as of
January 9, 2001, by:
- each person known by the Company to beneficially own more than 5% of any
class of common stock;
- each director and each executive officer named in the Summary
Compensation Table; and
- all named executive officers and directors as a group.
Unless indicated below, each stockholder listed had sole voting and sole
investment power with respect to all shares beneficially owned, subject to
community property laws, if applicable.
CLASS A SHARES CLASS B SHARES
------------------------- ------------------------ PERCENT OF PERCENT OF
PERCENT OF PERCENT OF TOTAL TOTAL
NUMBER OF CLASS A NUMBER OF CLASS B ECONOMIC VOTING
NAME AND ADDRESS(1)(2) SHARES SHARES SHARES SHARES INTEREST POWER
---------------------- --------- ---------- ---------- ---------- ------------- ----------
Raul Alarcon, Jr. .................. 200,000(3) * 26,156,750 94.1% 40.8% 83.1%
Pablo Raul Alarcon, Sr.............. -- 0% 1,070,000(15) 3.85% 1.65% 3.4%
Joseph A. Garcia.................... 130,000(3) * -- 0% * *
Juan A. Garcia...................... 18,000(3)(4) * -- 0% * *
Luis Diaz-Albertini................. 35,470(3) * -- 0% * *
Roman Martinez IV................... 20,000(16) * -- 0% * *
Jason L. Shrinsky................... 35,000(3)(5) * -- 0% * *
All named executive officers and
directors as a group.............. 438,470(3) 1.2% 27,226,750 97.9% 42.8% 86.6%
The Marcos and Sonya Rodriguez
Family Trust(7)................... 2,958,844 8.0% -- 0% 4.57% *
Massachusetts Financial Services
Company(9)(14).................... 2,038,370(13) 5.53% -- 0% 3.15% *
Putnam Investments, Inc. (10)(12)... 3,695,000 10.0% -- 0% 5.71% 1.17%
TCW Group, Inc.(11)(14)............. 2,496,800 6.8% -- 0% 3.86% *
James L. Anderson(8)................ 3,445,586(6) 9.3% -- 0% 5.32% 1.1%
Awad Asset Management, Inc.(17)..... 2,997,150 8.13% -- 0% 4.64% *
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* Indicates less than 1%.
1. The address of all directors and executive officers in this table, unless
otherwise specified, is c/o Spanish Broadcasting System, Inc., 2601 South
Bayshore Drive, Coconut Grove, Florida 33133.
2. As used in this table, "beneficial ownership" means the sole or shared
power to vote or direct the voting of a security, or the sole or shared
power to dispose, or direct the disposition, of a security. A person is
deemed as of any date to have beneficial ownership of any security that the
person has the right to acquire within 60 days after that date. For
purposes of computing the percentage of outstanding shares held by each
person named above, any security that the person has the right to acquire
within 60 days of the date of calculation is deemed to be outstanding, but
is not deemed to be outstanding for purposes of computing the percentage
ownership of any other person.
3. Includes Class A Common Stock issuable upon the exercise of options that
the holder has the right to exercise within sixty days of the Record Date.
4. Includes 4,500 shares owned indirectly through Fraga Incorporated Profit
Sharing Plan, an incentive plan of Fraga, Inc., a Florida subchapter S
corporation (Mr. Juan A. Garcia shares voting and investment power relating
to such shares with his brother, David R. Garcia), 2,750 shares owned
jointly with Mr. Juan A. Garcia's spouse (Mr. Juan A. Garcia shares voting
and investment power relating to
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such shares with his spouse) and 750 shares owned by Mr. Juan A. Garcia's
spouse (Mr. Juan A. Garcia shares voting and investment power relating to
such shares with his spouse).
5. Mr. Shrinsky holds options to purchase 20,000 shares of Class A Common Stock
for the benefit of his law firm, Kaye, Scholer, Fierman, Hays & Handler,
LLP. Mr. Shrinsky shares ownership of, and voting and investment power for,
15,000 shares of Class A Common Stock with his spouse.
6. James L. Anderson has sole voting power and sole dispositive power with
respect to 2,961,494 shares and shared voting power with respect to 484,092
shares.
The Marcos and Sonya Rodriguez Family Trust has the right to receive
dividends relating to and the proceeds from the sale of 2,958,844 shares of
the Company's Class A Common Stock for which Mr. Anderson has sole voting
and dispositive power resulting from his serving as Trustee of the Trust.
A company of which Mr. Anderson is president has the right to receive
dividends relating to and the proceeds from the sale of 484,092 shares of
the Company's Class A Common Stock for which Mr. Anderson has shared voting
power.
7. The address of The Marcos and Sonya Rodriguez Family Trust is 8828 North
Stemmons Freeway, Suite 106, Dallas, Texas 75247.
8. The address of James L. Anderson is 8828 North Stemmons Freeway, Suite 106,
Dallas, Texas 75247.
9. The address of the Massachusetts Financial Services Company is 500 Boylston
Street, Boston, MA 02116.
10. The address of Putnam Investments, Inc. is One Post Office Square, Boston,
MA 02109.
11. The address of the TCW Group, Inc. is 865 South Figueroa Street, Los
Angeles, CA 90017.
12. Putnam Investments, Inc. ("Putnam") is a wholly-owned subsidiary of Marsh &
McLennan Companies, Inc. Putnam wholly owns two registered investment
advisers: Putnam Investment Management, Inc., which is the investment
adviser to the Putnam family of mutual funds and The Putnam Advisory
Company, Inc., ("PAC"), which is the investment adviser to Putnam's
institutional clients. Both subsidiaries have dispository power over the
shares as investment managers, but each of the mutual fund's trustees has
voting power over the shares held by each fund, and The Putnam Advisory
Company, Inc. has shared voting power over the shares held by the
institutional clients.
Putnam and PAC have shared voting power with respect to 192,273 shares.
13. The Massachusetts Financial Services Company has sole voting power with
respect to 1,946,545 shares.
14. The Company obtained this information from Form 13F filed November 1, 2000.
15. Mr. Pablo Raul Alarcon, Sr.'s shares are held in a Flint Trust with Mr.
Alarcon, Sr. as sole beneficiary.
16. Class A Common Stock issuable upon the exercise of options that Mr. Martinez
has the right to exercise within sixty days of the Record Date.
17. The address of Awad Asset Management, Inc. is 250 Park Avenue, New York,
N.Y. 10177.
PROPOSAL 1
ELECTION OF DIRECTORS
Five directors, constituting the entire Board of Directors, are to be
elected at the Annual Meeting to hold office until the next Annual Meeting of
Stockholders or until their respective successors have been elected and shall
qualify. The Board of Directors has designated Raul Alarcon, Jr., Pablo Raul
Alarcon, Sr., Jose Grimalt, Roman Martinez IV and Jason L. Shrinsky as nominees,
each of whom currently serves as a member of the Board of Directors. It is the
intention of the persons named in the enclosed proxy to vote the shares covered
by each proxy for the election of all the nominees named above. Although the
Board of Directors does not anticipate that any nominees will be unavailable for
election, in the event of such occurrence the proxies will be voted for such
substitute, if any, as the Board of Directors may designate.
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The election of directors requires a majority of the votes cast at the
Annual Meeting. Votes withheld and broker non-votes are not counted toward a
nominee's total. There is no cumulative voting for the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT EACH HOLDER OF CLASS A COMMON STOCK
AND EACH HOLDER OF CLASS B COMMON STOCK VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES LISTED BELOW.
NOMINEES FOR DIRECTOR
The following table sets forth information concerning the nominees for
director. Each of our directors serves until his successor is elected and
qualifies.
NAME AGE POSITION WITH SBS
---- --- -----------------
Raul Alarcon, Jr. ................... 44 Chairman of the Board of Directors, Chief Executive
Officer and President, Member of Compensation Committee
and Executive Committee
Pablo Raul Alarcon, Sr. ............. 74 Chairman Emeritus and Director
Jose Grimalt......................... 72 Secretary Emeritus and Director
Roman Martinez IV.................... 53 Director, Member of Audit Committee, Compensation
Committee, Executive Committee and Options Committee
Jason L. Shrinsky.................... 63 Director, Member of Audit Committee, Compensation
Committee, Executive Committee and Options Committee
RAUL ALARCON, JR. has been President and a director since October 1985 and
Chief Executive Officer since June 1994. On November 2, 1999, Mr. Alarcon, Jr.
became Chairman of the Board of Directors and continues as our Chief Executive
Officer and President. Mr. Alarcon, Jr. joined SBS as a sales manager in 1983.
