UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
Filed by the
Registrant
Filed by a Party other
than the Registrant
o
Check the
appropriate box:
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o
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Preliminary
Proxy Statement
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o
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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þ
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Definitive
Proxy Statement
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o
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Definitive
Additional Materials
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o
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Soliciting
Material Pursuant to §240.14a-12
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LIN
TV Corp.
(Name of
Registrant as Specified In Its Charter)
(Name of
Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
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o
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction
applies:
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(3)
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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):
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(4)
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Proposed
maximum aggregate value of
transaction:
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o
Fee
paid previously with preliminary materials.
o
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.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement
No.:
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LIN
TV Corp.
One
West Exchange Street, Suite 5A
Providence,
Rhode Island 02903
NOTICE OF 2010 ANNUAL MEETING OF STOCKHOLDERS
To
be held on May 11, 2010
As a
stockholder of LIN TV Corp., you are hereby given notice of and invited to
attend, in person or by proxy, our 2010 Annual Meeting of Stockholders to be
held at our KXAN-TV offices, 908 W. Martin Luther King Boulevard, Austin, Texas,
78701, on May 11, 2010 at 10:00 a.m., local time, at which
stockholders will consider and vote on the following matters:
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1.
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The
election of two members to our Board of Directors to serve as Class I
directors for a term of three
years;
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2.
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The
ratification of the selection of PricewaterhouseCoopers LLP as our
independent registered public accounting firm for the year ending
December 31, 2010;
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3.
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The
approval of the amended and restated 2002 Non-Employee Director Stock Plan
which will (i) increase the number of shares of class A common stock
reserved for issuance under the plan by 1,500,000 shares (from 1,500,000
shares to 3,000,000 shares) and (ii) eliminate the expiration date of May
1, 2012;
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4.
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The
approval of the amended and restated 2002 Stock Plan which will increase
the number of shares of class A common stock reserved for issuance under
the plan by 2,500,000 shares (from 6,300,000 shares to 8,800,000
shares);
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5.
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The
approval of the 2010 Employee Stock Purchase Plan which will reserve for
issuance 350,000 shares of class A common stock for issuance under the
plan; and
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6.
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The
transaction of any other business which may properly come before the
meeting.
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Our Board
of Directors has fixed the close of business on March 24, 2010 as the
record date for the determination of stockholders entitled to receive notice of
and to vote at the Annual Meeting.
All
stockholders are cordially invited to attend the Annual Meeting.
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By
Order of our Board of Directors,
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Denise
M. Parent
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Secretary
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April 12,
2010
TO ENSURE THAT YOUR SHARES ARE
REPRESENTED AT THE ANNUAL MEETING, PLEASE FILL IN,
DATE, SIGN AND PROMPTLY MAIL THE
ENCLOSED PROXY CARD, FOR WHICH A RETURN STAMPED
ENVELOPE IS
PROVIDED.
LIN
TV Corp.
One
West Exchange Street, Suite 5A
Providence,
Rhode Island 02903
PROXY STATEMENT FOR THE ANNUAL MEETING OF
STOCKHOLDERS
To be held on May
11, 2010
The
accompanying proxy is solicited on behalf of the Board of Directors of LIN TV
Corp., a Delaware corporation (“we,” “us,” “our” or the “Company”), for use at
our 2010 Annual Meeting of Stockholders (the “Annual Meeting”) to be held at our
KXAN-TV offices, 908 W. Martin Luther King Boulevard, Austin, Texas, 78701, May
11, 2010 at 10:00 a.m., local time, notice of which is attached hereto, and any
adjournment or postponement thereof.
The
Annual Meeting is being held (1) to consider and vote upon the election of two
Class I directors for a three-year term, (2) to ratify the selection of
PricewaterhouseCoopers LLP as the independent registered public accounting firm
of LIN TV Corp. for the year ending December 31, 2010, (3) to approve the
amended and restated 2002 Non-Employee Director Stock Plan which will (a)
increase the number of shares of class A common stock reserved for issuance
under the plan by 1,500,000 shares (from 1,500,000 shares to 3,000,000 shares)
and (b) eliminate the expiration date of May 1, 2012, (4) to approve the amended
and restated 2002 Stock Plan which will increase the number of shares of class A
common stock reserved for issuance under the plan by 2,500,000 shares (from
6,300,000 shares to 8,800,000 shares), (5) to approve the 2010 Employee Stock
Purchase Plan which will reserve for issuance 350,000 shares of class A common
stock for issuance under the plan, and (6) to transact any other business which
may properly come before the meeting.
Our Board
recommends that you vote FOR all proposals presented.
This
Proxy Statement and the enclosed form of proxy are being mailed to stockholders
commencing on or about April 12, 2010.
A copy of
our Annual Report on Form 10-K for the fiscal year ended December 31, 2009, as
filed with the Securities and Exchange Commission, is being mailed to
stockholders with this Notice and Proxy Statement on or about April 12, 2010.
Exhibits will be provided to any stockholder at no charge upon written or oral
request to LIN TV Corp., One West Exchange Street, Suite 5A, Providence, Rhode
Island 02903, Attention: Denise M. Parent, Secretary; Telephone: (401)
454-2880.
Shares
Entitled to Vote
Our Board
has fixed the close of business on March 24, 2010 as the record date for the
Annual Meeting or any adjournment thereof. Only stockholders who were record
owners of shares of our common stock at the close of business on the record date
are entitled to receive notice of and to vote at the Annual Meeting or any
adjournment or postponement thereof. As of March 24, 2010, 29,407,007 shares of
our class A common stock, 23,502,059 shares of our class B common stock and two
shares of our class C common stock were issued and outstanding.
Holders
of shares of class A common stock outstanding on the record date are entitled to
one vote per share at the Annual Meeting.
The class
B common stock is generally not entitled to vote except with respect to approval
of a range of specified corporate transactions as to which the class B common
stock votes as a separate class, with each share of class B common stock
entitled to one vote. The approval of the amended and restated 2002 Non-Employee
Director Stock Plan, the amended and restated 2002 Stock Plan and the 2010
Employee Stock Purchase Plan each constitute one of the specified corporate
transactions as to which the approval of a majority of the voting power of the
class B common stock voting as a separate class is required. Holders of shares
of class B common stock outstanding on the record date are entitled to one vote
per share at the Annual Meeting with respect to these proposals. None of the
remaining proposals being considered at the Annual Meeting are matters as to
which approval of a majority of the class B common stock is
required.
The class
C common stock is entitled to 70% of the voting power on all matters submitted
to a vote of our stockholders. Each outstanding share of class C common stock is
entitled to a proportionate number of votes determined at the record date
relative to the total number of shares of class A common stock outstanding. As
of March 24, 2010, there were two shares of class C common stock outstanding. As
a result, each share of class C common stock will be entitled to cast 34,308,175
votes at the Annual Meeting. The class A common stock and the class C common
stock generally vote together as a single class on all matters submitted to a
vote of our stockholders.
Voting
in Person
If a
stockholder plans to attend the meeting and vote in person, we will provide a
ballot to such stockholder as he or she arrives. However, if shares are held in
the name of a broker, bank or other nominee, the stockholder must bring an
account statement or letter from the nominee indicating that such stockholder
was the beneficial owner of the shares on March 24, 2010, the record date for
voting.
Voting
by Proxy
Shares
represented by a properly executed proxy in the accompanying form will be voted
at the Annual Meeting and, when instructions have been given by the stockholder,
will be voted in accordance with those instructions. If no instructions are
given, the stockholder’s shares will be voted according to the recommendations
of our Board.
Quorum
Requirement
A quorum
of stockholders is necessary to hold a valid meeting. A majority of shares
entitled to vote at the Annual Meeting present in person or represented by proxy
represents a quorum. Shares which abstain from voting on a particular matter and
“broker non-votes,” or shares held in “street name” by brokers or nominees who
indicate on their proxies that they do not have discretionary authority to vote
such shares on a particular matter, are counted for purposes of determining
whether a quorum exists.
Under the
rules of the New York Stock Exchange (“NYSE”), in the absence of instructions
from persons holding shares in “street name,” brokers and nominees may vote at
their discretion on routine matters. The only proposal at the Annual Meeting
that is considered a routine matter under NYSE rules is the ratification of
appointment of our independent registered public accounting firm. The other
proposals are not routine under NYSE rules and brokers and nominees will not be
permitted to vote at their discretion on such proposals in the absence of
instructions.
Vote
Required
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Proposal
1: Election of Directors
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The
election of directors requires a plurality of the votes cast, and votes may be
cast in favor of the nominees or withheld. A plurality means that the nominee
receiving the most votes for election to a director position is elected to that
position. Votes that are withheld and broker non-votes will be excluded entirely
from the vote to elect directors and have no effect.
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Proposal
2: Ratification of the Selection of Independent Registered Public
Accounting Firm
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The
ratification of the selection of our independent registered public accounting
firm requires the affirmative vote of a majority of the votes cast at the
meeting, and votes may be cast for, against or may abstain. Abstentions will
count in the tabulations of votes cast on this proposal, while broker non-votes
are not counted as votes cast or shares voting on such matter and will have no
effect on the voting on such matter.
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—
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Proposal
3: Approval of Amended and Restated 2002 Non-Employee Director Stock
Plan
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—
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Proposal
4: Approval of Amended and Restated 2002 Stock
Plan
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—
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Proposal
5: Approval of 2010 Employee Stock Purchase
Plan
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Each of
Proposals 3, 4 and 5, the approval of the amended and restated 2002 Non-Employee
Director Stock Plan, the amended and restated 2002 Stock Plan, and the 2010
Employee Stock Purchase Plan requires the affirmative vote of (1) a majority of
the votes entitled to be cast by holders of class A common stock and class C
common stock entitled to vote at the meeting, voting together as a single class,
provided that the total votes cast on the proposal represent over 50% in
interest of all securities entitled to vote on the proposal, and (2) the
affirmative vote of a majority of the shares of class B common stock outstanding
as of the record date, voting as a separate class. Votes may be cast for,
against or may abstain. Abstentions will have the effect of voting against the
proposal. Broker non-votes are not counted as votes cast and will not be counted
for purposes of determining whether the total votes cast on the proposal
represent over 50% in interest of all securities entitled to vote on the
proposal. Holders of a majority of the shares of class B common stock
outstanding as of the record date, voting as a separate class, have approved the
amended and restated 2002 Non-Employee Director Stock Plan, the amended and
restated 2002 Stock Plan, and the 2010 Employee Stock Purchase
Plan.
Under
Delaware law, stockholders have no rights of appraisal or similar rights of
dissenters with respect to any of the proposals to be voted upon at the Annual
Meeting.
Revoking
a Proxy
A
stockholder may revoke his or her proxy at any time before its exercise by
sending written notice of revocation to the Secretary of the Company, by signing
and delivering a later dated proxy or, if the stockholder attends the Annual
Meeting in person, either by giving notice of revocation to the inspector of
election at the Annual Meeting or by voting at the Annual Meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following table sets forth information regarding the beneficial ownership of
each class of our common stock by each person who beneficially owned more than
5% of any class of our equity securities and by our directors and named
executive officers (as defined in the Summary Compensation Table), individually,
and by our directors and executive officers as a group, as of March 18, 2010
(unless otherwise noted).
The
amounts and percentages of common stock beneficially owned are reported on the
basis of regulations of the Securities and Exchange Commission (“SEC”) governing
the determination of beneficial ownership of securities. Under the rules of the
SEC, a person is deemed to be a beneficial owner of a security if that person
has or shares voting power, which includes the power to vote or to direct the
voting of such security, or investment power, which includes the power to
dispose of or to direct the disposition of such security. Unless otherwise
indicated below, each beneficial owner named in the table below has sole voting
and sole investment power with respect to all shares beneficially owned, subject
to community property laws where applicable.
Holders
of shares of our class B common stock may elect at any time to convert their
shares into an equal number of shares of class A common stock, provided that any
necessary consent by the Federal Communications Commission (“FCC”) has been
obtained. With the approval of the holders of a majority of our class B common
stock and the FCC, one or more shares of class B common stock of a holder may be
converted into an equal number of shares of class C common stock. If a majority
of the shares of class B common stock convert into shares of class A common
stock, each outstanding share of class C common stock will automatically convert
into an equal number of shares of class A common stock.
Percentage
of beneficial ownership is based on 29,407,007
shares of class A common
stock, 23,502,059 shares of class B common stock and two shares of class C
common stock outstanding as of March 18, 2010. The number of beneficially owned
shares of class A common stock excludes shares of class A common stock issuable
upon conversion of shares of our class B common stock and class C common stock.
The number of beneficially owned shares of class C common stock excludes shares
of our class C common stock issuable upon conversion of shares of our class B
common stock.
Unless
otherwise indicated below, the address of each person below is c/o LIN TV Corp.,
One West Exchange Street, Suite 5A, Providence, Rhode Island 02903.
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Class
A
Common
Stock
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Class
B
Common
Stock
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Class
C
Common
Stock
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Percent
of
Total
Economic
Interest
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Percentage
of
Total
Class
A
and
Class C
Voting
Power
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Number
of
Shares
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Percent
of
Class
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Number
of
Shares
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Percent
of
Class
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Number
of
Shares
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Percent
of
Class
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HM
Entities
(1)
c/o
HM Capital Partners I LP
200
Crescent Court,
Suite
1600
Dallas,
Texas 75201
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-
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-
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23,300,739
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99.1%
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1
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50.0%
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44.0%
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35.0%
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Gabelli Asset Management
Entities
(2
)
767 Fifth
Avenue
New
York, NY 10153
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5,259,877
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17.9%
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-
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|
-
|
|
-
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-
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9.9%
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5.4%
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|
|
|
|
|
|
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|
|
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|
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Amalgamated
Gadget, L.P
(3)
301
Commerce Street
Suite
2975
Fort
Worth, TX 76102
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2,383,290
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8.1%
|
|
-
|
|
-
|
|
-
|
|
-
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4.5%
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2.4%
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|
|
|
|
|
|
|
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Dimensional Fund Advisors
Inc
.(4)
1299
Ocean Avenue, 11
th
Floor
Santa
Monica, CA 90401
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1,878,657
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6.4%
|
|
-
|
|
-
|
|
-
|
|
-
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3.6%
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1.9%
|
|
|
|
|
|
|
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BlackRock
Inc.
(5)
40
East 52
nd
Street
New
York, NY 10022
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1,612,534
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5.5%
|
|
-
|
|
-
|
|
-
|
|
-
|
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3.0%
|
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1.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Vincent
L. Sadusky
|
268,434
|
|
*
|
|
-
|
|
-
|
|
-
|
|
-
|
|
*
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott
M. Blumenthal
|
132,965
|
|
*
|
|
-
|
|
-
|
|
-
|
|
-
|
|
*
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denise
M. Parent
|
67,273
|
|
*
|
|
-
|
|
-
|
|
-
|
|
-
|
|
*
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
S. Banowsky
|
49,461
|
|
*
|
|
-
|
|
-
|
|
-
|
|
-
|
|
*
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
S. Richter
|
49,433
|
|
*
|
|
-
|
|
-
|
|
-
|
|
-
|
|
*
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royal W. Carson, III
(6)
500
Victory Plaza East, 3030
Olive
Street,
Dallas,
Texas 75219
|
34,119
|
|
*
|
|
-
|
|
-
|
|
1
|
|
50.0%
|
|
*
|
|
35.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr.
William H. Cunningham
|
16,808
|
|
*
|
|
-
|
|
-
|
|
-
|
|
-
|
|
*
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
A. Pausic
|
12,794
|
|
*
|
|
-
|
|
-
|
|
-
|
|
-
|
|
*
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter S. Brodsky
(7)
|
12,572
|
|
*
|
|
-
|
|
-
|
|
-
|
|
-
|
|
*
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
J. Schmaeling
|
12,100
|
|
*
|
|
-
|
|
-
|
|
-
|
|
-
|
|
*
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas
W. McCormick
|
10,572
|
|
*
|
|
-
|
|
-
|
|
-
|
|
-
|
|
*
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All executive officers and
directors as a group (11
persons)
(8)
|
666,531
|
|
2.3%
|
|
-
|
|
-
|
|
1
|
|
50.0%
|
|
1.3%
|
|
35.7%
|
____________
|
*
|
Represents
less than 1%
|
|
(1)
|
Includes
shares held by the following persons or entities that are or may be deemed
to be affiliated with HM Capital Partners I LP (“HMC”): (i) 18,122,110
shares of class B common stock and one share of class C common stock held
of record by Hicks, Muse, Tate & Furst Equity Fund III, L.P., a
limited partnership of which the ultimate general partner is Hicks Muse
Fund III Incorporated, (ii) 236,980 shares of class B common stock held of
record by HM3 Coinvestors, L.P., a limited partnership of which the
ultimate general partner is Hicks Muse Fund III Incorporated, (iii)
4,692,329 shares of class B common stock held of record by Hicks, Muse,
Tate & Furst Equity Fund IV, L.P., a limited partnership of which the
ultimate general partner is Hicks, Muse Latin America Fund I Incorporated,
(iv) 31,562 shares of class B common stock held of record by Hicks, Muse,
Tate & Furst Private Equity Fund IV, L.P., a limited partnership of
which the ultimate general partner is Hicks, Muse Latin America Fund I
Incorporated, (v) 72,820 shares of class B common stock held of record by
HM4-EQ Coinvestors, L.P., a limited partnership of which the ultimate
general partner is Hicks, Muse Fund IV, LLC, (vi) 13,016 shares of class B
common stock held of record by HM4-EN Coinvestors, L.P., a limited
partnership of which the ultimate general partner is Hicks, Muse Fund IV,
LLC, (vii) 8,329 shares of class B common stock held of record by HM4-P
Coinvestors, L.P., a limited partnership of which the ultimate general
partner is Hicks, Muse Fund IV, LLC, (viii) 127 shares of class B common
stock held of record by HM 1-FOF Coinvestors, L.P., a limited partnership
of which the ultimate general partner is Hicks, Muse Latin America Fund I
Incorporated, and (ix) 123,466 shares of class B common stock held of
record by Hicks, Muse & Co. Partners, L.P., a limited partnership of
which the ultimate general partner is HM Partners
Inc.
|
John R.
Muse is (a) the sole shareholder and an executive officer of Hicks, Muse Fund
III Incorporated and Hicks, Muse Latin America Fund I Incorporated, (b) the sole
member and an executive officer of Hicks, Muse Fund IV, LLC and (c) the majority
stockholder, a director and an executive officer of HM Partners Inc.
Accordingly, Mr. Muse may be deemed to be the beneficial owner of the shares
held of record by the entities listed in clauses (i) through (ix) of this
footnote (1). Mr. Muse disclaims beneficial ownership of shares not owned of
record by him, except to the extent of his pecuniary interest therein. In
addition, Mr. Muse, Andrew S. Rosen, and Joe Colonnetta are the voting members
of a committee that exercises voting and dispositive powers over the LIN TV
securities held by the entities affiliated with HMC. No single member of the
committee has dispositive and/or voting power over the shares held by the HMC
affiliates. Messrs. Muse, Rosen and Colonnetta are current partners of HMC. As a
result of the foregoing, each of Messrs. Muse, Rosen and Colonnetta may be
deemed to beneficially own all or a portion of the shares of common stock
beneficially owned by the HMC affiliates described above. Each of Messrs. Muse,
Rosen and Colonnetta disclaims the existence of a group and disclaims beneficial
ownership of shares of common stock not owned of record by him, except to the
extent of any pecuniary interest therein.
|
(2)
|
According
to the Schedule 13DA amendment filed on March 22, 2010, Gabelli Funds, LLC
(“Gabelli Funds”), GAMCO Asset Management Inc. (“GBL”), Gabelli
Securities, Inc. (“GSI”), MJG Associates, Inc. (“MJG”) and Teton Advisors,
such persons are the beneficial owners of, and have the sole power to
dispose of or direct the disposition of 921,800 shares, 4,220,077 shares,
4,000 shares, 4,000 shares and 110,000 shares, respectively, of class A
common stock. Gabelli Funds, GBL, GSI, MJG and Teton Advisors have the
sole power to vote or direct the vote of 921,800 shares, 4,033,677 shares,
4,000 shares 4,000 shares and 110,000 shares, respectively of class A
common stock. Gabelli Funds and GSI are subsidiaries of GBL. Mario J.
Gabelli is the sole shareholder of
MJG.
|
|
(3)
|
According
to the Schedule 13G filed on February 11, 2010, Amalgamated Gadget, L.P.
is the beneficial owner of 2,383,290 shares of class A common stock
with the sole power to vote or direct the vote and to dispose of or direct
the disposition of 2,383,290 of class A common
stock.
|
|
(4)
|
According
to the Schedule 13G amendment filed on February 8, 2010, Dimensional Fund
Advisors Inc. is the beneficial owner of 1,878,657 shares, with the sole
power to vote or direct the vote of, 1,852,170 shares, and to dispose of
or direct the disposition of 1,878,657 shares, of class A common
stock.
|
|
(5)
|
According
to the Schedule 13G filed on January 29, 2010, BlackRock Inc. is the
beneficial owner of 1,612,534 shares of class A common stock with the sole
power to vote or direct the vote and to dispose of or direct the
disposition of 1,612,534 of class A common stock. BlackRock, Inc.
completed its acquisition of Barclays Global Investors, NA (“BGI”) form
Barclays Bank PLC on Dec. 1, 2009. As a result, substantially all of the
BGI entities are now included as subsidiaries of BlackRock for purposes of
Schedule 13G filings.
|
|
(6)
|
Consists
of 1 share of class C common stock held by Carson LIN SBS L.P., a limited
partnership whose ultimate general partner is Carson Private Capital
Incorporated, and 34,119 shares of class A common stock held of
record.
|
|
(7)
|
Mr.
Brodsky is a partner of HMC and a member of a committee that exercises
voting and dispositive powers over the securities held by the entities
affiliated with HMC, but Mr. Brodsky does not vote on such committee with
respect to matters involving LIN TV. Based on the totality of Mr.
Brodsky’s role and ownership position in the HMC entities, the Company
does not believe that Mr. Brodsky shares beneficial ownership of the
shares of common stock beneficially owned by the HMC affiliates described
in footnote (1) above, although it is possible that he may be deemed to
beneficially own all or a portion of such shares. Mr. Brodsky disclaims
beneficial ownership of shares of common stock not owned of record by him,
except to the extent of any pecuniary interest
therein.
|
|
(8)
|
There
were no shares of class A common stock issuable upon the exercise of
options that are exercisable within 60 days of March 18, 2010. The total
for all executive officers and directors represent shares of class A
common stock held of record.
|
|
|
DIRECTORS AND EXECUTIVE
OFFICERS
|
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
requires our directors, executive officers and holders of more than 10% of our
class A common stock to file with the SEC initial reports of ownership of our
class A common stock and other equity securities on a Form 3 and reports of
changes in such ownership on a Form 4 or Form 5. Officers, directors and holders
of more than 10% of our class A common stock are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file. To our
knowledge, based solely on a review of our records and representations made by
our officers and directors regarding their filing obligations, all Section 16(a)
filing requirements were satisfied with respect to the fiscal year ended
December 31, 2009.
PROPOSAL 1 — ELECTION OF DIRECTORS
We have a
classified Board of Directors consisting of Class I, Class II and Class III
directors. Currently there is one vacancy on our Board in Class I and one
vacancy on our Board in Class III. Our Second Amended and Restated Certificate
of Incorporation provides that subject to the rights of holders of any class or
series of preferred stock to elect directors, the number of directors shall be
established by our Board. Our Board has set the number of directors at
nine.
At each
annual meeting of stockholders, each nominee is elected for a term of three
years to succeed those whose terms are expiring. This year, two Class I
directors will be elected for a three-year term expiring at the 2013 Annual
Meeting. The Class II directors have terms expiring at the 2011 Annual Meeting
and the Class III directors have terms expiring at the 2012 Annual
Meeting.
The
persons named in the enclosed proxy will vote to elect as directors the Class I
nominees named below, unless the proxy is marked otherwise. If a stockholder
returns a proxy without contrary instructions, the persons named as proxies will
vote to elect as directors the Class I nominees named below. Each Class I
nominee will be elected to hold office until the 2013 Annual Meeting of
Stockholders and until his successor is duly elected and qualified. The nominees
have indicated their willingness to serve, if elected. However, if any should be
unable to serve, the shares of common stock represented by proxies may be voted
for substitute nominees designated by our Board.
