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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 Rule 14a-11(c) or Rule 14a-12
CUMULUS MEDIA INC.
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
N/A
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(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)(4) 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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Date Filed:
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CUMULUS LOGO
CUMULUS MEDIA INC.
ANNUAL MEETING OF SHAREHOLDERS
MAY 4, 2001
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NOTICE OF MEETING AND PROXY STATEMENT
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TABLE OF CONTENTS
Notice of Annual Meeting of Shareholders.................... 3
Proxy Statement............................................. 4
Proposals You May Vote On................................... 6
Security Ownership of Certain Beneficial Owners and
Management................................................ 11
Section 16(a) Beneficial Ownership Reporting Compliance..... 14
Non-Employee Director Compensation.......................... 14
Executive Compensation...................................... 15
Compensation Committee Interlocks and Insider
Participation............................................. 18
Certain Relationships and Related Transactions.............. 19
Information about the Board of Directors.................... 20
Compensation Committee Report on Executive Compensation..... 21
Audit Committee Report...................................... 23
Members of the Board of Directors........................... 25
Performance Graph........................................... 28
Submission of Shareholder Proposals......................... 29
Other Matters............................................... 29
Appendix A: 2000 Stock Incentive Plan....................... A-1
Appendix B: Audit Committee Charter......................... B-1
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CUMULUS MEDIA INC.
3535 PIEDMONT ROAD
BUILDING 14, FOURTEENTH FLOOR
ATLANTA, GA 30305
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
MAY 4, 2001
To the Shareholders of Cumulus Media Inc.:
The 2001 Annual Meeting of Shareholders (the "Annual Meeting") of Cumulus
Media Inc., an Illinois corporation (the "Company" or "Cumulus"), will be held
at the Company's principal executive offices at 3535 Piedmont Road, Building 14,
Fourteenth Floor, Atlanta, Georgia, 30305 on Friday, May 4, 2001 at 1:30 p.m.,
local time, for the following purposes:
(1) To elect the following Class I directors and Class II directors;
Class I Directors Ralph B. Everett
Holcombe T. Green, Jr.
Class II Directors Eric P. Robison
Robert H. Sheridan, III
(2) To ratify the Board's selection of KPMG LLP as Cumulus' independent
auditors for 2001;
(3) To approve the Cumulus Media Inc. 2000 Stock Incentive Plan; and
(4) To transact such other business as may properly come before the Annual
Meeting, all in accordance with the accompanying Proxy Statement.
Only holders of record of Class A Common Stock or Class C Common Stock at
the close of business on Friday, March 16, 2001 are entitled to notice of, and
to vote at, the Annual Meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSALS
MADE IN THE ENCLOSED PROXY STATEMENT.
At the Annual Meeting, members of Cumulus' senior management will report on
Cumulus' 2000 and year to date 2001 results. The Company's Annual Report on Form
10-K for the year ended December 31, 2000 is included with the Proxy Statement.
HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF CLASS A COMMON STOCK AND
CLASS C COMMON STOCK MUST BE PRESENT IN PERSON OR BY PROXY IN ORDER FOR THE
MEETING TO BE HELD. THEREFORE, SHAREHOLDERS ARE URGED TO DATE, SIGN AND RETURN
THE ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE WHETHER OR NOT THEY 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 REVOKING YOUR PROXY AT ANY TIME
PRIOR TO THE VOTING THEREOF.
LEWIS W. DICKEY, JR.
Chairman, President & CEO
April 2, 2001
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CUMULUS MEDIA INC.
3535 PIEDMONT ROAD
BUILDING 14, FOURTEENTH FLOOR
ATLANTA, GEORGIA 30305
APRIL 2, 2001
PROXY STATEMENT
The enclosed proxy is being solicited by the Board of Directors of Cumulus
Media Inc. (the "Company") for use at the Annual Meeting of Shareholders to be
held on Friday, May 4, 2001 (the "Annual Meeting").
The expense of printing and mailing proxy materials, including expenses
involved in forwarding materials to beneficial owners of common stock held in
the name of another person, will be borne by the Company. The Company does not
expect to pay any fees for the solicitation of proxies but may reimburse
brokers, fiduciaries and other custodians for their reasonable fees and expenses
for sending proxy materials to beneficial owners and obtaining their voting
instructions. No solicitation other than by mail is contemplated, except that
officers or employees of the Company or its subsidiaries may solicit the return
of proxies from certain shareholders in person or by telephone, facsimile
transmission or other means of electronic communication. This Proxy Statement
and the accompanying Proxy Card are being sent to the Company's shareholders
commencing on or about April 2, 2001.
Only holders of record of shares of Class A Common Stock, $.01 par value
(the "Class A Common Stock"), or shares of Class C Common Stock, $.01 par value
(the "Class C Common Stock"), at the close of business on March 16, 2001 (the
"Record Date") are entitled to notice of, and to vote at, the Annual Meeting. As
of the Record Date, the Company had outstanding 28,427,729 shares of Class A
Common Stock, 4,479,343 shares of Class B Common Stock, $.01 par value (the
"Class B Common Stock"), 2,307,277 shares of Class C Common Stock, 117,530
shares of 13 3/4% Series A Cumulative Redeemable Exchangeable Preferred Stock,
and 258 shares of 12% Series B Cumulative Preferred Stock. Only holders of
shares of Class A Common Stock and Class C Common Stock are entitled to vote at
the Annual Meeting. The presence, in person or by proxy, of the holders of a
majority of the shares of Class A Common Stock and Class C Common Stock
outstanding on the Record Date is required for a quorum with respect to the
matters on which action is to be taken at the Annual Meeting.
Any shareholder executing and delivering the enclosed proxy may revoke the
same at any time prior to the voting thereof by written notice of revocation
given to the Secretary of the Company.
The Company's Annual Report on Form 10-K for the year ended December 31,
2000 is included with this Proxy Statement.
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, but will be treated as
votes against each proposal. Each share of Class A Common Stock entitles its
holder to cast one vote on each matter to be voted upon at the
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Annual Meeting. Each share of Class C Common Stock entitles its holder to cast
10 votes on each matter to be voted upon at the Annual Meeting.
UNLESS OTHERWISE DIRECTED, ALL PROXIES WILL BE VOTED FOR THE ELECTION OF
EACH OF THE INDIVIDUALS NOMINATED TO SERVE AS A DIRECTOR AND FOR EACH OF THE
OTHER PROPOSALS. DIRECTORS WILL BE ELECTED BY A PLURALITY OF THE VOTES CAST BY
HOLDERS OF THE COMPANY'S CLASS A COMMON STOCK AND CLASS C COMMON STOCK AT THE
ANNUAL MEETING. IN OTHER WORDS, THE TWO NOMINEES FOR DIRECTOR FROM EACH CLASS
WHO RECEIVE THE LARGEST NUMBER OF VOTES WILL BE ELECTED AS DIRECTORS. ANY SHARES
NOT VOTED, WHETHER BY WITHHELD AUTHORITY, BROKER NON-VOTE OR OTHERWISE, WILL
HAVE NO EFFECT IN THE ELECTION OF DIRECTORS EXCEPT TO THE EXTENT THAT THE
FAILURE TO VOTE FOR AN INDIVIDUAL RESULTS IN ANOTHER INDIVIDUAL RECEIVING A
LARGER NUMBER OF VOTES.
A MAJORITY OF THE VOTES ENTITLED TO BE CAST BY THE PRESENT OR REPRESENTED
SHARES ENTITLED TO VOTE IS REQUIRED TO I) RATIFY THE APPOINTMENT OF KPMG LLP AS
THE COMPANY'S INDEPENDENT AUDITORS FOR 2001 AND II) APPROVE THE COMPANY'S 2000
STOCK INCENTIVE PLAN.
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PROPOSALS YOU MAY VOTE ON
1. ELECTION OF DIRECTORS
Two Class I directors and two Class II directors of the Company's Board of
Directors will be elected at the Annual Meeting. Each elected Class I director
will serve until the 2003 annual meeting of shareholders or until he is
succeeded by another qualified director who has been elected. Each elected Class
II director will serve until the 2004 annual meeting of shareholders or until he
is succeeded by another qualified director who has been elected.
Class I Directors Ralph B. Everett
Holcombe T. Green, Jr.
Class II Directors Eric P. Robison
Robert H. Sheridan, III
Detailed information about each nominee is provided elsewhere in this Proxy
Statement. The Board has no reason to believe that any nominee will be unable to
serve as a director. If for any reason a nominee becomes unable to serve, the
persons named in the proxy will vote for the election of such other person or
persons as the Board may recommend.
YOUR BOARD RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE NOMINEES.
2. RATIFICATION OF THE APPOINTMENT OF KPMG LLP
AS INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, and subject to ratification
by the Company's shareholders, the Board has appointed KPMG LLP as the Company's
independent auditors for the fiscal year ending December 31, 2001. KPMG LLP has
served as the Company's independent auditors since May 5, 2000. From May 5, 2000
until December 31, 2000, KPMG LLP also provided certain non-audit services to
the Company.
AUDIT FEES
KPMG LLP has billed the Company $477,000, in the aggregate, for
professional services rendered by KPMG LLP for the audit of the Company's annual
financial statements for the fiscal year ended December 31, 2000 and reviews of
the interim financial statements included in the Company's Forms 10-Q filed
during the fiscal year ended December 31, 2000.
FINANCIAL INFORMATION DESIGN AND IMPLEMENTATION FEES
KPMG LLP has not rendered any professional services described in paragraph
(c)(4)(ii) of Rule 2-01 of Regulation S-X for the Company during the fiscal year
ended December 31, 2000.
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ALL OTHER FEES
KPMG LLP has billed $232,000, in the aggregate, for all other services
rendered by KPMG (other than those described above) during the fiscal year ended
December 31, 2000.
Representatives of KPMG LLP will be present at the Annual Meeting to make
any statement they may desire and to respond to appropriate questions from
shareholders.
FORMER INDEPENDENT AUDITORS
On April 17, 2000, the Company was notified by PricewaterhouseCoopers LLP
("PwC") that it was resigning as independent auditors of the Company.
The reports of PwC on the Company's consolidated financial statements as of
December 31, 1999 and 1998 and for each of the years then ended did not contain
an adverse opinion or a disclaimer of opinion, nor were such reports qualified
or modified as to uncertainty, audit scope or accounting principles.
During the period from January 1, 1998 through April 17, 2000, PwC and the
Company did not have any disagreement on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreement, if not resolved to the satisfaction of PwC, would have caused it
to make reference to the subject matter of the disagreement in connection with
its reports on the consolidated financial statements of the Company for the
years ended December 31, 1999 or 1998.
Except for the matters reported in the following paragraph, during 1998,
1999 and through PwC's resignation on April 17, 2000, there were no reportable
events as defined in Regulation S-K Rule 304(a)(1)(v).
PwC informed the Audit Committee of the Board of Directors of the Company
of the following material weaknesses, which came to PwC's attention in
connection with the audit of the consolidated financial statements of the
Registrant for the year ended December 30, 1999: (a) the internal controls over
the recognition of revenue failed to detect, on a timely basis, that spot,
package billing and non-traditional revenues had been recorded in advance of
when the spots aired or events occurred and (b) the Company's internal controls
over related party transactions failed to ensure, on a timely basis, that
amendments to related party service agreements were appropriately reviewed and
approved prior to being recorded in the financial records of the Company.