Mr. Alarcon, Jr. is responsible for our long-range strategic planning and was
instrumental in the acquisition and financing of each of our radio stations as
well as our initial public offering. Mr. Alarcon, Jr. is the son of Mr. Alarcon,
Sr. and the son-in-law of Mr. Grimalt.
PABLO RAUL ALARCON, SR. was our Chairman of the Board of Directors from
March 1983 until November 2, 1999, when he became Chairman Emeritus. Mr.
Alarcon, Sr. continues to be a member of our Board of Directors. Mr. Alarcon,
Sr. has been involved in Spanish-language radio broadcasting for much of his
life. He started his broadcasting career in Cuba in the early 1950's when he
established a radio station chain in Camaguey, Cuba. Upon his arrival in the
United States, Mr. Alarcon, Sr. continued his career in radio broadcasting and
was an on-air personality for a New York radio station before being promoted to
programming director. Mr. Alarcon, Sr. subsequently owned and operated a
recording studio and an advertising agency. In 1983, he purchased our first
radio station. Mr. Alarcon, Sr. is Raul Alarcon, Jr.'s father.
JOSE GRIMALT has been a member of our Board of Directors and Secretary
since 1986. On November 2, 1999, Mr. Grimalt became Secretary Emeritus. From
1969 to 1986, Mr. Grimalt owned and operated Spanish-language station WLVH-FM in
Hartford, Connecticut. In 1984, Mr. Grimalt became a stockholder and the
President of SBS's California subsidiary which operated KXMG-AM in Los Angeles.
Mr. Grimalt is Mr. Alarcon, Jr.'s father-in-law.
ROMAN MARTINEZ IV became one of our directors on November 2, 1999. Mr.
Martinez is a Managing Director for the investment banking firm of Lehman
Brothers Inc. where he has held this title since 1978. Mr. Martinez has been an
investment banker advising corporations on financings, mergers and acquisitions
and related financial matters since 1971. Mr. Martinez sits on the Board of
Governors of New York Presbyterian Healthcare System, Inc. and on the Board of
Directors of the International Rescue Committee. Lehman Brothers Inc. acts and
has acted as financial advisor to us in connection with our financings and one
of our acquisitions in fiscal year 2000. An affiliate of Lehman Brothers Inc.,
Lehman Commercial Paper Inc., acted as administrative agent in connection with
the Company's senior credit facilities.
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JASON L. SHRINSKY became one of our directors on November 2, 1999. Mr.
Shrinsky is a partner of the law firm of Kaye, Scholer, Fierman, Hays & Handler,
LLP, where he has been a partner since 1986. Mr. Shrinsky has been a lawyer
counseling corporations and high net worth individuals on financings, mergers
and acquisitions, other related financial transactions and regulatory procedures
since 1964. Kaye, Scholer, Fierman, Hays & Handler, LLP has served as the
Company's counsel for more than 16 years.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
AND CERTAIN COMMITTEES THEREOF
The Board of Directors has an Audit Committee and Compensation Committee.
There is no Nominating Committee of the Board of Directors. The primary function
of the Audit Committee is to provide advice with respect to the Company's
financial matters and to assist the Board of Directors in fulfilling its
oversight responsibilities by reviewing (i) the financial reports and other
financial information which will be provided by the Company to any governmental
body or the public, (ii) the Company's systems of internal controls that
management and the Board of Directors have established and (iii) the Company's
auditing, accounting and financial reporting processes generally. The members of
the Audit Committee are Roman Martinez IV and Jason L. Shrinsky. The Audit
Committee held two meetings during the last fiscal year.
The members of the Compensation Committee are Raul Alarcon, Jr., Roman
Martinez IV and Jason L. Shrinsky. Mr. Alarcon, Jr. is our Chairman of the Board
of Directors, Chief Executive Officer and President. The functions of the
Compensation Committee are to (i) approve policies, plans and performance
criteria concerning the salaries, bonuses and other compensation of the
executive officers of the Company, (ii) review and approve the salaries, bonuses
and other compensation of the executive officers of the Company, (iii) review
the compensation programs for other key employees, including salary and cash
bonus amounts, (iv) establish and review policies regarding executive officer
perquisites, (v) engage experts on compensation matters, if and when the members
of the Compensation Committee deem it proper or advisable to do so, and (vi)
perform such other duties as shall from time to time be delegated by the Board
of Directors. The Compensation Committee met on November 13, 2000 to review
certain compensation items for fiscal years 2000 and 2001. Arrangements for the
Company's key employees for fiscal year 2000 were determined prior to the
creation of the Compensation Committee, which was organized after the completion
of our initial public offering on November 2, 1999.
The Board of Directors held four meetings during the last fiscal year. Each
incumbent director who was a director of the Company during the fiscal year
ended September 24, 2000, attended all of the meetings of the Board of Directors
and the committees of which he was a member that were held during the period
such director was a member of the Board of Directors.
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by or
paid for services rendered to the Company and its subsidiaries, in all
capacities during the fiscal years 2000, 1999 and 1998, by our Chief Executive
Officer and President and our next four highest paid executive officers at
September 24, 2000, whose total annual salary and bonus exceeded $100,000. On
November 2, 1999, Mr. Alarcon, Sr. ceased being a salaried executive of SBS and
retired effective December 31, 1999. He remains as a member of our Board of
Directors.
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SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
AWARDS
------------
SECURITIES
OTHER ANNUAL UNDERLYING
SALARY BONUS COMPENSATION OPTIONS/SARS
NAME PRINCIPAL POSITION YEAR ($) ($) ($) (#)
---- -------------------- ---- ---------- ---------- ------------ ------------
Raul Alarcon, Jr. ...... Chief Executive 2000 $1,000,000 $1,000,000 $201,829(1) 100,000
1999 1,985,768 1,265,857 202,452(1) --
Officer, President
1998 1,633,743(2) 215,000 63,624(1) --
and Chairman of
the Board of
Directors
Joseph A. Garcia........ Executive Vice 2000 300,000 150,000 (3) 250,000
1999 296,298 385,000 (3) --
President, Chief
1998 266,346 27,500 (3) --
Financial Officer
and Secretary
Luis Diaz-Albertini..... Vice President/ 2000 225,000 80,000 (7) 50,000
1999 225,053 210,000 (3) --
Group Sales
1998 200,000 25,000 (3) --
Juan A. Garcia(4)....... Vice President of 2000 136,500 70,000 (3) 100,000
1999 -- -- -- --
Finance and
1998 -- -- -- --
Strategic Planning
Pablo Raul Alarcon, Director (formerly
Sr. .................. 2000 124,923(5) -- 56,955(6) --
1999 481,846(5) 362,368 59,291(6) --
Chairman of the
1998 492,577(2) 25,000 50,745(6) --
Board of Directors)
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1. Excludes amounts paid by us in connection with our lease of an apartment in
Manhattan owned by Mr. Alarcon, Jr. which is used primarily by Mr. Alarcon,
Jr. while on SBS business in New York. Mr. Alarcon, Jr. received personal
benefits in addition to his salary and bonus, including use of automobiles.
We paid an aggregate of $85,329, $96,512 and $62,691 in each of 2000, 1999
and 1998, respectively, for automobiles used, including driver's salary, by
Mr. Alarcon, Jr. In fiscal year 2000, Mr. Alarcon, Jr. received total
personal benefits estimated at $201,829, including living quarters for the
Raul Alarcon, Jr. family pending completion of the construction of their
family home in Miami, Florida. As a result of Mr. Alarcon, Jr.'s relocation
to his newly constructed home, our last rent payment for his apartment in Key
Biscayne was made on November 30, 2000.
2. Excludes the payment of a dividend to our stockholders in 1998, of which Mr.
Alarcon, Jr. received $3.1 million and Mr. Alarcon, Sr. received $0.2
million. Excludes reimbursement of Mr. Alarcon, Jr.'s relocation expenses
incurred in connection with the relocation of our headquarters.
3. Excludes perquisites and other personal benefits, securities or property
which aggregate the lesser of $50,000 or 10% of the total of annual salary
and bonus.