Set forth
below are the name and age of each member of our Board (including the nominees
for election as Class I directors), and the positions and offices held by him,
his principal occupation and business experience during the past five years, the
names of other publicly held companies of which he serves as a director or has
served as a director during the past five (5) years and the year of the
commencement of his term as a member of our Board. In evaluating
potential director candidates, the Nominating and Corporate Governance Committee
seeks candidates who can make substantial contributions to our Board on various
issues, including, chief executive officer or similar senior executive
leadership experience, expertise in finance, accounting, financial controls and
compliance, experience with public company directorships and core management
experience in the media industry. Each of the director nominees has served in
senior leadership positions in large organizations and has experience with
corporate management and the oversight of financial reporting. The nominees for
election at the Annual Meeting also possess experiences and qualifications that
the Nominating and Corporate Governance Committee believes make such nominees
uniquely suited to make substantial contributions to the Board. Specific skills
and experience of each of our Board members, including directors whose terms
continue beyond the Annual Meeting, are identified in the summaries
below.
Information
with respect to the number of shares of common stock beneficially owned by each
director, directly or indirectly, as of March 18, 2010, appears above under the
heading “Security Ownership of Certain Beneficial Owners and
Management.”
We
recommend that you vote
FOR
each of the two nominees
listed below.
|
Name
and Age
|
Principal
Occupation and Business Experience
|
|
Nominees
for Term Expiring in 2013 (Class I Directors)
|
|
Currently
there is a vacancy on our Board for a Class I
Director.
|
|
William
S. Banowsky, Jr.,
48
|
Mr.
Banowsky was elected to our Board in May 2002. Since 2001, Mr. Banowsky
has served as Chief Executive Officer of Magnolia Pictures Company, an
independent film distribution company. Since October 2008, Mr. Banowsky
has also served as Chief Executive Officer of Carolina Cinemas, a movie
theatre chain. From March 1999 to September 2000, Mr. Banowsky was
Executive Vice President and General Counsel of AMFM, Inc., which was
publicly traded on the New York Stock Exchange until September 2000. From
January 1997 to July 2000, Mr. Banowsky was Executive Vice President and
General Counsel of Capstar Broadcasting Corporation, which was publicly
traded on the New York Stock Exchange until it merged with AMFM, Inc., in
July 1999. Mr. Banowsky practiced law for 10 years in Dallas, Texas prior
to joining Capstar. Mr. Banowsky served as a director of Sunrise
Television Corporation and STC Broadcasting, Inc. until May 2002, when
they were merged into the Company.
Specific
qualifications, experience, skills and expertise:
—
Operating
and management experience, including as chief executive officer, in
media-related businesses
—
Expertise
in finance, financial reporting, compliance and controls
—
Legal
experience in the media industry
—
Company
directorship and committee experience
—
Independent
of the Company
|
|
|
|
|
Dr.
William H. Cunningham, 66
|
Dr.
William H. Cunningham was elected to LIN TV’s Board of Directors in May,
2009. Dr. Cunningham joined the University of Texas in 1971, when he was
hired as Assistant Professor of Marketing. He later became a Professor of
Marketing and has held the following additional positions: James L.
Bayless Chair for Free Enterprise from 1986 to present; the President of
the University of Texas in Austin from 1985 to 1992; and Dean of College
of Business Administration/Graduate School of Business from 1983 to 1985.
Dr. Cunningham was also Chancellor of the University of Texas System from
1992 to 2000. Dr. Cunningham also serves on the Board of Directors of the
following publicly traded companies: Lincoln National Corporation,
Southwest Airlines Co., Resolute Energy Corporation and also serves as a
disinterested director of the John Hancock Funds. Within the last five
years, Dr. Cunningham also served on the Board of Directors of the
following publicly traded companies: Introgen Therapeutics, Inc., Hayes
Lemmerz International, Inc., Hicks Acquisition Company I, Inc. and
Jefferson-Pilot Corporation. He is a member of the Philosophical Society
of Texas, a trustee for the Southwest Research Institute and a director of
the greater Austin Crime Commission. Dr. Cunningham received his B.B.S.,
M.B.A. and Ph.D. from Michigan State University. Dr. Cunningham served as
a director of Sunrise Television Corp. and STC Broadcasting, Inc. until
May 2002 when they were merged into LIN TV Corp. and he continued to serve
on the LIN TV Corp. board until 2008.
Specific
qualifications, experience, skills and expertise:
—
Distinguished
faculty member of a large university
—
Expertise
in accounting, finance and business analysis, financial reporting,
compliance and controls
—
Extensive
public company directorship and committee experience
—
Independent
of the Company
|
|
|
|
Directors
Whose Terms Expire in 2011 (Class II Directors)
|
|
Peter
S. Brodsky,
39
|
Mr.
Brodsky was elected to our Board in June 2005. Mr. Brodsky joined HM
Capital Partners I, LP in 1995 and was named partner in 2001. Mr. Brodsky
focuses primarily on the media sector. He serves as director of several of
HM Capital’s portfolio companies including Choice Cable TV, CanPages Inc.,
Phone Directories Company, Unitek USA, Wilkes-Barre Publishing Company,
Persona and Maine Today Media. Mr. Brodsky also sits on the board of
directors of HM Capital Partners LLC. Prior to joining HM Capital
Partners, Mr. Brodsky worked in the Investment Banking Division of Credit
Suisse First Boston. Mr. Brodsky received his BA from Yale University in
1992.
Specific
qualifications, experience, skills and expertise:
—
Expertise
in finance and business opportunities in traditional and new media as well
as other industries
—
Core
business skills
—
Company
directorship and committee experience
—
Independent
of the Company
|
|
|
|
|
Douglas
W. McCormick,
60
|
Mr.
McCormick was elected to our Board and named non-executive Chairman of our
Board in September 2006. Mr. McCormick is a Venture Partner with Rho
Ventures, a division of Rho Capital Partners, which he joined in October
2006. Mr. McCormick’s primary focus at Rho is on investments in the media
sector. Prior to Rho, Mr. McCormick was CEO of iVillage Inc., a public
company, from August 2000 until the sale of iVillage Inc. to NBC Universal
in May 2006. He also served on iVillage’s Board of Directors, to which he
was appointed in February 1999 and was elected Chairman in April 2001. Mr.
McCormick also served as President and Chief Executive Officer of Lifetime
Television, a cable network provider, from 1993 to 1998. Prior to
Lifetime, Mr. McCormick held executive positions with The Samuel Goldwyn
Company, Cable Health Network, Petry Television and KCOP-TV. Currently,
Mr. McCormick is a member of the board of Ovation Television and is
Chairman of the Board of Everyday Health. Mr. McCormick received his MBA
from Columbia University.
Specific
qualifications, experience, skills and expertise:
—
Operating
and management experience, including as a chief executive officer of a
global media corporation
—
Expertise
in the traditional and new media markets
—
Company
directorship and committee experience
—
Independent
of the Company
|
|
Michael
A. Pausic,
45
|
Mr.
Pausic was elected to our Board in February 2006. Mr. Pausic has been a
Limited Partner of Maverick Capital Ltd., a registered investment advisor
managing private investment funds, since 1997, where he leads Maverick’s
efforts in media and telecommunications investments. From 1995 to 1997,
Mr. Pausic was a corporate Vice President at Viacom where he was
responsible for international strategic planning and business development.
From 1991 to 1995, he served as Vice President of market development and
strategic planning for 20
th
Century Fox. Mr. Pausic received his BS from the University of Virginia
and MBA from Fuqua School of Business at Duke University.
Specific
qualifications, experience, skills and expertise:
—
Expertise
in business and finance
—
Extensive
background in development of strategic business opportunities in the media
industry
—
Company
directorship and committee experience
—
Independent
of the Company
|
|
|
|
Directors
Whose Term Expires in 2012 (Class III Directors)
|
|
Currently
there is a vacancy on our Board for a Class III
Director.
|
|
Royal
W. Carson, III,
60
|
Mr.
Carson was elected to our Board in August 2000. Since 1982, he has served
as Chairman and Chief Executive Officer of Carson Private Capital, and he
has over 38 years of experience sourcing, structuring and managing
investments within the private equity and energy industries. From 1974 to
1994, Mr. Carson’s investment focus was in the oil and gas sector. During
that period, Mr. Carson founded Carson Petroleum Corporation, which was
sold to Devon Energy Corporation in 1982. Mr. Carson also co-founded CPC
Dale Petroleum Company, which generated oil and gas prospects and operated
wells until those assets were sold to W.R. Grace & Company and Snyder
Oil & Gas in 1994. Since 1997, Mr. Carson’s core focus has been the
formation of investment partnerships and in the acquisition of oil and
natural gas reserves, typically restricted to institutional investors. Mr.
Carson serves as a director of various privately held corporations and
community organizations. Mr. Carson also serves on the advisory boards of
private equity sponsors, HM Capital Partners (Dallas), Lion Capital
(London) and Cotton Creek Partners (Dallas).
Specific
qualifications, experience, skills and expertise:
—
Expertise
in business and finance
—
Extensive
background in development of strategic business opportunities
—
Company
directorship and committee experience
—
Independent
of the Company
|
|
Vincent
L. Sadusky, 44
|
Mr.
Sadusky was elected to our Board in July 2006, when he was also appointed
our President and Chief Executive Officer. From August 2004 until July
2006, Mr. Sadusky served as Vice President Chief Financial Officer and
Treasurer of the Company. From 1999 until August 2004, Mr. Sadusky was
Chief Financial Officer and Treasurer of Telemundo Communications Group,
Inc., where he worked for over ten years. Prior to joining Telemundo
Communications, he performed audit and consulting services for seven years
with Ernst & Young, LLC. Mr. Sadusky serves on the boards of JVB
Financial Group, LLC, Maximum Service Television, Inc. (MSTV) and the Open
Mobile Video Coalition (OMVC). Mr. Sadusky received his BS in
accounting from Penn State University and his MBA from New York Institute
of Technology.
Specific
qualifications, experience, skills and expertise:
—
Unique
perspective of the Chief Executive Officer of the Company on the
operations, business relationships, financial position and challenges of
the Company
—
Expertise
in finance, financial reporting, compliance and controls
—
Core
business skills, including operations and management experience in the
media industry
|
PROPOSAL 2 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The Audit
Committee of the Board of Directors has the authority and responsibility to
nominate for shareholder ratification the independent registered public
accounting firm and has selected PricewaterhouseCoopers LLP as our independent
registered public accounting firm for 2010. The Board of Directors is now
soliciting the shareholders’ ratification of the selection of
PricewaterhouseCoopers LLP. If the shareholders do not ratify the appointment of
PricewaterhouseCoopers LLP, the Audit Committee will reevaluate the engagement
of the independent registered public accounting firm. Even if the appointment is
ratified, the Audit Committee, in its discretion, may nevertheless appoint
another independent registered public accounting firm at any time during the
year if the Audit Committee determines that such a change would be in the best
interests of the shareholders.
A
representative of PricewaterhouseCoopers LLP is expected to attend the Annual
Meeting. The PricewaterhouseCoopers LLP representative will have the opportunity
to make a statement if he or she desires to do so and will be able to respond to
appropriate questions from shareholders. Additional information regarding fees
paid to PricewaterhouseCoopers LLP is available in the section of this Proxy
Statement titled “Independent Registered Public Accounting Firm Fees and Other
Matters.”
We
recommend that you vote
FOR
ratification of the
appointment of PricewaterhouseCoopers LLP.
PROPOSAL 3 —
APPROVAL OF AMENDED AND
RESTATED
2002
NON-EMPLOYEE
DIRECTOR
STOCK PLAN
A
proposal will be presented at the Annual Meeting for the stockholders to approve
an amendment and restatement of our 2002 Non-Employee Director Stock Plan, or
the “Director Plan,” which will (1) increase the number of shares of
class A common stock reserved for issuance under the Director Plan by
1,500,000 shares (from 1,500,000 shares to 3,000,000 shares) and (ii) eliminate
the plan’s current expiration date of May 1, 2012.
As of
April 12, 2010, there were 652,638
shares of our
class A common stock available for grant under the 2002 Non-Employee
Director Stock Plan. We last obtained stockholder approval to increase the
number of shares authorized for issuance under the Director Plan at a Special
Meeting of Stockholders on December 1, 2006 when the stockholders approved an
amendment to increase the number of shares available for issuance under the
Director Plan to 1,500,000 shares.
The Board
of Directors believes that our future growth and profitability depend upon our
ability to maintain a competitive position in attracting and retaining qualified
directors and that equity awards are an important part of the compensation to be
offered to directors. Accordingly, on March 31, 2010, our Board of Directors
voted, subject to stockholder approval, to amend and restate the Director Plan
to increase the number of shares of class A common stock reserved for
issuance under the Director Plan from 1,500,000 shares to
3,000,000 shares to ensure that we will have a sufficient number of shares
of class A common stock available under the Director Plan to continue to provide
sufficient option grants to attract and retain directors. The Board of Directors
also voted, subject to stockholder approval, to eliminate the expiration date of
May 1, 2012 to allow for grants, used to attract and retain directors, beyond
the May 1, 2012 expiration date.
As of
April 12, 2010, options to purchase an aggregate of 716,508 shares of our
class A common stock and awards of 48,719 shares of our restricted
class A common stock were outstanding to our current non-employee directors
under the 2002 Non-Employee Director Stock Plan.
Summary
of the 2002 Non-Employee Director Stock Plan, as amended and
restated
The
following is a brief summary of the 2002 Non-Employee Director Stock Plan, as
proposed to be amended and restated, a copy of which is attached as
Appendix A
to
the electronic copy of the filing of this proxy statement with the Securities
and Exchange Commission and may be accessed from the Securities and Exchange
Commission’s Internet home page (www.sec.gov). In addition, a copy of the
Director Plan may be obtained upon written request from our Corporate Secretary
at the Company’s principal executive offices. The following summary is qualified
in its entirety by reference to the complete text of amended and restated 2002
Non-Employee Director Stock Plan.
The
Director Plan is administered by the Compensation Committee of our Board of
Directors, subject to the authority of our Board of Directors to delegate
administration of the Director Plan to any other committee appointed by our
Board of Directors. The Compensation Committee has the authority to prescribe,
amend, modify and rescind rules and regulations relating to the Director Plan,
and to interpret the terms and conditions of the Director Plan and make all
determinations permitted or deemed necessary, appropriate or advisable for the
administration of the Director Plan. The Compensation Committee’s decisions are
final, conclusive and binding on all participants.
Eligibility
to Receive Awards
Our
non-employee directors are eligible to be granted awards under the Director
Plan. As of April 12, 2010, there were six (6) non-employee directors eligible
to receive awards under the 2002 Non-Employee Director Stock
Plan.
The
Director Plan permits us to issue non-qualified stock options and stock awards,
including restricted stock awards, to our non-employee directors, which in the
aggregate may not be exercisable for more than 3,000,000 shares of our
class A common stock. The terms of these awards will be determined by the
Compensation Committee of our Board of Directors. In this summary, options and
stock awards are referred to collectively as “Awards.”
Non-qualified
Stock Options
The
Compensation Committee of our Board of Directors may grant non-qualified stock
options to our non-employee directors. The Compensation Committee determines the
terms of the options, including the amount, the exercise price, vesting schedule
and term, which may not exceed 10 years from the date of grant. The exercise
price of an option may not be less than the fair market value of a share of
common stock on the date of grant. Non-qualified stock options granted pursuant
to the Director Plan generally will not be exercisable until one year after
their grant and will vest in equal amounts over the span of four years. A
non-employee director may pay the exercise price of an option in cash or, if
permitted by the Compensation Committee, other consideration including by
surrender of common stock the non-employee director holds.
The
Compensation Committee of our Board of Directors will determine the terms of the
stock awards, including the duration of the period which, and the conditions
under which, the stock awards may be forfeited to the Company and what, if
anything, the participant must pay to receive a stock award. Stock awards
granted under the plan vest in equal amounts over five years.
Adjustments
upon Changes in Capitalization
Our Board
of Directors is required to make appropriate adjustments in connection with the
Director Plan and any outstanding awards to reflect stock dividends, stock
splits, reorganizations and certain other events to preserve the benefits
intended to be provided by the Director Plan.
Upon any
change of control, as defined in the Director Plan, or if we or affiliates of
HMC enter into any agreement providing for our change of control, the Board of
Directors may act to preserve the rights of non-employee directors by, among
other things, declaring that any restrictions applicable to any stock award
shall lapse and that any outstanding options shall vest and become immediately
exercisable. Thereafter, the options will be subject to the terms of the
transaction effecting the change of control.
The
Director Plan permits stock exchange programs pursuant to which outstanding
options may be exchanged for new stock options or restricted stock on such terms
as our Board of Directors may determine, provided the exercise price per share
of the new stock option or stock award shall not exceed the fair market value of
a share of common stock on the date of grant.
Transferability
of Awards
Except as
otherwise expressly provided in an option agreement, stock options granted under
the Director Plan are not assignable or transferable except by will or the laws
of descent and distribution. The Compensation Committee may, on a case-by-case
basis, permit a non-employee director to transfer a stock option, in whole or in
part, during his or her lifetime to one or more immediate family members or to a
trust established exclusively for one or more such family
members.
The Board
of Directors may at any time amend, modify, suspend or terminate the Director
Plan, provided that an amendment will not become effective without stockholder
approval where the absence of such approval would cause the Director Plan to
fail to comply with any requirements of applicable law or regulation. No
amendment, modification, suspension or termination of the Director Plan may
cause, without the consent of the holder, any previously granted awards to be
forfeited or altered in a way that materially and adverse affects the
holder.
U.S. Federal Income Tax Consequences
Relating to Awards under the 2002 Non-Employee Director Stock
Plan
The
following is a summary of the United States federal income tax consequences that
generally will arise with respect to awards granted under the plan. This summary
is based on the federal tax laws in effect as of the date of this proxy
statement. In addition, this summary assumes that all awards are exempt from, or
comply with, the rules under Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”) regarding nonqualified deferred compensation and
does not describe state, local or international tax consequences. Changes to
these laws could alter the tax consequences described below.
Non-qualified Stock Options.
A non-employee director will not have income upon the grant of a non-statutory
stock option. A non-employee director will have ordinary income upon the
exercise of a non-statutory stock option equal to the value of the stock on the
day the non-employee director exercised the option less the exercise price. Upon
sale of the stock, the non-employee director will have capital gain or loss
equal to the difference between the sales proceeds and the value of the stock on
the day the option was exercised. This capital gain or loss will be long-term if
the non-employee director has held the stock for more than one year and
otherwise will be short-term. The ordinary income recognized will be reported as
self-employment income to the non-employee director.
Restricted Stock Awards.
A
non-employee director will not have income upon the grant of restricted stock
unless an election under Section 83(b) of the Code is made within
30 days of the date of grant. If a timely 83(b) election is made, then a
non-employee director will have compensation income equal to the value of the
stock less the purchase price. When the stock is sold, the non-employee director
will have capital gain or loss equal to the difference between the sales
proceeds and the value of the stock on the date of grant. If the non-employee
director does not make an 83(b) election, then when the stock vests the
nonemployee director will have ordinary income equal to the value of the stock
on the vesting date less the purchase price. When the stock is sold, the
non-employee director will have capital gain or loss equal to the sales proceeds
less the value of the stock on the vesting date. Any capital gain or loss will
be long-term if the non-employee director held the stock for more than one year
and otherwise will be short-term. The ordinary income recognized will be
reported as self-employment income to the non-employee director.
Tax Consequences to the
Company.
There will be no tax consequences to the Company except that the
Company will be entitled to a deduction in the year the non-employee recognizes
the ordinary income.
Total
Awards to Date under the 2002 Non-Employee Director Plan
The
number of stock options and stock awards to be granted to our non-employee
directors under the amended and restated 2002 Non-Employee Director Stock Plan
cannot be determined. The following table sets forth the stock options and stock
awards granted as of April 12, 2010 to our current non-employee directors under
the plan.
|
Name
and Title or Group
|
|
Number
of Stock Options Granted to Date
|
|
Number
of Shares of Restricted Stock Granted to Date
|
|
|
|
|
|
|
|
Current
Non-Employee
Directors
|
|
852,350
(1)
|
|
96,183
|
|
(1)
|
This
number includes 102,592 stock options that were granted to Dr. William H.
Cunningham and cancelled upon his resignation from the Board on January
24, 2008.
|
Recommendation
of the Board of Directors
The Board
of Directors believes that the amendment and restatement of our 2002
Non-Employee Director Stock Plan is in the best interests of the Company and its
stockholders and therefore recommends that the stockholders vote
FOR
this
proposal.
PROPOSAL
4 — APPROVAL OF AMENDED AND RESTATED 2002 STOCK PLAN
A
proposal will be presented at the Annual Meeting that the stockholders approve
an amendment and restatement of the 2002 Stock Plan (we refer to the plan as
amended and restated as the “
Plan
”) which will
increase the number of shares of class A common stock reserved for issuance
under the Plan by 2,500,000 shares (from 6,300,000 shares to
8,800,000 shares).
As of
April 12, 2010, under the 2002 Stock Plan there were (i) grants of options for
3,026,451 shares of our class A common stock and (ii) grants for 2,515,231
shares of our restricted stock. As a result, as of such date there were 758,318
shares of our class A common stock available for grant under the Plan. The Board
of Directors believes that our future growth and profitability depend, in large
part, upon our ability to maintain a competitive position in attracting and
retaining key personnel, particularly senior executives. Accordingly, on March
31, 2010, the Board of Directors voted, subject to stockholder approval, to
amend and restate the Plan to ensure that we will have a sufficient number of
shares of class A common stock available under that Plan to continue to
provide sufficient option grants to attract, retain and motivate
personnel.
We last
obtained stockholder approval to increase the number of shares authorized for
issuance under the Plan at the 2005 Annual Meeting of Stockholders when the
stockholders approved an amendment to increase the number of shares available
for issuance under the Plan to 6,300,000 shares.
Summary of the
2002 Stock Plan, as amended and restated
The
following is a brief summary of the 2002 Stock Plan, as proposed to be amended
and restated, a copy of which is attached as
Appendix B
to
the electronic copy of the filing of this proxy statement with the Securities
and Exchange Commission and may be accessed from the Securities and Exchange
Commission’s Internet home page (www.sec.gov). In addition, a copy of the 2002
Stock Plan may be obtained upon written request from our Corporate Secretary at
the Company’s principal executive offices. The following summary is qualified in
its entirety by reference to the complete text of the amended and restated 2002
Stock Plan.
The Plan
is administered by the Compensation Committee of the Board of Directors or by
any other committee appointed by the Board of Directors, or by the entire Board
of Directors acting as the committee. The Compensation Committee may delegate to
one or more of its members, or to one or more agents, such administrative duties
as it may deem advisable. Subject to any applicable limitations contained in the
Plan, the Compensation Committee or its delegate has authority to select the
recipients of awards and to determine the time when such awards will be granted,
the number of shares of class A common stock subject to such awards and the
dates upon which such options become exercisable, the exercise price and the
duration of options, and other terms and provisions of awards. The Compensation
Committee or its delegate also has authority to prescribe, amend, modify and
rescind rules and regulations relating to the Plan, and to interpret the terms
and conditions of the Plan and make all determinations permitted or deemed
necessary, appropriate or advisable for the administration of the Plan. The
Compensation Committee’s decisions are final, conclusive and binding on all
participants.
Eligibility
to Receive Awards
Employees
of the Company and its subsidiaries and providers of consulting, advisory or
other services to the Company and its subsidiaries, whom the Board of Directors
or the Compensation Committee believes have a direct and significant effect on
the financial development of the Company or any of its subsidiaries, are
eligible to be granted Awards under the Plan. Non-employee directors are not
eligible to be granted Awards under the Plan. Under present law, however,
incentive stock options may only be granted to employees of the Company and its
subsidiaries. The maximum number of shares with respect to which options and
stock awards may be granted to any participant under the Plan is 350,000 shares
per calendar year.
As of
April 12, 2010, approximately 1,840 persons were eligible to receive awards
under the Plan, including our executive officers and directors who are also
employees of the Company. The granting of awards under the Plan is
discretionary, and we cannot now determine the number or type of awards to be
granted in the future to any particular person or group. On March 29, 2010, the
last reported sale price of our class A common stock on The New York Stock
Exchange was $5.41
.
The Plan
permits us to issue both non-qualified and incentive stock options, which in the
aggregate may not be exercisable for more than 8,800,000 shares of our class A
common stock. The Plan also permits us to make stock awards, including
restricted stock awards, the terms of which will be determined by the
Compensation Committee of our Board of Directors. In this summary, options and
stock awards are referred to collectively as “Awards.”
Incentive
Stock Options and Non-qualified Stock Options
The
Compensation Committee of our Board of Directors may grant incentive stock
options qualifying under Section 422 of the Code and non-qualified stock
options. Incentive stock options may be granted only to employees of the Company
and its subsidiaries whereas non-qualified stock options may be granted to
employees or non-employees, but not non-employee directors. The Compensation
Committee determines the terms of the option awards, including the amount, the
exercise price, vesting schedule and term, which may not exceed ten years from
the date of grant. The exercise price of an option may not be less than the fair
market value of a share of common stock on the date of grant. Incentive stock
options and non-qualified stock options granted pursuant to the Plan generally
will not be exercisable until one year after their grant and will vest over the
span of four years. A participant may pay the exercise price of an option in
cash or, if permitted by the Compensation Committee, other consideration
including by surrender of common stock the participant holds.