As a result, PwC expanded the scope of its testing relating to revenue
recognition for the year ended December 31, 1999.
As previously disclosed by the Company, the Company requested that PwC
furnish a letter addressed to the Securities and Exchange Commission stating
whether PwC agreed with the above statements. A copy of such letter, dated April
24, 2000, was attached as an exhibit to the Company's Current Report on Form
8-K, filed on April 24, 2000.
YOUR BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF KPMG LLP AS THE
COMPANY'S INDEPENDENT AUDITORS.
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3. APPROVAL OF THE COMPANY'S 2000 STOCK INCENTIVE PLAN
The complete text of the Company's 2000 Stock Incentive Plan is set forth
in Appendix A. The following summary of the material features of the 2000 Stock
Incentive Plan is qualified in its entirety by reference to Appendix A.
The Board of Directors approved the 2000 Stock Incentive Plan on July 31,
2000, and subsequently amended the Plan on February 23, 2001, all subject to
approval by the Company's shareholders. The purpose of the 2000 Stock Incentive
Plan is to attract and retain certain selected officers, key employees,
non-employee directors and consultants whose skills and talents are important to
the Company's operations and reward them for making major contributions to the
success of the Company. The aggregate number of shares of Class A Common Stock
subject to awards that may be granted under the 2000 Stock Incentive Plan is
2,750,000, any of which may be granted as incentive stock options ("ISOs"). In
addition, no one person may receive options representing more than 500,000
shares of Class A Common Stock in any one calendar year.
Under the 2000 Stock Incentive Plan, current and prospective employees,
non-employee directors, consultants or other persons who provide services to the
Company are eligible to participate, provided that those persons hold, or will
hold, positions of responsibility and that their performance can have a
significant effect on the success of the Company ("Participants").
The 2000 Stock Incentive Plan permits the Company to grant nonqualified
stock options and ISOs, as defined in Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"). No options may be granted under the 2000 Stock
Incentive Plan after October 1, 2010. If any shares of stock which are subject
to an award granted under the 2000 Stock Incentive Plan are used in settlement
of tax withholding obligations, or if any stock option is exercised by tendering
shares to the Company as full or partial payment for such exercise under the
2000 Stock Incentive Plan, then only the net number of shares issued shall be
deemed issued for purposes of determining the maximum number of shares available
for issuance pursuant to the 2000 Stock Incentive Plan.
The Compensation Committee of the Board of Directors administers the 2000
Stock Incentive Plan. The Compensation Committee has full and exclusive power to
interpret the 2000 Stock Incentive Plan and to adopt rules, regulations and
guidelines for carrying out the 2000 Stock Incentive Plan, as it may deem
necessary or proper.
If the service providing relationship of a Participant terminates, or a
non-employee director no longer serves as a director, all unvested awards
granted pursuant to the 2000 Stock Incentive Plan shall immediately terminate.
All vested but unexercised awards will terminate one year after such termination
of service, unless the applicable award agreement provides otherwise.
Notwithstanding the foregoing, if a Participant is terminated for cause, then to
the extent an award under the 2000 Stock Incentive Plan has not vested or is not
exercised prior to such termination, it shall lapse and be forfeited to the
Company. The Compensation Committee may permit an award to continue in effect
after a Participant's retirement and may accelerate or continue awards granted
to Participants who resign in the best interests of the Company after the date
of such resignation.
As of December 31, 2000, approximately 200 individuals were eligible to
participate in the 2000 Stock Incentive Plan. The following table provides
information on options that have been granted to the Named Executive Officers
(as defined hereinafter), to all current executive officers as a group, to all
non-executive directors as a group and to all other
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employees as of March 16, 2001. The number of shares subject to options to be
granted in the future, pursuant to the 2000 Stock Incentive Plan, to the
individuals and groups below cannot be determined at this time.
NEW PLAN BENEFITS TABLE
NUMBER OF SECURITIES
NAME UNDERLYING OPTIONS GRANTS
---- -------------------------
Lewis W. Dickey, Jr................................ 500,000
John W. Dickey..................................... 250,000
Martin R. Gausvik.................................. 300,000
Jonathon G. Pinch.................................. 200,000
Richard W. Weening................................. 0
All current executive officers as a group (5)...... 1,250,000
All non-executive directors as a group (3)......... 70,000
All other employees as a group (190)............... 708,300
The 2000 Stock Incentive Plan may be amended with the approval of the Board
of Directors, but certain amendments adversely affecting the rights of a
Participant under any existing option grant may not be made without obtaining
the Participant's written consent, and amendments increasing the number of
shares of Class A Common Stock which may be granted under the 2000 Stock
Incentive Plan may not be made without obtaining shareholder approval.
The exercise price for options granted under the 2000 Stock Incentive Plan
may be no less than 100% of the fair market value of the Class A Common Stock on
the date of grant of the option (or 110% in the case of ISOs granted to
participants who are 10% or greater shareholders of the Company). Options will
be exercisable during the period specified in each award agreement and will be
exercisable in installments pursuant to a vesting schedule to be designated by
the Compensation Committee, generally at a rate of 25% per completed year of the
Participant's continuous service to the Company. Upon a change of control of the
Company (as defined in the plan), any outstanding and unexercised awards become
immediately exercisable. No option will remain exercisable later than ten years
after the date of grant (or five years from the date of grant in the case of
ISOs granted to 10% or greater shareholders of the Company). The closing sale
price of the Class A Common Stock on the Nasdaq National Market on March 16,
2001 was $5.406 per share.
The federal income tax consequences of nonqualified stock options and ISOs
granted under the 2000 Stock Incentive Plan are generally as follows:
Nonqualified Stock Options. The grant of a nonqualified option will have no
federal income tax consequences to the Company or to a participant. A
participant will recognize taxable ordinary income at the time of exercise of
the option in an amount equal to the excess of the fair market value of the
shares acquired at the time of exercise over the option price, and the Company
will ordinarily be entitled to a deduction for such amount.
The holders of shares acquired upon exercise of a nonqualified option will,
upon a subsequent disposition of such shares, generally recognize a short-term
or long-term capital gain or loss, depending upon the holding period of the
shares, equal to the difference
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between the amount realized on the sale and the basis in such shares (the sum of
the option price and the amount taxed as ordinary income at the time of
exercise).
ISOs. Neither the grant nor exercise of an ISO will generally have any
federal income tax consequences for a participant. The amount by which the fair
market value of the shares acquired upon the exercise of any ISO exceeds the
option price at the date of exercise, however, is an item of "tax preference"
for purposes of computing the alternative minimum tax on individuals. If a
participant has held the shares acquired on the exercise of an ISO for at least
two years from the date of the grant of the option and at least one year from
the date of exercise, the participant will recognize taxable long-term capital
gain or loss upon a subsequent disposition of the shares. In such circumstances,
no deduction would be allowed to the Company for federal income tax purposes in
connection with the grant or exercise of the option or the transfer of shares
acquired upon such exercise.
If, however, the participant disposes of his or her shares within the
holding periods described above, (i) the participant will recognize ordinary
income in an amount equal to the difference between the fair market value of
such shares on the date of exercise and the option price, provided that, if the
amount realized from such sale or exchange is less than the fair market value on
the exercise date, then the ordinary income will be limited to the excess of the
amount realized upon the sale or exchange of shares over the option price; (ii)
the Company will be entitled to a deduction during such year in the amount of
the ordinary income so recognized; and (iii) the participant will recognize
capital gain or loss, as the case may be, in an amount equal to the difference
between the amount realized upon such sale or exchange of shares and the sum of
the option price plus the amount of ordinary income, if any, recognized upon
such disposition.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE COMPANY'S 2000
STOCK INCENTIVE PLAN.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table lists information concerning the beneficial ownership
of the Common Stock of the Company as of December 31, 2000 (unless otherwise
noted) by (i) each Director and Named Executive Officer of the Company and their
affiliates, (ii) all directors and executive officers as a group, and (iii) each
person known to the Company to own beneficially more than 5% of any class of
Common Stock of the Company.
CLASS A CLASS B CLASS C
COMMON STOCK(1) COMMON STOCK(1) COMMON STOCK(1)(2)
---------------------- ---------------------- ---------------------- PERCENTAGE
NUMBER OF NUMBER OF NUMBER OF OF VOTING
NAME OF STOCKHOLDER SHARES PERCENTAGE SHARES PERCENTAGE SHARES PERCENTAGE CONTROL
------------------- --------- ---------- --------- ---------- --------- ---------- ----------
State of Wisconsin
Investment Board(3)... -- -- 3,240,619 72.3% -- -- --
BA Capital Company,
L.P.(4)............... 2,292,375 8.1% 544,996 12.2% -- -- 4.5%
The Northwestern Mutual
Life Insurance
Company(5)............ -- -- 693,728 15.5% -- -- --
CML Holdings, LLC(6).... 201,100 * -- -- 1,522,422 66.0% 30.0%
QUAESTUS Management
Corporation(6)........ 201,000 * -- -- 237,313 10.3% 5.0%
DBBC of Georgia,
LLC(7)................ 95,000 * -- -- 291,542 12.6% 5.9%
Wellington Management
Company, LLP(8)....... 2,825,700 10.0% -- -- -- -- 5.5%
Lehman Brothers Holdings
Inc.(9)............... 2,710,000 9.5% -- -- -- -- 5.3%
Dimension Fund
Advisors(10).......... 2,402,100 8.5% -- -- -- -- 4.7%
Capital Research and
Management
Company(11)........... 2,090,000 7.4% -- -- -- -- 4.1%
Mellon Financial
Corporation(12)....... 1,597,400 5.6% -- -- -- -- 3.1%
The Boston Company,
Inc.(12).............. 1,469,800 5.2% -- -- -- -- 2.9%
Franklin Resources,
Inc.(13).............. 1,538,593 5.4% -- -- -- -- 3.0%
Richard W.
Weening(6)(14)........ 533,100 1.9% -- -- 3,044,437 87.8% 41.3%
Lewis W. Dickey, Jr.
(15).................. 254,240 * -- -- 1,146,470 37.8% 15.6%
John Dickey(16)......... 179,604 * -- -- -- -- *
Martin R. Gausvik(17)... 48,750 * -- -- -- -- *
Jonathon Pinch(17)...... 25,000 * -- -- -- -- *
Robert H. Sheridan,
III................... -- -- -- -- -- -- *
Ralph B. Everett(18).... 18,500 * -- -- -- -- *
Eric P. Robison(18)..... 13,125 * -- -- -- -- *
All directors and
executive officers as
a group (8 persons)... 1,072,319 3.7% -- -- 4,190,907 100.0% 57.3%
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* Indicates less than one percent
(1) 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
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holders 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 such Class B common stock (provided that the prior consent of
any governmental authority required to make such conversion lawful shall
have 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 the board of directors has determined that the holder of Class A
Common Stock at the time of conversion would not disqualify the Company
under, or violate, any rules and regulations of the FCC.