4. Juan A. Garcia served as our Vice President of Finance and Strategic Planning
from February 1, 2000 to November 24, 2000.
5. Mr. Alarcon, Sr. received compensation as an officer of SBS through December
31, 1999. He is also entitled to reimbursement of his out-of-pocket expenses
as a member of the Board of Directors. Pursuant to his retirement agreement,
upon completion of the Company's initial public offering on November 2, 1999,
we purchased an annuity for his retirement which became effective on January
2, 2000.
6. In addition to his salary and bonus, Mr. Alarcon, Sr. received personal
benefits including the use of automobiles. We paid an aggregate of $56,955,
$57,451 and $49,812 in each of 2000, 1999 and 1998, respectively, for
automobiles used by Mr. Alarcon, Sr., including driver's salary.
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7. Excludes a $50,000 loan made by SBS to Mr. Diaz-Albertini which is to be
repaid over two years with amounts withheld from Mr. Diaz-Albertini's salary.
The loan is subject to forgiveness if Mr. Diaz-Albertini meets certain sales
targets.
STOCK OPTIONS
The following table sets forth information concerning the grant of stock
options to each of the named executive officers in fiscal year 2000:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------------ -----------------------
PERCENT OF
TOTAL
NUMBER OF OPTIONS/SARS
SECURITIES GRANTED TO VALUE AT ASSUMED
UNDERLYING EMPLOYEES IN EXERCISE OR ANNUAL RATES OF STOCK
OPTIONS/SARS FISCAL YEAR BASE PRICE EXPIRATION PRICE APPRECIATION FOR
NAME GRANTED(#)(1) 2000 ($/SH) DATE OPTION TERM
---- ------------- ------------ ----------- ---------- -----------------------
5%($) 10%($)
---------- ----------
Raul Alarcon, Jr. ............. 100,000(2) 6.3% $20.00 10/27/04 $1,257,789 $3,187,485
Joseph A. Garcia............... 250,000 15.7 $20.00 10/27/09 3,144,473 7,968,712
Luis Diaz-Albertini............ 50,000 3.1 $20.00 10/27/09 628,895 1,593,742
Juan A. Garcia................. 100,000(3) 6.3 $20.8125 02/16/10 1,308,887 3,316,976
Pablo Raul Alarcon, Sr......... -- -- -- -- -- --
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1. Each option was granted under our 1999 Stock Option Plan and, other than as
noted in footnote (2) or (3), vests 20% immediately, and 20% on the
anniversary date of the completion of our initial public offering on November
2, 1999 for the following four consecutive years. The options that are not
otherwise exercisable prior to a change in control of the Company shall
become exercisable on the date of a change in control of the Company and
shall remain exercisable for the remainder of the term of the option, as
discussed in the Company's 1999 Stock Option Plan.
2. Raul Alarcon, Jr.'s options vested immediately and became exercisable upon
completion of the Company's initial public offering on November 2, 1999.
3. Juan A. Garcia served as our Vice President of Finance and Strategic Planning
from February 1, 2000 to November 24, 2000. Of Mr. Juan A. Garcia's options,
10,000 vested on February 16, 2000, and became immediately exercisable and
the remainder were forfeited upon the termination of his employment with the
Company on November 24, 2000.
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The following table sets forth certain information regarding stock options
exercised by the named executive officers during the fiscal year ended September
24, 2000, including the aggregate value of gains on the date of exercise. In
addition, the table sets forth the number of shares covered by both exercisable
and nonexercisable stock options as of September 24, 2000. Also reported are the
values of "in the money" options which represent the positive spread between the
exercise price of any existing stock options and the Class A Common Stock price
as of September 24, 2000.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR END OPTION/SAR VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISABLE IN-
OPTIONS/SARS AT FISCAL THE-MONEY OPTIONS
YEAR END(#) AT FISCAL YEAR END($)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ----------- ----------- ------------- ----------- -------------
Raul Alarcon, Jr......... -- -- 100,000 0 -- --
Joseph A. Garcia......... -- -- 50,000 200,000 -- --
Luis Diaz-Albertini...... -- -- 10,000 40,000 -- --
Juan A. Garcia........... -- -- 10,000 90,000* -- --
Pablo Raul Alarcon,
Sr. ................... -- -- -- -- -- --
- ---------------
* Upon the termination of Mr. Juan A. Garcia's employment with the Company on
November 24, 2000, Mr. Garcia's unexercisable options to purchase 90,000
shares of Class A Common Stock were forfeited.
EMPLOYMENT AGREEMENTS AND ARRANGEMENTS
Raul Alarcon, Jr.
We have an employment agreement with Raul Alarcon, Jr. dated as of October
25, 1999, pursuant to which Mr. Alarcon, Jr. serves as our Chairman of the Board
of Directors, Chief Executive Officer and President. The agreement became
effective on October 27, 1999, expires on December 31, 2004 and renews for
successive one-year periods after December 31, 2004, unless notice of
termination is delivered by either party 90 days prior to the termination date.
The agreement provides for a base salary of not less than $1.0 million for each
year of the employment term, which may be increased by the Board of Directors.
Under the terms of the agreement, Mr. Alarcon, Jr. will be paid an annual cash
performance bonus determined by the Board of Directors based on annual same
station broadcast cash flow growth. Mr. Alarcon, Jr. has the right to receive
options to purchase 100,000 shares of Class A Common Stock each year of
employment. The initial grant of options to purchase 100,000 shares was made on
October 27, 1999 and vested on November 2, 1999 at an exercise price equal to
$20.00 per share. The additional grants will be made on each anniversary of
October 27, 1999 at an exercise price equal to the then fair market value of our
Class A Common Stock. Mr. Alarcon, Jr. is also entitled to participate in our
employee benefit plans and to receive other non-salary benefits, such as health
insurance, life insurance, reimbursement for business related expenses and
reimbursement for personal tax and accounting expenses. The agreement provides
that Mr. Alarcon, Jr.'s employment may be terminated at the election of the
Board of Directors upon his disability or for cause (as defined in the
agreement). Pursuant to the agreement, Mr. Alarcon, Jr. is entitled to the use
of one automobile and driver at our expense.
Joseph A. Garcia
During fiscal year 2000, we had an employment agreement with Joseph A.
Garcia dated as of October 25, 1999, pursuant to which Mr. Garcia served as our
Chief Financial Officer, Executive Vice President and Secretary. This employment
agreement became effective on October 27, 1999, was to terminate on October 27,
2002 and was to automatically renew for successive one-year periods after
October 27, 2002, unless notice of termination was delivered by either party
within 90 days prior to the termination date or any succeeding October 27. Mr.
Garcia received an annual base salary of $300,000 which could be increased by
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the Board of Directors. In addition, Mr. Garcia was entitled to receive (a) an
annual cash bonus to be determined by the Board of Directors, based on
performance, and (b) options to purchase 250,000 shares of Class A Common Stock,
at an exercise price equal to $20.00 per share, for past performance. The
options were granted on October 27, 1999, with options to purchase 50,000 shares
vesting on November 2, 1999 and the remaining options to purchase 200,000 shares
to vest ratably over the ensuing four-year period. Mr. Garcia was also entitled
to receive standard employee benefits provided to all of our executives, such as
health, life and long-term disability insurance and reimbursement for business
related expenses.
On December 7, 2000, we entered into a new employment agreement with Mr.
Garcia pursuant to which he continues to serve as our Chief Financial Officer,
Executive Vice President and Secretary. This new employment agreement became
effective as of December 7, 2000 and has similar terms to his employment
agreement signed in fiscal year 2000, including a discretionary bonus, except
that the new employment agreement has a term expiring December 7, 2005 (with a
similar automatic renewal term to the October 25, 1999 employment agreement) and
provides for an annual base salary of $400,000. Under his new agreement, Mr.
Garcia is entitled to receive options to purchase 100,000 shares of common stock
at an exercise price equal to the closing price on the Nasdaq National Market on
December 7, 2000. Options to purchase 20,000 shares vested on December 7, 2000
and the remaining options will vest ratably over the next four years.
Luis Diaz-Albertini
We have an employment agreement with Luis Diaz-Albertini dated as of
October 25, 1999, pursuant to which Mr. Diaz-Albertini serves as our Vice
President/Group Sales. The employment agreement became effective on October 27,
1999, terminates on October 27, 2002 and automatically renews for successive
one-year periods after October 27, 2002, unless notice of termination is
delivered by either party within 90 days prior to the termination date or any
succeeding October 27. Mr. Diaz-Albertini receives an annual salary of $225,000
which may be increased by the Board of Directors. In addition, Mr.