Stock
awards may be made under the Plan to employees or non-employees, but not to
non-employee directors. The Compensation Committee of our Board of Directors
will determine the terms of the stock awards, including the duration of the
period which, and the conditions under which, the stock awards may be forfeited
to the Company, and what, if anything, the participant must pay to receive a
stock award.
The plan
permits the compensation committee to structure restricted stock awards so that
restrictions lapse based on the achievement of certain business criteria
relating to the employee, one or more of our business units or the Company as a
whole in order to qualify such awards for the qualified performance-based
compensation exception to Section 162(m) of the Code. The business criteria may
include comparisons to the performance of other companies. The business criteria
shall be as follows, individually or in combination: (i) net earnings; (ii)
earnings per share; (iii) net sales growth; (iv) market share; (v) net operating
profit; (vi) expense targets; (vii) working capital targets; (viii) operating
margin; (ix) return on equity; (x) return on assets; (xi) planning accuracy (as
measured by comparing planned results to actual results); (xii) market price per
share; (xiii) total return to stockholders and (xiv) broadcast cash flow (as
defined below). Broadcast cash flow is defined as operating income plus
corporate expenses plus depreciation and amortization of intangible assets and
amortization of program rights plus other non-cash expenses or credits, minus
cash program payments.
Such
performance goals may be adjusted to exclude any one or more of (i)
extraordinary items, (ii) gains or losses on the dispositions of discontinued
operations, (iii) the cumulative effects of changes in accounting principles,
(iv) the write down of any asset, and (v) charges for restructuring and
rationalization programs.
Such
performance goals: (i) may vary by participant and may be different for
different awards; (ii) may be particular to a participant or the
department, station, subsidiary or other unit in which the participant works and
may cover such period as may be specified by the Compensation Committee; and
(iii) will be set by the Compensation Committee within the time period
prescribed by, and will otherwise comply with the requirements of, Section
162(m).
Adjustments
upon Changes in Capitalization
The
Compensation Committee is required to make appropriate adjustments in connection
with the Plan and any outstanding awards to reflect stock dividends, stock
splits, reorganizations and certain other events to preserve the benefits
intended to be provided by the Plan.
Upon any
change of control, or if we or affiliates of HMC enter into any agreement
providing for our change of control, the Compensation Committee may act to
preserve the rights of participants by, among other things, declaring that any
or all outstanding options shall vest and become immediately exercisable and any
restrictions applicable to outstanding stock awards shall completely lapse.
Thereafter, the options and awards will be subject to the terms of the
transaction effecting the change of control.
The
Compensation Committee may, without stockholder approval, amend any outstanding
option to reduce the exercise price thereof, but not less than the fair market
value of a share of common stock on the date the option is amended and to cancel
any outstanding stock option and grant in exchange therefor a new option or
stock award in such proportion and with such vesting criteria as the
Compensation Committee may determine.
Amendment
and Termination
The Board
of Directors may at any time amend, modify, suspend or terminate the Plan,
provided that an amendment that would disqualify any incentive stock options
granted under the Plan, increase the number of shares reserved for issuance
under the Plan, increase the annual per-participant limit or modify the
requirements for eligibility to participate in the Plan will not become
effective without the approval of a majority of our stockholders. No amendment,
modification, suspension or termination of the Plan may cause, without the
consent of the holder, any previously granted awards to be forfeited or altered
in a way that materially and adverse affects the holder.
U.S.
Federal Income Tax Aspects Relating to Awards under the 2002 Stock
Plan
The
following is a summary of the U.S. federal income tax consequences to
participants receiving certain awards under the 2002 Stock Plan. This summary is
based on the federal tax laws in effect as of the date of this proxy statement.
This summary is not intended to be complete and, among other considerations,
does not describe the deferred compensation provisions of Section 409A of the
Code to the extent an award is subject to and does not satisfy those rules nor
does it describe state, local or international tax consequences. Changes to
these laws could alter the tax consequences described
below.
Incentive Stock Options
. A
participant does not realize taxable income upon the grant or exercise of an
incentive stock option under the Plan. If a participant does not dispose of
shares received upon the exercise of an ISO for at least two years from the date
of grant and one year from the date of exercise, then (a) upon sale of such
shares, any amount realized in excess of the option price is taxed to the
participant as a capital gain and any loss sustained will be a capital loss and
(b) we would not be entitled to a deduction for federal income tax purposes. The
exercise of incentive stock options gives rise to an adjustment in computing
alternative minimum taxable income that may result in alternative minimum tax
liability for the participant.
If shares
of common stock acquired upon the exercise of an ISO are disposed of prior to
the expiration of the two-year and one-year holding periods described above, a
“disqualifying disposition” occurs and the participant realizes ordinary income
in the year of disposition in an amount equal to the excess, if any, of the fair
market value of the shares at exercise (or, if less, the amount realized on a
sale of such shares) over the exercise price. We would be entitled to a tax
deduction for the same amount. Any further gain realized would be taxed as a
short-term or long-term capital gain and would not result in any deduction for
us. A disqualifying disposition in the year of exercise will generally avoid the
alternative minimum tax consequences of the exercise of an ISO.
Non-qualified Stock Options
.
No income is realized by the participant at the time a non-qualified stock
option is granted. Upon exercise, the participant realizes ordinary income in an
amount equal to the excess of the fair market value of the shares of common
stock on the date the option is exercised and the option exercise price. We will
be entitled to take a tax deduction in an equal amount. Any further
gain realized would be taxed as a short-term or long-term capital gain and would
not result in any deduction for us.
Stock Awards
. Generally, a
participant will be taxed at the time the restrictions on the shares lapse and
are no longer subject to a substantial risk of forfeiture. The excess of the
fair market value of the shares at that time over the amount paid, if any, by
the participant for the shares will be treated as ordinary income. The
participant may, instead, elect at the time of grant to be taxed as ordinary
income on the excess of the then fair market value of the shares over the amount
paid, if any, for the shares by filing an election under Section 83(b) of the
Code. In either case, we would receive a tax deduction for the amount reported
as ordinary income to the participant. When the participant disposes of the
shares, any subsequent appreciation or depreciation is treated as a short or
long-term capital gain or loss and we will not be entitled to any further tax
deduction.
Other Tax Matters
. If a
participant receives any accelerated vesting or exercise of options or
accelerated lapse of restrictions on stock awards in connection with a change in
control, we may not be permitted to deduct the portion of the compensation
attributable to the acceleration (“parachute payments”) if it exceeds certain
threshold limits under the Code and the participant may be subject to an excise
tax. Further, U.S. tax laws generally do not allow publicly-held companies to
obtain a tax deduction for compensation in excess of $1,000,000 paid in any year
to any of the Chief Executive Officer or three most highly paid executive
officers other than the Chief Financial Officer unless the compensation is
“performance based” as defined in Section 162(m).
Total
Awards to Date under the 2002 Stock Plan
The
following table sets forth the stock options and stock awards granted as of
April 12, 2010 under the 2002 Stock Plan to the named executive officers, all
current executive officers as a group and all current employees and consultants
(including all current officers who are not executive officers) as a group under
the 2002 Stock Plan.
|
Name
and Title or Group
|
|
Number
of Stock Options Granted to Date
|
|
|
Number
of Shares of Restricted Stock Granted to Date
|
|
|
|
|
|
|
|
|
|
|
Vincent
L. Sadusky
|
|
|
775,834
|
|
|
|
295,956
|
|
|
President
and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
J. Schmaeling
|
|
|
136,800
|
|
|
|
12,100
|
|
|
Senior
Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott
M. Blumenthal
|
|
|
358,000
|
|
|
|
156,894
|
|
|
Executive
Vice President Television
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denise
M. Parent
|
|
|
173,466
|
|
|
|
108,545
|
|
|
Vice
President General Counsel and Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
S. Richter
|
|
|
176,800
|
|
|
|
58,767
|
|
|
Senior
Vice President New Media
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Current Executive Officers as a Group
|
|
|
1,620,900
|
|
|
|
632,262
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Current Employees, including all current officers who are not executive
officers, as a Group
|
|
|
1,405,551
|
|
|
|
1,882,969
|
|
Recommendation
of the Board of Directors
The Board
of Directors believes that the amendment and restatement of the 2002 Stock Plan
is in the best interests of the Company and its stockholders and therefore
recommends that the stockholders vote
FOR
this
proposal.
PROPOSAL 5 — APPROVAL OF THE COMPANY’S 2010 EMPLOYEE STOCK PURCHASE
PLAN
A
proposal will be presented at the Annual Meeting that the stockholders approve
the Company’s 2010 Employee Stock Purchase Plan (the “Purchase
Plan”).
On March
31, 2010, the Board of Directors adopted, subject to stockholder approval, the
2010 Employee Stock Purchase Plan. Under the Purchase Plan, eligible employees
of the Company may purchase shares of common stock at a discount from fair
market value. The purpose of the Purchase Plan is to provide eligible employees
of the Company who wish to become stockholders of the Company with a convenient
method of purchasing Class A common stock of the Company. Stockholder approval
of the Purchase Plan is required in order for the Purchase Plan to qualify under
Section 423 of the Code. Qualification under Section 423 of the Code will permit
the Company’s employees to benefit from the favorable tax treatment described
below. If the stockholders do not approve the proposal, the Board of Directors
will not commence any offerings under the Purchase Plan. The Company believes
that operation of the Purchase Plan is important in attracting and retaining
employees in a competitive labor market, which is essential to the Company’s
future growth and profitability.
Summary
of 2010 Employee Stock Purchase Plan
The
following is a brief summary of the 2010 Employee Stock Purchase Plan, a copy of
which is attached as
Appendix C
to the
electronic copy of the filing of this proxy statement with the Securities and
Exchange Commission and may be accessed from the Securities and Exchange
Commission’s Internet home page (www.sec.gov). In addition, a copy of the
Purchase Plan may be obtained upon written request from our Corporate Secretary
at the Company’s principal executive offices. The following summary is qualified
in its entirety by reference to the complete text of the 2010 Employee Stock
Purchase Plan.
Subject
to stockholder approval, the Purchase Plan is intended to qualify under Section
423 of the Code. It is not a tax-qualified retirement plan under Section 401(a)
of the Code nor is it subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA). The purpose of the Purchase Plan is to
provide employees of the Company with an opportunity to purchase common stock of
the Company at a discount from market price through payroll
deductions.
Three
hundred fifty thousand (350,000) shares of our class A common stock are reserved
for issuance under the Purchase Plan.
The
Purchase Plan will be administered by the Compensation Committee of the Board of
Directors or by any other committee designated by the Board of Directors, or by
the entire Board of Directors acting as the committee. Subject to any applicable
limitations contained in the Purchase Plan, the Compensation Committee has the
authority to administer and interpret the provisions of the Purchase Plan, to
make any rules, regulations or procedures relating to the Purchase Plan. The
Compensation Committee’s decisions are final, conclusive and binding upon all
participants.
Eligibility
and Participation
Employees
(including officers and employee directors) who are regularly scheduled to work
more than 20 hours per week and more than five months per
calendar year with the Company or any designated subsidiary of the Company are
eligible to participate in the Purchase Plan, subject to certain limitations
imposed by the Code. Eligible employees become participants in the Purchase Plan
by filing with the Company an enrollment agreement authorizing payroll
deductions prior to the applicable offering date, unless the administrator sets
a later time for filing the enrollment agreement. A participant’s enrollment
agreement continues to be effective for each consecutive offering period until
the participant withdraws from the Purchase Plan or ceases to be eligible to
participate in the Purchase Plan.
As of
April 12, 2010, approximately 1,840
employees, including
five (5) named executive officers, would have been eligible to participate in
the Purchase Plan. Members of the Company’s Board of Directors who are not
employees and other non-employees, such as consultants, are not eligible to
participate. To date, no shares of common stock have been issued under the
Purchase Plan.
Offering
Periods; Purchase Price
The
Purchase Plan operates by a series of consecutive offering periods. Each
offering period is a three-month period commencing on each January 1, April 1,
July 1, and October 1 (or if such day is not a regular business day, the first
regular business day thereafter) and ending on each March 30, June 30, September
30 and December 31, respectively. The purchases are made for participants at the
end of each month in an offering period by applying payroll deductions
accumulated over the preceding month towards such purchases. The price at which
these purchases are made equal 85% of the fair market value of the common stock
as of the final trading day of each month occurring within the offering period
(i.e., the purchase date).
Employees
who join the Company during an ongoing offering period, or who are otherwise not
yet eligible to participate in the Purchase Plan, may enter the offering period
as of the later of the employee’s hire date or the date the individual becomes
otherwise eligible to participate in the Purchase Plan. For employees who begin
participating in the Purchase Plan after the beginning of an offering period,
the offering date will be the date such employees enter an offering
period.
Limitations
on Participation
Employees
are permitted to have 2%, 4%, 6%, 8% or 10% of their compensation accumulated
and applied toward purchases of shares under the Purchase Plan. The
Administrator may change this maximum participation rate at any time before the
beginning of an offering period. The compensation that can be accumulated and
applied toward purchase of shares under the Purchase Plan generally includes
salary or wages, overtime and commissions, but excludes bonuses and other
special payments except to the extent that any such excluded item is
specifically included by the Compensation Committee. An employee may not
participate in the Purchase Plan if, immediately after he or she joined, he or
she (or any other person whose stock would be attributed to such employee under
stock attribution rules of the Code) would own stock and/or hold rights to
purchase stock possessing 5% or more of the total combined voting power or value
of all classes of stock of the Company or of any subsidiary of the Company. The
Purchase Plan also limits an employee’s rights to purchase stock under all
employee stock purchase plans (those subject to Section 423 of the Code) of
the Company and its subsidiaries so that such rights may accrue at a rate that
does not exceed $25,000 of fair market value of such stock (determined at the
time the employee begins participating in the offering period) for each calendar
year in which such right to purchase stock is outstanding at any time. In
addition, no employee may purchase more than 10,000 shares of common stock
under the Purchase Plan during any offering period.
The
Company may make a pro rata allocation of the shares remaining available for
stock purchase if the total number of shares that would otherwise be subject to
stock purchase rights granted at the beginning of an offering period exceeds the
number of remaining available shares in the Purchase Plan. Employees may
withdraw from the Purchase Plan, and receive back their accumulated payroll
deductions, without interest, at any time prior to a purchase date. If any
employee does not withdraw prior to the end of an offering period, he or she
will continue to participate in the next offering period that begins following
the end of that offering period.
Payroll
Deductions
The
purchase price of the shares to be acquired under the Purchase Plan is
accumulated by payroll deductions over an offering period. A participant may
authorize the Company to deduct from his or her pay 2%, 4%, 6%, 8% or 10% of his
or her compensation on each payday during the offering period. The administrator
may change the maximum amount that a participant can contribute at any time
before the beginning of an offering period. A participant may change his or her
rate of contribution as of the beginning of an offering period. A participant
may discontinue his or her participation in the Purchase Plan by withdrawing at
any time. When a participant withdraws, he or she receives back the payroll
deductions accumulated under the Purchase Plan, but does not receive interest on
such amounts. Amounts contributed to the Purchase Plan are part of the Company’s
general funds and are not required to be segregated. Payroll deductions for a
participant begin with the first full payroll following the date he or she joins
the Purchase Plan.
Termination
of Employment or Loss of Eligibility
Termination
of a participant’s employment for any reason, including retirement or death, or
the failure of the participant to remain in the continuous employ of the Company
for at least 20 hours per week during an offering period (unless on an
approved leave of absence or a temporary reduction of hours) causes the employee
to become ineligible to participate in the Purchase Plan. In such event, payroll
deductions credited to the participant’s account will be returned to him or her
or, in the case of death, to the person or persons entitled thereto as provided
in the Purchase Plan, without interest.
Adjustments
Our Board
of Directors is required to make appropriate adjustments in connection with the
Purchase Plan and any outstanding options to reflect stock dividends, stock
splits, reorganizations and certain other events to preserve the benefits
intended to be provided by the Purchase Plan.
Transfer
Restrictions
A
participant’s rights with respect to the purchase of shares under the Purchase
Plan, as well as payroll deduction accumulated under the Purchase Plan, may not
be assigned, transferred, pledged or otherwise disposed of in any way except by
will or the laws of descent and distribution.
Amendment
and Termination
The Board
of Directors may at any time amend, modify, suspend or terminate the Purchase
Plan, provided that any amendment to increase the number of shares reserved for
issuance under the Purchase Plan will not become effective without the approval
of a majority of our stockholders. No amendment, modification, suspension or
termination of the Purchase Plan can affect rights to purchase stock previously
granted nor may an amendment, in general, make any change in an outstanding
right to purchase stock which adversely affects the rights of any
participant.
U.S.
Federal Income Tax Aspects Relating to the Purchase Plan
The
following is a summary of the United States federal income tax consequences that
generally will arise with respect to options granted under the Purchase Plan.
This summary is based on the federal tax laws in effect as of the date of this
proxy statement. This summary does not purport to be complete and, among other
considerations, does not describe state, local or international tax
consequences. Changes to these laws could alter the tax consequences described
below.
The
Purchase Plan, and the right of participants to make purchases thereunder, is
intended to qualify under the provisions of Section 421 and 423 of the
Code.
If the
stockholders approve the Purchase Plan, participants will not realize taxable
income at the commencement of an offering or at the time shares are purchased
under the Purchase Plan. Under these provisions, participants will not realize
taxable income until the shares purchased under the Purchase Plan are sold or
otherwise disposed of. If a participant disposes of his or her shares of common
stock within the later of two years from the offering date that applies to the
shares or within one year from the purchase date of the shares, a transaction
referred to as a “disqualifying disposition,” the participant will realize
ordinary income in the year of such disposition equal to the amount by which the
fair market value of the stock on the purchase date exceeded the purchase price.
Any difference over or under the participant’s tax cost (the purchase price plus
the amount of ordinary income that the participant recognizes upon the sale of
the shares) will be treated as a capital gain or loss. A capital gain or loss
will be long-term if the participant holds the shares of common stock for more
than one year after the purchase date.
If the
participant disposes of his or her shares of common stock more than two years
after the offering date of such right to purchase stock under the Purchase Plan
and more than one year after the purchase date of such stock purchase right, the
participant will realize ordinary income in the year of such disposition equal
to the lesser of (i) the excess of the fair market value of the shares on the
date of disposition over the purchase price or (ii) 15% of the fair market value
of the shares on the offering date of such stock purchase right.
Any difference over or
under the participant’s tax cost (the purchase price plus the amount of ordinary
income that the participant recognizes upon the sale of the shares) will be
treated as a long-term capital gain. If the fair market value of the shares on
the date of disposition is less than the purchase price, there will be no
ordinary income and any loss recognized will be a capital loss.
The
Company will generally be entitled to a deduction in the year of a disqualifying
disposition equal to the amount of ordinary income recognized by the participant
as a result of such disposition. In all other cases, no deduction is allowed the
Company.
New
Plan Benefits
If the
Purchase Plan is approved, eligible employees may purchase shares of our Class A
common stock at their discretion, subject to the limitations under Section 423
of the Code and the terms of the Purchase Plan. Consequently, it is not possible
for us to determine the amounts or benefits that our employees will receive
under the Purchase Plan at this time.
Recommendation
of the Board of Directors
The Board
of Directors believes that the adoption of the 2010 Employee Stock Purchase Plan
is in the best interests of the Company and its stockholders and therefore
recommends that the stockholders vote
FOR
this
proposal.
CORPORATE GOVERNANCE MATTERS
Under
applicable New York Stock Exchange (“NYSE”) rules, a director of our Company
only qualifies as “independent” if our Board determines that the director has no
material relationship with our Company (either directly or as a partner,
shareholder or officer of an organization that has such a relationship with our
Company). Our Board has not adopted any categorical standards to assist it in
making determinations of independence, but instead considers all relevant facts
and circumstances regarding a director’s relationship with our Company.
Consistent with NYSE rules and guidance, our Board does not consider ownership
of a significant amount of our stock, or affiliation with a holder of a
significant amount of our stock, by itself a material relationship.
The
determination of whether a material relationship exists is made by the other
members of our Board who are independent.
Our Board
has determined that none of Dr. Cunningham, or Messrs. Banowsky, Brodsky,
Carson, McCormick, or Pausic has a material relationship with our Company, and
that each of these directors is “independent” as determined under Section
303A.02(b) of the NYSE Listed Company Manual. None of these directors had any
commercial, industrial, banking, consulting, legal, accounting, charitable or
familial relationships with our Company, either directly or as a partner,
shareholder or officer of an organization that has a relationship with our
Company that would constitute a “material relationship” under NYSE
rules.
BOARD OF DIRECTORS’ COMMITTEES AND MEETINGS
During
2009, our Board held six (6) meetings. Each of our directors, with the exception
of Mitchell Stern, who left our Board on May 21, 2009, attended at least 75% of
such meetings and the meetings of the committees on which he or she served
during 2009. Resolutions adopted by our Nominating and Corporate Governance
Committee of our Board provide that directors are expected to attend the Annual
Meeting of stockholders. Messrs. Banowsky, Brodsky, Carson, and Sadusky attended
the 2009 Annual Meeting of stockholders in person and Ms. Hart, who left our
Board on May 22, 2009, participated by teleconference. Messrs. McCormick, Pausic
and Stern were unable to attend.
Our Board
has established three standing committees — Audit, Compensation, and Nominating
and Corporate Governance. Current copies of the charters for all three
committees, along with our Corporate Governance Guidelines, the Code of Business
Conduct and Ethics and our Code of Ethics for Senior Financial Officers, are
posted on our website,
www.lintv.com
, in the “About
LIN TV” section under Corporate Governance in the Guidelines subsection. All of
these corporate governance documents are also available in print upon request
directed to Denise M. Parent, Secretary, LIN TV Corp., One West Exchange Street,
Suite 5A, Providence, Rhode Island 02903.
Our Board
has determined that none of the members of the Audit, Compensation or Nominating
and Corporate Governance committees has a material relationship with our Company
and that each of these directors is independent as determined under Section
303A.02 (b) of the NYSE Listed Company Manual, including, in the case of all
members of the Audit Committee, the independence requirements of Rule 10A-3
under the Exchange Act.
Board
Leadership Structure
As noted
above, our Board is currently comprised of six independent directors and one
management director. Mr. McCormick has served as non-executive Chairman of the
Board since September 29, 2006. In that role, Mr. McCormick’s responsibilities,
include (i) presiding at meetings of our Board and stockholders, including
executive sessions of the non-management directors, (ii) advising the Chief
Executive Officer and/or the Corporate Secretary regarding agenda items for the
meetings of the Board, (iii) calling meetings of the independent directors, with
appropriate notice, (iv) advising the Chief Executive Officer on issues
discussed at executive sessions of the independent directors, and (v) such other
responsibilities that the Board deems appropriate. We believe that our current
Board leadership structure allows for our independent directors to effectively
focus on governance matters, evaluate risks, oversee our management, and pursue
strategic business plans that serve the interests of the
stockholders.
Our Board
conducts an annual evaluation in order to determine whether it and its
committees are functioning effectively. As part of this annual self-evaluation,
the Board evaluates whether the current leadership structure continues to be
optimal for the Company and its stockholders. Our Corporate Governance
Guidelines provide the flexibility for our Board to modify or continue our
leadership structure in the future, as it deems appropriate.
Risk
Oversight
The Board
is apprised of particular risk management matters by management in connection
with its general oversight and approval of corporate matters. The Board has
delegated to the Audit Committee oversight of our risk management process. Among
its responsibilities, the Audit Committee reviews with management (i) management
of risks that may be material to the Company, (ii) the Company’s system of
disclosure controls and the system of internal controls over financial
reporting, and (iii) the Company’s compliance with legal and regulatory
requirements. The Audit Committee, and all other Board committees, report to the
full Board, including when a matter rises to the level of a material risk. The
Company’s management is responsible for day-to-day risk management. This
oversight includes identifying, evaluating, and addressing potential risks that
may exist at the strategic, financial, operational, compliance and reporting
levels. We believe the division of risk management responsibilities described
above is an effective approach for addressing the risks facing our Company and
that our Board leadership structure supports this approach.
Stockholders
and other interested parties may communicate directly with our Chairman of the
Board or with the independent directors as a group as described below under the
heading “Communicating with the Directors.”
The
current members of the committees are identified below:
|
|
|
|
|
Committees
|
|
Name
|
|
Chairman
of Board
|
|
Audit
|
|
Compensation
|
|
Nominating
and
Corporate
Governance
|
|
William
S. Banowsky,
Jr.
|
|
|
|
×
|
|
|
|
Chair
|
|
Peter
S. Brodsky
|
|
|
|
|
|
Chair
|
|
×
|
|
Royal
W. Carson, III
|
|
|
|
|
|
×
|
|
|
|
Dr.