(2) 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 such Class C
common stock (provided that the prior consent of any governmental authority
required to make such conversion lawful shall have 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 the board of directors has determined
that the holder of Class A Common Stock at the time of conversion would not
disqualify the Company under, or violate, any rules and regulations of the
FCC. In the event of the death of Richard W. Weening or Lewis W. Dickey, Jr.
(each a "Principal") or the disability of a Principal which results in the
termination of such Principal's employment, each share of Class C common
stock held by such deceased or disabled Principal or any related party or
affiliate of such deceased or disabled Principal shall automatically be
converted into one share of Class A common stock.
(3) The address of the State of Wisconsin Investment Board is P.O. Box 7842,
Madison, Wisconsin 53707. This information is based on a Schedule 13G filed
on February 10, 2000.
(4) The address of BA Capital Company, L.P. is 100 North Tryon Street, Floor
25, Bank of America Corporate Center, Charlotte, North Carolina 28255.
Includes options to purchase 17,125 shares of Class A Common Stock granted
to BA Capital Company, L.P. in connection with its participation in
designating a member to serve on the Board and exercisable within 60 days.
This information is based on a Schedule 13G filed on December 3, 1999.
(5) The address of the Northwestern Mutual Life Insurance Company is 720 East
Wisconsin Avenue, Milwaukee, Wisconsin 53202. This information is based on a
Schedule 13G filed on February 2, 2000.
(6) The address of CML Holdings, LLC, QUAESTUS Management Corporation and
Richard W. Weening is 400 E. Wisconsin Ave., 4th Floor, Milwaukee, Wisconsin
53202. This information is based on a Schedule 13G filed on February 14,
2001. Mr. Weening exercises voting and dispositive power with respect to the
shares of stock owned by CML Holdings, LLC and by QUAESTUS Management
Corporation.
(7) The address of DBBC of Georgia, LLC is 50 Music Square W., Suite 901,
Nashville, TN 37203. This information is based on a Schedule 13G filed on
February 14, 2000. Mr. Lewis Dickey, Jr. is the president of DBBC of
Georgia, LLC.
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(8) The address of Wellington Management Company, LLP is 75 State Street,
Boston, Massachusetts 02109. This information is based on a Schedule 13G
filed on February 13, 2001. Of these shares, Wellington Management Company
has shared voting power as to 1,784,600 shares and shared dispositive power
as to all 2,825,700 shares of Class A Common Stock.
(9) The address of Lehman Brothers Holdings Inc. is 3 World Financial Center,
New York, New York 10285. This information is based on a Schedule 13G filed
on February 14, 2001.
(10) The address of Dimensional Fund Advisors, Inc. is 1299 Ocean Avenue, 11th
Floor, Santa Monica, California 90401. This information is based on a
Schedule 13G filed on February 2, 2001.
(11) The address of Capital Research and Management Company is 333 Hope Street,
Los Angeles, California 90071. This information is based on a Schedule 13G
filed on February 12, 2001.
(12) The address of Mellon Financial Corporation and The Boston Company, Inc. is
One Mellon Center, Pittsburgh, Pennsylvania 15258. This information is
based on a Schedule 13G filed on January 18, 2001. Of these shares, Mellon
Financial Corporation has shared voting power as to 172,100 shares and sole
dispositive power as to all 1,597,400 shares of Class A Common Stock. The
Boston Company, Inc. has shared voting power as to 172,100 shares and sole
dispositive power as to all 1,469,800 shares of Class A Common Stock.
(13) The address of Franklin Resources, Inc. is 777 Mariners Island Boulevard,
San Mateo, California 94404. This information is based on a Schedule 13G
filed on January 29, 2001.
(14) Represents beneficial ownership attributable to Mr. Weening as a result of
his direct ownership of 1,000 shares of Class A Common Stock and 128,000
shares of Class C Common Stock and his controlling interests in QUAESTUS
Management Corporation, which currently holds 201,000 shares of Class A
Common Stock and 237,313 shares of Class C Common Stock, QUAESTUS Partner
Fund, which currently holds 100,000 shares of Class A Common Stock, and CML
Holdings, LLC, which currently holds 201,100 shares of Class A Common Stock
and 1,522,422 shares of Class C Common Stock. Also includes options to
purchase 30,000 shares of Class A Common Stock and 1,156,702 shares of
Class C Common Stock granted to Mr. Weening and exercisable within 60 days.
Mr. Weening disclaims beneficial ownership of shares owned by CML Holdings,
LLC, QUAESTUS Management Corporation and QUAESTUS Partners Fund, except to
the extent of his pecuniary interest therein.
(15) Represents beneficial ownership attributable to Mr. Dickey as a result of
his direct ownership of 66,740 shares of Class A Common Stock and 128,000
shares of Class C Common Stock and his controlling interest in DBBC of
Georgia, LLC, which currently holds 95,000 shares of Class A Common Stock
and 291,542 shares of Class C Common Stock. Also includes options to
purchase 92,500 shares of Class A Common Stock and 726,928 shares of Class
C Common Stock granted to Mr. Dickey and exercisable within 60 days. Mr.
Dickey disclaims beneficial ownership of shares owned by DBBC of Georgia,
LLC except to the extent of his pecuniary interest therein.
(16) Includes options to purchase 107,604 shares of Class A Common Stock
exercisable within 60 days.
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(17) Includes options to purchase 48,750 shares of Class A Common Stock
exercisable within 60 days granted to Mr. Gausvik and 25,000 shares of
Class A Common Stock exercisable within 60 days granted to Mr. Pinch.
(18) Includes options to purchase 16,500 shares of Class A Common Stock
exercisable within 60 days granted to Mr. Everett and 13,125 shares of
Class A Common Stock exercisable within 60 days granted to Mr. Robison.
SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under U.S. securities laws, directors, executive officers and persons
holding more than 10% of the Company's Class A Common Stock must report their
initial ownership of the Class A Common Stock and any changes in that ownership
to the Securities and Exchange Commission. The Commission has designated
specific due dates for these reports and the Company must identify in this Proxy
Statement those persons for whom these reports were not filed when due. The
Company believes, based upon a review of copies of such reports received by the
Company, that during 2000 all Section 16 filing requirements applicable to the
Company's directors, executive officers and greater than 10% beneficial owners
were complied with, except for the following: the Form 4 report for one
transaction of John W. Dickey for the month ended September 30, 2000 was
inadvertently filed after the due date of October 10, 2000, and an initial
report on Form 3 for Jon Pinch was inadvertently not filed by the required due
date.
NON-EMPLOYEE DIRECTOR COMPENSATION
Directors of the Company who are not employees receive a fee of $7,500 per
quarter ($30,000 annually). Additionally, each director receives an additional
$2,500 per quarter ($10,000 annually) for each Committee membership they hold.
Each director also receives a $1,500 fee for each in-person meeting of the Board
(or for each in-person meeting of a committee, if conducted separately from a
Board Meeting) and $300 for each telephonic meeting of the Board or committee
thereof. Finally, each director receives reimbursement of out-of-pocket expenses
incurred in connection with attendance at each such meeting.
In 2000, BA Capital Company, L.P., which is entitled to designate one
member to serve on the Board of Directors (with Mr. Sheridan currently serving
in that capacity), and Mr. Robison were each granted options to purchase a total
of 25,000 shares of Class A Common Stock and Mr. Everett was granted options to
purchase a total of 20,000 shares of Class A Common Stock. Such options are
exercisable at the fair market value of the Class A Common Stock at the date of
grant. These options vest 25% per year with each option being fully exercisable
four years from the date of grant.
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EXECUTIVE COMPENSATION
The following table sets forth for the periods indicated the compensation
paid or accrued for services rendered to the Company in all capacities, for the
past three years for (i) each person who served as the chief executive officer
during 2000 and each of the other executive officers of the Company employed as
of December 31, 2000 and who earned in excess of $100,000 during that year (the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
ANNUAL ------------
COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#) COMPENSATION(7)
--------------------------- ---- -------- -------- ------------ ---------------
Lewis W. Dickey, Jr.(1)(7)..... 2000 $315,000 $161,438(6) 500,000 $ --
Chairman, President and CEO 1999 $303,750 $ -- 530,000 $ --
1998 $300,000 $ -- 1,000,690 $ --
Jonathon Pinch(2).............. 2000 $ 35,417 $100,000(6) 200,000 $ --
Executive Vice President
and Chief Operating Officer
Martin R. Gausvik(3)........... 2000 $162,326 $137,500(6) 300,000 $ --
Executive Vice President
Chief Financial Officer
and Treasurer
John Dickey(4)................. 2000 $302,832 $151,316(6) 250,000 $ --
Executive Vice President 1999 $279,812 $ 60,000 76,354 $ --
1998 $250,000 $ -- 152,708 $ --
Richard W. Weening(5)(7)(8).... 2000 $315,000 $ -- -- $1,000
Former Executive Chairman 1999 $303,750 $ -- 530,000 $ --
and Treasurer 1998 $300,000 $ -- 1,000,690 $ --
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(1) From January 1, 2000 through March 16, 2000 Lewis W. Dickey, Jr. was the
Executive Vice Chairman of the Company. In June 2000 he became President and
CEO of the Company, and effective December 23, 2000 he was appointed
Chairman, President and CEO.
(2) Effective December 1, 2000 Jon Pinch was named Executive Vice President and
Chief Operating Officer of the Company.
(3) Effective May 29, 2000 Martin R. Gausvik was named the Executive Vice
President, Chief Financial Officer and Treasurer
(4) Effective June 2000 John Dickey was named an Executive Vice President of the
Company. From January 1, 2000 through June 2000, John Dickey served as the
Company's Senior Vice President, Programming.
(5) Richard Weening served the Company as Executive Chairman and Treasurer from
January 1, 2000 through May 29, 2000. He remained as Executive Chairman
through December 2000, but had ceased all management responsibility
effective June 2000. In January 2001, Mr. Weening resigned all positions as
an officer of the Company.
(6) In January 2001, Lew Dickey, Marty Gausvik and John Dickey were awarded and
paid their respective bonuses for the successful completion of the Clear
Channel Asset Exchange and Sale Agreements, which were completed in August
2000, October 2000 and January 2001. In January 2001 Mr. Pinch was paid a
bonus in pursuant to the
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terms of his employment agreement, which became effective December 1, 2000.
The Company has determined that these bonuses were earned in 2000.
(7) On August 30, 1999 Mr. Weening and Lew Dickey each received options to
purchase 30,000 shares of Class A Common Stock in lieu of a cash bonus in
1999 for calendar year 1998. These options vest and are exercisable at any
time on or after August 30, 1999.
(8) During the fiscal year ending December 31, 2000 a $1,000 401(k) matching
contribution was made for Mr. Weening.
EMPLOYMENT AGREEMENTS
As discussed more particularly below, the Company has entered into
employment agreements with certain of the Named Executive Officers. Subject to
certain exceptions, such employment agreements prohibit each of the Named
Executive Officers from competing with the Company for a specified period after
termination of employment (18 months for Mr. Lew Dickey).