Diaz-Albertini is entitled to receive (a) an annual cash bonus to be determined
by the Board of Directors, based on performance, and (b) options to purchase
50,000 shares of Class A Common Stock for past performance. The options were
granted on October 27, 1999, with options to purchase 10,000 shares vesting on
November 2, 1999 at an exercise price equal to $20.00 per share and options to
purchase 40,000 shares to vest ratably over a four-year period. Mr.
Diaz-Albertini is also entitled to receive standard employee benefits provided
to all of our executives, such as health, life and long-term disability
insurance and reimbursement for business related expenses.
Juan A. Garcia
We had an employment agreement with Juan A. Garcia during fiscal year 2000
pursuant to which Mr. Garcia served as our Vice President of Finance and
Strategic Planning. This employment agreement became effective on February 16,
2000, was to terminate on February 16, 2003 and automatically renew for
successive one-year periods after February 16, 2003, unless notice of
termination was delivered by either party within 90 days prior to the
termination date or any succeeding February 16. Mr. Garcia received an annual
base salary of $210,000 which could be increased by the Board of Directors. In
addition, Mr. Garcia was entitled to receive (a) an annual cash bonus based on
SBS meeting projected consolidated broadcast cash flow for each fiscal year, and
(b) options to purchase 100,000 shares of Class A Common Stock with an exercise
price of $20.8125 per share. The options were granted effective as of February
16, 2000 with options to purchase 10,000 shares vesting on February 16, 2000,
options to purchase 10,000 shares to vest on February 16, 2001 and options to
purchase 20,000 shares to vest on each of the next four anniversaries of
February 16, 2001. Mr. Garcia was also entitled to receive standard employee
benefits provided to all of our executives. Mr. Garcia's employment with the
Company terminated on November 24, 2000, at which time his unvested options were
forfeited.
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DIRECTOR COMPENSATION
Directors who are officers or who were formerly officers do not receive any
compensation for serving on our Board of Directors. Our non-employee directors
are eligible to receive options under the Company's Non-Employee Director Stock
Option Plan. All directors are reimbursed for their out-of-pocket expenses
incurred in connection with their service as directors.
In connection with their election to the Board of Directors on November 2,
1999, we granted each of Messrs. Roman Martinez IV and Jason L. Shrinsky options
for 50,000 shares of Class A Common Stock exercisable at the public offering
price, of which, options for 10,000 shares vested immediately, options for
10,000 shares vested on November 2, 2000 and the rest will vest ratably over the
next three years. Mr. Shrinsky holds his options for the benefit of his law
firm, Kaye, Scholer, Fierman, Hays & Handler, LLP.
Arnold Sheiffer, who served as a director from 1996 until August 1999,
received a cash payment of $250,000, which was accrued in fiscal year 1999, and
was granted options to purchase 250,000 shares of Class A Common Stock
exercisable at $20.00 per share, which vested on November 2, 1999, for his past
services as a director.
ANNUITY
Upon the completion of our initial public offering on November 2, 1999, we
purchased an annuity from The Canada Life Assurance Company as a retirement
vehicle for the benefit of Messrs. Alarcon, Sr. and Grimalt for $10.2 million.
Messrs. Alarcon, Sr. and Grimalt will receive annual payments of approximately
$700,000 and $300,000, respectively, for the rest of their lives. Mr. Alarcon,
Sr.'s wife and Mr. Grimalt's wife are joint annuitants with their husbands.
Should Mrs. Alarcon, Sr. or Mrs. Grimalt survive their husbands, they would
receive annual payments of $350,000 and $150,000, respectively, for the rest of
their lives.
STOCK PLANS
1999 Stock Option Plan
We adopted an option plan to incentivize our present and future executive,
managerial and other employees through equity ownership. The option plan
provides for the granting of stock options to individuals selected by the
Compensation Committee of the Board of Directors (or by the Board of Directors
if such committee is not appointed). An aggregate of 3,000,000 shares of Class A
Common Stock have been reserved for issuance under this option plan. The option
plan allows us to tailor incentive compensation for the retention of personnel,
to support corporate and business objectives, and to anticipate and respond to a
changing business environment and competitive compensation practices. As of
September 24, 2000, options to purchase 1,593,552 shares of Class A Common Stock
have been granted under this plan at exercise prices ranging from $10.00 to
$24.63 per share.
The Compensation Committee, or such other committees as the Board of
Directors shall determine, has discretion to select the participants, to
determine the type, size and terms of each award, to modify the terms of awards,
to determine when awards will be granted and paid, and to make all other
determinations which it deems necessary or desirable in the interpretation and
administration of the option plan. The option plan terminates ten years from the
date that it was approved and adopted by the stockholders of SBS. Generally, a
participant's rights and interest under the option plan are not transferable
except by will or by the laws of descent and distribution.
Options, which include non-qualified stock options and incentive stock
options, are rights to purchase a specified number of shares of Class A Common
Stock at a price fixed by the Compensation Committee. The option price may be
less than, equal to or greater than the fair market value of the underlying
shares of Class A Common Stock, but in no event will the exercise price of an
incentive stock option be less than the fair market value on the date of grant.
Options will expire no later than ten years after the date on which they
are granted (five years in the case of incentive stock options granted to 10%
stockholders). Options will become exercisable at such times and in
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such installments as the Compensation Committee or other designated committee
shall determine. Notwithstanding this, any nonexercisable options shall
immediately vest and become exercisable upon a change in control of SBS. Upon
termination of a participant's employment with SBS, options that are not
exercisable will be forfeited immediately and options that are exercisable will
remain exercisable for twelve months following any termination by reason of an
optionholder's death, disability or retirement. If termination is for any other
reason other than cause, exercisable options will remain exercisable for three
months following such termination. Payment of the option price must be made in
full at the time of exercise in such form (including, but not limited to, cash
or common stock of SBS) as the Compensation Committee may determine.
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, distribution of assets,
or any other change in the corporate structure of shares of SBS, the
Compensation Committee will have the discretion to make any adjustments it deems
appropriate in the number and kind of shares reserved for issuance upon the
exercise of options and vesting of grants under the option plan and in the
exercise price of outstanding options.
Non-Employee Director Stock Option Plan
We also adopted a separate option plan for our non-employee directors. The
terms of the plan provide that the Board of Directors has the discretion to
grant stock options to any non-employee director. An aggregate of 300,000 shares
of Class A Common Stock have been reserved for issuance under this option plan.
The plan is administered by the Board of Directors. In connection with their
election as directors, on November 2, 1999, we granted each of Messrs. Shrinsky
and Martinez an option under this plan to purchase 50,000 shares of Class A
Common Stock exercisable at $20.00 per share. Of these options to purchase
50,000 shares, options to purchase 10,000 shares vested immediately and options
to purchase 10,000 shares vested on November 2, 2000. Options to purchase 10,000
shares vest each year over the next three years on the anniversary of the grant
so long as Messrs. Shrinsky and Martinez remain directors. Mr. Shrinsky holds
his options for the benefit of his law firm, Kaye, Scholer, Fierman, Hays &
Handler, LLP. Any non-exercisable options shall immediately vest and become
exercisable upon a change in control of SBS. If a non-employee director's
service as a director is terminated for any reason, all options held by the
non-employee director which have not then vested shall terminate automatically.
401(K) PLAN
We offer a tax-qualified employee savings and retirement plan (the "401(k)
Plan") covering our employees. Pursuant to the 401(k) Plan, an employee may
elect to reduce his annual salary by 1%-15%, not to exceed the statutorily
prescribed annual limit which is $10,500 for 2000, and have the amount of such
reduction contributed to the 401(k) Plan. We may, at our option and in our sole
discretion, make matching and/or profit sharing contributions to the 401(k) Plan
on behalf of all participants. The 401(k) Plan is intended to qualify under
Section 401(a) of the Internal Revenue Code so that contributions by employees
or by us to the 401(k) Plan and income earned on plan contributions are not
taxable to employees until distributed to them and contributions by us will be
deductible by us when, and if, made. The trustees under the 401(k) Plan, at the
direction of each participant, invest such participant's assets in the 401(k)
Plan in selected investment options.