William H. Cunningham
(1)
|
|
|
|
Chair
|
|
|
|
|
|
Douglas
W. McCormick
|
|
×
|
|
|
|
×
|
|
×
|
|
Michael
A. Pausic
(2)
|
|
|
|
×
|
|
|
|
×
|
|
Vincent
L. Sadusky
(3)
|
|
|
|
|
|
|
|
|
__________
|
(1)
|
Dr.
Cunningham was appointed to our Board on May 21, 2009 and the Audit
Committee on May 22, 2009.
|
|
(2)
|
Mr.
Pausic was appointed to our Audit Committee on April 1,
2010.
|
|
(3)
|
See
Summary Compensation Table for disclosure related to Mr. Sadusky, who is a
named executive officer of the
Company.
|
Audit Committee.
The Audit
Committee has the following principal duties:
|
|
Ÿ
|
to
nominate for shareholder ratification the independent registered public
accounting firm for appointment by our Board of
Directors;
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|
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Ÿ
|
to
meet with our financial management, internal audit and independent
registered public accounting firm to review matters relating to our
internal accounting controls, internal audit program, accounting practices
and procedures, the scope and procedures of the independent audit, the
independence of the outside registered public accounting firm and other
matters relating to our financial
condition;
|
|
|
Ÿ
|
to
report to our Board periodically any recommendations the Audit Committee
may have with respect to the foregoing matters;
and
|
|
|
Ÿ
|
to
review our annual and quarterly financial statements and annual report to
stockholders, proxy materials and Annual Report on Form 10-K and our
Quarterly Reports on Form 10-Q for filing with the
SEC.
|
The Audit
Committee has the power to investigate any matter brought to its attention
within the scope of its duties and to retain counsel for this purpose where
appropriate.
The
members of our Audit Committee are Messrs. Banowsky and Pausic and Dr.
Cunningham, with Dr. Cunningham serving as Chair since his appointment to the
Audit Committee on May 22, 2009. Mr. Brodsky served on our Audit Committee from
May 21, 2009 through March 31, 2010. Mr. Pausic was appointed to the Audit
Committee on April 1, 2010 to fill the vacancy. Our Board has determined that
each member of the Audit Committee is an “independent director” under NYSE rules
governing the qualifications of the members of the Audit Committee. The Audit
Committee met seven (7) times during 2009.
Our Board
has determined that Dr. Cunningham is an “audit committee financial expert” as
defined in Item 407(d)(5) of Regulation S-K.
Compensation Committee.
The
Compensation Committee has the following principal duties:
|
|
Ÿ
|
to
review director and executive officer compensation policies, plans and
programs;
|
|
|
Ÿ
|
to
prepare recommendations and periodic reports to our Board concerning these
matters;
|
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Ÿ
|
to
function as the committee that administers our stock option, stock
incentive and other equity-based plans;
and
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|
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Ÿ
|
to
oversee compensation-related disclosures to be included in the Company’s
Annual Report on Form 10-K or Proxy Statement or other appropriate
documents filed with the SEC.
|
For
additional information about the Compensation Committee, see “Compensation
Discussion and Analysis” below.
The
members of our Compensation Committee are Messrs. Brodsky, Carson and McCormick,
with Mr. Brodsky serving as its Chair. The Compensation Committee held five (5)
meetings during 2009.
Nominating and Corporate Governance
Committee.
The Nominating and Corporate Governance Committee has the
following principal duties:
|
|
Ÿ
|
to
identify individuals qualified to become members of our
Board;
|
|
|
Ÿ
|
to
recommend to our Board the persons to be nominated by our Board for
election as directors at the Annual Meeting of
stockholders;
|
|
|
Ÿ
|
to
develop and recommend to our Board a set of corporate governance
principles applicable to us; and
|
|
|
Ÿ
|
to
oversee the evaluations of our Board and
management.
|
The
members of the Nominating and Corporate Governance Committee are Messrs.
Banowsky, Brodsky, McCormick and Pausic, with Mr. Banowsky serving as its Chair.
The Nominating and Corporate Governance Committee held four (4) meetings during
2009.
DIRECTOR CANDIDATES
The
process followed by the Nominating and Corporate Governance Committee to
identify and evaluate director candidates includes requests to the members of
our Board and others for recommendations, meetings from time-to-time to evaluate
biographical information and background material relating to potential
candidates and interviews of selected candidates by members of the committee and
our Board. In addition, the Company may retain the services of an executive
search firm to help identify and evaluate potential director
candidates.
In
considering whether to recommend any particular candidate for inclusion in our
Board’s slate of recommended director nominees, the Nominating and Corporate
Governance Committee will apply the criteria set forth in our corporate
governance guidelines. The committee considers: diversity, skills and experience
in the context of the needs of our Board; commitment to understanding our
business and industry; the creation, by virtue of other employment or
directorships, of potential or actual conflicts of interest; risks of
anticompetitive activity, or potential or actual violations of, or restrictions
arising from media ownership regulations; and the ability to exercise sound
judgment and high ethical standards. The committee does not assign specific
weights to particular criteria and no particular criterion is a prerequisite for
each prospective nominee. We believe that the backgrounds and qualifications of
our directors, considered as a group, should provide a composite mix of
experience, knowledge and abilities that will allow our Board to fulfill its
responsibilities.
Stockholders
may recommend individuals to the Nominating and Corporate Governance Committee
for consideration as potential director candidates by submitting their names,
together with appropriate biographical information and background materials and
a statement as to whether the stockholder or group of stockholders making the
recommendation has beneficially owned more than 5% of our common stock for at
least a year as of the date such recommendation is made, to the Nominating and
Corporate Governance Committee, c/o Denise M. Parent, Secretary, LIN TV Corp.,
One West Exchange Street, Suite 5A, Providence, Rhode Island 02903. Assuming
that appropriate biographical and background material has been provided on a
timely basis, the committee will evaluate stockholder-recommended candidates by
following substantially the same process, and applying substantially the same
criteria, as it follows for candidates submitted by others. If our Board
determines to nominate a stockholder-recommended candidate and recommends his or
her election, then his or her name will be included in the proxy card for our
next annual meeting of stockholders.
Stockholders
also have the right under our bylaws to directly nominate director candidates,
without any action or recommendation on the part of the committee or our Board,
by following the procedures set forth below under “Stockholder Proposals for the
2011 Annual Meeting”; provided that such recommendations are delivered to us,
with the information required by our bylaws, no later than the deadline for
submission of stockholder proposals provided below.
COMMUNICATING WITH THE DIRECTORS
Our Board
will give appropriate attention to written communications that are submitted by
stockholders and other interested parties, and will respond if and as
appropriate. The Chair of the Nominating and Corporate Governance Committee,
with the assistance of our General Counsel, is primarily responsible for
monitoring communications from stockholders and other interested parties and for
providing copies or summaries to the other directors as he or she considers
appropriate.
Communications
are forwarded to all directors if they relate to important substantive matters
and include suggestions or comments that the Chair of the Nominating and
Corporate Governance Committee considers to be important for the directors to
know. In general, communications relating to corporate governance and long-term
corporate strategy are more likely to be forwarded than communications relating
to ordinary business affairs, personal grievances and matters as to which we
tend to receive repetitive or duplicative communications.
Stockholders
and other interested parties that wish to send communications on any topic to
our Board, should address such communications to Board of Directors, c/o Denise
M. Parent, Secretary, LIN TV Corp., One West Exchange Street, Suite 5A,
Providence, Rhode Island 02903.
Stockholders
and other interested parties who wish to send communications on any topic to any
of our independent directors, or all of our independent directors as a group,
should address such communications to Independent Directors, c/o Denise M.
Parent, Secretary, LIN TV Corp., One West Exchange Street, Suite 5A, Providence,
Rhode Island 02903.
REPORT OF THE AUDIT COMMITTEE OF OUR BOARD OF
DIRECTORS
The Audit
Committee acts under a written charter adopted by our Board, a copy of which is
posted in the “About LIN TV” section under Corporate Governance in the
Guidelines subsection of our web site, www.lintv.com. The members of the Audit
Committee are independent directors, as defined by its charter and NYSE
rules.
The Audit
Committee reviewed the audited financial statements for the fiscal year ended
December 31, 2009 and discussed these financial statements with our management.
Management is responsible for our internal controls and the financial reporting
process. Management represented to the Audit Committee that the financial
statements had been prepared in accordance with generally accepted accounting
principles. Our independent registered public accounting firm,
PricewaterhouseCoopers LLP, is responsible for performing an audit of the
financial statements in accordance with generally accepted auditing standards
and issuing a report on those financial statements. As appropriate, the Audit
Committee reviews and evaluates, and discusses with our management, our internal
auditor and our independent registered public accounting firm, the following
matters:
|
|
Ÿ
|
the
plan for and the report of the independent registered public accounting
firm on each audit of our financial
statements;
|
|
|
Ÿ
|
our
management’s assessment of the effectiveness of internal control over
financial reporting;
|
|
|
Ÿ
|
our
financial disclosure documents, including all financial statements and
reports filed with the SEC or sent to
stockholders;
|
|
|
Ÿ
|
management’s
selection, application and disclosure of critical accounting
policies;
|
|
|
Ÿ
|
changes
in our accounting practices, principles, controls or
methodologies;
|
|
|
Ÿ
|
the
performance of the internal audit function and the independent registered
public accounting firm;
|
|
|
Ÿ
|
the
engagement letter between the Company and the independent registered
public accounting firm;
|
|
|
Ÿ
|
significant
developments or changes in accounting rules applicable to the Company;
and
|
|
|
Ÿ
|
the
adequacy of our internal controls and accounting, financial and auditing
personnel.
|
In
addition, the Audit Committee held regular executive session meetings with the
Chief Financial Officer, the Vice President Controller, the internal auditor and
the independent registered public accounting firm. The Audit Committee also
reviewed and discussed the audited financial statements and the matters required
by AU Section 380 with PricewaterhouseCoopers LLP, our independent registered
public accounting firm. AU Section 380 requires our independent registered
public accounting firm to discuss with our Audit Committee, among other things,
the following:
|
|
Ÿ
|
methods
used to account for significant or unusual
transactions;
|
|
|
Ÿ
|
the
effect of significant accounting policies in controversial or emerging
areas for which there is a lack of authoritative guidance or
consensus;
|
|
|
Ÿ
|
the
process used by management in formulating particularly sensitive
accounting estimates and the basis for the auditors’ conclusions regarding
the reasonableness of those estimates;
and
|
|
|
Ÿ
|
disagreements,
if applicable, with management over the application of accounting
principles, the basis for management’s accounting estimates and the
disclosures in the financial
statements.
|
PricewaterhouseCoopers
LLP also provided the Audit Committee with the written disclosures and the
letter required by Public Company Accounting Oversight Board Rule No. 3526
(“Communications with Audit Committees Concerning Independence”), which requires
auditors annually to disclose in writing all relationships that in the auditor’s
professional opinion may reasonably be thought to bear on independence, confirm
their independence and engage in a discussion of independence. The Audit
Committee discussed with the independent registered public accounting firm the
matters disclosed in this letter and its independence from the Company. The
Audit Committee also considered whether the provision of the other, non-audit
related services to us which are referred to under the heading “Independent
Registered Public Accounting Firm Fees and Other Matters” is compatible with
maintaining the independence of our registered public accounting
firm.
Based on
its discussions with management and the independent registered public accounting
firm, and its review of the representations and information provided by
management and the report of independent registered public accounting firm, the
Audit Committee recommended to our Board that the audited financial statements
be included in our Annual Report on Form 10-K for the fiscal year ended December
31, 2009.
|
|
Audit
Committee of our Board of Directors
|
|
|
|
|
|
Dr.
William H. Cunningham (Chair)
|
|
|
William
S. Banowsky
|
|
|
Michael
A. Pausic
|
EXECUTIVE OFFICERS
The
executive officers of the Company are:
|
Name
|
Age
|
Position
|
|
Vincent
L.
Sadusky
|
44
|
President
and Chief Executive Officer
|
|
Richard
J.
Schmaeling
|
45
|
Senior
Vice President and Chief Financial Officer
|
|
Scott
M.
Blumenthal
|
61
|
Executive
Vice President Television
|
|
Nicholas
N.
Mohamed
|
34
|
Vice
President Controller
|
|
Denise
M.
Parent
|
46
|
Vice
President General Counsel and Secretary
|
|
Robert
S.
Richter
|
40
|
Senior
Vice President New Media
|
The
following information describes the background of our executive officers who are
not members of our Board.
Richard J.
Schmaeling
has been Senior Vice President and Chief Financial Officer
since October 2008. He was previously employed by Dow Jones & Company, Inc.
in the positions of Vice President, Finance since 2007 and Vice President,
Business Unit Finance from 2004 – 2007. Mr. Schmaeling was Vice President,
Finance of Bracco Diagnostics Inc. from 1994 – 2004.
Scott M.
Blumenthal
has been Executive Vice President Television since September
2006. From February 2005 until September 2006, he served as Vice President
Television of our wholly-owned subsidiary, LIN Television Corporation from
September 2002 to February 2005. Mr. Blumenthal previously held general manager
positions at our WISH-TV station from May 1999 to September 2002 and at our
WOOD-TV and WOTV-TV stations from May 1994 to May 1999.
Nicholas N.
Mohamed
has been Vice President Controller since March 2009 and the
Company’s Vice President, Finance from February 2009 to March 2009. From May
2007 to December 2008, he was Director of Finance Mergers and Acquisitions at
Sensata Technologies, Inc. Prior to joining Sensata Technologies, Inc., Mr.
Mohamed served as a Director at PricewaterhouseCoopers LLP in its Transaction
Services group, where he was employed in various positions since September
1997.
Denise M. Parent
has been Vice President General Counsel and Secretary since September
2006. Previously, she was Vice President Deputy General Counsel since March
1997. From April 1993 to March 1997, Ms. Parent was employed by The Providence
Journal Company as Senior Corporate Counsel. Prior to 1993, Ms. Parent was
employed by Adler, Pollock & Sheehan Incorporated, a law firm in Providence,
Rhode Island.
Robert S. Richter
has been Senior Vice President New Media since September 2008.
Previously, he was Vice President Internet of LIN Television Corporation since
2006. From 2001 – 2006, Mr. Richter served as Vice President of Marketing and
Sales Planning for ShopNBC. Prior to 2001, Mr. Richter was Vice President of
DET, LLC, a market newspaper consulting company.
COMPENSATION DISCUSSION AND ANALYSIS
Overview
In this
section, we discuss certain aspects of our compensation program as it pertains
to our President and Chief Executive Officer, Senior Vice President Chief
Financial Officer, Executive Vice President Television, Senior Vice President
New Media and Vice President General Counsel and Secretary. These individuals
are referred to as the “named executive officers” throughout this Compensation
Discussion and Analysis.
Role
of the Compensation Committee
The
Compensation Committee has primary responsibilities for assessing, recommending
and approving the following areas of compensation:
|
|
Ÿ
|
determining
the compensation of the named executive
officers;
|
|
|
Ÿ
|
overseeing
and administering incentive-compensation plans and equity-based plans of
our Company, including the authority to grant stock options and to make
other stock-based awards;
|
|
|
Ÿ
|
determining
the compensation of directors;
|
|
|
Ÿ
|
other
duties as authorized by our Board from time-to-time;
and
|
|
|
Ÿ
|
overseeing
and approving this Compensation Discussion and
Analysis.
|
Objectives
of Compensation Program
The
Compensation Committee is committed to and responsible for designing,
implementing, and administering a compensation program for executive officers
that ensures appropriate linkage between pay, company performance and results
for shareholders. The Compensation Committee seeks to increase shareholder value
by rewarding performance with cost-effective compensation and ensuring that we
can attract and retain the best executive talent. To achieve the objectives set
forth below, the Compensation Committee has designed the executive compensation
program to reward the achievement of specific annual and long-term financial and
strategic goals of our Company that are designed to improve shareholder
value.
The
Compensation Committee believes that executive compensation should be designed
to:
|
|
Ÿ
|
align
compensation of the named executive officers with their own performance
and the overall performance of our
Company;
|
|
|
Ÿ
|
manage
compensation costs by combining a conservative approach to base salaries
and benefits, with performance-dependent short-term and long-term
incentives;
|
|
|
Ÿ
|
heavily
weight the compensation package towards long-term, performance-dependent
incentives to better align the interests of executives with shareholders;
and
|
|
|
Ÿ
|
reward
and retain our named executive
officers.
|
Although
we do not engage in a formal benchmarking process, the Compensation Committee
periodically evaluates our executive compensation program to ensure that the
program is competitive with peer companies in our industry so that we can
continue to attract and retain qualified employees in key
positions.
Factors
Considered in Establishing Compensation
The
Compensation Committee makes all compensation decisions regarding our President
and Chief Executive Officer and other executive officers. The Compensation
Committee takes many factors into account in making compensation decisions,
including the individual’s performance, tenure, and experience; the performance
of our Company overall and the individual’s contribution to that performance;
achievement of specific quantifiable and qualitative business goals and
objectives; retention considerations; the individual’s historical compensation;
comparisons to other executive officers; and the recommendations of the
President and Chief Executive Officer with respect to the other executive
officers. Additionally, because the President and Chief Executive Officer is
ultimately responsible for the direction of our Company, his greater
compensation reflects this differential compared with the other named executive
officers. The grant of stock options and restricted stock awards to all of our
employees is approved by the Compensation Committee based on the recommendations
of our President and Chief Executive Officer.
Role
of Compensation Consultant
Neither
the Compensation Committee nor our Company has any long-term contractual
arrangements with a compensation consultant whose role would be to determine or
to recommend the amount or the form of compensation for our named executive
officers. The Compensation Committee and our management have periodically worked
with compensation consultants to assist in providing the Compensation Committee
with market information and reports regarding compensation practices of peer
companies.
Design
of Compensation Programs
Our
executive compensation plan is designed to attract qualified executives and to
reward those executives for their contributions to our Company and our
shareholders. The compensation program for the named executive officers includes
an annual base salary, an annual performance bonus opportunity, equity-based
compensation, retirement benefits and limited perquisites. Because executive
officers are in a position to directly influence the overall performance of our
Company, a significant portion of their compensation is in the form of
performance-dependent short-term and long-term incentive programs. The level of
performance-dependent pay varies for each executive based upon level of
responsibility, with a greater emphasis on performance-dependent pay for those
in more senior positions who have responsibility over matters that have a direct
impact on the overall performance of our Company.
Effect
of Economic Downturn on Compensation Decisions
Our
operations and financial performance were materially affected by macroeconomic
conditions, which began to deteriorate significantly in 2008 and remained
depressed throughout 2009 and into 2010. The economic slowdown adversely
affected local and national advertising revenues across all of our television
stations throughout most of 2009. These economic conditions resulted in
significant declines in advertising expenditures in several industries,
including the automotive industry, from which we receive a substantial
percentage of our revenue. These difficult economic conditions had a direct
effect on a number of decisions regarding executive compensation made by the
Compensation Committee in 2009.
During
2009, the Compensation Committee approved amendments to our named executive
officers’ employment agreements for the purpose of amending each executive’s
incentive bonus plan for the 2009 fiscal year to adjust the financial targets to
reflect the effects of the economic downturn and unusually poor market
conditions since the time the financial targets were established in 2008. As
described in greater detail below under “Cash Compensation - Performance Bonus,”
the Compensation Committee decided to award discretionary bonuses for 2009 that,
for some named executive officers, exceeded the target discretionary bonus
called for under the named executive officers’ employment agreements, to
recognize the achievement of certain strategic and operational milestones in
2009 reached under very challenging economic conditions.
In
addition, the severe economic conditions led management, in consultation with
the Board of Directors, to make certain changes regarding the Company’s benefit
plans that affect all employees, including the named executive officers, and
which were aimed at controlling our operating expenses during the economic
downturn. Those decisions included, among others, (i) terminating the executive
disability insurance premiums, (ii) suspending participation in the deferred
compensation plan, (iii) suspending the Company’s accruals and contributions,
respectively to the retirement plan, including the traditional final-pay plan
and the cash balance pension benefit plan, (iv) suspending the Company’s
contributions to the 401(k) plan, and (v) increasing employees’ share of
contributions to the health and welfare benefit plans. Effective January 1,
2010, the Company initiated a 3% non-elective contribution to the Company’s
401(k) Plan for all employees, including the named executive officers. The
remainder of the expense controlling measures outlined above remain in place
indefinitely.
Cash
Compensation
Base Salary.
Base salary
amounts for our named executive officers are determined based on the judgment of
our Compensation Committee in consultation with our President and Chief
Executive Officer, for the other named executive officers. The Compensation
Committee considers a number of factors to determine the salary for each of our
executives, including compensation paid to persons in similar positions by peer
companies in our industry, the work experience of the executive, each
executive’s individual skills, the executive’s length of service with our
Company and the performance of the executive. For 2010, with the exception of
Mr. Sadusky, the Compensation Committee determined that the annual base salaries
for the named executive officers would be increased by 3% after holding all
annual base salaries flat for 2009, as reflected in the Summary Compensation
Table under “Salary.” For Mr. Sadusky, the Compensation Committee determined
that his annual base salary would be increased by 10% after holding his base
salary flat since 2006, as reflected in the Summary Compensation Table under
“Salary.”
Performance Bonus.
The annual
incentive bonus plan is designed to align executive officer pay with the
Company’s financial performance and individual performance during a particular
year. The annual bonus is comprised of two separate components, as described in
more detail below. One portion of the bonus is determined quantitatively based
solely on the Company’s achievement of financial performance goals. The other
portion of the annual bonus is determined qualitatively by the Compensation
Committee based on the Committee’s assessment of other performance criteria as
it deems relevant on a case-by-case basis. The target amount of each component
of the annual bonus opportunity is a percentage of the executive’s base salary,
as specified in the executive’s employment agreement. The target bonus
opportunity for 2009 for the named executive officers (including both components
of the bonus) ranged from 46.2% to 100% of base salary. For 2010, the
Compensation Committee determined that in light of the challenging economic
environment and the direct impact on our Company, the target bonus opportunities
for the named executive officers would retain the same split, as was revised in
2009, between the percentage of the bonus amount determined by quantitative
factors and the percentage of the bonus amount determined by subjective factors
due to the continued level of difficulty in forecasting the market.
The two
components of the annual bonus program are more fully described
below:
|
|
Ÿ
|
The
quantitative
or budget-based objective bonus
target amount can range from
13.2-60.0% of the named executive officer’s base salary. For 2009, the
percentage that determines the target amount for each named executive
officer is specified in the first amendment to his or her employment
agreement dated October 29, 2009. Except for the Senior Vice President New
Media, which is discussed in further detail below, the amount of the
budget-based objective bonus paid out to named executive officers is based
on our results with respect to Adjusted EBITDA (defined below). The
budget-based objective bonus is paid out at the target level if we achieve
performance at the budgeted levels for this metric. For 2009, Adjusted
EBITDA was budgeted at $93.9 million. If we exceed our budgeted Adjusted
EBITDA, the executive receives a budget-based objective bonus amount based
on an increasing sliding scale up to a maximum of twice the target
budget-based bonus amount. Conversely, if we do not achieve our budgeted
Adjusted EBITDA, the executive receives less than the target budget-based
objective bonus amount based on a decreasing sliding scale. The named
executive officers do not receive any budget-based objective bonus if
Adjusted EBITDA is less than 82% of the budgeted Adjusted EBITDA. The
budget-based objective bonus for the Senior Vice President New Media is
based solely on achievement of budgeted Internet revenues instead of
Adjusted EBITDA, as outlined in his employment agreement. Given the
objective nature of the determination of the budget-based objective bonus,
such portion of the annual bonus is reported in the Summary Compensation
Table under “Non-Equity Incentive Plan
Compensation.”
|
|
|
Ÿ
|
The
qualitative
or discretionary performance bonus
target amount can range from
18.5-40% of the named executive officer’s base salary. The percentage that
determines the target amount for each named executive officer is specified
in his or her employment agreement. The actual amount of discretionary
performance bonus paid out is determined by the Compensation Committee, in
consultation with the Chief Executive Officer for named executive officers
other than the Chief Executive Officer, based on the Compensation
Committee’s assessment of other performance criteria as it deems relevant
on a case-by-case basis. Factors that may be considered by the
Compensation Committee in determining the appropriate amount of the
discretionary performance bonus include, without limitation, the Company’s
performance in the prior fiscal year, general business conditions and
achievement by the executive of certain project, department and
development goals established by the Chief Executive Officer, our Board
and/or the Compensation Committee. Given the subjective nature of the
determination of the discretionary performance bonus, such portion of the
annual bonus is reported in the Summary Compensation Table under
“Bonus.”
|
The table
below shows the 2009 target bonus opportunity for each component of the annual
bonus program for each named executive officer, as specified in the named
executive officer’s first amendment to employment agreement. The different
allocations and weightings among the named executive officers for the
quantitative, budget-based component and the qualitative, discretionary
component reflect the Compensation Committee’s judgment regarding the
appropriate balance for each named executive officer, based on his or her
seniority, experience, role and ability to influence the Company’s
results.
|
Name
|
Target
Budget-Based
Objective
Bonus
(as
% of Base Salary)
|
|
Target
Discretionary
Performance
Bonus
(as
% of Base Salary)
|
|
Vincent
L.