Mr. Lewis W. Dickey, Jr. serves as Chairman, President and CEO of the
Company. Under the terms of Mr. Dickey's employment agreement he is entitled to
receive an annual base salary of $315,000. Such base salary will increase by
5.0% during each year of the term of the employment agreement, subject to merit
increases, as the Compensation Committee deems appropriate. The agreement
provides that Mr. Dickey may receive a bonus of up to 50% of his base salary,
with bonus targets to be based on budgeted revenue and cash flow targets as
determined by the Compensation Committee. Mr. Dickey's employment agreement has
a three-year term, which automatically extends each year for one additional
year, subject to non-renewal.
The terms of the agreement also provide that upon the death or disability
of Mr. Dickey, the Company shall continue to pay Mr. Dickey's base salary for
the twelve-month period immediately following such event, all unvested time
vested options will vest and the Company will continue to provide benefits to
Mr. Dickey and his dependents for twelve months. In addition, if (i) the death
or disability occurs after the mid-point of a particular vesting year and (ii)
the fair market value of the Class A Common Stock as of the date of such death
or disability equals or exceeds the exercise price per share of the performance
options scheduled to vest at the end of such vesting year, his performance
options will vest.
The agreement also provides that in the event Mr. Dickey is terminated by
the Company without cause or terminates his employment for good reason, the
Company will pay to Mr. Dickey an amount equal to the greater of (i) the base
salary owed to Mr. Dickey for the remainder of the term of the agreement and
(ii) one times his annual base salary in effect as of the date of termination
plus the last bonus received by Mr. Dickey and all unvested time vested options
will vest. In addition, if the fair market value of the Class A Common Stock as
of the date of such termination equals or exceeds the exercise price per share
of the unvested performance options, such performance options will vest.
Further, if the cumulative total return of the Class A Common Stock from July 1,
1998 to the date of termination exceeds the total return of a peer group of
companies, the performance options will vest. Such performance options that
become vested shall remain exercisable until 90 days following the date that
such performance options would otherwise have become vested and exercisable. If,
within the one-year period following a change of control, the Company terminates
Mr. Dickey's employment for any reason other than death or disability or for
cause, or Mr. Dickey terminates his
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employment for good reason, Mr. Dickey will be paid the same amount as if he
were terminated without cause if no change of control had occurred and all time
vested and performance options will vest.
Mr. Jonathon G. Pinch serves as Executive Vice President and Chief
Operating Officer of the Company. Under the terms of Mr. Pinch's employment
agreement he is entitled to receive an annual base salary of $425,000. Such base
salary will increase by 5.0% during each year of the term of the employment
agreement, subject to merit increases, as the Compensation Committee deems
appropriate. The agreement provides that Mr. Pinch may receive a bonus of up to
$200,000, half of which is based upon the achievement of Board-approved budgeted
revenue and cash flow targets; the other half of any bonus will be based upon
the achievement of 110% of the targets based upon the combined discretion of the
Chairman, President and CEO and the Compensation Committee of the Board. Mr.
Pinch's employment agreement has a three-year term, which automatically extends
each year for one additional year, subject to non-renewal.
Mr. Martin R. Gausvik serves as Executive Vice President, Treasurer and
Chief Financial Officer of the Company. Under the terms of Mr. Gausvik's
employment agreement he is entitled to receive an annual base salary of
$275,000. Such base salary will increase by 5.0% during each year of the term of
the employment agreement, subject to merit increases, as the Compensation
Committee deems appropriate. The agreement provides that Mr. Gausvik 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; the other
half of any bonus will be based upon the discretion of the Compensation
Committee of the Board. Mr. Gausvik's employment agreement has a three-year
term, which automatically extends each year for one additional year, subject to
non-renewal.
Mr. John W. Dickey serves as Executive Vice President of the Company. Under
the terms of Mr. John Dickey's employment agreement he is entitled to receive an
annual base salary of $375,000. Such base salary will increase to $400,000
during the second year of the employment agreement, subject to merit increases,
as the Compensation Committee deems appropriate. The agreement provides that Mr.
John 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; the other half of any bonus will be based upon the combined discretion
of the Chairman, President and CEO and the Compensation Committee of the Board.
Mr. John Dickey's employment agreement has a two-year term, which automatically
extends each year for one additional year, subject to non-renewal.
Mr. Weening served as Executive Chairman of the Company under an employment
agreement until his resignation for "good reason" on January 22, 200. Under the
terms of Mr. Weening's employment agreement, the Company will pay to Mr. Weening
an amount equal to the greater of (i) the base salary owed to Mr. Weening for
the remainder of the term of the agreement and (ii) one times annual base salary
in effect as of the date of termination plus the last bonus received by Mr.
Weening. In connection with Mr. Weening's resignation all of Mr. Weening's
unvested time vested options have vested.
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OPTION GRANTS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2000
The following table sets forth information regarding options to purchase
Common Stock granted by the Company to the Named Executive Officers during the
2000 calendar year:
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR PER SHARE DATE VALUE(1)
---- ---------- ------------ ----------- ---------- ----------
Lewis W. Dickey, Jr..... 500,000 24.7% $6.3475 October 2010 $1,755,000
Jonathon Pinch.......... 200,000 9.9% $3.9375 December 2010 $ 702,000
Martin R. Gausvik....... 300,000 14.8% $6.3475 October 2010 $1,053,000
John Dickey............. 250,000 12.3% $6.3475 October 2010 $ 877,500
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(1) The present value of each grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions: dividend yield of 0.00% for all years; expected volatility of
65.00%; risk-free interest rate of 6.25; and expected life of four years.
Mr. Pinch's options were granted on December 1, 2000 in accordance with his
employment agreement. The present value per share of the options granted to
the other executive officers were also used for Mr. Pinch's options.
AGGREGATED OPTION EXERCISES FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2000
AND YEAR-END VALUES
The following table sets forth information concerning option exercises in
the year ended December 31, 2000 by the Named Executive Officers, and the value
of each such officer's unexercised options at December 31, 2000:
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 2000 DECEMBER 31, 2000
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
Lewis W. Dickey,
Jr................. 0 $0 756,928 1,273,762 $0 $0
Jonathon Pinch....... 0 $0 0 200,000 $0 $0
Martin R. Gausvik.... 0 $0 18,750 281,250 $0 $0
John Dickey.......... 0 $0 91,979 387,083 $0 $0
Richard W. Weening... 0 $0 725,678 805,012 $0 $0
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(1) Based upon a per share price of Class A Common Stock of $3.625. This price
represents the closing price for the Class A Common Stock on the Nasdaq
National Market on December 29, 2000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2000, Eric P. Robison (chairman) and Robert H. Sheridan, III,
neither of whom is an officer or employee of the Company, were members of the
Compensation Committee of the Cumulus Media Inc.'s Board of Directors, which
determines, or makes recommendations with respect to, compensation matters for
the Company. Neither
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member of the Compensation Committee serves as a member 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 of Directors or Compensation
Committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Lewis W. Dickey, Jr. and John Dickey each have a 25% ownership interest in
Stratford Research, Inc. ("Stratford"), an entity that provides programming
consulting and market research services to the Company. Under an agreement with
Stratford (the "Stratford Agreement") the Company pays Stratford $25,000 to
evaluate programming at target radio stations. Additionally, prior to June 2000
Stratford provided program-consulting services for amounts as specified in the
Stratford Agreement.
On June 29, 2000 the Company's Board of Directors amended the Stratford
format-consulting contract terms effective June 30, 2000, for all markets with
the exception of twelve radio stations. These twelve stations will continue
under the terms of the existing contract. Stratford continues to provide
research services under the terms of the contract.
Total fees paid to Stratford by the Company during 2000 were $4.1 million.
Of these fees paid in 2000, $1.1 million, were capitalized as acquisition costs.
The remaining amounts have been included as part of the station operating
expenses in the statement of operations. At December 31, 2000, amounts payable
to Stratford were approximately $199,000.
QUAESTUS Management Corporation ("QUAESTUS"), an investment firm
specializing in media and new media controlled by Richard W. Weening, performed
due diligence on the Company's proposed transactions as well as certain other
consulting services including internet strategy consulting, research support for
Department of Justice inquiries and analytic services in support of the treasury
and corporate finance function. For these specified due diligence services
QUAESTUS received a specified rate per transaction between $15,000 and $60,000
(depending on the amount of work involved as reflected in the number of FM
stations proposed to be acquired in the transaction). For other services
QUAESTUS is paid an hourly rate per person-hour. The Company was also obligated
to reimburse QUAESTUS for all of its out-of-pocket expenses incurred in
connection with the performance of services under such agreement. On June 29,
2000 the Company's Board of Directors terminated the QUAESTUS consulting
contract effective June 30, 2000.
During 2000, the Company paid QUAESTUS $1.6 million for services under that
arrangement. Of the total payments made to QUAESTUS in 2000, $465,000 were
capitalized as acquisition costs. The remaining expenses have been included as
part of the corporate general and administrative expenses in the statement of
operations. At December 31, 2000, amounts payable to QUAESTUS Management
Corporation were approximately $293,000.
On November 23, 1999 QUAESTUS and the Company entered into a Sublease
Agreement as co-sublessees, which provided for the use of a 1989 Cessna Citation
III model aircraft. QUAESTUS and the Company are obligated to pay the sublessor
rent of $62,500 per month, plus an hourly rate for each hour of flight. QUAESTUS
acted as the manager of the aircraft, hiring pilots, arranging for maintenance
and scheduling usage. Expenses for the use of the aircraft were billed to the
Company based upon the percentage of hours of Company use. The Company incurred
aircraft related expenses of $541,000 in 2000. As of December 31, 2000, there
remains $408,000 payable to QUAESTUS under
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this agreement. The Company's sublease agreement was terminated effective
October 31, 2000.
On February 2, 2000, the Company loaned each of Mr. Weening and Mr. Dickey
$4,992,000 respectively, for the purpose of enabling Mr. Weening and Mr. Dickey
to each purchase 128,000 shares of newly issued shares of Class C Common Stock
from the Company. The price of the shares was $39.00 each, which was the
approximate market price for the Company's Class A Common Stock on that date.
The loans are represented by recourse promissory notes executed by each of Mr.
Weening and Mr. Dickey which provide for the payment of interest at the greatest
of 9.0% or the maximum rate paid by the Company under its credit facility.
Interest accrues on the notes from February 2, 2000 through December 31, 2003
and is payable on that date. All accrued and unpaid interest and the principal
amount of the loans are due and payable in a lump sum on December 31, 2003. As
of December 31, 2000, the original principal amount of $4,992,000 plus accrued
interest remains outstanding from each of Mr. Weening and Mr. Dickey.
One of the Company's Directors is Mr. Ralph B. Everett. Mr. Everett is a
partner with the Washington, D.C. office of the law firm of Paul, Hastings,
Janofsky & Walker LLP, where he heads the Firm's Federal Legislative Practice
Group. The Company also engages the law firm of Paul, Hastings, Janofsky &
Walker LLP on various matters from time to time. Total amounts paid to Paul,
Hastings, Janofsky & Walker LLP during 2000 were approximately $1.1 million. Of
that amount $810,000 was capitalized as acquisition or financing costs. The
remaining amounts have been included as part of the corporate general and
administrative expenses in the Company's statement of operations. At December
31, 2000, amounts remaining payable to Paul, Hastings, Janofsky & Walker LLP
were approximately $420,000.
One of the Company's Directors is Eric P. Robison. Since January 1994, Mr.