LIMITATIONS ON DIRECTORS' AND OFFICERS' LIABILITY
Our third amended and restated certificate of incorporation has a provision
which limits the liability of directors to us to the maximum extent permitted by
Delaware law. The third amended and restated certificate of incorporation
specifies that our directors will not be personally liable for monetary damages
for breach of fiduciary duty as a director. This limitation does not apply to
actions by a director or officer that do not meet the standards of conduct which
make it permissible under the Delaware General Corporation Law for SBS to
indemnify directors or officers.
Our amended and restated by-laws provide for indemnification of directors
and officers (and others) in the manner, under the circumstances and to the
fullest extent permitted by the Delaware General Corporation
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Law, which generally authorizes indemnification as to all expenses incurred or
imposed as a result of actions, suits or proceedings if the indemnified parties
act in good faith and in a manner they reasonably believe to be in or not
opposed to the best interests of SBS. Each director has entered into an
indemnification agreement with us that provides for indemnification to the
fullest extent provided by law. We believe that these provisions are necessary
or useful to attract and retain qualified persons as directors and officers.
We have obtained insurance for the benefit of our directors and officers
that provides for coverage of up to $100.0 million.
There is no pending litigation or proceeding involving a director or
officer as to which indemnification is being sought.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Our Board of Directors maintains a Compensation Committee whose members
consist of Mr. Alarcon, Jr., Roman Martinez IV and Jason L. Shrinsky. Mr.
Alarcon, Jr. is our Chairman of the Board of Directors, Chief Executive Officer
and President. Roman Martinez IV and Jason L. Shrinsky are directors. The
Compensation Committee met on November 13, 2000 to review certain compensation
items for fiscal years 2000 and 2001. Arrangements for the Company's key
employees for fiscal year 2000 were determined prior to the creation of the
Compensation Committee, which was organized after the completion of our initial
public offering on November 2, 1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following transactions were entered into between the Company, certain
current directors, nominees for election as directors, officers and beneficial
owners of five percent or more of the Company's common stock.
Upon the completion of our initial public offering on November 2, 1999, we
purchased an annuity for $10.2 million from The Canada Life Assurance Company as
a retirement vehicle for the benefit of Mr. Alarcon, Sr., our Chairman Emeritus
and a member of our Board of Directors, and Mr. Grimalt, our Secretary Emeritus
and a member of our Board of Directors. Messrs. Alarcon, Sr. and Grimalt will
receive annual payments of approximately $0.7 million and $0.3 million,
respectively for the rest of their lives. Mr. Alarcon, Sr.'s wife and Mr.
Grimalt's wife are joint annuitants with their husbands. Should Mrs. Alarcon,
Sr. or Mrs. Grimalt survive their husbands, they would receive annual payments
of $350,000 and $150,000, respectively, for the rest of their lives.
On February 2, 2000, SBS completed the sale of WVMQ-FM in Key West, Florida
and WZMQ-FM in Key Largo, Florida to South Broadcasting System, Inc., a company
owned by Mr. Pablo Raul Alarcon, Sr., our Chairman Emeritus and a member of our
Board of Directors, for total cash consideration of $0.7 million.
We lease a two-bedroom furnished condominium apartment in midtown Manhattan
from Mr. Alarcon, Jr., our Chief Executive Officer, President and Chairman of
the Board of Directors, for a monthly rent of $9,000. The lease commenced in
August 1987 and will expire in August 2007. During fiscal years 1999 and 1998,
we renovated the apartment and incurred approximately $0.2 million in renovation
expenses. We made no renovations in fiscal year 2000. Generally, the apartment
is used by Mr. Alarcon, Jr. while on SBS business in New York. We believe that
the lease for this apartment is at the market rate.
For the year ended September 26, 1999, SBS paid operating expenses
aggregating $0.1 million for a boat owned by CMQ Radio, an entity owned equally
by Messrs. Alarcon, Sr. and Alarcon, Jr. The boat was used by SBS for business
entertainment. For the year ended September 26, 1999, the amount paid by SBS for
our use of the boat owned by CMQ Radio was comparable to amounts we would have
paid had we leased the boat from an unaffiliated party. In November 1999, we
discontinued our arrangement with respect to this boat. We have not made any
further payments to CMQ Radio, Inc.
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Effective July 1993, Messrs. Alarcon, Sr. and Alarcon, Jr. executed
promissory notes to SBS for the principal amounts of $0.5 million and $1.6
million, respectively. These promissory notes evidenced loans made by SBS to
Messrs. Alarcon, Sr. and Alarcon, Jr. over several prior years. The notes were
to mature in 2001 and bore interest at the rate of 6% percent per annum until
July 19, 1994 and after that at the lesser of 9% percent per annum or the prime
rate charged by the Chase Manhattan Bank, N.A. Interest on the unpaid principal
amount of the notes was payable annually. In December 1995, SBS exchanged these
promissory notes for amended and restated notes in the principal amounts of $0.6
million and $1.9 million due from Messrs. Alarcon, Sr. and Alarcon, Jr.,
respectively. The amended and restated notes bore interest at the rate of 6.36%
per annum, were to mature on December 30, 2025, and the interest was to be
payable in 30 equal annual installments of $43,570 and $143,158, respectively,
on December 30th of each year starting December 30, 1996. As of September 26,
1999, $0.6 million and $1.9 million, plus accrued and unpaid interest of $0.1
million and $0.4 million to date, was outstanding, respectively, on these
promissory notes. Upon completion of our initial public offering, Messrs.
Alarcon, Sr. and Alarcon, Jr. paid all remaining amounts outstanding under these
notes.
In 1992, Messrs. Alarcon, Sr. and Alarcon, Jr. acquired a building in Coral
Gables, Florida, for the purpose of housing the studios of WCMQ-AM and WCMQ-FM.
In June 1992, Spanish Broadcasting System of Florida, Inc., a subsidiary of SBS,
entered into a 20-year net lease with Messrs. Alarcon, Sr. and Alarcon, Jr. for
the Coral Gables building which provides for a base monthly rent of $9,000.
Effective June 1, 1998, the lease on this building was assigned to SBS Realty
Corp., a realty management company owned by Messrs. Alarcon, Sr. and Alarcon,
Jr. This building currently houses the offices and studios of all of our Miami
stations. The lease on the stations' previous studios expired in October 1993,
was for less than half the space of the stations' present studios and had a
monthly rental of approximately $7,500. Based upon our prior lease for studio
space, we believe that the lease for the current studio is at market rates.
In 1992, Mr. Alarcon, Jr. and other investors organized Nuestra Telefonica,
Inc., a New York corporation, to operate long distance telephone service in
Spanish aimed at the Hispanic population in the markets served by our radio
stations. In February 1993, Nuestra Telefonica entered into an access agreement
with a common carrier and commenced operations. Nuestra Telefonica advertised
its Spanish-language long distance telephone service on our radio stations in
Los Angeles and New York and purchased this air time at standard station rates.
Since early 1994, Nuestra Telefonica has not utilized any air time on our radio
stations. As of September 26, 1999 Nuestra Telefonica owed SBS $0.4 million
related to unpaid air time and $0.3 million related to certain expenses paid by
SBS on Nuestra Telefonica's behalf. The amounts due were recorded on our books
as a receivable and due from related party asset, respectively. Mr. Alarcon, Jr.
personally guaranteed the payment of $0.5 million of Nuestra Telefonica's
obligations to SBS. Mr. Alarcon, Jr. is Nuestra Telefonica's Chairman and
majority shareholder. Joseph A. Garcia, our Executive Vice President and Chief
Financial Officer and Secretary, is Nuestra Telefonica's President and a
minority shareholder. Nuestra Telefonica is no longer an operating entity and,
therefore, upon the completion of our initial public offering on November 2,
1999, we forgave the loans and canceled the guarantees described above. The
unreserved portion of these receivables was written-off by SBS at September 26,
1999 and is included in our financial statements for the year ended September
26, 1999 under the line item "Other income (expense), net".
Mr. Grimalt's son is employed by SBS as an operations manager. He was paid
$129,419 and a bonus of $5,000 for the fiscal year ended September 24, 2000. As
part of his compensation, we also paid the leasing costs for an automobile in
the amount of $8,028. Mr. Alarcon, Jr.'s uncle is currently employed by us as an
operations manager and his salary is $76,500.