Sadusky
|
60.0%
|
|
40.0%
|
|
Richard
J.
Schmaeling
|
27.7
|
|
18.5
|
|
Scott
M.
Blumenthal
|
31.1
|
|
20.7
|
|
Denise
M.
Parent
|
13.2
|
|
39.7
|
|
Robert
S.
Richter
|
30.0
|
|
20.0
|
For
purposes of the budget-based objective bonus, Adjusted EBITDA is defined as
operating income plus amortization of program rights, depreciation and
amortization of intangible assets, impairment of goodwill and intangible assets,
restructuring charges and non-recurring severance payments, less program
payments. Program payments represent cash payments for program contracts and do
not necessarily correspond to program usage.
We
believe Adjusted EBITDA, which is a non-GAAP measure, is relevant and useful as
a metric for determining bonus amounts because it is a measurement used by
lenders to measure our ability to service our debt and it is a measurement
industry analysts use when evaluating our operating performance. We use Adjusted
EBITDA, among other things, in evaluating the operating performance of our
stations and to value stations targeted for acquisition.
In 2009,
our Adjusted EBITDA was $86.9
million, which
represented 93% of the budgeted amount of Adjusted EBITDA. Because our Adjusted
EBITDA was below the budgeted level, the budget-based objective bonus for all
named executive officers other than Mr. Richter was paid out in amounts that
reflect such level of performance, as shown in the Summary Compensation Table
under “Non-Equity Incentive Plan Compensation.” Mr. Richter’s budget-based
objective bonus is based solely on achievement of budgeted Internet revenues
instead of Adjusted EBITDA. The amount of Mr. Richter’s budget-based objective
bonus for 2009, reflecting achievement of the performance target applicable to
his bonus at the 33% level, is reflected in the Summary Compensation Table under
“Non-Equity Incentive Plan Compensation.” A more detailed analysis of our
financial and operational performance is contained in the Management’s
Discussion and Analysis section and in our audited consolidated financial
statements in our Annual Report on Form 10-K for the year ended December 31,
2009.
The
Compensation Committee awarded discretionary performance bonuses for 2009 to our
named executive officers in the amounts shown in the Summary Compensation Table
under “Bonus.” These bonus awards reflect the Compensation Committee’s
consideration of factors that included each named executive officer’s individual
performance in addition to achievement of certain strategic and operational
milestones. The Compensation Committee exercised its discretion to award
discretionary performance bonuses above the targeted discretionary bonus
amounts, based on the Compensation Committee’s determination that the named
executive officers expended significant efforts toward managing the Company
through an unprecedented economic downturn. The Compensation Committee
acknowledged that macroeconomic factors have had a significant impact on our
business and that the named executive officers should be incentivized to remain
focused on management despite factors extending beyond their control that have a
direct impact on their capacity to earn the budget-based objective bonus. In
awarding these discretionary bonuses, the Compensation Committee considered,
among other things, the achievement of certain strategic and operational
milestones in 2009 under very challenging economic conditions, including (i)
market share improvements in many of our markets, (ii) completed negotiations
with every major pay TV provider in our local markets, (iii) a significant
increase in digital revenues, and (iv) achievement of operating milestones by
our online business.
Equity-Based
Compensation
Another
key component of our compensation package for the named executive officers is
the granting of stock options and restricted stock awards. We believe these
awards provide a significant incentive for executives to manage our Company for
long-term growth, thereby aligning their interests with those of our
shareholders. These incentives are designed to motivate executive officers to
improve financial performance and stockholder value, as well as encourage
long-term employment with the Company. We rely primarily on stock option awards
and restricted stock awards in granting long-term incentives. We do not backdate
options or grant options retroactively. In addition, we do not purposely
schedule option awards prior to the disclosure of favorable information or after
the announcement of unfavorable information. Options are granted at fair market
value on a predetermined date. All stock option grants and restricted stock
awards to executive officers require the approval of the Compensation Committee.
We have no formal policy or practice as to the timing of equity
grants.
Option
grants are designed to reward executive officers for the increase in our stock
price over time. Options represent the high-risk and potential high-return
component of our total long-term incentive program, as the realizable value of
each option can fall to zero if the stock price is lower than the exercise price
established on the date of grant. The size of stock option grants for executive
officers is based primarily on the target dollar value of the award translated
into a number of option shares based on the estimated economic value on the date
of grant, as determined using the Black-Scholes option pricing formula. As a
result, the number of shares underlying stock option awards will typically vary
from year-to-year, as it is dependent on the price of our common stock on the
date of grant.
The
exercise prices of the options outstanding under the Company’s Amended and
Restated 2002 Stock Plan and the Third Amended and Restated Non-employee
Director Stock Plan exceeded the range within which our class A common stock had
traded beginning in 2007 and continuing into 2009. In order to retain key
personnel whom the Board of Directors believe to be instrumental to our success,
on May 4, 2009, the Company initiated a tender offer to its employees and
non-employee directors to exchange outstanding stock options to purchase shares
of our class A common stock granted under the Amended and Restated 2002 Stock
Plan and Third Amended and Restated Non-Employee Director Stock Plan,
respectively (the “Exchange Offer”). This offer expired on June 2, 2009.
Pursuant to the Exchange Offer, holders of options to purchase the Company’s
class A common stock tendered, and the Company accepted for cancellation,
options to purchase an aggregate of 2,931,285 shares of the Company’s class A
common stock from 257 participants, representing approximately 90% of the shares
of class A common stock underlying options eligible for exchange in the Exchange
Offer. On June 2, 2009, the Company granted new options to participating option
holders to purchase an equal number of shares of class A common stock in
exchange for the cancellation of the tendered eligible options. The exercise
price per share of the new options granted in the Exchange Offer was $1.99, the
last reported sale price of the Company’s Class A common stock on the New York
Stock Exchange on June 2, 2009.
On
December 16, 2009, Mr. Sadusky was granted an option to purchase 122,500 shares
of our class A common stock at an exercise price equal to fair market value on
the date of grant. Also on December 16, 2009, the other named executive
officers, Messrs. Blumenthal, Schmaeling and Richter, and Ms. Parent, were
granted options to purchase 49,000, 36,800, 36,800 and 36,800 shares,
respectively, of class A common stock at an exercise price equal to fair market
value on the date of grant. All of the options vest over four years, with 25%
vesting on each anniversary of the grant date, and they expire ten years from
the date of grant.
Restricted
stock awards are designed to reward executive officers with equity in the
Company which vests over a period of time. On December 16, 2009, the
Compensation Committee also granted restricted stock awards to each of the named
executive officers in the amounts shown in the “Grants of Plan-Based Awards”
table below. In determining the size of the restricted stock awards made to the
named executive officers in 2009, the Compensation Committee considered the
strategic, operational and financial performance of our Company along with each
named executive officers’ expected contributions to our Company’s future
success.
Other
Benefits
Our
Company also provides certain benefits and perquisites to our named executive
officers that the Compensation Committee believes are reasonable and necessary
to attract and retain key executives. The Company provides the use of a company
automobile and covers term life insurance premiums for the named executive
officers in the amount of $400,000. See “Other Benefit Plans” below. The named
executive officers are also entitled to health, disability and retirement
benefits substantially similar to those that are offered to all of our
employees.
Employment
Agreements, Severance and Change-in-Control Arrangements
In 2006
we entered into employment agreements with Ms. Parent and Messrs. Sadusky and
Blumenthal to memorialize key terms of their employment and to reduce certain
severance and change in control benefits potentially paid by the Company and
thereby more fully align management’s interest with shareholder interests. Since
then, we have entered into employment agreements with Mr. Schmaeling and Mr.
Richter in connection with their appointments as officers of the
Company.
Each
employment agreement addresses the following elements: base salary; target
discretionary performance bonus and target budget-based objective performance
bonus. The actual amount of the objective performance bonus is calculated as
described in the “Design of Compensation Programs — Cash Compensation -
Performance Bonus” above. The term of the agreement will continue each year
unless terminated by the executive or us.
If the
executive’s employment is terminated by us “without cause” or by the executive
for “good reason” as defined in the agreement, the executive is entitled to
receive certain benefits. The executive will be entitled to receive as a
severance payment an amount equal to their annual base salary plus a payment
equal to the annual bonus they received in the prior year and we will also
continue to pay the employer’s portion of their health and dental insurance
premiums for twelve months.
Upon a
change in control transaction or if we terminate any of the named executive
officer’s employment in anticipation of a change in control transaction, in
addition to severance payments described above, the employment agreements
provide that certain of the stock options granted in 2006 to each executive upon
their appointment to their current positions will become fully vested. In
addition, with respect to Ms. Parent, all stock options and restricted stock
awards granted to Ms. Parent prior to 2006 which are not otherwise exercisable
or vested will become fully vested as of the date of termination in the
circumstances described above. See “Potential Payments upon Termination or
Change in Control” below for more detailed information.
The
employment agreements include non-competition and non-solicitation provisions
that are in effect during the term of the agreement and for one year
thereafter.
Share
Ownership Guidelines
We do not
require but encourage our named executives to own our Company’s class A common
stock.
Tax
Considerations
Under
Section 162(m) of the Internal Revenue Code, a limitation is placed on tax
deductions of any publicly-held corporation for individual compensation to
certain executives exceeding $1.0 million in any taxable year, unless the
compensation is performance-based. To the extent practical, the Compensation
Committee intends to preserve deductibility, but may choose to provide
compensation that is not deductible if necessary to attract, retain and reward
high-performing executives.
REPORT OF THE COMPENSATION COMMITTEE OF OUR BOARD OF
DIRECTORS
The
Compensation Committee has reviewed the Compensation Discussion and Analysis and
discussed such discussion and analysis with management. Based on the
Compensation Committee’s review and discussions with management, the
Compensation Committee recommended to our Board that the Compensation Discussion
and Analysis be included in the Company’s 2010 Proxy Statement. This Report is
provided by the following independent directors, who comprise the Compensation
Committee:
Compensation
Committee of our Board of Directors
Peter S.
Brodsky (Chair)
Royal W.
Carson III
Douglas
W. McCormick
Summary
Compensation Table
The
following table sets forth the compensation earned by our Chief Executive
Officer, our Chief Financial Officer and our three other most highly-compensated
executive officers who were serving as executive officers as of December 31,
2009 (collectively, the “named executive officers”).
|
Name
and Principal Position
|
|
Year
|
|
Salary
|
|
|
Bonus
|
|
|
Stock
Awards
(6)
|
|
|
Option
Awards
(6)
|
|
|
Non
Equity Incentive Plan Compensation
|
|
|
Change
in Pension Value and Nonqualified Deferred Compensation Earnings
(7)
|
|
|
All
Other Compensation
(8)
|
|
|
Total
|
|
|
Vincent L. Sadusky
(1)
|
|
2009
|
|
$
|
500,000
|
|
|
$
|
200,000
|
|
|
$
|
169,074
|
|
|
$
|
834,691
|
|
|
$
|
221,250
|
|
|
$
|
26,053
|
|
|
$
|
9,914
|
|
|
$
|
1,960,982
|
|
|
President
and Chief
|
|
2008
|
|
|
500,000
|
|
|
|
425,000
|
|
|
|
1,135,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
49,320
|
|
|
|
9,914
|
|
|
|
2,119,234
|
|
|
Executive
Officer
|
|
2007
|
|
|
500,000
|
|
|
|
125,000
|
|
|
|
-
|
|
|
|
429,898
|
|
|
|
251,250
|
|
|
|
74,100
|
|
|
|
5,938
|
|
|
|
1,386,186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
J. Schmaeling
(2)
|
|
2009
|
|
|
325,000
|
|
|
|
72,000
|
|
|
|
50,639
|
|
|
|
139,133
|
|
|
|
66,380
|
|
|
|
5,395
|
|
|
|
75,281
|
|
|
|
733,828
|
|
|
Senior
Vice President and Chief Financial Officer
|
|
2008
|
|
|
75,000
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
191,923
|
|
|
|
-
|
|
|
|
3,125
|
|
|
|
24,011
|
|
|
|
344,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott
M. Blumenthal
(3)
|
|
2009
|
|
|
386,250
|
|
|
|
96,000
|
|
|
|
67,379
|
|
|
|
363,722
|
|
|
|
88,500
|
|
|
|
152,893
|
|
|
|
1,268
|
|
|
|
1,156,012
|
|
|
Executive
Vice President
|
|
2008
|
|
|
386,250
|
|
|
|
150,000
|
|
|
|
472,915
|
|
|
|
-
|
|
|
|
-
|
|
|
|
173,263
|
|
|
|
547
|
|
|
|
1,182,975
|
|
|
Television
|
|
2007
|
|
|
375,000
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
214,948
|
|
|
|
100,500
|
|
|
|
307,494
|
|
|
|
3,045
|
|
|
|
1,050,987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denise
M. Parent
(4)
|
|
2009
|
|
|
283,250
|
|
|
|
112,500
|
|
|
|
50,639
|
|
|
|
218,501
|
|
|
|
27,660
|
|
|
|
11,953
|
|
|
|
2,968
|
|
|
|
707,471
|
|
|
Vice
President General
|
|
2008
|
|
|
283,250
|
|
|
|
115,000
|
|
|
|
189,165
|
|
|
|
-
|
|
|
|
-
|
|
|
|
27,019
|
|
|
|
2,557
|
|
|
|
616,991
|
|
|
Counsel
and Secretary
|
|
2007
|
|
|
275,000
|
|
|
|
112,500
|
|
|
|
-
|
|
|
|
171,959
|
|
|
|
25,125
|
|
|
|
28,527
|
|
|
|
4,312
|
|
|
|
617,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
S. Richter
(5)
|
|
2009
|
|
|
300,000
|
|
|
|
85,000
|
|
|
|
50,639
|
|
|
|
227,107
|
|
|
|
29,700
|
|
|
|
7,974
|
|
|
|
2,027
|
|
|
|
702,447
|
|
|
Senior
Vice President New Media
|
|
2008
|
|
|
270,250
|
|
|
|
45,000
|
|
|
|
264,835
|
|
|
|
-
|
|
|
|
62,000
|
|
|
|
18,459
|
|
|
|
2,418
|
|
|
|
662,962
|
|
_________
|
(1)
|
On
February 4, 2010, the Compensation Committee determined the amount of the
2009 cash bonus to be paid to Mr. Sadusky. As discussed in “Compensation
Discussion and Analysis — Design of Compensation Programs — Cash
Compensation — Performance Bonus,” the 2009 bonus had two components: the
budget-based objective bonus, which was determined to be $221,250 and is
reported under “Non-equity incentive plan compensation” and the
discretionary performance bonus, which was determined by the Committee
based on criteria it deemed relevant. Mr. Sadusky’s 2009 discretionary
performance bonus is reported under “Bonus.” (See the Grants of Plan-Based
Awards Table for more details regarding Mr. Sadusky’s 2009 budget-based
objective bonus opportunity.) On February 4, 2010, the Compensation
Committee approved the 2010 salary to be paid to Mr. Sadusky in the amount
of $550,000.
|
|
(2)
|
On
February 4, 2010, the Compensation Committee, in consultation with the
Chief Executive Officer, determined the amount of the 2009 cash bonus to
be paid to Mr. Schmaeling. Mr. Schmaeling’s 2009 budget-based
objective bonus was determined to be $66,380 and is reported under
“Non-equity incentive plan compensation” and his 2009 discretionary
performance bonus is reported under “Bonus.” (See “Compensation Discussion
and Analysis — Design of Compensation Programs — Cash Compensation —
Performance Bonus” for more information about our bonus program, and see
the Grants of Plan-Based Awards Table for more details regarding Mr.
Schmaeling’s 2009 budget-based objective bonus opportunity.) On February
4, 2010 the Compensation Committee also approved the 2010 salary to be
paid to Mr. Schmaeling in the amount of
$335,000.
|
|
(3)
|
On
February 4, 2010, the Compensation Committee, in consultation with the
Chief Executive Officer, determined the amount of the 2009 cash bonus to
be paid to Mr. Blumenthal. Mr. Blumenthal’s 2009 budget-based
objective bonus was determined to be $88,500 and is reported under
“Non-equity incentive plan compensation” and his 2009 discretionary
performance bonus is reported under “Bonus.” (See “Compensation Discussion
and Analysis — Design of Compensation Programs — Cash Compensation —
Performance Bonus” for more information about our bonus program, and see
the Grants of Plan-Based Awards Table for more details regarding Mr.
Blumenthal’s 2009 budget-based objective bonus opportunity.) On February
4, 2010 the Compensation Committee also approved the 2010 salary to be
paid to Mr. Blumenthal in the amount of
$398,000.
|
|
(4)
|
On
February 4, 2010, the Compensation Committee, in consultation with the
Chief Executive Officer, determined the amount of the 2009 cash bonus to
be paid to Ms. Parent. Ms. Parent’s 2009 budget-based objective bonus was
determined to be $27,660 and is reported under “Non-equity incentive plan
compensation” and her 2009 discretionary performance bonus is reported
under “Bonus.” (See “Compensation Discussion and Analysis — Design of
Compensation Programs — Cash Compensation — Performance Bonus” for more
information about our bonus program, and see the Grants of Plan-Based
Awards Table for more details regarding Ms. Parent’s 2009 budget-based
objective bonus opportunity.) On February 4, 2010 the Compensation
Committee also approved the 2010 salary to be paid to Ms. Parent in the
amount of $291,000.
|
|
(5)
|
On
February 4, 2010, the Compensation Committee, in consultation with the
Chief Executive Officer, determined the amount of the 2009 cash bonus to
be paid to Mr. Richter. Mr. Richter’s 2009 budget-based objective bonus is
reported under “Non-Equity Incentive Plan Compensation” and his 2009
discretionary performance bonus is reported under “Bonus.” (See
“Compensation Discussion and Analysis — Design of Compensation Programs —
Cash Compensation — Performance Bonus” for more information about our
bonus program, and see the Grants of Plan-Based Awards Table for more
details regarding Mr. Richter’s 2009 budget-based objective bonus
opportunity.) On February 4, 2010 the Compensation Committee also approved
the 2010 salary to be paid to Mr. Richter in the amount of
$309,000.
|
|
(6)
|
Represents
the aggregate grant date fair value computed in accordance with FASB Topic
ASC 718 (“ASC 718”). See Note 8 to the consolidated financial statements
included in our Form 10-K filed March 15, 2010 for a discussion of the
assumptions used to value equity-based compensation. The amounts shown for
fiscal year 2009 also include the incremental fair value related to the
modifications to certain stock options held by each of the named executive
officers pursuant to the June 2, 2009 Exchange Offer as described in the
Compensation Discussion and Analysis
section.
|
|
(7)
|
These
amounts relate solely to a change in pension value during the year
shown.
|
|
(8)
|
See
“All Other Compensation” below for additional information regarding the
amounts shown for 2009.
|
Grants
of Plan-Based Awards
The
following table provides information about the non-equity incentive plan and
equity awards granted to the named executive officers in 2009:
|
|
|
|
|
|
|
|
|
All
Other
Stock
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant
|
|
|
Estimated
Possible Payouts Under Non-Equity Incentive Plan Awards(1)
|
|
|
Number
of Shares of
|
|
|
Stock
Award Grant Date Fair
|
|
|
All
Other Option Awards: Number of Securities Underlying
|
|
|
Exercise
or Base Price of Option/Stock Awards
|
|
|
Closing Price On Date
of
|
|
|
Option
Award Grant Date Fair
|
|
|
Name
|
|
Date
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Stock
(2)
|
|
|
Value
(3)
|
|
|
Options
(4)
|
|
|
($
per share)
(5)
|
|
|
Grant
(6)
|
|
|
Value
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vincent
L. Sadusky
|
|
—
|
|
|
$
|
97,500
|
|
|
$
|
300,000
|
|
|
$
|
600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/2/09
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
653,334
|
|
|
$
|
1.99
|
|
|
$
|
1.99
|
|
|
$
|
423,899
|
|
|
|
|
12/16/09
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
40,400
|
|
|
|
169,074
|
|
|
|
122,500
|
|
|
|
4.19
|
|
|
|
4.12
|
|
|
|
410,792
|
|
|
Richard
J. Schmaeling
|
|
—
|
|
|
$
|
29,250
|
|
|
$
|
90,000
|
|
|
$
|
180,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/2/09
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
100,000
|
|
|
|
1.99
|
|
|
|
1.99
|
|
|
|
15,728
|
|
|
|
|
12/16/09
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,100
|
|
|
|
50,639
|
|
|
|
36,800
|
|
|
|
4.19
|
|
|
|
4.12
|
|
|
|
123,405
|
|
|
Scott
M. Blumenthal
|
|
—
|
|
|
$
|
39,000
|
|
|
$
|
120,000
|
|
|
$
|
240,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/2/09
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
309,000
|
|
|
|
1.99
|
|
|
|
1.99
|
|
|
|
199,405
|
|
|
|
|
12/16/09
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16,100
|
|
|
|
67,379
|
|
|
|
49,000
|
|
|
|
4.19
|
|
|
|
4.12
|
|
|
|
164,317
|
|
|
Denise
M. Parent
|
|
—
|
|
|
$
|
12,188
|
|
|
$
|
37,500
|
|
|
$
|
75,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/2/09
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
136,666
|
|
|
|
1.99
|
|
|
|
1.99
|
|
|
|
95,096
|
|
|
|
|
12/16/09
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,100
|
|
|
|
50,639
|
|
|
|
36,800
|
|
|
|
4.19
|
|
|
|
4.12
|
|
|
|
123,405
|
|
|
Robert
S. Richter
|
|
—
|
|
|
$
|
22,500
|
|
|
$
|
90,000
|
|
|
$
|
180,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/2/09
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
140,000
|
|
|
|
1.99
|
|
|
|
1.99
|
|
|
|
103,702
|
|
|
|
|
12/16/09
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,100
|
|
|
|
50,639
|
|
|
|
36,800
|
|
|
|
4.19
|
|
|
|
4.12
|
|
|
|
123,405
|
|
__________
|
(1)
|
These
columns show the potential value of the payout for the budget-based
objective bonus for 2009, which are defined in each executive’s first
amendment to employment agreement, if the threshold, target or maximum
goals are satisfied for the Company’s financial performance metrics. The
potential payouts are performance-based and are completely at risk. The
budget-based objective bonus is described more fully in “Compensation
Discussion and Analysis — Design of Compensation Programs — Cash
Compensation — Performance Bonus”.
|
|
(2)
|
This
column shows the number of shares of restricted stock granted on December
16, 2009, which vest in equal installments of 25% over 4 years following
the date of grant.
|
|
(3)
|
This
column shows the fair value of the restricted stock awards on the date of
grant, computed in accordance with ASC 718 based on the average stock
price of our class A common stock on grant
date.
|
|
(4)
|
This
column shows stock options granted pursuant to the Amended and Restated
2002 Stock Plan. The stock options granted on December 16, 2009 vest over
four years, with 25% vesting on each anniversary of the grant date, and
expire 10 years from the date of grant. The options granted on June 2,
2009 in connection with the Exchange Offer vest over three years, with
33.3% vesting on each anniversary of the grant date, and expire 10 years
from the grant date.
|
|
(5)
|
This
column shows the stock option exercise price, which was based on the
average of the high and low prices of our class A common stock on the
grant date. The exercise price per share of the options granted on June 2,
2009 in connection with the Exchange Offer is $1.99, which was the last
reported sale price of the Company’s class A common stock on the New York
Stock Exchange for that date.
|
|
(6)
|
This
column shows the closing price of our class A common stock on the grant
date.
|
|
(7)
|
This
column shows the full grant date fair value of the stock options under ASC
718. Generally, the full grant date fair value is the amount that we would
expense in our financial statements over the entire term of the stock
options’ vesting schedule. The amounts shown for awards granted on June 2,
2009 include the incremental increase in the fair value of certain stock
options granted prior to 2009, computed in accordance with ASC 718,
resulting from the Exchange Offer as described in Compensation Discussion
and Analysis. The amount shown for the grant date fair value represents
the incremental compensation for each named executive officer and is
comprised of the amounts, per grant, as shown
below:
|
|
|
Grant
Date
|
|
Grant
Date Fair Value
|
|
|
Vincent L.
Sadusky
|
7/1/2005
|
|
$
|
22,452
|
|
|
|
5/11/2006
|
|
|
14,808
|
|
|
|
7/11/2006
|
|
|
299,565
|
|
|
|
12/18/2007
|
|
|
87,074
|
|
|
|
|
|
$
|
423,899
|
|
|
|
|
|
|
|
|
|
Richard J.
Schmaeling
|
10/6/2008
|
|
$
|
15,728
|
|
|
|
|
|
|
|
|
|
Scott M.