Robison has worked for Vulcan Northwest, Inc., the holding company that manages
all personal and business interests for investor Paul G. Allen. In this role Mr.
Robison serves as a Business Development Associate for Vulcan Ventures, Inc.,
the venture fund division of Vulcan Northwest and investigates and secures
investment opportunities. In 2000, the Company retained Mr. Robison to provide
consulting services relating to the development of the Cumulus Internet Services
Inc. business plan. During 2000, the Company paid Mr. Robison $15,000 for
consulting services.
INFORMATION ABOUT THE BOARD OF DIRECTORS
The Board of Directors held fourteen regularly scheduled and special
meetings during 2000. Each director attended at least 75% of his Board and
committee meetings.
It is primarily the Board's responsibility to oversee the management of the
Company's business. To assist in carrying out this responsibility, the Board has
established the standing committees listed below. The Company does not have a
standing nominating committee.
The Audit Committee (i) reviews management's recommendation for selection
of the Company's independent auditors, (ii) examines accounting processes and
reporting systems, (iii) assesses the adequacy of internal controls and risk
management, (iv) reviews and approves the Company's financial disclosures and
(v) reviews other similar matters. The Audit Committee met 10 times in 2000. The
current members of the Audit Committee are Messrs. Sheridan (Chairman), Everett
and Robison.
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The Compensation Committee oversees the determination of all matters
relating to employee compensation and benefits and specifically reviews and
approves salaries, bonuses and stock-based compensation for the named executive
officers. The Compensation Committee met two times in 2000. The current members
of the Compensation Committee are Messrs. Sheridan (Chairman) and Robison.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee was established after completion of the
Company's initial public offering in June 1998. In 2000, the Compensation
Committee consisted of Messrs. Sheridan and Robison, neither of who is an
employee of the Company. The Compensation Committee is responsible for making
recommendations to the Board concerning the compensation levels of the executive
officers of the Company. The Compensation Committee also administers the
Company's 2000 Stock Incentive Plan, 1999 Stock Incentive Plan, 1999 Executive
Stock Incentive Plan, 1998 Stock Incentive Plan and the 1998 Executive Stock
Incentive Plan and determines awards to be made under such plans to the
Company's executive officers and to other eligible individuals. The Compensation
Committee reviews compensation programs for executive officers annually.
With respect to 2000, virtually all of the compensation decisions for
executive officers were made by the Compensation Committee.
The Company's executive compensation program aims to:
- Link managers' goals with shareholders' interests.
- Support business plans and long-term Company goals.
- Tie executive compensation to Company performance.
- Attract and retain talented management.
TYPES OF COMPENSATION
There are two main types of compensation:
(1) Annual compensation. This includes salary and bonus. The Company awards
bonuses only when profits and other performance criteria meet certain
levels.
(2) Equity Based Compensation. The Company adopted the 2000 Stock Incentive
Plan in connection with the management reorganization that occurred
during the year. The Company adopted the 1999 Stock Incentive Plan and
the 1999 Executive Stock Incentive Plan in connection with the
Company's equity offering in July 1999. The Company adopted the 1998
Stock Incentive Plan and the 1998 Executive Stock Incentive Plan in
connection with the Company's initial public offering. The Compensation
Committee expects that stock option grants will be the primary form of
long-term incentive compensation for the Company's executive officers.
The Compensation Committee believes stock options are an effective
means of incenting senior management to increase the long-term value of
the Company's common stock.
In making compensation decisions, it is the Compensation Committee's
current intention to recommend plans and awards which will meet the
requirements for deductibility for tax purposes under Section 162(m) of
the Code.
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FACTORS CONSIDERED IN DETERMINING COMPENSATION
The Compensation Committee wants the compensation of the Company's
executives to be competitive in the broadcast industry and with other U.S.
media companies. The Committee conducts its own review of various parts of
the compensation program, and using its assessment of the skills,
experience, and achievements of individual executives, the Committee
decides the compensation of executives.
The Committee looks at the size and success of other companies and the
types of jobs covered by these companies in determining executive
compensation. One goal of the Company's compensation program is to
approximate the survey group's average compensation, adjusted for company
size and performance.
The Committee also considers the tax deductibility of compensation paid to
the executive officers.
ANNUAL COMPENSATION
GENERAL
Annual compensation for the Company's executives includes salary and bonus.
This is similar to the compensation programs of most leading companies.
The Committee aims to pay salaries at the average of the survey companies,
adjusted for company size and performance. The Committee also looks at the
specific job duties, the person's achievements and other criteria.
BONUSES
The Company provides cash bonuses to executives, market managers and other
key personnel based on the Company's achievement of the overall financial
performance plan and the achievement of executive-specific performance
goals in the applicable fiscal year. Bonus awards are limited to a
percentage of base salary ranging from 10% to 50% depending on the
participant's level of responsibility. Awards are made at the sole
discretion of the Company's principal executive officer and the
Compensation Committee taking into account the above mentioned factors and
such other factors as the Compensation Committee might deem relevant.
EQUITY BASED COMPENSATION
GENERAL
Today's business decisions affect the Company over a number of years. This
is why the long-term incentive awards are tied to the Company's performance
and the value of the Company's common stock over several years.
In general, the amount of the long-term incentive awards does not change as
much as the amount of the annual bonus awards.
STOCK OPTIONS
Stock options are an important part of the Company's long-term incentive
program. Executive officers who are granted awards under the Company's
incentive plan only benefit from such awards when there is an increase in
the stock price of the common stock, a measurement of long-term value of
the Company.
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In 2000, executives received option grants in amounts commensurate with
rank and responsibility. In deciding the size of individual option grants
for 2000, the Compensation Committee considered the responsibilities and
title, as well as the total number of options awarded to all employees.
CHAIRMAN AND CEO COMPENSATION
ANNUAL COMPENSATION
In determining Mr. Dickey's salary, the Committee considered his job
duties, the pay practices of other companies and Mr. Dickey's preference
for equity-based compensation.
Mr. Dickey's target bonus for 2000 was based on the terms of his employment
agreement and Company performance criteria set forth therein, which
provided for the full bonus of $150,000 if the Company exceeded certain
revenue and cash flow thresholds. Such thresholds were not exceeded in
2000. In awarding Mr. Dickey's bonus the Committee considered his job as
the newly appointed chief executive of a significant U.S. media company
with a wide area of control and broad duties. The Committee also considered
the significant financial and operational challenges faced by the Company
upon Mr. Dickey's appointment. The Committee reviewed his 2000
accomplishments and considered these factors in determining Mr. Dickey's
2000 bonus. Finally, the Committee considered the deductibility of Mr.
Dickey's compensation under the tax laws.
EQUITY-BASED COMPENSATION
The value of the stock options granted to Mr. Dickey in 2000 also depends
on the Company's future success and whether that success is reflected in
the value of the common stock.
COMPENSATION COMMITTEE
Eric P. Robison, Chairman
Robert H. Sheridan III
AUDIT COMMITTEE REPORT
The Board of Directors of Cumulus Media Inc. adopted a written Audit
Committee Charter on June 6, 2000, a copy of which is included as Appendix B to
this Proxy Statement. All members of the Audit Committee are independent as
defined in Rule 4200(a)(14) of The Nasdaq Stock Market's listing standards.
The Audit Committee has reviewed and discussed with the Company's
management and KPMG LLP, the Company's independent auditors, the audited
financial statements of the Company contained in its Annual Report on Form 10-K
for the year ended December 31, 2000. The Audit Committee has also discussed
with KPMG LLP, the Company's independent auditors, the matters required to be
discussed pursuant to SAS No. 61 (Codification of Statements on Auditing
Standards, Communication with Audit Committees).
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The Audit Committee has received and reviewed the written disclosures and
the letter from KPMG LLP required by Independence Standards Board Standard No. 1
(titled, "Independence Discussions with Audit Committees"), and has discussed
with KPMG LLP their independence. The Audit Committee has also considered
whether the provision of information technology services and other non-audit
services to the Company by KPMG LLP is compatible with maintaining their
independence.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000, filed with the Securities and Exchange Commission.
AUDIT COMMITTEE
Robert H. Sheridan, Audit Committee Chair
Ralph B. Everett, Audit Committee Member
Eric P. Robison, Audit Committee Member
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26
MEMBERS OF THE BOARD OF DIRECTORS
PRINCIPAL OCCUPATION AND DIRECTORSHIPS
NAME --------------------------------------
CLASS I DIRECTORS NOMINATED FOR ELECTION TO SERVE UNTIL THE 2003 ANNUAL MEETING
Ralph B. Everett Mr. Everett has served as a Director since July
1998. Mr. Everett, age 49, has been a partner
with the Washington, D.C. office of the law firm
of Paul, Hastings, Janofsky & Walker LLP, where
he heads the firm's Federal Legislative Practice
Group. In 1998, Mr. Everett was appointed by the
President as United States Ambassador to the 1998
International Telecommunication Union
Plenipotentiary Conference. Prior to 1989, he was
Chief Counsel and Staff Director of the United
States Senate Committee on Commerce, Science and
Transportation. 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
and the Norfolk Southern Corporation Advisory
Board. Mr. Everett holds a Bachelor of Arts
degree from Morehouse College (Phi Beta Kappa)
and a Juris Doctor degree from Duke University.
Holcombe T. Green, Jr. Mr. Green has been Chairman and Chief Executive
Officer of WestPoint Stevens, Inc. since October
1992. Mr. Green, age 60, is the sole shareholder
of the general partner of WPS Investors, L.P., a
significant shareholder of the WestPoint Stevens,
Inc. Mr. Green is also the founder and principal
of Green Capital Investors, L.P., a private
investment partnership, and certain other
affiliated partnerships. He is the retired
Chairman of HBO & Company, a supplier of hospital
information systems.
CLASS II DIRECTORS NOMINATED FOR ELECTION TO SERVE UNTIL THE 2004 ANNUAL MEETING
Eric P. Robison Mr. Robison, age 41, has served as a Director of
the Company since August 1999. Since January
1994, Mr. Robison has worked for Vulcan
Northwest, Inc., the holding company that manages
all personal and business interests for investor
Paul G. Allen. In this role Mr. Robison serves as
Vice President, Business Development managing
various projects and investigating investment
opportunities. Mr. Robison also serves on the
board of directors of CNET Media Networks, Inc.
Prior to joining Vulcan, Mr. Robison was
co-founder and vice president of The Stanton
Robison Group, Inc., a business development,
marketing and advertising consulting firm. Mr.
Robison has served in key marketing management
positions with SGS, Inc., Ashton-Tate, Inc., and
Denny's Inc. He has also worked on the account
staffs of several advertising agencies
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27
PRINCIPAL OCCUPATION AND DIRECTORSHIPS
NAME --------------------------------------
including McCann Erickson, Doyle Dane Bernbach
and Foote Cone and Belding. Mr. Robison holds a
Bachelor of Arts degree in Communication Studies
from California State University, Sacramento, and
a Master of Administration in general management
from the University of California, Davis.