Roman Martinez IV, one of our directors, is a Managing Director for Lehman
Brothers Inc. which acts and acted as financial advisor to us in connection with
our financings and one of our acquisitions in fiscal year 2000. Jason L.
Shrinsky, one of our directors, is a partner of Kaye, Scholer, Fierman, Hays &
Handler, LLP, which firm has regularly represented us as our legal counsel and
will continue to do so.
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On November 30, 2000, we loaned Luis Diaz-Albertini, our Vice
President/Group Sales, $50,000 which is to be repaid over two years with amounts
withheld from Mr. Diaz-Albertini's salary. The loan is subject to forgiveness if
Mr. Diaz-Albertini meets certain sales targets.
Our new corporate headquarters is located on one floor of a 21-story office
building in Coconut Grove, Florida owned by Irradio Holdings Ltd., a Florida
limited partnership, for which the general partner is Irradio Investments, Inc.,
a Florida subchapter S corporation wholly-owned by Mr. Alarcon, Jr. As of
November 1, 2000, we are leasing our office space under a 10-year lease, with
the right to renew for two consecutive five-year terms. We believe the monthly
rent we pay for our new office space is below market rate.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and persons who own more than 10%
of a registered class of the Company's equity securities (collectively,
"Reporting Persons") to file reports of ownership and changes in ownership of
the Company's securities with the SEC. Reporting Persons are required by the SEC
to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received or written
representations from the Reporting Persons, the Company believes that with
respect to the fiscal year ended September 24, 2000, all the Reporting Persons
complied with all applicable filing requirements, except that: (1) on November
8, 1999, Luis Diaz-Albertini filed a Form 3 due on October 27, 1999 to report
his ownership of options to purchase shares of the Company's Class A Common
Stock; (2) on January 10, 2000, Mr. Diaz-Albertini filed a Form 4 due on
November 10, 1999 to report his purchase of shares of the Company's Class A
Common Stock; (3) on January 9, 2001, Mr. Diaz-Albertini filed an amended Form 4
for October 1999 to report his ownership of options to purchase shares of the
Company's Class A Common Stock and to correct the reported vesting schedule for
such options reported on his Form 3 filed on November 8, 1999; (4) on January 9,
2001, Mr. Diaz-Albertini filed an amended Form 3 to redact his prior report of
ownership of options to purchase shares of the Company's Class A Common Stock
reported on Form 3 filed on November 8, 1999; (5) on January 19, 2001, Jason L.
Shrinsky filed an amended Form 3, to amend his Form 3 filed on November 12,
1999, to report his ownership of 15,000 shares of the Company's Class A Common
Stock which he owns jointly with his spouse and to correct the reported vesting
schedule for his options to purchase shares of the Company's Class A Common
Stock; (6) on January 10, 2001, William Tanner filed a Form 3 due on September
10, 2000 and (7) on January 10, 2001, William Tanner filed a Form 4 due on
September 10, 2000, to report, among other transactions, his ownership of
options to purchase 218,552 shares of the Company's Class A Common Stock which
were not granted by the Compensation Committee of the Board of Directors until
January 2001, but which Mr. Tanner was entitled to receive as of August 31,
2000, pursuant to his employment agreement.
BOARD OF DIRECTORS COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee reviews the performance and salaries of the
Company's executive officers, managers and key employees. In its deliberations
the Compensation Committee oversees the Company's compensation program,
including salaries and cash bonuses. The Compensation Committee consists of
Chief Executive Officer (the "CEO") Raul Alarcon, Jr. and two outside directors,
Roman Martinez IV and Jason L. Shrinsky.
The executive officers and managers of the Company have the responsibility
to direct our current and future operations in order to continue the historic
financial and operating success of the Company. The Compensation Committee is
committed to assisting the executive officers and managers in achieving the
Company's continued growth by actively participating in salary, bonus and option
plan decisions for all current and future Company employees. The Compensation
Committee recognizes the need to provide incentives to and reward the executive
officers and key management employees who direct the day-to-day operations of
the
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Company. It is axiomatic that financial rewards based upon performance are the
best motivational tools available to provide incentives to management to achieve
the Company's financial and operational goals thereby achieving maximum
shareholder value in keeping with the Company's mandate.
The Compensation Committee employs a policy of awarding cash bonuses and
stock options based upon performance. Base salaries are also increased from time
to time as an extra incentive and/or reward for future or past performance. In
its deliberations on compensation the Compensation Committee takes into account
a number of factors including, but not limited to, the marketplace, achieving
budget goals, performance vis-a-vis competitors, performance relative to overall
business conditions and the Company's results.
Executive officer base salaries are established pursuant to historical
wages and in relation to salaries for individuals in comparable positions paid
by other broadcast companies. Executive officer cash bonuses are also based upon
performance and provide the requisite incentive to meet annual performance
goals. The performance bonuses are based upon the Company's and/or individual
station results consistent with the annual operating budget presented to
management and the Board of Directors. Cash bonus recommendations for executive
officers, other than the CEO, are presented to the Compensation Committee by the
CEO, and following a review and discussion are either revised or approved by the
Compensation Committee. Any bonus for the CEO is determined by the Compensation
Committee or is consistent with existing employment contracts.
Equity ownership in the Company by executive officers, managers and key
employees of the Company establishes a co-partnership with stockholders. Equity
ownership by executive officers, managers and key employees is the most direct
method to align employee interest with stockholders. Each Company employee
awarded stock options has an incentive to increase stockholder value thereby
benefitting all stockholders. When the Company hires executive officers,
managers and other key employees, the Option Committee, a subcommittee of the
Compensation Committee comprised of Roman Martinez IV and Jason L. Shrinsky, is
presented by the CEO with a proposed stock option plan consistent with the 1999
Stock Option Plan, subject to the Company's vesting periods. On all other
occasions, the Option Committee is presented a plan by the CEO for review,
comment, revision or approval for additional option grants to existing managers
and employees, traditionally on an annual basis, under the 1999 Stock Option
Plan. The Option Committee, in its deliberation, makes the necessary
determination as to whether the recommended additional annual grants will in
fact provide incentives for executive officers, managers and key employees of
the Company. In many instances, the additional option grants are necessary in
order to insure continuity of management and operations. Options are granted at
the current market price of the Company's Class A Common Stock and, as a
consequence, have value to the optionholder only if the Company's Class A Common
Stock increases in price over the exercise price. The amount of the initial and
periodic grants to employees other than the CEO and the executive officers are
proposed by the CEO for review, discussion and action by the Option Committee.
The Option Committee establishes, when not governed by employment contract,
stock option grants to the CEO, the Chief Financial Officer and other executive
officers.
On October 27, 1999, the Company entered into an employment agreement with
Raul Alarcon, Jr., Chairman of the Board of Directors, President and CEO of the
Company, which provides for an annual base salary of $1,000,000 and an annual
cash performance bonus determined by the Board of Directors based on annual same
station broadcast cash flow growth. Mr. Alarcon, Jr.'s employment agreement and
the compensation arrangements for other Company key employees for fiscal year
2000 were determined prior to the creation of the Compensation Committee, which
was organized after the completion of our initial public offering on November 2,
1999. The Compensation Committee on a going forward basis reviews the
performance of the CEO of the Company annually in addition to the other
executive officers of the Company.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act or the Exchange Act that
might incorporate this Proxy Statement or future filings with the SEC, in whole
or in part, the following report shall not be deemed to be incorporated by
reference into any such filing.
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Membership and Role of the Audit Committee
The Audit Committee consists of the following members of the Board of
Directors: Roman Martinez, IV and Jason L. Shrinsky. Both members of the Audit
Committee are independent as defined under the National Association of
Securities Dealers' listing standards. The Audit Committee operates under a
written charter adopted by the Board of Directors which is included in this
proxy as Appendix A.
The primary function of the Audit Committee is to provide advice with
respect to the Company's financial matters and to assist the Board of Directors
in fulfilling its oversight responsibilities by reviewing (i) the financial
reports and other financial information which will be provided by the Company to
any governmental body or the public, (ii) the Company's systems of internal
controls that management and the Board of Directors have established and (iii)
the Company's auditing, accounting and financial reporting processes generally.