Blumenthal
|
5/2/2005
|
|
$
|
5,435
|
|
|
|
7/1/2005
|
|
|
21,050
|
|
|
|
5/11/2006
|
|
|
13,882
|
|
|
|
9/6/2006
|
|
|
115,501
|
|
|
|
12/18/2007
|
|
|
43,537
|
|
|
|
|
|
$
|
199,405
|
|
|
|
|
|
|
|
|
|
Denise M. Parent
|
7/1/2005
|
|
$
|
15,436
|
|
|
|
5/11/2006
|
|
|
10,180
|
|
|
|
9/6/2006
|
|
|
34,650
|
|
|
|
12/18/2007
|
|
|
34,830
|
|
|
|
|
|
$
|
95,096
|
|
|
|
|
|
|
|
|
|
Robert S.
Richter
|
11/27/2006
|
|
$
|
68,872
|
|
|
|
12/18/2007
|
|
|
34,830
|
|
|
|
|
|
$
|
103,702
|
|
|
|
Outstanding
Equity Awards at Year-End
|
The
following table provides information about the holdings of stock options and
restricted stock awards by our named executive officers as of December 31,
2009.
For
additional information about the stock option grants and restricted stock
awards, see “Compensation Discussion and Analysis - Design of Compensation
Programs - Equity-Based Compensation.”
|
|
|
Stock
Option Awards
|
|
|
Restricted
Stock Awards
|
|
|
Name
|
|
Number
of Securities Underlying
Unexercised
Options
Exercisable
|
|
|
Number
of Securities Underlying
Unexercised
Options
Unexercisable
|
|
|
Option
Exercise
Price
|
|
|
Option
Expiration
Date
(1)(2)
|
|
|
Number of
Shares or Units
of Stock That
Have Not Vested
(3)
|
|
|
Market Value of
Shares or Units
of Stock
That
Have
Not Vested
(4)
|
|
|
Vincent
L. Sadusky
|
|
|
—
|
|
|
|
653,334
|
|
|
$
|
1.99
|
|
|
6/2/2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
122,500
|
|
|
|
4.19
|
|
12/16/2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
207,955
(5)
|
|
|
$
|
927,479
|
|
|
Richard
J. Schmaeling
|
|
|
—
|
|
|
|
100,000
|
|
|
|
1.99
|
|
|
6/2/2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
36,800
|
|
|
|
4.19
|
|
|
12/16/2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,100
(6)
|
|
|
|
53,966
|
|
|
Scott
M. Blumenthal
|
|
|
—
|
|
|
|
309,000
|
|
|
|
1.99
|
|
|
6/2/2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
49,000
|
|
|
|
4.19
|
|
12/16/2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
90,924
(7)
|
|
|
|
405,521
|
|
|
Denise
M. Parent
|
|
|
—
|
|
|
|
136,666
|
|
|
|
1.99
|
|
|
6/2/2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
36,800
|
|
|
|
4.19
|
|
12/16/2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
48,943
(8)
|
|
|
|
218,286
|
|
|
Robert
S. Richter
|
|
|
—
|
|
|
|
140,000
|
|
|
|
1.99
|
|
|
6/2/2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
36,800
|
|
|
|
4.19
|
|
|
12/16/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
49,433
(9)
|
|
|
|
220,471
|
|
__________
|
(1)
|
The
option expiration date is ten years from the date of
grant.
|
|
(2)
|
Stock
option awards expiring on December 16, 2019 were granted on December 16,
2009 and vest in equal installments of 25% over 4 years following the
date of grant. Stock option awards expiring on June 2, 2019 were granted
on June 2, 2009 as part of the Exchange Offer and vest in equal
installments of 33.3% over 3 years following the date of
grant.
|
|
(3)
|
Restricted
stock awards were granted on September 10, 2008, September 15, 2005
and December 22, 2005, respectively, and vest in equal installments
of 20% over 5 years following the date of grant. Restricted stock
awards were also granted on December 16, 2009 and vest in equal
installments of 25% over 4 years following the date of
grant.
|
|
(4)
|
Market
value of unvested shares is calculated based upon the closing price of our
class A common stock on December 31, 2009 of $4.46, as reported by
the New York Stock Exchange.
|
|
(5)
|
Represents
restricted stock that will vest as follows: (i) 3,555 shares July 1,
2010; (ii) 4,000 shares on July 6, 2010; (iii) 40,000 shares on
September 10, 2010; (iv) 10,100 shares on December 16, 2010; (v) 40,000
shares on September 10, 2011; (vi) 10,100 shares on December 16, 2011;
(vii) 40,000 shares on September 10, 2012; (viii) 10,100 shares on
December 16, 2012; (ix) 40,000 shares on September 10, 2013; and
(x) 10,100 shares on December 16,
2013.
|
|
(6)
|
Represents
restricted stock that will vest as follows: (i) 3,025 shares December 16,
2010; (ii) 3,025 shares on December 16, 2011; (iii) 3,025 shares
on December 16, 2012; and (iv) 3,025 shares on December 16,
2013.
|
|
(7)
|
Represents
restricted stock that will vest as follows: (i) 3,333 shares on
July 1, 2010; (ii) 1,825 shares on July 6, 2010; (iii) 1,500 shares
on July 9, 2010; (iv) 750 shares on July 12, 2010; (v) 750 shares on July
15, 2010; (vi) 16,667 shares on September 10, 2010; (vii) 4,025 shares on
December 16, 2010; (viii) 16,667 shares on September 10, 2011; (ix) 4,025
shares on December 16, 2011; (x) 16,666 shares on September 10, 2012; (xi)
4,025 shares on December 16, 2012; (xii) 16,666 shares on September 10,
2013; and (xiii) 4,025 shares on December 16,
2013.
|
|
(8)
|
Represents
restricted stock that will vest as follows: (i) 2,444 shares on
July 1, 2010; (ii) 1,567 shares on July 6, 2010; (iii) 2,000 shares
on July 9, 2010; (iv) 2,916 shares on July 12, 2010; (v) 1,250 shares on
July 15, 2010; (vi) 6,667 shares on September 10, 2010; (vii) 3,025 shares
on December 16, 2010; (viii) 6,667 shares on September 10, 2011; (ix)
3,025 shares on December 16, 2011; (x) 6,666 shares on September 10, 2012;
(xi) 3,025 shares on December 16, 2012; (xii) 6,666 shares on September
10, 2013; and (xiii) 3,025 shares on December 16,
2013.
|
|
(9)
|
Represents
restricted stock that will vest as follows: (i) 9,334 shares on
September 10, 2010; (ii) 3,025 shares on December 16, 2010; (iii) 9,333
shares on September 10, 2011; (iv) 3,025 shares on December 16, 2011; (v)
9,333 shares on September 10, 2012; (vi) 3,025 shares on December 16,
2012; (vii) 9,333 shares on September 10, 2013; and (viii) 3,025 shares on
December 16, 2013.
|
Option
Exercises and Stock Vested
The
following table provides information regarding the number of shares of our class
A common stock acquired by named executive officers upon the vesting of
restricted stock awards and the value realized, before payment of any applicable
withholding tax and broker commissions. None of the named executive officers
exercised any stock options during 2009.
|
|
|
Stock
Option Awards
|
|
|
Restricted
Stock Awards
|
|
|
Name
|
|
Number
of Shares Acquired on Exercise
|
|
|
Value
Realized on Exercise
|
|
|
Number
of Shares Acquired on Vesting
|
|
|
Value
Realized on Vesting
(1)
|
|
|
Vincent
L.
Sadusky
|
|
|
—
|
|
|
|
—
|
|
|
|
53,481
|
|
|
$
|
162,425
|
|
|
Richard
J.
Schmaeling
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Scott
M.
Blumenthal
|
|
|
—
|
|
|
|
—
|
|
|
|
30,380
|
|
|
|
84,808
|
|
|
Denise
M.
Parent
|
|
|
—
|
|
|
|
—
|
|
|
|
20,918
|
|
|
|
49,410
|
|
|
Robert
S.
Richter
|
|
|
—
|
|
|
|
—
|
|
|
|
9,334
|
|
|
|
30,662
|
|
__________
|
(1)
|
Based
on the average of the high and low prices of our class A common stock
on the vesting date if stock was held by named executive officer. If named
executive officer sold the stock, the value was based on the actual sales
price, net of commission and fees.
|
Other
Benefit Plans
Pension
Benefits
The table
below shows the present value of accumulated benefits payable to each of the
named executive officers, including the number of years of service credited to
each of the named executive officers, under each of the Retirement Plan and the
Supplemental Employee Retirement Plan. Certain terms of these plans are
described below. The present value is determined using interest rate, mortality
rate and other assumptions consistent with those described in Note 11 of the
consolidated financial statements included in our Annual Report on Form 10-K for
the year ended December 31, 2009 as filed on March 15, 2010.
|
Name
|
|
Plan
Name
|
|
Number
of Years of Credited Service
|
|
|
Present
Value of Accumulated Benefit
|
|
|
Payments
During the Last Fiscal Year
|
|
|
Vincent
L. Sadusky
(2)
|
|
Retirement
Plan
|
|
|
5
|
|
|
$
|
63,339
|
|
|
|
—
|
|
|
|
|
Supplemental
Employee Retirement Plan
|
|
|
5
|
|
|
|
153,977
|
|
|
|
—
|
|
|
Richard
J. Schmaeling
(2)
|
|
Retirement
Plan
|
|
|
1
|
|
|
|
8,520
|
|
|
|
—
|
|
|
|
|
Supplemental
Employee Retirement Plan
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
Scott
M. Blumenthal
(1)
|
|
Retirement
Plan
|
|
|
21
|
|
|
|
620,015
|
|
|
|
—
|
|
|
|
|
Supplemental
Employee Retirement Plan
|
|
|
21
|
|
|
|
874,026
|
|
|
|
—
|
|
|
Denise
M. Parent
(2)
|
|
Retirement
Plan
|
|
|
13
|
|
|
|
145,052
|
|
|
|
—
|
|
|
|
|
Supplemental
Employee Retirement Plan
|
|
|
13
|
|
|
|
49,978
|
|
|
|
—
|
|
|
Robert
S. Richter
(2)
|
|
Retirement
Plan
|
|
|
3
|
|
|
|
30,906
|
|
|
|
—
|
|
|
|
|
Supplemental
Employee Retirement Plan
|
|
|
3
|
|
|
|
8,245
|
|
|
|
—
|
|
__________
|
(1)
|
Mr. Blumenthal
participates in the traditional average final-pay
plan.
|
|
(2)
|
Messrs. Sadusky,
Schmaeling, Richter and Ms. Parent participate in the cash balance
plan.
|
Retirement
Plan
Participants
in our tax qualified pension plan participate in either a cash balance benefit
plan or a traditional average final-pay plan and may also receive benefits under
our SERP, as hereinafter defined, which is described below. Mr. Blumenthal
participates in the traditional average final-pay plan. Messrs. Sadusky,
Schmaeling, Richter and Ms. Parent participate in the cash balance
plan.
Effective
April 1, 2009, these plans were frozen and we do not expect to make additional
benefit accruals to these plans. Pension benefits vest after three years of
service. Cash balance plan accounts earn annual interest at a rate equal to the
interest rate for five-year U.S. Treasury Bills plus 25 basis points (the
interest rate is reset annually at the Treasury rate during the November
preceding each plan year). As of December 31, 2009, the estimated annual
retirement benefits payable under the cash balance plan and our SERP as an
annuity for life upon normal retirement, assuming Messrs. Sadusky, Schmaeling,
Blumenthal, Richter and Ms. Parent, remain employed by us at their current level
of compensation until age 65, is $47,442, $1,803, $166,396, $10,537 and $39,959,
respectively.
Under the
traditional average final-pay benefit plan, benefits are computed by multiplying
(i) 1.50% of the average of the employee’s three highest years of annual
compensation, as defined in the plan, times (ii) the employee’s number of years
of credited service, up to a maximum of 32 years. Each named executive officer’s
salary and bonus for 2009 is set forth above in the “Salary”, “Bonus” and
“Non-Equity Incentive Plan Compensation” columns of the Summary Compensation
Table.
Under the
plan, a participant’s normal retirement age is 65. The normal form of payment
for a participant who is not married is a single life annuity. The normal form
of payment for a participant who is married is a qualified joint and survivor
annuity. A participant may retire early after attaining age 55 and full vesting.
A traditional participant who retires early will have their benefit reduced by
0.55% for each month up to 60 months and by 0.30% for each month in excess of 60
months that they retire prior to their normal retirement date. A cash balance
participant will receive the present value of their accrued benefit at the time
they retire early.
Supplemental
Benefit Retirement Plan
As
permitted by the Employee Retirement Income Security Act of 1974, as amended,
our Supplemental Benefit Retirement Plan (“SERP”) is a non-qualified plan
designed to provide for the payment by us of the difference, if any, between the
amount of maximum IRS and/or other regulatory limitations and the annual benefit
that would be payable under the pension plan (including the cash balance benefit
plan and traditional average final-pay benefit plan), but for such
limitations.
The SERP
follows the provisions of the retirement plan for normal retirement date and
early retirement. Payments for traditional participants will commence at their
normal retirement date. Payments to cash balance participants will be paid in a
lump sum six (6) months after termination.
401(k)
Plan
We have
historically provided a defined contribution plan (“401(k) Plan”) for almost all
of our employees. We have historically made contributions to the 401(k) Plan on
behalf of employee groups that were not covered by the retirement plans
described above, matching 50% of the employee’s contribution up to 6% of the
employee’s total annual compensation. We suspended our contributions to the
401(k) Plan during 2009 in connection with efforts to control operating expenses
in response to the effect of the economic downturn on our business. Effective
January 1, 2010, we resumed Company contributions to the 401(k) Plan, which will
provide a 3% non-elective contribution to all eligible employees, including each
of the named executive officers.
Nonqualified
Deferred Compensation
The named
executive officers and other eligible employees have had the opportunity to
participate in our Deferred Compensation Plan. The Deferred Compensation Plan
allows eligible employees to defer up to 100% of their base salary and
performance bonuses in either mutual funds managed by Fidelity Investments or in
our Company’s Senior Subordinated Notes, which are described more fully in Note
7 of the notes to our audited consolidated financial statements in our Annual
Report on Form 10-K for the year ended December 31, 2009. As of December 2008,
we decided not to offer the named executive officers and other eligible
employees the opportunity to participate in the Deferred Compensation Plan
because, among other reasons, the number of participants in the plan had
declined while the expense and resources required to manage the plan had
increased. The Deferred Compensation Plan remains in place for purposes of
servicing the current participants and the balance of the amounts that were
previously deferred by named executive officers and other eligible
employees.
The
following table summarizes the deferred compensation accounts for each of the
named executive officers under our Deferred Compensation Plan as of December 31,
2009:
|
Name
|
|
Executive
Contributions
in Last Fiscal
Year
|
|
|
Registrant
Contributions
in
Last Fiscal
Year
|
|
|
Aggregate
Earnings
in
Last
Fiscal Year
|
|
|
Aggregate
Withdrawals/
Distributions
|
|
|
Aggregate
Balance at Last
Fiscal Year
End
|
|
|
Vincent
L.
Sadusky
|
|
|
—
|
|
|
|
—
|
|
|
|
31,706
|
|
|
|
—
|
|
|
|
186,097
(1)
|
|
|
Richard
J.
Schmaeling
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Scott
M.
Blumenthal
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Denise
M.
Parent
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Robert
S.
Richter
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
__________
|
(1)
|
With
the exception of the earnings shown in the table for 2009, the aggregate
balance of Mr. Sadusky’s deferred compensation represents compensation and
investments earnings earned prior to January 1,
2007.
|
Other
Benefits and Perquisites
All
Other Compensation
For the
year ended December 31, 2009 the following table describes each component of the
All Other Compensation column in the Summary Compensation Table.
|
Name
|
|
Company
Paid Auto and Commuting Benefits
(1)
|
|
|
Executive Life
Insurance
|
|
|
Relocation
|
|
|
Total
Other
Compensation
|
|
|
Vincent
L.
Sadusky
|
|
$
|
9,367
|
|
|
$
|
547
|
|
|
$
|
—
|
|
|
$
|
9,914
|
|
|
Richard
J.
Schmaeling
|
|
|
8,686
|
|
|
|
547
|
|
|
|
66,048
(2)
|
|
|
|
75,281
|
|
|
Scott
M.
Blumenthal
|
|
|
721
|
|
|
|
547
|
|
|
|
—
|
|
|
|
1,268
|
|
|
Denise
M.
Parent
|
|
|
2,421
|
|
|
|
547
|
|
|
|
—
|
|
|
|
2,968
|
|
|
Robert
S.
Richter
|
|
|
1,480
|
|
|
|
547
|
|
|
|
—
|
|
|
|
2,027
|
|
__________
|
(1)
|
Our
Company provides the use of a company automobile to each of our named
executive officers and we allow the purchase of a new vehicle every three
years. We limit our Company’s contribution towards the purchase of a
vehicle to $35,000 plus applicable taxes, registration and insurance for
each of our named executive
officers.
|
|
(2)
|
Relocation
expenses for 2009 totaled $66,048 comprised of rental and relocation
expenses of $21,509 and $22,049, respectively,
and
payment for payroll withholding taxes in the amount of
$22,490.
|
Potential
Payments Upon Termination or Change in Control
Had any
of the named executive officers been terminated “without cause” or if the named
executive officers had terminated their employment for “good reason” as of
December 31, 2009, or if there had been a change in control as of such date, the
named executive officers would have been eligible to receive the following
payments:
|
|
|
Termination
Without Change in Control
|
|
|
Additional
Payment if
Change
in Control
|
|
|
|
|
Salary
&
Bonus
(1)
|
|
|
Health
and
Other
Benefits
(2)
|
|
|
Retirement
Benefits
(3)
|
|
|
Accelerated
Vesting
of
Options
&
Awards
(4)
|
|
|
Total
|
|
|
Accelerated
Vesting
of
Options
&
Awards
(5)
|
|
|
Total
|
|
|
Vincent
L. Sadusky
|
|
$
|
925,000
|
|
|
$
|
6,619
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
931,619
|
|
|
$
|
262,071
|
|
|
$
|
1,193,690
|
|
|
Chairman,
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
J. Schmaeling
|
|
|
375,000
|
|
|
|
6,471
|
|
|
|
—
|
|
|
|
—
|
|
|
|
381,471
|
|
|
|
93,399
|
|
|
|
474,870
|
|
|
Senior
Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott
M. Blumenthal
|
|
|
536,250
|
|
|
|
5,894
|
|
|
|
—
|
|
|
|
—
|
|
|
|
542,144
|
|
|
|
108,868
|
|
|
|
651,012
|
|
|
Executive
Vice President Television
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denise
M. Parent
|
|
|
433,250
|
|
|
|
42,301
|
|
|
|
11,948
|
|
|
|
32,959
|
|
|
|
520,458
|
|
|
|
32,660
|
|
|
|
553,118
|
|
|
Vice
President General Counsel and Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
S. Richter
|
|
|
407,000
|
|
|
|
6,619
|
|
|
|
—
|
|
|
|
—
|
|
|
|
413,619
|
|
|
|
73,711
|
|
|
|
487,330
|
|
|
Senior
Vice President New Media
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________
|
(1)
|
In
accordance with each named executive officer’s employment agreement,
described above under “Compensation Discussion and Analysis — Design of
Compensation Programs — Employment Agreements, Severance and
Change-in-Control Arrangements”, calculated as a multiple of salary and
bonus paid to the named executive officer in 2009 or if not paid, the
amount to which the executive was
eligible.
|
|
(2)
|
Benefits
include the medical and dental costs paid by our Company using the
healthcare rates in effect as of January 1, 2009. For Ms. Parent in
accordance with her employment agreement, in addition to medical and
dental costs, other executive benefits including company automobile,
vision, life and pension benefits will be
provided.
|
|
(3)
|
This
represents additional retirement benefits that would have accrued to Ms.
Parent in the 12 months following termination in accordance with her
employment agreement.
|
|
(4)
|
For
Ms. Parent in accordance with her employment agreement, all prior stock
options and restricted stock awards which are not otherwise exercisable or
vested will become fully vested as of the date of the employment
termination except for grants made on or after September 6, 2006 or as
otherwise determined by the Compensation
Committee.
|
|
(5)
|
This
reflects the value which will automatically vest upon a change in control
pursuant to existing agreements. In addition, with respect to all other
outstanding option grants, the Compensation Committee has the authority to
declare that any restrictions may lapse and any or all outstanding options
shall vest and become immediately exercisable upon consummation of a
change in control.
|
DIRECTOR COMPENSATION
Our Board
believes that our future growth and profitability depend upon our ability to
maintain a competitive position in attracting and retaining qualified directors
and that both cash compensation and equity awards are an important part of the
compensation offered to directors.
The
following table summarizes the compensation paid to all persons serving as
non-employee directors during 2009.
|
Name
|
|
Fees Earned or
Paid in
Cash
|
|
|
Stock
Awards
(1)
|
|
|
Option
Awards
(1)
|
|
|
Total
|
|
|
William
S. Banowsky,
Jr.
|
|
$
|
90,000
|
|
|
$
|
-
|
|
|
$
|
90,113
|
|
|
$
|
180,113
|
|
|
Peter
S.
Brodsky
|
|
|
90,500
|
|
|
|
-
|
|
|
|
90,462
|
|
|
|
180,962
|
|
|
Royal
W. Carson
III
|
|
|
70,500
|
|
|
|
-
|
|
|
|
71,953
|
|
|
|
142,453
|
|
|
Dr. William
H.
Cunningham
|
|
|
56,532
|
|
|
|
-
|
|
|
|
149,165
|
|
|
|
205,697
|
|
|
Patti
S. Hart
(2)
|
|
|
35,683
|
|
|
|
-
|
|
|
|
-
|
|
|
|
35,683
|
|
|
Douglas
W. McCormick,
Chairman
|
|
|
96,500
|
|
|
|
-
|
|
|
|
104,075
|
|
|
|
200,575
|
|
|
Michael
A.
Pausic
|
|
|
67,500
|
|
|
|
-
|
|
|
|
71,347
|
|
|
|
138,847
|
|
|
Mitchell
Stern
(3)
|
|
|
23,226
|
|
|
|
-
|
|
|
|
-
|
|
|
|
23,226
|
|
|
Totals
|
|
$
|
530,441
|
|
|
$
|
-
|
|
|
$
|
577,115
|
|
|
$
|
1,107,556
|
|
__________
|
(1)
|
Represents
the aggregate grant date fair value computed in accordance with ASC 718.
See Note 8 to the consolidated financial statements included in our Form
10-K filed March 15, 2010 for a discussion of the assumptions used to
value equity-based compensation. With the exception of a grant of 100,000
options for our class A common stock to Dr. Cunningham, the amounts shown
include the increase in fair value related to the modifications to certain
stock options held by each of the non-employee directors pursuant to the
June 2, 2009 Exchange Offer as described in the Compensation Discussion
and Analysis section.
|
|
(2)
|
Ms.
Hart resigned from our Board effective on May 22, 2009. The compensation
amounts set forth in this table reflect the compensation earned through
that date.
|
|
(3)
|
Mr.
Stern’s term on our Board expired on May 21, 2009. The compensation
amounts set forth in this table reflect the compensation earned through
that date.
|
Cash
Compensation
Effective
as of September 2008, our non-employee directors were eligible to receive an
annual retainer of $60,000 for services rendered as directors, plus compensation
of $1,500 per meeting for attending Board meetings in person, or $1,000 per
meeting for attending via telephone. Committee members also receive $1,000 per
meeting for attending committee meetings in person, or $500 per meeting for
attending via telephone. The Chair of our Compensation Committee and our
Nominating and Corporate Governance Committee each receive an additional annual
retainer of $15,000, the chair of our Audit Committee receives an additional
annual retainer of $20,000, and the Chairman of the Board receives an additional
annual retainer of $25,000. Directors may elect to receive half of their annual
retainer in the Company’s class A common stock. We do not maintain a medical,
dental or retirement benefits plan for our non-employee directors.
Equity
Compensation
1,500,000
shares of class A common stock are reserved for issuance under the Third Amended
and Restated 2002 Non-Employee Director Stock Plan (“Director Stock Plan”). The
Board is recommending the stockholders vote for a proposal at the Annual Meeting
to amend the Director Stock Plan to (i) increase the number of shares of class A
common stock reserved for issuance under the plan by 1,500,000 shares (from
1,500,000 shares to 3,000,000 shares) and (ii) eliminate the expiration date of
May 1, 2012.
Stock
options granted pursuant to the Director Stock Plan expire on the earlier of 10
years from the date of grant or three months after cessation of service as a
director. Stock options granted pursuant to the Director Stock Plan have an
exercise price equal to the fair market value of a share of our common stock on
the date of grant. Options granted pursuant to the Exchange Offer vest in equal
installments of 33.3% over three years from the date of grant. Options granted
under the Director Stock Plan vest over a period of four years, with 25% of the
options vesting on each anniversary of the grant date. Restricted stock awards
granted under the Director Stock Plan vest over a period of five years, with 20%
of the shares granted under the award vesting on each anniversary of the grant
date.