Robert H. Sheridan, III Mr. Sheridan has served as a Director of the
Company since July 1998. Mr. Sheridan, age 38,
served as a member of the Investment Committee of
Cumulus Media, LLC from April 1997 until its
dissolution in June 1998. Mr. Sheridan has served
as a Managing Director of Bank of America Capital
Investors, the principal investment group within
Bank of America Corporation since January 1998,
and is a Senior Vice President of BA Capital
Company, L.P., formerly known as NationsBanc
Capital Corp. He was a Director of NationsBank
Capital Investors, the predecessor of Bank of
America Capital Investors, from January 1996 to
January 1998. BA Capital Company, L.P. is a
stockholder of the Company. Prior to joining
NationsBank Capital Investors in January 1994,
Mr. Sheridan worked in the corporate bank
division of NationsBank Corporation from June
1989 to January 1994. Mr. Sheridan serves as a
director of several privately held companies. Mr.
Sheridan holds a Bachelor of Arts degree from
Vanderbilt University and a Master of Business
Administration from Columbia University. See
"Security Ownership of Certain Beneficial Owners
and Management."
CONTINUING DIRECTORS WITH A TERM EXPIRING AT 2002 ANNUAL MEETING
Lewis W. Dickey, Jr. Mr. Dickey, age 39, has served as Chairman ,
President and CEO since December, 2000 and has
served as a Director of the Company since March
1998. Mr. Dickey was a founder and an initial
investor in Cumulus Media, LLC through his
interest in CML and owns 25% of the outstanding
capital stock of DBBC of Georgia, LLC, a Managing
Member of Cumulus Media, LLC. He served as
Executive Vice Chairman and a Director of Cumulus
Media, LLC from its inception in April 1997 until
its dissolution in June 1998. Mr. Dickey is the
founder and was President of Stratford from
September 1985 to March 1998 and owns 25% of the
outstanding capital stock of Stratford. Stratford
is a strategy consulting and market research firm
advising radio and television broadcasters as
well as other media related industries. From
January 1988 until March 1998, Mr. Dickey served
as President and Chief Operating Officer of
Midwestern Broadcasting, which operated two
stations
26
28
PRINCIPAL OCCUPATION AND DIRECTORSHIPS
NAME --------------------------------------
in Toledo, Ohio that were acquired by the Company
in November 1997. He also has an ownership
interest (along with members of his family and
others) in three stations in Nashville,
Tennessee: WQQK-FM, WNPL-FM and WVOL-AM. Mr.
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. He
holds Bachelor of Arts and Master of Arts degrees
from Stanford University and a Master of Business
Administration degree from Harvard University.
Mr. Dickey is the brother of John Dickey, the
Company's Executive Vice President.
Richard W. Weening Mr. Weening has been a Director since March 1998.
Mr. Weening, age 55, was a founder and initial
investor in Cumulus Media LLC. He served as
Chairman and Chief Executive Officer of Cumulus
Media LLC from its inception in April 1997 until
its dissolution in June 1998. He served as our
Executive Chairman from March 1998 to December
2000. In 1989, Mr. Weening founded QUAESTUS
Management Corporation (d/b/a/ QUAESTUS & Co.,
Inc.), a private equity investment and advisory
firm specializing in media, new media,
information and related technology companies. Mr.
Weening served as Chairman and Chief Executive
Officer of QUAESTUS & Co., Inc. from December
1989 until March 1998 and as President and Chief
Executive Officer from December 2000 to the
present. QUAESTUS & Co., Inc. is one of our
shareholders. QUAESTUS & Co., Inc. was Managing
Member of Cumulus Media LLC. It is also the
Managing Member of CML Holdings LLC, one of our
shareholders and an investment fund that was a
founding investor in Cumulus Media LLC. See
"Certain Relationships and Related Transactions."
In 1985, Mr. Weening founded Caribbean
Communications Company Ltd., a radio broadcasting
company acquired by Cumulus in May 1997. He
currently serves as a Director of QUAESTUS & Co.,
Inc. and ARI Network Services, Inc. and several
private companies. He holds a Bachelor of Arts
degree from St. John's University.
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PERFORMANCE GRAPH
The following graph compares the total stockholder return on the Company's
Common Stock for the year ending December 31, 2000 with that of the (i) Standard
& Poors 500 Stock Index ("S&P 500"); (ii) the Nasdaq Stock Market Index (the
"Nasdaq Composite")and (iii) an index comprised of radio broadcast and media
companies. See note (I) below. The total return calculations set forth below
assume $100 invested on December 31, 1999, with reinvestment of dividends into
additional shares of the same class of securities at the frequency with which
dividends were paid on such securities through December 31, 2000. The stock
price performance shown in the graph below should not be considered indicative
of potential future stock price performance.
[PERFORMANCE GRAPH]
CUMULATIVE TOTAL RETURN
- ---------------------------------------------------------------------------------------------------
12/31/1999 3/31/2000 6/30/2000 9/29/2000 12/29/2000
- ---------------------------------------------------------------------------------------------------
Cumulus 100.00% 28.33% 17.98% 12.07% 7.14%
- ---------------------------------------------------------------------------------------------------
S & P 500 100.00% 102.00% 99.00% 97.77% 89.86%
- ---------------------------------------------------------------------------------------------------
NASDAQ 100.00% 112.37% 97.46% 90.26% 60.71%
- ---------------------------------------------------------------------------------------------------
Radio Index 100.00% 84.15% 87.89% 60.97% 60.68%
- ---------------------------------------------------------------------------------------------------
(1) Index comprised of radio broadcast, outdoor and other media companies with
the following trading symbols: Clear Channel Communications Corporation
(CCU), Citadel Broadcasting Company (CITC), Cox Radio Inc. (CXR), Emmis
Broadcasting Corporation (EMMS) and Saga Communications Inc. (SGA).
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30
SUBMISSION OF SHAREHOLDER PROPOSALS
In accordance with the Company's Amended and Restated By-Laws, nominations,
other than by or at the direction of the Board of Directors, of candidates for
election as directors at the 2002 Annual Meeting of Shareholders and any other
shareholder proposed business intended to be brought before the 2002 Annual
Meeting of Shareholders, whether or not such shareholder seeks to have such
proposal included in the Company's proxy statement, must be received by the
Company not later than November 30, 2001. Shareholder proposed nominations and
other shareholder proposed business must be made in accordance with the
Company's Amended and Restated By-Laws which provide, among other things, that
shareholder proposed nominations must be accompanied by certain information
concerning the nominee and the shareholder submitting the nomination, and that
shareholder proposed business must be accompanied by certain information
concerning the proposal and the shareholder submitting the proposal. Proposals
should be directed to Mr. Martin R. Gausvik, Executive Vice President, Chief
Financial Officer and Treasurer, at the Company's principal executive offices,
3535 Piedmont Road, Building 14, Fourteenth Floor, Atlanta, Georgia 30305. To
avoid disputes as to the date of receipt, it is suggested that any shareholder
proposal be submitted by certified mail, return receipt requested.
OTHER MATTERS
Although management is not aware of any other matters that may come before
the Annual Meeting, if any such matters should be presented, the persons named
in the accompanying proxy intend to vote such proxy in accordance with their
best judgment.
The Company's financial statements, supplementary financial information,
management's discussion and analysis of financial condition and results of
operations, and quantitative and qualitative disclosures about market risk are
incorporated herein by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2000 and the Company's other periodic filings
made with the Securities and Exchange Commission from time to time. Shareholders
may obtain a copy of the Company's Annual Report for the year ended December 31,
2000 as filed on Form 10-K at no cost by writing to Mr. Daniel O'Donnell, Vice
President, Finance, Cumulus Media Inc., 3535 Piedmont Road, Building 14,
Fourteenth Floor, Atlanta, Georgia 30305.
By Order of the Board of
Directors,
Lewis W. Dickey, Jr.
Chairman, President & CEO
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31
APPENDIX A
CUMULUS MEDIA INC.
2000 STOCK INCENTIVE PLAN
1. OBJECTIVES. The Cumulus Media Inc. 2000 Stock Incentive Plan is designed
to attract and retain certain selected officers, key employees, non-employee
directors and consultants whose skills and talents are important to the
Company's operations, and reward them for making major contributions to the
success of the Company. These objectives are accomplished by making awards under
the Plan, thereby providing Participants with a proprietary interest in the
growth and performance of the Company.
2. DEFINITIONS.
(a) "Award" shall mean the grant of a Stock Option to a Plan
Participant pursuant to such terms, conditions, performance requirements,
and limitations as the Committee may establish in order to fulfill the
objectives of the Plan.
(b) "Award Agreement" shall mean an agreement between Cumulus Media
Inc. and a Participant that sets forth the terms, conditions, performance
requirements, and limitations applicable to an Award.
(c) "Board" shall mean the Board of Directors of Cumulus Media Inc.
(d) "Cause" shall mean termination of a Participant's service with the
Company for (i) any failure of the Participant to substantially perform his
duties with the Company (other than by reason of illness) which occurs
after the Company has delivered to the Participant a demand for performance
which specifically identifies the manner in which the Company believes the
Participant has failed to perform his duties, and the Participant fails to
resume performance of his duties on a continuous basis within 14 days after
receiving such demand, (ii) the commission by the Participant of any
material act of dishonesty or disloyalty involving the Company or its
business, or (iii) the conviction of the Participant of a felony or
misdemeanor which, in the reasonable judgment of the Committee, is
substantially related to the Participant's position with the Company or
substantially impairs the Participant's ability to perform his duties with
the Company.
(e) "Change in Control" shall mean any of the following events:
(i) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (a "Person"), after the date hereof, of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 35% or more of either (a) the then outstanding
shares of common stock of Cumulus Media Inc. (the "Outstanding Company
Common Stock") or (b) the combined voting power of the then outstanding
voting securities of Cumulus Media Inc. entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (i), the
following acquisitions shall not constitute a Change of Control: (a) any
acquisition directly from Cumulus Media Inc., (b) any acquisition by the
Company, (c) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company, or (d) any
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acquisition by any corporation pursuant to a transaction which complies
with clauses (a), (b) and (c) of subsection (iii) of this Section 2(e);
or
(ii) individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by Cumulus Media Inc.'s shareholders, was approved by a vote of
at least a majority of the directors then constituting the Incumbent
Board shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board; or
(iii) consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
the Company for which approval of the shareholders of Cumulus Media Inc.
is required (a "Business Combination"), in each case, unless,
immediately following such Business Combination, (a) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than
60% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may
be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns Cumulus Media Inc. or all or substantially all of the
Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior
to such Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (b) no Person
(excluding any employee benefit plan (or related trust) of the Company
or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 35% or more of, respectively,
the then outstanding common stock of the corporation resulting from such
Business Combination or the combined voting power of the then
outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Business Combination and (c) at
least a majority of the members of the Board of Directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of he initial agreement, or
of the action of the Board, providing for such Business Combination; or
(iv) approval by the shareholders of Cumulus Media Inc. of a
complete liquidation or dissolution of Cumulus Media Inc.
(f) "Class A Common Stock" shall mean the authorized and issued or
unissued $.01 par value Class A common stock of Cumulus Media Inc.
(g) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
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(h) "Committee" shall mean the Compensation Committee of the Board of
Directors of Cumulus Media Inc. which shall be comprised of at least two
non-employee directors within the meaning of Rule 16-b 3 of the Securities
Exchange Act of 1934.