The Audit Committee's primary duties and responsibilities are to: i) serve as an
independent and objective party to monitor the Company's financial reporting
process and internal control system, ii) review and appraise the audit efforts
of the Company's independent accountants and iii) provide an open avenue of
communication among the independent accountants, financial and senior
management, the internal auditing department and the Board of Directors.
Review of the Company's Audited Financial Statements for the Fiscal Year ended
September 24, 2000
The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the fiscal year ended September 24, 2000 with the
Company's management. The Audit Committee has discussed with KPMG LLP, the
Company's independent public accountants, the matters required to be discussed
by Statement on Auditing Standards No. 61 (Communication with Audit Committee).
The Audit Committee has also received the written disclosures and the
letter from KPMG LLP required by Independence Standards Board No. 1 (Independent
Discussion with Audit Committees) and the Audit Committee has discussed with
KPMG LLP the latter's independence.
Based on the Audit Committee's review and discussions noted above, the
Audit Committee recommended to the Board of Directors that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended September 24, 2000 for filing with the SEC.
Roman Martinez, IV
Jason L. Shrinsky
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STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The graph below compares the cumulative total stockholder return on the
Company's Class A Common Stock with the cumulative total return on the Standard
& Poor's 500 Index and the Standard & Poor's Broadcasting Index for TV, Radio
and Cable from October 27, 1999, the date on which the Company's common stock
began trading on the Nasdaq National Market, to September 24, 2000. The data set
forth below assumes the value of an investment in the Company's Class A Common
Stock and in each Index was $100 on October 27, 1999 and assumes the
reinvestment of dividends.
The comparisons in the graph below are based upon historical data and are
not indicative of, nor intended to forecast, future performance of the Company's
Class A Common Stock.
COMPARISON OF CUMULATIVE TOTAL RETURN*
FROM OCTOBER 27, 1999 TO SEPTEMBER 24, 2000
AMONG SPANISH BROADCASTING SYSTEM, INC., THE S&P 500
INDEX AND THE S&P BROADCASTING (TV, RADIO, CABLE) INDEX
COMPARISON CHART
SBSA S&P BROADCAST MEDIA S&P 500
---- ------------------- -------
Oct-99 100.00 100.00 100.00
Nov-99
Dec-99 110.13 125.23 114.90
Jan-00
Feb-00
Mar-00
Apr-00
May-00
Jun-00
Jul-00
Aug-00
Sep-00 32.15 92.31 114.24
- ---------------
* $100 INVESTED ON OCTOBER 27, 1999 IN STOCK OR INDEX INCLUDING REINVESTMENT OF
DIVIDENDS
CUMULATIVE TOTAL RETURN
[CUMULATIVE RETURN TABLE]
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PROPOSAL 2
RATIFICATION OF SELECTION
OF INDEPENDENT AUDITORS
The Company's financial statements for the year ended September 24, 2000
have been audited by KPMG LLP, independent certified public accountants.
Representatives of KPMG LLP are expected to be present at the Annual Meeting to
respond to appropriate questions, and will have an opportunity to make a
statement if they so desire.
The Board of Directors has appointed KPMG LLP as independent auditors to
audit the financial statements of the Company for the year ending September 30,
2001. Unless otherwise directed, the persons named in the accompanying proxy
will vote in favor of the ratification of the appointment of KPMG LLP.
The ratification of the selection of independent auditors requires a
majority of the votes cast at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT EACH HOLDER OF CLASS A COMMON STOCK
AND EACH HOLDER OF CLASS B COMMON STOCK VOTE "FOR" THE RATIFICATION OF KPMG LLP
AS AUDITORS FOR THE YEAR ENDING SEPTEMBER 30, 2001.
STOCKHOLDER PROPOSALS FOR NEXT
ANNUAL MEETING
In order for a stockholder proposal to be included in the Proxy Statement
for the next Annual Meeting of Stockholders, such proposal must be submitted in
writing and received by the Company at 2601 South Bayshore Drive, Coconut Grove,
Florida 33133, Attention: Joseph A. Garcia, Chief Financial Officer, no later
than the close of business on October 15, 2001. In order to avoid controversy as
to the date on which the Company received a proposal, stockholders should submit
proposals by certified mail, return receipt requested.
The deadline for delivering a notice of any other stockholder proposal
which does not seek to nominate a director(s) of the Company or is not to be
included in the proxy materials for the next Annual Meeting of stockholders will
be December 31, 2001. The persons named as proxies in the proxy materials for
the next Annual Meeting of Stockholders may exercise discretionary voting
authority with respect to any matter that is not submitted to the Company by
such date. Additionally, even if proper notice is received on or prior to
December 31, 2001, the individuals named as proxies on the proxy card for that
meeting may nevertheless exercise their discretionary authority in voting such
proxies with respect to such proposal by advising the stockholders of the
proposal and how they intend to exercise their discretion to vote on such
proposal, unless the stockholder making the proposal solicits proxies with
respect to the proposal to the extent required by Rule 14a-4(c)(2) under the
Exchange Act, as amended.
ANNUAL REPORT
The Company's Annual Report on Form 10-K containing its financial
statements for the fiscal year ended September 24, 2000 has been mailed
concurrently with the mailing of this Proxy Statement. The Annual Report to
Stockholders is not incorporated in this Proxy Statement and is not deemed to be
a part of the proxy solicitation material. Any stockholder who does not receive
a copy of such Annual Report on Form 10-K may obtain one by writing to the
Company.
REPORT FILED WITH SECURITIES AND EXCHANGE COMMISSION
Any beneficial owner of securities of the Company whose proxy is hereby
solicited may request and receive without charge a copy of the Company's Annual
Report on Form 10-K, including the financial statements and financial statement
schedules thereto, filed with the SEC. Such request should be addressed
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to: Spanish Broadcasting System, Inc., 2601 South Bayshore Drive, Coconut Grove,
Florida 33133, Attention: Joseph A. Garcia, Chief Financial Officer.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
know of any other matter which will be brought before the Annual Meeting.
However, if any other matter properly comes before the Annual Meeting, or any
adjournment thereof, the person or persons voting the proxies will vote on such
matters in accordance with their best judgment and discretion.
By Order of the Board of Directors
/s/ Raul Alarcon, Jr.
Raul Alarcon, Jr.
Chairman of the Board of Directors
Coconut Grove, Florida
February 12, 2001
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APPENDIX A
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The primary function of the Audit Committee (the "Audit Committee") of the
Board of Directors (the "Board") of Spanish Broadcasting System, Inc., a
Delaware corporation (the "Corporation") is to assist the Board in fulfilling
its oversight responsibilities by reviewing (i) the financial reports and other
financial information which will be provided by the Corporation to any
governmental body or the public, (ii) the Corporation's systems of internal
controls that management and the Board have established; and (iii) the
Corporation's auditing, accounting and financial reporting processes generally.
The Audit Committee's primary duties and responsibilities are to:
- Serve as an independent and objective party to monitor the Corporation's
financial reporting process and internal control system.
- Review and appraise the audit efforts of the Corporation's independent
accountants and internal auditing department.
- Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal auditing
department and the Board.
II. COMPOSITION
The Audit Committee shall be comprised of two or more directors before June
14, 2001 and three or more directors after June 14, 2001 as determined by the
Board.
Prior to June 14, 2001. Prior to June 14, 2001, a majority of the members
of the Audit Committee shall be "independent directors" and the term
"independent director" shall mean a person other than an officer or employee of
the Corporation or its subsidiaries or any other individual having a
relationship which, in the opinion of the Board, would interfere with the
exercise of independent judgment in carrying out the responsibilities of a
director.
On and Subsequent to June 14, 2001. On and subsequent to June 14, 2001,
except as provided herein, all members of the Audit Committee shall be
"independent directors" as defined below. The Audit Committee will primarily
fulfill these responsibilities by carrying out the activities enumerated in
Section IV. of this Charter. A member of the Audit Committee shall be considered
to be an "independent director" if he or she is not an officer or employee of
the Corporation or its subsidiaries or an individual having a relationship
which, in the opinion of the Board, would interfere with the exercise of
independent judgement in carrying out the responsibilities of a director. The
following persons shall not be considered "independent":
- a director who is employed by the Corporation or any of its affiliates
for the current year or any of the past three years;
- a director who accepts any compensation from the Corporation or any of
its affiliates in excess of $60,000 during the previous fiscal year,
other than compensation for board service, benefits under a tax-
qualified retirement plan, or non-discretionary compensation;
- a director who is a member of the immediate family of an individual who
is, or has been in any of the past three years, employed by the
Corporation or any of its affiliates as an executive officer. Immediate
family includes a person's spouse, parents, children, siblings,
mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law,
daughter-in-law and anyone who resided in such person's home.