Upon any
change in control, or if we or affiliates of HM Capital Partners I LP enter into
any agreement providing for our change in control, the Compensation Committee
may declare that any restrictions applicable to a stock award may lapse and any
or all outstanding options shall vest and become immediately exercisable.
Thereafter, the stock options will be subject to the terms of the transaction
effecting the change in control.
Except
for Dr. Cunningham, there were no equity awards made to non-employee directors
during 2009. The following table summarizes the aggregate number of stock
options and unvested restricted stock awards outstanding for each non-employee
director as of December 31, 2009:
|
|
|
Restricted
Stock Awards
|
|
|
Stock
Option Awards
|
|
|
Aggregate
Number of
Awards
Outstanding
|
|
|
Name
|
|
Date
of Award
|
|
|
Restricted
Stock Awards
|
|
|
Fair
Value at Grant Date
|
|
|
Date
of Award
|
|
|
Stock
Option Awards
|
|
|
Fair
Value at Grant Date
(1)
|
|
|
Outstanding
Restricted Stock Awards
|
|
|
Stock
Options
|
|
|
William
S. Banowsky, Jr
.
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
6/2/09
|
|
|
|
130,842
|
|
|
$
|
90,113
|
|
|
|
10,632
|
|
|
|
130,842
|
|
|
Peter
S. Brodsky
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
6/2/09
|
|
|
|
128,000
|
|
|
|
90,462
|
|
|
|
9,257
|
|
|
|
128,000
|
|
|
Royal
W. Carson III
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
6/2/09
|
|
|
|
104,333
|
|
|
|
71,953
|
|
|
|
11,028
|
|
|
|
104,333
|
|
|
Dr.
William H. Cunningham
(2)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
5/21/09
|
|
|
|
100,000
|
|
|
|
149,165
|
|
|
|
—
|
|
|
|
100,000
|
|
|
Patti
S. Hart
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Douglas
W. McCormick, Chairman
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
6/2/09
|
|
|
|
150,000
|
|
|
|
104,075
|
|
|
|
8,457
|
|
|
|
150,000
|
|
|
Michael
A. Pausic
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
6/2/09
|
|
|
|
103,333
|
|
|
|
71,347
|
|
|
|
9,345
|
|
|
|
103,333
|
|
|
Mitchell
Stern
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
716,508
|
|
|
$
|
577,115
|
|
|
|
48,719
|
|
|
|
716,508
|
|
_____________
|
|
(1)
|
This
column shows the full grant date fair value of the stock options under ASC
718. Generally, the full grant date fair value is the amount that we would
expense in our financial statements over the entire term of the stock
options’ vesting schedule. The amounts shown for awards granted on June 2,
2009 include the incremental increase in the fair value of certain stock
options granted prior to 2009, computed in accordance with ASC 718,
resulting from the Exchange Offer as described in Compensation Discussion
and Analysis. The amount shown for the grant date fair value for this
exchange for each non-employee director is comprised of the amounts, per
grant, as shown below:
|
|
|
Grant
Date
|
|
Grant
Date Fair Value
|
|
|
William
S. Banowsky,
Jr.
|
2/8/2002
|
|
$
|
814
|
|
|
|
5/6/2005
|
|
|
802
|
|
|
|
5/5/2006
|
|
|
1,767
|
|
|
|
11/14/2006
|
|
|
86,730
|
|
|
|
|
|
$
|
90,113
|
|
|
|
|
|
|
|
|
|
Peter
S.
Brodsky
|
7/13/2005
|
|
$
|
8,904
|
|
|
|
5/5/2006
|
|
|
1,767
|
|
|
|
11/14/2006
|
|
|
79,791
|
|
|
|
|
|
$
|
90,462
|
|
|
|
|
|
|
|
|
|
Royal
W. Carson
III
|
5/6/2005
|
|
$
|
802
|
|
|
|
5/5/2006
|
|
|
1,767
|
|
|
|
11/14/2006
|
|
|
69,384
|
|
|
|
|
|
$
|
71,953
|
|
|
|
|
|
|
|
|
|
Douglas
W. McCormick,
Chairman
|
11/14/2006
|
|
$
|
104,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
A.
Pausic
|
5/5/2006
|
|
$
|
1,963
|
|
|
|
11/14/2006
|
|
|
69,384
|
|
|
|
|
|
$
|
71,347
|
|
|
|
(2)
|
Dr.
Cunningham was elected to our Board on May 21,
2009.
|
|
|
(3)
|
Ms.
Hart resigned from our Board effective on May 22,
2009.
|
|
|
(4)
|
Mr.
Stern’s term on our Board expired effective May 21,
2009.
|
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
None of
the members of our Compensation Committee has at any time been one of our
officers or employees. None of our executive officers currently serves, or in
the past year has served, as a member of the board or compensation committee of
any entity that has one or more executive officers serving on our Board or
Compensation Committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We are
unaware of any relationships or related transactions that are required to be
reported in this proxy statement.
REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED
PERSONS
On an
annual basis, each director and executive officer of our Company must complete a
Director and Officer Questionnaire that requires disclosure of any transaction,
arrangement or relationship with us during the last fiscal year, in which the
director or executive officer, or any member of his or her immediate family, had
a direct or indirect material interest. Any transaction, arrangement or
relationship disclosed in the Director and Officer Questionnaire is reviewed and
considered by our Board in making independence determinations and resolving any
conflicts of interest that may be implicated
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES AND OTHER
MATTERS
The
aggregate fees billed for professional services rendered by
PricewaterhouseCoopers LLP in the fiscal years ended December 31, 2009, and
December 31, 2008, respectively, are as follows (in
thousands):
|
|
|
2009
|
|
|
2008
|
|
|
Audit
Fees
|
|
$
|
1,065
|
|
|
$
|
1,365
|
|
|
Audit-Related
Fees
|
|
|
—
|
|
|
|
—
|
|
|
Tax
Fees
|
|
|
—
|
|
|
|
—
|
|
|
All
Other
Fees
|
|
|
4
|
|
|
|
2
|
|
|
Total
|
|
$
|
1,069
|
|
|
$
|
1,367
|
|
Items
included under Audit Fees include professional services rendered by
PricewaterhouseCoopers LLP for the audit of our annual financial statements
included in our Form 10-K, including compliance testing with respect to
Sarbanes Oxley Act Section 404, and review of interim financial statements
included in our Forms 10-Q for the years ended December 31, 2009 and
2008.
Items
included under Audit-Related Fees include professional services rendered by
PricewaterhouseCoopers LLP for assurance and other related services that are
required in the performance of the audit or review of the financial statements,
and which are not included under Audit Fees, during the years ended December 31,
2009 and 2008.
Items
included under All Other Fees include annual usage fees relating to software
licensed by PricewaterhouseCoopers LLP.
The Audit
Committee reviews and pre-approves all annual services and fees proposed by
PricewaterhouseCoopers LLP. No services were approved pursuant to the de minimis
exception.
OTHER INFORMATION
Other
Matters
As of the
date of this Proxy Statement, our Board does not intend to present any matter
for action at the Annual Meeting other than as set forth in the Notice and Proxy
Statement for the Annual Meeting. If any other matters properly come before the
meeting, it is intended that the holders of the proxies will act in accordance
with their best judgment.
Stockholder
Proposals for the 2011 Annual Meeting
Proposals
of stockholders who intend to be present at the 2011 annual meeting of
stockholders pursuant to Rule 14a-8 promulgated under the Exchange Act must be
received by us no later than the close of business on December 12, 2010 in order
that they may be included in the proxy statement and form of proxy relating to
that meeting. Proposals should be addressed to Denise M. Parent, Secretary, LIN
TV Corp., One West Exchange Street, Suite 5A, Providence, Rhode Island
02903.
In
addition, our bylaws require that we be given advance notice of stockholder
nominations for election to our Board and of other business that stockholders
wish to present for action at an annual meeting of stockholders (other than
matters included in our Proxy Statement in accordance with Rule 14a-8). Such
nominations and proposals for the 2011 annual meeting, other than those made by
or on behalf of our Board, shall be made by notice in writing delivered or
mailed by first class United States mail, postage prepaid, to the Secretary, and
received no earlier than January 2, 2011 and no later than February 1, 2011,
assuming that the 2011 annual meeting is to be held between April 2, 2011 and
July 11, 2011, as we currently anticipate. In the event that the 2011 annual
meeting is not held between April 2, 2011 and July 11, 2011, notice of
stockholder nominees or proposals must be received no earlier than 120 days
before the date of the 2011 annual meeting and no later than 90 days before the
date of the 2011 annual meeting or the 10th day following our first public
announcement of the date of such meeting, whichever is later. Our bylaws also
require that such notice contain certain additional information. Copies of our
bylaws can be obtained without charge from the Secretary.
Proxy
Solicitation
The cost
of the solicitation of proxies will be borne by us. In addition to the
solicitation of proxies by mail, certain of our officers and employees, without
extra remuneration, may solicit proxies personally, by telephone, mail or
facsimile. Brokers, custodians and fiduciaries will be requested to forward
proxy soliciting material to the owners of stock held in their names, and we
will reimburse them for their reasonable out-of-pocket expenses incurred in
connection with the distribution of proxy materials.
Householding
of Annual Meeting Materials
Some
banks, brokers and other nominee record holders may be participating in the
practice of “householding” proxy statements. This means that only one copy of
our Proxy Statement may have been sent to multiple stockholders in a
stockholder’s household. We will promptly deliver a separate copy to any
stockholder upon written or oral request to LIN TV Corp., One West Exchange
Street, Suite 5A, Providence, Rhode Island 02903, Attention: Denise M. Parent,
Secretary; Telephone: (401) 454-2880. If any stockholder wants to receive
separate copies of the Proxy Statement in the future, or if any stockholder is
receiving multiple copies and would like to receive only one copy for his or her
household, such stockholder should contact his or her bank, broker, or other
nominee record holder, or such stockholder may contact us at the above address
and phone number.
|
|
By
Order of our Board of Directors,
|
|
|
|
|
|
|
|
|
Denise
M. Parent
|
|
|
Secretary
|
April 12,
2010
Appendix A
LIN TV
CORP.
NON-EMPLOYEE DIRECTOR STOCK
PLAN
LIN TV
CORP
2002
NON-EMPLOYEE DIRECTOR
STOCK
PLAN
(as
amended and restated effective as of [ ])
LIN
TV CORP.
2002
NON-EMPLOYEE DIRECTOR STOCK PLAN
(as
amended and restated effective as of [ ])
The
purpose of the LIN TV Corp. 2002 Non-Employee Director Stock Plan (“Plan”) is to
attract highly qualified individuals who are not current employees of LIN TV
Corp. or its subsidiaries (collectively, the “Company”) to serve as members of
the Board of Directors of the Company, to enable such individuals to increase
their ownership in the Company’s Class A common stock, par value $.01 per share
(the “Common Stock”) and to provide them with a further incentive to remain as
directors of the Company. Capitalized terms in the Plan or in any agreement
evidencing an award granted under the Plan shall have the meaning assigned to
such terms in the Plan, except to the extent the context requires a different
construction.
(a)
Committee
. The Plan
shall be administered by the Compensation Committee of the Board of Directors of
the Company (“Board of Directors”) or by any other committee appointed by the
Board of Directors of the Company to administer the Plan (the “Committee”);
provided that the Board of Directors shall act as the Committee if no such
committee is appointed by the Board of Directors; further provided that, the
entire Board of Directors may act as the Committee if it chooses to do so. The
number of individuals that shall constitute the Committee shall be determined
from time to time by a majority of all the members of the Board of Directors,
and, unless a majority of the Board of Directors determines otherwise, shall
consist of not less than two (2) members who shall be “non-employee directors”
within the meaning of Rule 16b-3(b)(3) (or any successor rule) promulgated under
the Securities Exchange Act of 1934, as amended (the “Exchange
Act”).
(b)
Authority
. The
Committee shall have full and final authority, subject to the terms of the
Plan:
(i) to
establish such rules and regulations as it deems necessary for the proper
administration of the Plan;
(ii) to
make all determinations permitted or deemed necessary, appropriate, or advisable
for the administration of the Plan;
(iii) to
interpret the terms and conditions of the Plan and any agreement evidencing an
award granted under the Plan; and
(iv) to
perform all other acts, exercise all other powers, and establish any other
procedures determined by the Committee to be necessary, appropriate, advisable,
in its sole discretion, for the administration of the Plan or for the conduct of
the Committee’s business.
All
determinations and interpretations made by the Committee with respect to the
Plan or an award granted under the Plan shall be binding and conclusive on all
individuals and their legal representatives.
(c)
Indemnification
. No
member of the Committee and no employee of the Company shall be liable for any
act or failure to act hereunder, except in circumstances involving such
director’s bad faith, gross negligence or willful misconduct, or for any act or
failure to act hereunder by any other member or employee or by any agent to whom
duties in connection with the administration of this Plan have been delegated.
The Company shall indemnify members of the Committee and any agent of the
Committee who is an employee of the Company against any and all liabilities or
expenses to which they may be subjected by reason of any act or failure to act
with respect to their duties on behalf of the Plan, except in circumstances
involving such person’s bad faith, gross negligence or willful
misconduct.
(d)
Delegation and
Advisers
. The Committee may delegate to one or more of its members, or to
one or more agents, such administrative duties as it may deem advisable, and the
Committee, or any person to whom it has delegated duties as aforesaid, may
employ one or more persons to render advice with respect to any responsibility
the Committee or such person may have under the Plan. The Committee may employ
such legal or other counsel, consultants and agents as it may deem desirable for
the administration of the Plan and may rely upon any opinion or computation
received from any such counsel, consultant or agent. Expenses incurred by the
Committee in the engagement of such counsel, consultant or agent shall be paid
by the Company.
Each
active member of the Company’s Board of Directors who is not a current employee
of the Company and who is not eligible to participate in the LIN TV Corp. 2002
Stock Plan (including any successor plan thereto), shall be eligible to
participate in the Plan (“Eligible Non-Employee Director”). An Eligible
Non-Employee Director shall become a participant in the Plan (“Participant”)
upon such director’s execution of an Option Agreement (as defined in Section
4(a) herein) or a Stock Award Agreement (as defined in Section 4(b)
herein).
(a)
Stock Options
. The
Plan provides for the grant of rights to purchase shares of Common Stock (“Stock
Options”) in accordance with the terms described herein and subject to the terms
of the written agreement executed by the Company and the Participant evidencing
the grant of such Stock Option (“Option Agreement”). Stock Options granted under
the Plan shall be designated as non-qualified stock options not entitled to
special tax treatment under Section 422 of the Internal Revenue Code of 1986, as
amended to date and as it may be amended from time to time.
(b)
Stock Awards
. The
Plan provides for the grant of awards with respect to shares of Common Stock
(“Stock Awards”), as described in Section 7 herein. Each Stock Award shall be
subject to the terms of the Plan and the written agreement executed by the
Company and the Participant evidencing the grant of such Stock Award (“Stock
Award Agreement”).
(c)
No Right to Become a
Participant
. Any Stock Option or Stock Award granted to a member of the
Committee shall be approved by the Board of Directors, and no member of the
Committee may approve the grant of a Stock Option or Stock Award to
himself. Eligibility to participate in the Plan shall not entitle an
Eligible Non-Employee Director to receive a Stock Option or Stock Award prior to
the date such Stock Option or Stock Award is granted under the Plan. The
granting of any Stock Option or Stock Award under the Plan shall not be deemed
to either entitle a Participant to receive or to disqualify a Participant from
receiving any other Stock Option or Stock Award under the Plan.
|
5.
|
COMMON
STOCK RESERVED UNDER THE PLAN
|
(a)
Basic Limitations
.
The aggregate number of shares of Common Stock that may be subject to Stock
Options or Stock Awards granted under the Plan shall be 3,000,000 shares of
Common Stock, which may be authorized and unissued or treasury shares, subject
to any adjustments made in accordance with Section 8 hereof
(b)
Additional Shares
.
Any shares of Common Stock subject to a Stock Option that for any reason is
cancelled, expires, forfeited, or terminates without having been exercised, or
any shares of Common Stock subject to a Stock Award that is cancelled, expires,
forfeited, or terminates without payment, if any, having been made by the
Participant for such shares of Common Stock shall again be available for the
grant of Stock Options or Stock Awards under the Plan.
(a)
General
. The
Committee may grant Stock Options and determine the number of shares of Common
Stock to be covered by each Stock Option and the conditions and limitations
applicable to the exercise of each Stock Option, including conditions relating
to applicable federal or state securities laws, as it considers necessary or
advisable.
(b)
Exercise Price
. Each
Stock Option granted hereunder shall have a per-share exercise price equal to
the Fair Market Value of a share of Common Stock on the date of grant of such
Stock Option.
(c)
Payment of Exercise
Price
. In no event shall any shares of Common Stock be issued pursuant to
the exercise of a Stock Option until the Participant has made full payment for
the shares of Common Stock (including payment of the exercise price and any
taxes required to be withheld by the Company in connection with the exercise of
the Stock Option).
The
exercise price shall be payable in United States dollars in cash or by check or
in such form as the Committee may from time to time designate. The Participant
also shall pay to the Company an amount determined by the Company to be
sufficient to pay any applicable federal or state withholding taxes imposed as a
result of the exercise of the Stock Option. In the sole discretion of the
Committee, a Participant may make payment of either or both of the exercise
price and any required, federal or state withholding taxes, in whole or in part,
by delivering shares of Common Stock to the Company. The Committee may impose
such limitations and restrictions on payments with shares of Common Stock as the
Committee, in its sole discretion, deems advisable.
(d)
Vesting
. A Stock
Option may be exercised to the extent the Stock Option is vested. Unless
otherwise determined by the Committee at the time of grant and as provided in an
Option Agreement, a Stock Option granted under the Plan shall become vested and
exercisable in accordance with the vesting schedule set forth below, unless
vesting is accelerated pursuant to Section 6(e) or Section 8(c)
herein.
|
PERCENTAGE
OF GRANT
VESTED AND EXERCISABLE
|
VESTING DATE
|
|
25%
|
1
st
anniversary of grant date
|
|
|
|
|
25%
|
2
nd
anniversary of grant date
|
|
|
|
|
25%
|
3
rd
anniversary of grant date
|
|
|
|
|
25%
|
4
th
anniversary of grant date
|
(e)
Acceleration of
Vesting
. To the extent a Stock Option has not previously vested or
expired, a Stock Option shall become 100% vested and exercisable effective as of
the date an Eligible Non-Employee Director ceases to provide services as an
Eligible Non-Employee Director of the Company, provided that such cessation of
service occurs as a result of such director’s death or Retirement. For purposes
of the Plan, “Retirement” shall mean cessation of service as an Eligible
Non-Employee Director of the Company on or after (i) the date on which an
Eligible Non-Employee Director attains age 60 with ten (10) or more years of
service with the Company as a Non-Employee Director or (ii) the date on which an
Eligible Non-Employee Director attains age 65 with five (5) or more years of
service with the Company as an Eligible Non-Employee Director.
(f)
Term of Stock
Options
. A Stock Option granted under the Plan shall terminate or expire,
and may no longer be exercised, on the earlier to occur of the following,
subject to Section 8(c) herein:
(i) Ten
(10) years after the date of grant; or
(ii) Three
(3) months after the date of an individual’s cessation of service as an Eligible
Non-Employee Director.
(g)
Exchange Programs
.
The Committee may, without stockholder approval, cancel any outstanding stock
option and grant in exchange therefore a new Stock Option or Stock Award
covering the same or a different number of shares of common stock and having an
exercise price per share lower than the then-current exercise price per share of
the cancelled Stock Option; provided, however, that the exercise price per share
of the new Stock Option or Stock Award shall not exceed the Fair Market Value of
a share of Common Stock on the date of the grant of such Stock Option or Stock
Award.
7. STOCK
AWARDS
(a)
Generally
. The
Committee may, in its discretion, grant Stock Awards consisting of shares of
Common Stock issued or transferred to an Eligible Non-Employee Director with or
without payments therefor. A Stock Award shall be construed as an offer by the
Company to the Participant to purchase the number of shares of Common Stock
subject to the Stock Award at the purchase price, if any, established
therefor.
(b)
Payment of the Purchase
Price
. If the Stock Award Agreement requires payment for shares of Common
Stock acquired pursuant to the Stock Award, the purchase price of any shares of
Common Stock subject to the Stock Award may be paid in any manner authorized by
the Committee, which may include any manner authorized under the Plan for the
payment of the exercise price of a Stock Option.
(c)
Additional Terms
.
Stock Awards shall be subject to such terms and conditions as the Committee
determines, in its sole discretion, to be appropriate, including restrictions on
the sale or other disposition of shares of Common Stock acquired pursuant to the
Stock Award and the right of the Company to reacquire such shares for no
consideration on or after the termination of the Participant’s service with the
Company. The Committee may require the Participant to deliver a duly signed
stock power, endorsed in blank, relating to the shares of Common Stock subject
to a Stock Award. The Committee may also require that the stock certificates
evidencing shares of Common Stock subject to a Stock Award be held in custody or
bear restrictive legends until the restrictions thereon shall have
lapsed.
(d)
Rights as a
Shareholder
. The Stock Award Agreement shall specify whether the
Participant shall have, with respect to shares of Common Stock subject to the
Stock Award, any of the rights of a holder of shares of Common Stock, including
the right to receive dividends and the right to vote the shares of Common
Stock.
(e)
Vesting
. Unless
otherwise determined by the Committee at the time of grant and as provided in a
Stock Award Agreement, Stock Awards granted under the Plan shall vest, and
restrictions applicable to such Award shall lapse, in accordance with the
vesting schedule set forth below, unless vesting is accelerated pursuant to
Section 7(f) or Section 8(c) herein.
|
PERCENTAGE OF GRANT VESTED
|
VESTING DATE
|
|
20%
|
1
st
anniversary of grant date
|
|
|
|
|
20%
|
2
nd
anniversary
of grant date
|
|
|
|
|
20%
|
3
rd
anniversary of grant date
|
|
|
|
|
20%
|
4
th
anniversary of grant date
|
|
|
|
|
20%
|
5
th
anniversary of grant date
|
(f)
Acceleration of
Vesting
. To the extent a Stock Award has not previously vested a Stock
Award shall become 100% vested effective as of the date an Eligible Non-Employee
Director ceases to provide services as an Eligible Non-Employee Director of the
Company, provided that such cessation of service occurs as a result of such
director’s death or Retirement.
|
8.
|
ADJUSTMENT
PROVISIONS; CHANGE OF CONTROL
|
(a)
Adjustment Generally
.
If there shall be any change in the shares of Common Stock through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
reverse stock split, split up, spin-off, combination of shares, exchange of
shares, dividend in kind or other like change in capital structure or
distribution (other than normal cash dividends) to stockholders of the Company,
the number of shares of Common Stock reserved under the Plan as set forth in
Section 5(a) herein, the number and kind of shares issuable under an outstanding
Stock Option, and the exercise price of a Stock Option, shall be adjusted to
reflect such change in the shares of Common Stock.
(b)
Adjustment to Stock
Awards
. In the event of any change in the shares of Common Stock
described in subsection (a) above, the Committee shall make appropriate
adjustments to such award to reflect such event may specify the effect of such
change on Stock Awards under the Plan.
(c)
Effect of a Change of
Control
. If (1) a Change of Control shall occur, (2) the Company shall
enter into an agreement providing for a Change of Control, or (3) any member of
the HMC Group shall enter into an agreement providing for a Change of Control,
then the Committee may declare any or all Stock Options outstanding under the
Plan to be exercisable in full, to the extent such Stock Options were not
previously exercisable, at such time or times as the Committee shall determine,
notwithstanding the express provisions of any Option Agreement; similarly, the
Committee may declare that any restrictions applicable to any Stock Award shall
completely lapse (to the extent not then lapsed), at such time or times as the
Committee shall determine, notwithstanding the terms of any Stock Award
Agreement. Each Stock Option the vesting of which is accelerated by the
Committee pursuant to the preceding sentence shall terminate, notwithstanding
any express provision thereof or any other provision of the Plan, on such date
(not later than the stated expiration date of such Stock Option) as the
Committee shall determine.
(d)
Definitions
.
(i) “Change
of Control” of the Company shall mean, for purposes of the Plan, the first to
occur of the following events: (i) any sale, lease, exchange, or other transfer
(in one transaction or series of related transactions) of all or substantially
all of the assets of the Company to any Person or group of related Persons for
purposes of Section 13(d) of the Exchange Act other than one or more members of
the HMC Group, (ii) a majority of the Board of Directors of the Company shall
consist of Persons who are not Continuing Directors; or (iii) the acquisition by
any Person or Group (other than one or more members of the HMC Group) of the
power, directly or indirectly, to vote or direct the voting of securities having
more than 50% of the ordinary voting power for the election of directors of the
Company.