(i) "Company" shall mean Cumulus Media Inc. and its subsidiaries
including subsidiaries of subsidiaries and partnerships and other business
ventures in which Cumulus Media Inc. has a significant equity interest, as
determined in the sole discretion of the Committee.
(j) "Fair Market Value" shall mean the closing sale price of the Class
A Common Stock on the Nasdaq National Market as reported in the Midwest
Edition of the Wall Street Journal for the date in question, provided that,
if no sales of Class A Common Stock were made on said exchange on that
date, "Fair Market Value" shall mean the closing sale price of Class A
Common Stock as reported for the most recent preceding day on which sales
of Class A Common Stock were made on such exchange, or, failing any such
sales, such other price as the Committee may determine in conformity with
pertinent law and regulations of the Treasury Department. Notwithstanding
the foregoing, in the case of Awards which are effective on the date the
Company sells shares of Class A Common Stock in an underwritten public
offering, Fair Market Value shall mean the price per share at which the
Class A Common Stock is initially sold to the public pursuant to the
offering.
(k) "Participant" shall mean a current or prospective employee,
non-employee director, consultant or other person who provides services to
the Company to whom an Award has been made under the Plan. Notwithstanding
the foregoing, if a director is serving on the Board to represent the
interests of a corporate shareholder of the Company, the option which
otherwise would be awarded to the director may be awarded to the director's
employer.
(l) "Plan" shall mean the Cumulus Media Inc. 2000 Stock Incentive
Plan.
(m) "Retirement" shall mean termination of employment or service with
the Company or service as a member of the Board on or after the attainment
of age 65.
(n) "Stock Option" shall mean a grant of a right to purchase a
specified number of shares of Class A Common Stock, the purchase price of
which shall be not less than 100% of Fair Market Value on the date of
grant. A stock option may be in the form of a nonqualified stock option or
an incentive stock option ("ISO"). A nonqualified stock option is an option
that does not meet the criteria of an ISO. An ISO, in addition to being
subject to applicable terms, conditions and limitations established by the
Committee, complies with Section 422 of the Code which, among other
limitations, provides that the Participant is an Employee on the date of
grant and exercises the ISO only while employed or within three months
thereafter (one year in the case of disability, within the meaning of
Section 12), that the aggregate Fair Market Value (determined at the time
the option is granted) of Class A Common Stock for which ISOs are
exercisable for the first time by a Participant during any calendar year
shall not exceed $100,000; that ISOs shall be priced at not less than 100%
of the Fair Market Value on the date of the grant (110% in the case of a
Participant who is a 10% shareholder of the Company within the meaning of
Section 422 of the Code); and that ISOs shall be exercisable for a period
of not more
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than ten years (five years in the case of a Participant who is a 10%
shareholder of the Company).
3. ELIGIBILITY. Current and prospective employees, non-employee directors,
consultants or other persons who provide services to the Company eligible for an
Award under the Plan are those who hold, or will hold, positions of
responsibility and whose performance, in the judgment of the Committee or the
management of the Company (if such responsibility is delegated pursuant to
Section 6 hereof), can have a significant effect on the success of the Company.
4. COMMON STOCK AVAILABLE FOR AWARDS. Subject to adjustment as provided in
Section 14 hereof, the number of shares that may be issued under the Plan for
Awards during the term of the Plan is 2,750,00 shares of Class A Common Stock,
all of which may be in the form of incentive stock options. Any shares subject
to an Award which are used in settlement of tax withholding obligations shall be
deemed not to have been issued for purposes of determining the maximum number of
shares available for issuance under the Plan. Likewise, if any Stock Option is
exercised by tendering shares, either actually or by attestation, to the Company
as full or partial payment for such exercise under this Plan, only the number of
shares issued net of the shares tendered shall be deemed issued for purposes of
determining the maximum number of shares available for issuance under the Plan.
No individual shall be eligible to receive Awards aggregating more than 500,000
shares of Class A Common Stock reserved under the Plan in any one calendar year,
subject to adjustment as provided in Section 14 hereof. Cumulus Media Inc. shall
take whatever actions are necessary to file required documents with the U.S.
Securities and Exchange Commission and any other appropriate governmental
authorities and stock exchanges to make shares of Class A Common Stock available
for issuance pursuant to Awards.
5. ADMINISTRATION. The Plan shall be administered by the Committee, which
shall have full and exclusive power to interpret the Plan, to determine which
current and prospective employees, non-employee directors and consultants are
Plan Participants, to grant waivers of Award restrictions, to determine the
provisions of Award Agreements and to adopt such rules, regulations and
guidelines for carrying out the Plan as it may deem necessary or proper, all of
which powers shall be executed in the best interests of the Company and in
keeping with the objectives of the Plan.
6. DELEGATION OF AUTHORITY. Except to the extent prohibited by applicable
law or the applicable rules of a stock exchange, the Committee may delegate to
the chief executive officer and to other senior officers of the Company its
duties under the Plan pursuant to such conditions or limitations as the
Committee may establish. Any such delegation may be revoked by the Committee at
any time.
7. AWARDS. The Committee shall set forth in the related Award Agreement the
terms, conditions, performance requirements, and limitations applicable to each
Award including, but not limited to, continuous service with the Company,
conditions under which acceleration of vesting will occur and achievement of
specific business objectives.
8. DEFERRED PAYMENT OF AWARDS. The Committee may permit selected
Participants to elect to defer payment of Awards in accordance with procedures
established by the Committee which are intended to permit such deferrals to
comply with applicable requirements of the Code including, at the choice of
Participants, the capability to make further deferrals for payment after
retirement. Dividends or dividend equivalent rights may
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be extended to and made part of any Award denominated in stock, subject to such
terms, conditions and restrictions as the Committee may establish. The Committee
may also establish rules and procedures for the crediting of dividend
equivalents for deferred payments denominated in stock.
9. STOCK OPTION EXERCISE. Unless the Award Agreement provides otherwise,
(I) an Award shall become vested, and thereby exercisable, at the rate of 25%
per completed year of the Participant's continuous service-providing
relationship with the Company (including in the case of a non-employee director,
service on the Board) after the grant date of the Award, and (II) each Award
that is outstanding and unexercised on the date of a Change in Control shall
immediately become fully vested and exercisable. The price at which shares of
Class A Common Stock may be purchased under a Stock Option shall be paid in full
at the time of the exercise in cash or, if permitted by the Committee, by means
of tendering shares of Class A Common Stock, which have been held by the
Participant for more than six months and have not been used within the prior
six-month period to exercise an option, either directly or by attestation,
valued at Fair Market Value on the date of exercise, or any combination thereof.
10. TAX WITHHOLDING. The Company shall have the right to deduct applicable
taxes from any Award payment and withhold, at the time of delivery or vesting of
shares under the Plan, an appropriate number of shares for payment of taxes (but
only the minimum amount required by law) or to take such other action as may be
necessary in the opinion of the Company to satisfy all obligations for
withholding of such taxes. The Company may defer making delivery with respect to
Class A Common Stock obtained pursuant to an Award hereunder until arrangements
satisfactory to it have been made with respect to any such withholding
obligation. If Class A Common Stock is used to satisfy tax withholding, such
stock shall be valued based on the Fair Market Value when the tax withholding is
required to be made.
11. AMENDMENT OR TERMINATION OF THE PLAN. The Board may, at any time, but
only with unanimous consent or approval, amend or terminate the Plan; provided,
however, that
(a) subject to Section 14 hereof, no amendment or termination may, in
the absence of written consent to the change by the affected Participant
(or, if the Participant is not then living, the affected beneficiary),
adversely affect the rights of any Participant or beneficiary under any
Award granted under the Plan prior to the date such amendment is adopted by
the Board; and
(b) without further approval of the shareholders of the Company, no
amendment shall increase the number of shares of Class A Common Stock which
may be delivered pursuant to Awards hereunder, except for increases
resulting from Section 14 hereof.
12. TERMINATION OF SERVICE. If the service-providing relationship of a
Participant terminates, or a non-employee director no longer serves on the
Board, other than pursuant to paragraphs (a) through (c) of this Section 12, all
unvested Awards shall immediately terminate and all vested but unexercised,
deferred or unpaid Awards shall terminate one year after such termination of
service, unless the Award Agreement provides otherwise, and during such one year
period shall be exercisable only to the extent provided in the Award Agreement.
If the status of a Participant's relationship with the Company changes, e.g.,
from a consultant to an employee or vice versa, it will not be a termination of
the service-providing relationship. Notwithstanding the foregoing, if a
Participant's service is
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terminated for Cause, to the extent the Award is not effectively exercised or
has not vested prior to such termination, it shall lapse or be forfeited to the
Company immediately upon termination. In all events, an Award will not be
exercisable after the end of its term as set forth in the Award Agreement.
(a) Retirement. When a Participant's employment or service terminates
as a result of Retirement, or early retirement with the consent of the
Committee, the Committee (in the form of an Award Agreement or otherwise)
may permit Awards to continue in effect beyond the date of Retirement, or
early retirement, and/or the exercisability and vesting of any Award may be
accelerated.
(b) Resignation in the Best Interests of the Company. When a
Participant resigns from the Company or the Board and, in the judgment of
the Committee, the acceleration and/or continuation of outstanding Awards
would be in the best interests of the Company, the Committee may (i)
authorize, where appropriate, the acceleration and/or continuation of all
or any part of Awards granted prior to such termination and (ii) permit the
exercise, vesting and payment of such Awards for such period as may be set
forth in the applicable Award Agreement.
(c) Death or Disability of a Participant.
(i) In the event of a Participant's death, the Participant's estate
or beneficiaries shall have a period specified in the Award Agreement
within which to receive or exercise any outstanding Award held by the
Participant under such terms, and to the extent, as may be specified in
the applicable Award Agreement. Rights to any such outstanding Awards
shall pass by will or the laws of descent and distribution in the
following order: (a) to beneficiaries so designated by the Participant;
if none, then (b) to a legal representative of the Participant; if none,
then (c) to the persons entitled thereto as determined by a court of
competent jurisdiction. Subject to subparagraph (iii) below, Awards so
passing shall be exercised or paid out at such times and in such manner
as if the Participant were living.
(ii) In the event a Participant is deemed by the Company to be
disabled within the meaning of Cumulus Media Inc.'s group long-term
disability plan, or if Cumulus Media Inc. does not have such a plan,
Section 22(e)(3) of the Code, the Award shall be exercisable for the
period, and to the extent, specified in the Award Agreement. Awards and
rights to any such Awards may be paid to or exercised by the
Participant, if legally competent, or a legally designated guardian or
representative if the Participant is legally incompetent by virtue of
such disability.
(iii) After the death or disability of a Participant, the Committee
may in its sole discretion at any time (1) terminate restrictions in
Award Agreements and (2) accelerate any or all installments and rights.
(iv) In the event of uncertainty as to interpretation of or
controversies concerning this paragraph (c) of Section 12, the
Committee's determinations shall be binding and conclusive.
(d) No Service Rights. The Plan shall not confer upon any Participant
any right with respect to continuation of employment by, or service with,
the Company or service on the Board, nor shall it interfere in any way with
the right of the Company
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to terminate any Participant's employment or service with the Company or on
the Board at any time.