- a director who is a partner in, or a controlling shareholder or an
executive officer of, any for-profit business organization to which the
Corporation made, or from which the Corporation received, payments (other
than those arising solely from investments in the Corporation's
securities) that exceed
A-1
24
5% of the Corporation's or business organization's consolidated gross
revenues for that year, or $200,000, whichever is more, in any of the
past three years;
- a director who is employed as an executive officer of another entity
where any of the company's executives serves on that entity's
compensation committee.
Notwithstanding the foregoing, one director who is not "independent" (as
defined above) and is not a current employee of the Corporation or its
subsidiaries or an immediate family member of such an employee may be appointed
to the Audit Committee, if the Board, under exceptional and limited
circumstances, determines that membership on the Audit Committee by that
director is required by the best interests of the Corporation and its
shareholders, and the Board discloses in the next proxy statement subsequent to
such determination, the nature of the relationship and the reasons for that
determination.
All members of the Audit Committee shall be able to read and understand
fundamental financial statements, including a company's balance sheet, income
statement, and cash flow statement or be able to do so within a reasonable
period of time after his or her appointment to the Audit Committee, and at least
one member of the Audit Committee shall have past employment experience in
finance or accounting, requisite professional certification in accounting, or
any comparable experience or background which results in the member's financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities.
The members of the Audit Committee shall be elected by the Board at each
annual organizational meeting of the Board and each member shall serve on the
Audit Committee until the next succeeding annual organizational meeting of the
Board and his or her successor shall have been elected and qualified. Unless a
Chairman is elected by the full Board, the members of the Audit Committee may
designate a Chairman by majority vote of the full Audit Committee membership.
III. MEETINGS
The Audit Committee shall meet as frequently as the Audit Committee deems
appropriate. As part of its job to foster open communication, the Audit
Committee should meet at least annually with management, the head of the
internal auditing department and the independent accountants in separate
executive sessions to discuss any matters that the Audit Committee or each of
these groups believes should be discussed privately. In addition, the Audit
Committee or at least its Chairman should meet with the independent accountants
and management quarterly to review the Corporation's financials. See item IV.6
below.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
1. Recognize that the independent accountants are ultimately accountable to
the Board and the Audit Committee, as representatives of the
Corporation's shareholders.
2. Recommend to the Board the nomination of the independent accountants,
considering independence and effectiveness of the independent
accountants, to be proposed for shareholder approval, and approve the
fees and other compensation to be paid to the independent accountants.
3. Confer with the independent accountants concerning the scope of their
examinations of the Corporation's books and records directing their
special attention to specific matters or areas deemed by the Audit
Committee or the independent accountants to be of special significance.
4. Review the Corporation's annual financial statements and any reports or
other financial information submitted to any governmental body, or the
public, including any certification, report, opinion, or review rendered
by the independent accountants.
5. Review with financial management and the independent accountants the
Corporation's Form 10-Q prior to its filing or prior to the release of
earnings. The Chairman of the Audit Committee may represent the entire
Audit Committee for purposes of this review.
A-2
25
6. At least annually receive from the independent accountants a formal
written statement delineating all relationships between the independent
accountants and the Corporation consistent with Independence Standards
Board Standard 1. Actively engage in a dialogue with the independent
accountants with respect to any disclosed relationship or services which
may impact the independent accountants' objectivity and independence and
recommend that the full Board take appropriate action to oversee the
independence of the independent accountants.
7. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
8. Periodically consult with the independent accountants out of the
presence of management about internal controls and the fullness and
accuracy of the Corporation's financial statements.
9. In consultation with the independent accountants and the internal
auditing department, review the integrity of the Corporation's financial
reporting processes, both internal and external.
10. Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices as
suggested by the independent accountants, management, or the internal
auditing department.
11. Following completion of the annual audit, review separately with each
of management, the independent accountants and the internal auditing
department any significant difficulties encountered during the course
of the audit, including any restrictions on the scope of work or access
to required information.
12. Review any significant disagreement among management and the
independent accountants or the internal auditing department in
connection with the preparation of the financial statements.
13. Review with the independent accountants, the internal auditing
department and management the extent to which changes or improvements
in financial or accounting practices, as approved by the Audit
Committee, have been implemented. (This review should be conducted at
an appropriate time subsequent to implementation of changes or
improvements, as decided by the Audit Committee.)
14. Review activities, organizational structure, and qualifications of the
internal auditing department.
15. Review, with the Corporation's counsel, any legal matter that could
have a significant impact on the Corporation's financial statements.
16. Perform any other activities consistent with this Charter, the
Corporation's Certificate of Incorporation, the Corporation's By-laws
and governing law, as the Audit Committee or the Board deems necessary
or appropriate.
V. ANNUAL REVIEW
The Board will review and update this charter at least annually, as
conditions dictate.
A-3
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TO VOTE BY MAIL, PLEASE DETACH THE PROXY CARD HERE
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SPANISH BROADCASTING SYSTEM, INC.
PROXY FOR 2001 ANNUAL MEETING OF STOCKHOLDERS
SOLICITED BY THE BOARD OF DIRECTORS
March 5, 2001
The undersigned, having received notice of the 2001 annual meeting of
stockholders to be held on March 5, 2001 at 11:30 a.m., Eastern time, at the
Continental Ballroom, Wyndham Grand Bay, 2669 South Bayshore Drive, Miami,
Florida 33133 and the Proxy Statement relating to the meeting, hereby revokes
all prior proxies and appoints Raul Alarcon, Jr., Joseph A. Garcia, and each of
them acting singly, with full power of substitution, as proxies to represent and
vote on behalf of the undersigned, as designated below, all shares of Class A
common stock, par value $0.0001 per share, and all shares of Class B common
stock, par value $0.0001 per share, of Spanish Broadcasting System, Inc.,
a Delaware corporation, that the undersigned would be entitled to vote if
present in person at the 2001 annual meeting of stockholders and any adjournment
or adjournments thereof. These proxies are authorized to vote in their
discretion upon such other matters as may properly come before the annual
meeting.
When properly executed, this proxy will be voted in the manner directed herein
by the undersigned. If a choice is not specified with respect to any proposal,
this proxy will be voted FOR such proposal.
Attendance of the undersigned at the annual meeting will not be deemed to revoke
this proxy unless the undersigned shall revoke this proxy in writing and shall
vote in person at the annual meeting.
EACH STOCKHOLDER SHOULD SIGN THIS PROXY PROMPTLY AND RETURN IT IN THE ENCLOSED
ENVELOPE. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF SPANISH
BROADCASTING SYSTEM, INC.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE COMMENTS?
- --------------------------------------- ------------------------------------
- --------------------------------------- ------------------------------------
27
TO VOTE BY MAIL, PLEASE DETACH THE PROXY CARD HERE
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES LISTED IN PROPOSAL 1
AND "FOR" PROPOSAL 2.
PROPOSAL 1: Election of Directors. For Raul Alarcon, Jr., Pablo Raul Alarcon,
Sr., Jose Grimalt, Roman Martinez IV, and Jason L. Shrinsky.
(INSTRUCTION: To withhold authority to vote for any individual
nominee, mark the "FOR ALL EXCEPT" box and write that nominee's
name in the space provided.) Exceptions:__________________________
[ ] FOR ALL NOMINEES LISTED [ ] WITHHOLD AUTHORITY TO VOTE FOR ALL [ ] FOR ALL EXCEPT
PROPOSAL 2: Ratification of appointment of KPMG LLP as auditors for the fiscal
year ending September 30, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Signature(s):______________________________
Please sign name(s) exactly as appearing on
your stock certificate. If shares are held
jointly, each joint owner should sign. When
signing as attorney, executor,
administrator, trustee or guardian, please
give full title as such. If a corporation,
please sign full corporate name by president
or other authorized officer. If a
partnership, please sign in partnership name
by authorized person.
Dated: ______________________________, 2001
Mark, sign and date the attached proxy card
and return it in the postage-paid envelope
enclosed.