13. NONASSIGNABILITY. Except as provided in subsection (c) of Section 12
and this Section 13, no Award under the Plan shall be assignable or
transferable, or payable to or exercisable by anyone other than the Participant
to whom it was granted. Notwithstanding the foregoing, the Committee (in the
form of an Award Agreement or otherwise) may permit Awards, other than incentive
stock options within the meaning of Section 422 of the Code, to be transferred
to members of the Participant's immediate family, to trusts for the benefit of
the Participant and/or such immediate family members, and to partnerships or
other entities in which the Participant and/or such immediate family members own
all the equity interests. For purposes of the preceding sentence, "immediate
family" shall mean a Participant's spouse, issue, and spouses of his issue.
14. ADJUSTMENTS. In the event of any change in the outstanding Class A
Common Stock of the Company by reason of a stock split, stock dividend,
combination or reclassification of shares, recapitalization, merger, or similar
event, the Committee may adjust proportionally (a) the number of shares of Class
A Common Stock (i) reserved under the Plan, (ii) available for ISOs, (iii) for
which Awards shall be granted to an individual Participant, and (iv) covered by
outstanding Awards denominated in stock; (b) the stock prices related to
outstanding Awards; and (c) the appropriate Fair Market Value and other price
determinations for such Awards. In the event of any other change affecting the
Class A Common Stock or any distribution (other than normal cash dividends) to
holders of Class A Common Stock, such adjustments as may be deemed equitable by
the Committee, including adjustments to avoid fractional shares, shall be made
to give proper effect to such event. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Committee shall be authorized to issue or assume Stock Options,
whether or not in a transaction to which Section 424(a) of the Code applies, by
means of substitution of new Stock Options for previously issued Stock Options
or an assumption of previously issued Stock Options.
15. NOTICE. Any notice to the Company required by any of the provisions of
the Plan shall be addressed to the director of finance of the Company in
writing, and shall become effective when it is received by his office.
16. UNFUNDED PLAN. The Plan shall be unfunded. Although bookkeeping
accounts may be established with respect to Participants who are entitled to
cash, Class A Common Stock or rights thereto under the Plan, any such accounts
shall be used merely as a bookkeeping convenience. The Company shall not be
required to segregate any assets that may at any time be represented by cash,
Class A Common Stock or rights thereto, nor shall the Plan be construed as
providing for such segregation, nor shall the Company nor the Board nor the
Committee be deemed to be a trustee of any cash, Class A Common Stock or rights
thereto to be granted under the Plan. Any liability of the Company to any
Participant with respect to a grant of cash, Class A Common Stock or rights
thereto under the Plan shall be based solely upon any contractual obligations
that may be created by the Plan and any Award Agreement; no such obligation of
the Company shall be deemed to be secured by any pledge or other encumbrance on
any property of the Company. Neither the Company nor the Board nor the Committee
shall be required to give any security or bond for the performance of any
obligation that may be created by the Plan.
17. GOVERNING LAW. The Plan and all determinations made and actions taken
pursuant hereto, to the extent not otherwise governed by the laws of the United
States,
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shall be governed by the laws of the State of Wisconsin, without giving effect
to principles of conflicts of laws, and construed accordingly.
18. EFFECTIVE AND TERMINATION DATES. The effective date of the Plan is
October 1, 2000. The Plan shall terminate on October 1, 2010 subject to earlier
termination by the Board pursuant to Section 11, after which no Awards may be
made under the Plan, but any such termination shall not affect Awards then
outstanding or the authority of the Committee to continue to administer the
Plan.
19. OTHER BENEFIT AND COMPENSATION PROGRAMS. Payments and other benefits
received by a Participant pursuant to an Award shall not be deemed a part of
such Participant's regular, recurring compensation for purposes of the
termination, indemnity or severance pay law of any country and shall not be
included in, nor have any effect on, the determination of benefits under any
other employee benefit plan, contract or similar arrangement, unless the
Committee expressly determines otherwise.
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APPENDIX B
CUMULUS MEDIA INC.
AUDIT COMMITTEE CHARTER
ORGANIZATION
There shall be an audit committee of the board of directors composed of
three directors, selected by the board, each of whom shall be independent of
management and free from any relationships that, in the opinion of the board,
would interfere with the member's exercise of his or her independent judgment.
Each member of the audit committee shall be financially literate (as defined in
the applicable rules) and at least one member shall have past employment
experience in finance or accounting, requisite professional certification in
accounting, or some other comparable experience or background that demonstrates
that individual's financial sophistication and expertise. The chairperson of the
audit committee shall be elected by the board of directors. The audit committee
shall meet at least four times a year and more often when circumstances so
require.
PURPOSE
It shall be the fundamental purpose of the audit committee to assist the
board of directors in fulfilling its responsibility to oversee the company's
system of financial reporting.
RESPONSIBILITIES AND POWERS
In performing its oversight function, the audit committee shall undertake
those tasks that, in its judgment, would most effectively contribute to the
effectiveness and integrity of the company's financial reporting system. In
doing so, the audit committee shall:
1. Encourage within senior management a corporate environment or "tone
at the top" that strives for integrity in financial reporting.
2. Make appropriate inquiry into the logistical capabilities of the
financial reporting system.
3. Make appropriate inquiry to assess the ability of the financial
reporting system to prevent financial misreporting and to detect
misreporting should it occur.
4. Possess, along with the board of directors, ultimate authority and
responsibility for the selection, evaluation, and, where appropriate,
replacement of the outside auditor of the company's financial statements,
so that the outside auditor shall ultimately be accountable to the board of
directors and to the audit committee.
5. Inquire into the independence of the outside auditor; receive from
the outside auditor a written statement, consistent with Independence
Standards Board Standard No. 1, delineating all relationships between the
auditor and the company; engage in dialogue with the auditor and, to the
extent appropriate, the board of directors, with respect to any disclosed
relationships or services that may affect the objectivity and independence
of the auditor; and take, or recommend that the board take, appropriate
action to ensure the independence of the auditor.
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6. Determine that the outside auditor, in addition to being engaged to
perform annual audits of the company's financial statements, has been
engaged to perform quarterly reviews of the company's Forms 10-Q.
7. Discuss with management, the company's chief financial officer, the
outside auditor, the director of internal audit, and/or others (as the
committee believes appropriate), the company's financial statements and
financial reporting system, including potential weaknesses in the system,
with such discussion to take place jointly and/or separately depending on
the committee's judgment.
8. Discuss with the outside auditor, to the extent appropriate, the
items identified in Statement on Auditing Standards No. 61 (including the
auditor's judgment about the quality, not just the acceptability, of the
company's accounting principles), with such discussion, to the extent it
takes place in conjunction with quarterly information, to take place prior
to the filing of each Form 10-Q or, if such discussion cannot reasonably
take place prior to filing, as soon as practicable thereafter.
9. Make a recommendation to the board of directors as to whether the
company's audited financial statements should be included in the company's
Form 10-K.
10. Prepare an annual audit committee report, to be included in the
company's proxy statement, stating whether the committee has:
- Reviewed and discussed the audited financial statements with
management;
- Discussed with outside auditor he matters required to be discussed by
Statement on Auditing Standards No. 61;
- Received appropriate disclosures from the outside auditor regarding
the auditor's independence as required by Independence Standards Board
Standard No. 1 and discussed with the auditor the auditor's
independence;
- Recommended to the board of directors that the audited financial
statements be included in the company's Form 10-K
11. See that the company's proxy statement includes a statement that
the company has adopted this charter, that the company's proxy statement
includes information regarding the independence of audit committee members
and that a copy of this charter is included as an appendix to the company's
proxy statement at least once every three years.
12. Investigate any matter brought to the audit committee's attention
within the scope of its duties, which, in its judgment, warrants
investigation, and possess the power, without consent of the board of
directors, to engage outside professionals for that purpose.
13. Review and assess the adequacy of this Charter on at least an
annual basis.
- Adopted on: June 6, 2000
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DEFINITIONS
NASD/AMEX DEFINITION OF "INDEPENDENT" DIRECTORS
The following directors would not be considered independent:
(a) a director who is currently an employee of the Company or any of
its affiliates or who was an employee of the Company or any of its
affiliates during the past three years;
(b) a director who accepted any compensation from the Company 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;
(c) a director who is an immediate family member of an individual who
is or has been during the past three years an executive officer of the
Company or any of its affiliates;
(d) a director who is a partner in, or a controlling shareholder or an
executive officer of, any for-business organization to which the Company
made, or from which the Company received, payments (other than those
arising from investments in the Company's securities) that exceeded 5% of
the Company's or business organization's consolidated gross revenues for
that year, or $200,000, whichever is more, in any of the past three years;
and
(e) a director who is employed as an executive of another entity where
any of the Company's executives serves on that entity's compensation
committee.
NASD/AMEX DEFINITION OF "FINANCIALLY LITERATE'
A financially literate director is one who is able to read and understand
fundamental financial statements, including a company's balance sheet, income
statement and cash flow statement.
NASD/AMEX DEFINITION OF ACCOUNTING/FINANCIAL EXPERTISE
A director has accounting or related financial management expertise if he
or she has past employment experience in finance or accounting, requisite
professional certification in accounting, or any other comparable experience or
background which results in the director's financial sophistication, including
being or having been a chief executive officer, chief financial officer or other
senior officer with financial oversight responsibilities.
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PROXY CARD
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 to vote, as designated below, all of
the shares of stock of Cumulus Media Inc. held of record by the undersigned on
March 16, 2001 at the 2001 Annual Meeting of Shareholders of Cumulus Media Inc.
to be held on May 4, 2001, or at any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" THE ELECTION OF ALL NOMINEES FOR DIRECTORS, "FOR" THE APPROVAL OF
THE RATIFICATION OF KPMG LLP AS INDEPENDENT AUDITORS FOR 2001, AND "FOR" THE
APPROVAL OF THE 2000 STOCK INCENTIVE PLAN.
\/ DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED \/
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| CUMULUS MEDIA INC. 2001 ANNUAL MEETING |
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[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY to
1. ELECTION OF DIRECTORS: to the left (except as vote for all nominees
specified below). listed to the left.
Class I Directors: 1 - Ralph B. Everett 2 - Holcombe T. Green, Jr.
Class II Directors: 3 - Eric P. Robison 4 - Robert H. Sheridan, III
--------------------------------------------------
(Instructions: To withhold authority to vote for any indicated nominee, ----->
write the number(s) of the nominee(s) in the box provided to the right). --------------------------------------------------
2. PROPOSAL TO APPROVE THE RATIFICATION OF KPMG LLP [ ] FOR [ ] AGAINST [ ] ABSTAIN
AS INDEPENDENT AUDITORS FOR 2001:
3. PROPOSAL TO APPROVE THE 2000 STOCK INCENTIVE PLAN: [ ] FOR [ ] AGAINST [ ] ABSTAIN
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Check appropriate box
Indicate changes below:
Address Change? [ ] Name Change? [ ] Date NO. OF SHARES
-------------------
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SIGNATURE(S) IN BOX
Please sign exactly as name appears hereon.
When shares are held by joint tenants, both
should sign. When signing as attorney,
executor, administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full corporate
name by President or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
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