(ii) “HMC
Group” shall mean Hicks, Muse, Tate & Furst Incorporated, its affiliates and
their respective employees, officers, and directors (and members of their
respective families and trusts for the primary benefit of such family members).
An affiliate of Hicks, Muse, Tate & Furst Incorporated shall mean, any
individual or legal entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with
Hicks, Muse, Tate & Furst Incorporated.
Except as
otherwise expressly provided in the Option Agreement, no Stock Option granted
under the Plan or any rights or interests therein shall be assignable or
transferable by a Participant except by will or the laws of descent and
distribution, and during the lifetime of a Participant, Stock Options granted to
such Participant under the Plan shall be exercisable only by such Participant or
such Participant’s guardian or legal representative. The Committee may, on a
case by case basis, permit a Participant to transfer a Stock Option, in whole or
in part, during the Participant’s lifetime to one or more members of the
Participant’s immediate family or to a trust established exclusively for one or
more such family members, and the extent of such permission shall be enumerated
in the Participant’s Option Agreement. The transferred portion of the Stock
Option may be exercised only by the person or persons who acquire a proprietary
interest in the Stock Option pursuant to the transfer. The terms applicable to
the transferred portion of the Stock Option shall be the same as those in effect
for the Stock Option under the Participant’s Option Agreement immediately prior
to the transfer. The Committee may impose on any transferable Stock Option such
limitations and conditions as the Committee deems appropriate in its sole
discretion. Any attempt to transfer a Stock Option in violation of this Section
9 shall be null and void and shall be disregarded by the
Company.
10. FAIR
MARKET VALUE
For
purposes of the Plan and any Stock Options or Stock Awards granted hereunder,
“Fair Market Value” shall, as it relates to the Common Stock, mean the average
of the high and low prices of such Common Stock as reported on the principal
national securities exchange on which the shares of Common Stock are then listed
on the date specified herein, or if there were no sales on such date, on the
next preceding day on which there were sales, or if such Common Stock is not
listed on a national securities exchange, the last reported bid price in the
over-the-counter market, or if such shares are not traded in the
over-the-counter market, the per share cash price for which all of outstanding
Common Stock could be sold to a willing purchaser in an arms-length transaction
(without regard to minority discount, absence of liquidity, or transfer
restrictions imposed by any applicable law or agreement) at the date of the
event giving rise to a need for a determination.
By
acceptance of a Stock Option or a Stock Award, a Participant shall be deemed to
(i) agree to reimburse the Company for any federal, state, or local taxes or
other amounts required by any government to be withheld or otherwise deducted by
such corporation in respect of the Participant’s exercise of all or a portion of
the Stock Option, the grant of a Stock Award, or the lapse of any restrictions
related to a Stock Award; (ii) authorize the Company to withhold from any cash
compensation paid to the Participant or in the Participant’s behalf, an amount
sufficient to discharge any federal, state, and local taxes or other amounts
required to be withheld by the Company, and which otherwise has not been paid by
the Participant, in respect of the Participant’s exercise of all or a portion of
a Stock Option or the grant of or lapse of any restrictions related to a Stock
Award; and (iii) agree that the Company may, in its discretion, hold the stock
certificate to which the Participant is entitled upon exercise of the Stock
Option (or refuse to release from escrow certificate related to any restricted
Stock Award), until cash sufficient to pay that liability has been accumulated,
and may, in its discretion, effect such withholding by retaining shares issuable
upon the exercise of the Stock Option having a Fair Market Value on the date of
exercise which is equal to the amount to be withheld or, in the case of a Stock
Award, require the Participant to return to the Company a number of shares of
Common Stock sufficient to satisfy the withholding requirement.
Nothing
contained in the Plan, any Option Agreement, or any Stock Award Agreement shall
affect, or be construed as affecting, the terms of relationship between the
Company and any Eligible Non-Employee Director. Nothing contained in the Plan,
any Option Agreement, or any Stock Award Agreement shall impose, or be construed
as imposing, an obligation on the Company to retain the services of any
individual.
Participants
shall have no right, title, or interest whatsoever in or to any investments
which the Company may make to aid it in meeting its obligations under the Plan.
Nothing contained in the Plan, and no action taken pursuant to its provisions,
shall create or be construed to create a trust of any kind, or a fiduciary
relationship between the Company and any participant, beneficiary, legal
representative or any other person. To the extent that any person acquires a
right to receive payments from the Company under the Plan, such right shall be
no greater than the right of an unsecured general creditor of the Company. All
payments to be made hereunder shall be paid from the general funds of the
Company and no special or separate fund shall be established and no segregation
of assets shall be made to assure payment of such amounts except as expressly
set forth in the Plan. The Plan is not intended to be subject to the Employee
Retirement Income Security Act of 1974, as amended.
No
fractional shares of Common Stock shall be issued or delivered pursuant to the
Plan. The Committee shall determine whether cash, or Options, or other property
shall be issued or paid in lieu of fractional shares or whether such fractional
shares of Common Stock or any rights thereto shall be forfeited or otherwise
eliminated.
15. NO
STOCKHOLDER’S RIGHTS FOR OPTIONS
Except as
otherwise provided by the Committee, a Participant shall have no rights as a
stockholder with respect to shares of Common Stock covered by a Stock Option
until the date of issuance of a stock certificate to the Participant with
respect to such shares. No adjustment shall be made for dividends or other
rights (except as provided in Section 8) for which the record date is prior to
the issuance such stock certificate. Notwithstanding the foregoing, the event
the Company effects a split of the Common Stock by means of a stock dividend and
the exercise price of and the number of shares subject to stock options are
adjusted as of the date of the distribution of the dividend (rather than as of
the record date for such dividend), then a Participant who exercises an option
between the record date and the distribution date for such stock dividend shall
be entitled to receive, on the distribution date, the stock dividend with
respect to the shares of Common Stock acquired upon such option exercise,
notwithstanding the fact that such shares were not outstanding as of the close
of business on the record date for such stock dividend.
|
16.
|
AMENDMENT
AND TERMINATION
|
(a)
Amendment and
Termination
. Except as provided in Section 16(b) herein, the Plan may be
terminated or amended by the Board of Directors, in whole or in part, at any
time.
(b)
Limitations on
Amendment
. No amendment to the Plan may revoke or alter the terms of any
previously-granted Stock Option or Stock Award outstanding as of the effective
date of such Plan amendment without the Participant’s consent, to the extent
such amendment would materially and adversely affect the Participant’s rights
under, or the value of, such Stock Option or Stock Award. Additionally, no
amendment to the Plan shall become effective before the date stockholders
approve such amendment where the absence of such approval would cause the Plan
to fail to comply with Rule 16b-3 under the Exchange Act, or any other
requirement of applicable law or regulation.
The
validity and construction of the Plan and any agreement evidencing the grant of
a Stock Option or Stock Award thereunder shall be governed by the laws of the
State of Delaware, excluding any conflicts or choice of law rules or principles
that might otherwise refer construction or interpretation of any provision of
the Plan or any such agreement to the substantive law of another jurisdiction,
except to the extent superseded by any applicable federal law.
The 2002
Non-Employee Director Plan was effective as of May 1, 2002, was amended and
restated as of May 4, 2005 and as of May 2, 2006 and was further amended and
restated as of December 1, 2006 (the “Third Amended Plan”). The Plan shall be
effective as of [ ], and shall be void ab initio if not
approved by the stockholders of the Company within twelve months thereafter and,
in such case, the terms of the Third Amended Plan shall remain in full force
effect. Any Stock Option or Stock Award granted under the Plan after the date
hereof prior to such approval of stockholders shall be effective as of the grant
date (unless the Committee specifies otherwise at the time of grant), but no
such Stock Option may be exercised nor may such Stock Award be deemed valid, as
the case may be, prior to such stockholder approval, and if stockholders fail to
approve the Plan as specified hereunder, any such Stock Option or Stock Award
shall be null and void as of the grant date.
LIN TV
Corp. 2002 Non-Employee Director Stock Plan,
Approved
by stockholders on May 1, 2002;
Further
amended by the Board of Directors on March 1, 2005,
And such
amendment was approved by stockholders as of May 4, 2005;
Further
amended by the Board of Directors on February 22, 2006,
And such
amendment was approved by stockholders on May 2, 2006;
Further
amended by the Board of Directors on October 16, 2006,
And such
amendment was approved by stockholders on December 1, 2006;
Further
amended by the Board of Directors on December 23, 2008;
Further
amended by the Board of Directors on March 31, 2010,
And such
amendment was approved by stockholders on May [ ], 2010
INDEX OF
DEFINED TERMS
|
TERM
|
SECTION WHERE DEFINED OR FIRST
USED
|
|
|
|
|
Board
of Directors
|
2(a)
|
|
|
|
|
Change
of Control
|
8(d)(i)
|
|
|
|
|
Committee
|
2(a)
|
|
|
|
|
Common
Stock
|
1
|
|
|
|
|
Company
|
1
|
|
|
|
|
Eligible
Non-Employee Director
|
3
|
|
|
|
|
Exchange
Act
|
2(a)
|
|
|
|
|
Fair
Market Value
|
10
|
|
|
|
|
HMC
Group
|
8(d)(ii)
|
|
|
|
|
Option
Agreement
|
4(a)
|
|
|
|
|
Participant
|
3
|
|
|
|
|
Plan
|
1
|
|
|
|
|
Retirement
|
6(e)
|
|
|
|
|
Second
Amended Plan
|
18
|
|
|
|
|
Stock
Award
|
4(b)
|
|
|
|
|
Stock
Award Agreement
|
4(b)
|
|
|
|
|
Stock
Option
|
4(a)
|
Appendix B
LIN TV
CORP.
2002 STOCK
PLAN
LIN TV
CORP.
2002
STOCK PLAN
(as
amended and restated effective as of [ ])
1. PURPOSE
LIN TV
Corp., a Delaware corporation (herein, together with its successors, referred to
as the “Company”), by means of this amended and restated 2002 Stock Plan (the
“Plan”), desires to afford certain individuals and key employees of the Company
and any subsidiary corporation thereof now existing or hereafter formed or
acquired (such subsidiary corporations sometimes referred to herein as “Related
Entities”) who are responsible for the continued growth of the Company an
opportunity to acquire a proprietary interest in the Company, and thus to create
in such persons an increased interest in and a greater concern for the welfare
of the Company and any Related Entities.
The stock
options described in Sections 6 and 9 (the “Options”), and the shares of Common
Stock (as hereinafter defined) acquired pursuant to the exercise of such
Options, shares of Common Stock awarded as described in Section 7 hereof (“Stock
Awards”), and Performance-Based Awards (as hereinafter defined) granted as
described in Section 8 hereof are a matter of separate inducement and are not in
lieu of any salary or other compensation for services. As used in the Plan, the
terms “parent corporation” and “subsidiary corporation” shall mean,
respectively, a corporation within the definition of such terms contained in
Sections 424(e) and 424(f), respectively, of the Internal Revenue Code of 1986,
as amended (the “Code”).
2. ADMINISTRATION
The Plan
shall be administered by the Compensation Committee of the Board of Directors of
the Company (“Board of Directors”) or by any other committee appointed by the
Board of Directors of the Company to administer this Plan (the “Committee”);
provided that the Board of Directors shall act as the Committee if no such
committee is appointed by the Board of Directors; further provided that, the
entire Board of Directors may act as the Committee if it chooses to do so. The
number of individuals that shall constitute the Committee shall be determined
from time to time by a majority of all the members of the Board of Directors,
and, unless that majority of the Board of Directors determines otherwise, shall
consist of not less than two (2) members who shall be (i) “Non-Employee
Directors” within the meaning of Rule 16b-3(b)(3) (or any successor rule)
promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and (ii) “outside directors” within the meaning of Treasury Regulation
Section 1.162-27(e)(3) under Section 162(m) of the Code.
A
majority of the Committee shall constitute a quorum (or if the Committee
consists of only two members, then both members shall constitute a quorum), and
subject to the provisions of Section 5, the acts of a majority of the members
present at any meeting at which a quorum is present, or acts approved in writing
by all members of the Committee, shall be the acts of the
Committee.
The
members of the Committee shall serve at the pleasure of the Board of Directors,
which shall have the power, at any time and from time to time, to remove members
from or add members to the Committee. Removal from the Committee may be with or
without cause. Any individual serving as a member of the Committee shall have
the right to resign from membership in the Committee by written notice to the
Board of Directors. The Board of Directors, and not the remaining members of the
Committee, shall have the power and authority to fill vacancies on the
Committee, however caused. The Board of Directors shall promptly fill any
vacancy that causes the number of members of the Committee to be below
two.
3. SHARES
AVAILABLE
a.
Basic Limitation
.
Subject to the adjustments provided in Section 11 hereof, the maximum aggregate
number of shares of Class A Common Stock, par value $.01 per share (“Common
Stock”), of the Company (“Shares”) in respect of which Options or Stock Awards
may be granted for all purposes under the Plan shall be 8,800,000 Shares.
Options granted under the Plan may be fulfilled in accordance with the terms of
the Plan with (i) authorized and unissued Shares, (ii) issued Shares held in the
Company’s treasury, or (iii) issued Shares reacquired by the Company, in each
situation as the Board of Directors or the Committee may determine from time to
time.
b.
Individual
Limitation
. Subject to the adjustments under Section 11 or Section 13
hereof, a Participant shall not be granted an Option or Stock Award under the
Plan and such Option or Stock Award shall not vest with respect to more than
350,000 Shares in any calendar year to the extent such Option or Stock Award is
intended to satisfy the requirements applicable to Performance-Based Awards
under Section 8 hereof. The limitation in this Section 3(b) shall not apply to
Options or Stock Awards that are not intended to satisfy the requirements of
“qualified performance-based compensation” under Section 162(m) of the
Code.
c.
Source of Shares
. If,
for any reason, any Shares as to which Options have been granted cease to be
subject to such Options (including as a result of the expiration, termination,
cancellation, or forfeiture of such Option) or any Shares acquired pursuant to a
Stock Award are returned to the Company (including as a result of a forfeiture
of such Shares pursuant to the terms of the Stock Award), such Shares shall
thereafter be available for the grant of Options or Stock Awards under the
Plan.
d.
Certain Acquisitions
.
In connection with the acquisition of any business by the Company or any of its
subsidiaries or Affiliates, any outstanding option grants, stock awards or other
similar rights pertaining to such business may be assumed or replaced by Options
or Stock Awards under the Plan upon such terms and conditions as the Committee
determines.
4. ELIGIBILITY
AND BASES OF PARTICIPATION
a.
Key Employees
. Grants
of Incentive Stock Options (as hereinafter defined), Non-Qualified Stock Options
(as hereinafter defined) may be made under the Plan to Key Employees, subject to
and in accordance with Section 6 hereof. Stock Awards may be made under the Plan
to Key Employees, subject to and in accordance with Section 7 hereof.
Performance-Based Awards may be made under the Plan to Key Employees, subject to
and in accordance with Section 8 hereof. As used herein, the term “Key Employee”
shall mean any employee of the Company or any Related Entity (including officers
and directors of the Company or any Related Entity who are also employees of the
Company or any Related Entity) who is regularly employed on a salaried basis,
who is so employed on the date of such grant, and whom the Committee identifies
as having a direct and significant effect on the performance of the Company or
any Related Entity.
b.
Eligible
Non-Employees
. Grants of Non-Qualified Stock Options may be made under
the Plan to Eligible Non-Employees, subject to and in accordance with Section 9
hereof. Stock Awards may be made under the Plan to Eligible Non-Employees,
subject to and in accordance with Section 7 hereof. As used herein, the term
“Eligible Non-Employee” shall mean any person or entity of any nature
whatsoever, other than a Non-Employee Director of the Company. Such term shall
specifically include any individual, a firm, a company, a corporation, a
partnership, a trust, or other entity (collectively, a “Person”), that the
Committee designates as eligible for a grant of Options or Stock Awards pursuant
to this Plan because such Person performs bona fide consulting, advisory, or
other services for the Company or any Related Entity (other than services in
connection with the offer or sale of securities in a capital-raising
transaction) and whom the Board of Directors or the Committee determines has a
direct and significant effect on the financial development of the Company or any
Related Entity.
c.
No Right to Become a
Participant
. The adoption of this Plan shall not be deemed to give any
Person a right to be granted any Options or Stock Awards, including
Performance-Based Awards. The recommendation or selection of a Key Employee or
Eligible Non-Employee as a recipient of any Option or Stock Award under the Plan
shall not be deemed to entitle the Key Employee or Eligible Non-Employee to such
Option prior to the date it is granted or such Stock Award prior to the date it
is awarded. Each grant of an Option or Stock Award shall be evidenced by an
Option Agreement or Stock Award Agreement, as applicable, executed by the
Participant and the Company. The agreement shall include expressly or by
reference the terms and conditions set forth in the Plan, and may include such
other provisions not inconsistent with the provisions of the Plan as the
Committee shall deem advisable.
5. AUTHORITY
AND INDEMNIFICATION OF COMMITTEE
a.
Authority
. Subject to
and not inconsistent with the express provisions of the Plan, the Code,
including Section 162(m) of the Code, and, if applicable, Rule 16b-3, the
Committee shall have plenary authority to:
(i) Determine
the Key Employees and Eligible Non-Employees to whom Options and/or Stock Awards
shall be granted, the time when such Options and/or Stock Awards shall be
granted, the number of Shares subject to such Options or Stock Awards, the
purchase price or exercise price of each Option or Stock Award, the period(s)
during which an Option shall be exercisable (whether in whole or in part,
including whether such Options shall become immediately exercisable upon the
consummation of a Change of Control), the period(s) during which restrictions on
any Stock Award (if any) shall lapse (including whether restrictions shall
immediately lapse, upon the consummation of a Change of Control), the terms of
any Performance-Based Award (as described in Section 8 hereof), and all other
terms and provisions thereof (which need not be identical);
(ii) Require,
as a condition to the granting of any Option or Stock Award, that the Person
receiving such Option or Stock Award agree not to sell or otherwise dispose of
such Option, any Shares acquired pursuant to an Option or Stock Award, or any
other “derivative security” (as defined by Rule 16a-1(c) under the Exchange Act)
for a period of six months following the date of the grant such Option or Stock
Award, or for such other period as the Committee may determine;
(iii) Provide
an arrangement through registered broker-dealers whereby temporary financing may
be made available to a Participant by the broker-dealer, under the rules and
regulations of the Board of Governors of the Federal Reserve, for the purpose of
assisting the Participant in the exercise of an Option and/or the payment of any
tax withholding obligations arising in connection with the exercise of an
Option, such authority to include the payment by the Company of the commissions
of the broker-dealer;
(iv) Provide
the establishment of procedures for a Participant to exercise all or a portion
of an Option by delivering that number of Shares previously acquired by the
Participant having an aggregate Fair Market Value equal to the per Share
exercise price of the Option multiplied by the number of Shares subject to the
portion of the Option being exercised and to deliver the Shares surrendered by
such Participant in payment of such exercise price;
(v) Provide
(in accordance with Section 14 hereof or otherwise) the establishment of a
procedure whereby a number of Shares or other securities may be withheld from
the total number of Shares or other securities to be issued upon exercise of an
Option (other than an Incentive Stock Option) or in connection with the granting
or vesting of a Stock Award to meet the minimum required tax withholding
obligations of a Participant with respect to federal income tax, federal
employment tax, and other taxes incurred by a Participant upon such grant,
vesting, or exercise or taxes required to be withheld by the Company or a
Related Entity in connection with such grant, vesting, or exercise;
(vi) Prescribe,
amend, modify and rescind rules and regulations relating to the Plan;
and
(vii) Make
all determinations permitted or deemed necessary, appropriate or advisable for
the administration of the Plan, interpret the terms and conditions of the Plan,
any Option Agreement, or any Stock Award Agreement, perform all other acts,
exercise all other powers, and establish any other procedures determined by the
Committee to be necessary, appropriate, or advisable in administering the Plan
or for the conduct of the Committee’s business. Any act of the Committee,
including interpretations of the provisions of the Plan or any Option Agreement
or Stock Award Agreement and determinations order the Plan or any such agreement
shall be final, conclusive and binding on all parties.
b.
Delegation
. The
Committee may delegate to one or more of its members, or to one or more agents,
such administrative duties as it may deem advisable, and the Committee or any
Person to whom it has delegated duties as aforesaid may employ one or more
Persons to render advice with respect to any responsibility the Committee or
such Person may have under the Plan. The Committee may employ attorneys,
consultants, accountants, or other Persons and the Committee, the Company, and
its officers and directors shall be entitled to rely upon the advice, opinions,
or valuations of any such Persons.
c.
Indemnification
. No
member of the Committee and no employee of the Company shall be liable for any
act or failure to act hereunder, except in circumstances involving his or her
bad faith, gross negligence or willful misconduct, or for any act or failure to
act hereunder by any other member or employee or by any agent to whom duties in
connection with the administration of this Plan have been delegated. The Company
shall indemnify members of the Committee and any agent of the Committee who is
an employee of the Company, a Subsidiary or an Affiliate against any and all
liabilities or expenses to which they may be subjected by reason of any act or
failure to act with respect to their duties on behalf of the Plan, except in
circumstances involving such person’s bad faith, gross negligence or willful
misconduct.
6. OPTIONS
GRANTED TO KEY EMPLOYEES
Subject
to the express provisions of this Plan, the Committee shall have the authority
to grant options intended to satisfy the requirements of Section 422 of the Code
regarding incentive stock options (“Incentive Stock Options”), to grant
non-qualified stock options (options which are not intended to meet the
requirements applicable to incentive stock options under Section 422 of the
Code) (“Non-Qualified Stock Options”), and to grant both types of Options to Key
Employees. No Incentive Stock Option shall be granted pursuant to this Plan more
than ten years after the last date on which the Plan was approved for purposes
of Section 422 of the Code. Incentive Stock Options shall be granted only to Key
Employees. The terms and conditions of the Options granted under this Section 6
shall be determined from time to time by the Committee; provided, however, that
the Options granted under this Section 6 shall be subject to all terms and
provisions of the Plan (other than Section 7, 8 (except with respect to Options
granted to “covered employees” within the meaning of Section 162(m) of the
Code), or 9 hereof), including the following:
a.
Option Exercise
Price
. Subject to Section 4 hereof, the Committee shall establish the
Option exercise price at the time an Option is granted, which shall not be less
than 100% of the Fair Market Value per Share on the date the Option is granted;
and provided that in the case of an Incentive Stock Option granted to a person
who, at the time such Incentive Stock Option is granted, owns shares of stock of
the Company or any Related Entity which possess more than 10% of the total
combined voting power of all classes of shares of stock of the Company or of any
Related Entity (“Substantial Shareholder”), the Incentive Stock Option exercise
price shall not be less than 110% of the Fair Market Value per Share on the date
the Incentive Stock Option is granted. The Option exercise price shall be
subject to adjustment in accordance with the provisions of Section 11 of the
Plan.
b.
Option Term
. Each
Option Agreement, shall specify the period during which the Option may be
exercised and shall provide that the Option shall expire at the end of such
period. The Option Agreement shall provide that the exercise of an Option shall
not be permitted more than ten years after the date on which the Option is
granted, subject to earlier termination or cancellation as provided in the Plan;
provided that, in the case, of an Incentive Stock Option granted to a
Substantial Shareholder, the exercise of an Incentive Stock Option shall not be
permitted more than five years after the date on which the Incentive Stock
Option is granted.
c.
Payment
. The exercise
price per Share with respect to each Option shall be payable at the time of such
exercise. Such price shall be payable in cash or by any other means acceptable
to the Committee, including delivery to the Company of Shares previously
acquired by the Participant or by the delivery or withholding of Shares pursuant
to a procedure created pursuant to Section 5(a)(iii), (iv) or (v) of the Plan.
Shares delivered to or withheld by the Company in payment of the Option exercise
price shall be valued at the Fair Market Value of the Share on the day preceding
the date of the exercise of the Option.
d.
Exercisability of Stock
Option
. Unless otherwise determined by the Committee at the time of grant
and as provided in an Option Agreement, Options granted hereunder shall become
exercisable according to the vesting schedule set forth below:
|
|
—
|
one-fourth
of the Shares subject to the Option shall become exercisable on the first
anniversary of the date of grant and shall remain exercisable until the
Option expires, terminates, or is cancelled;
and
|
|
|
—
|
one-fourth
of the Shares subject to the Option shall become exercisable on the second
anniversary of the date of grant and shall remain exercisable until the
Option expires, terminates, or is cancelled;
and
|
|
|
—
|
one-fourth
of the Shares subject to the Option shall become exercisable on the third
anniversary of the date of grant and shall remain exercisable until the
Option expires, terminates, or is cancelled;
and
|
|
|
—
|
one-fourth
of the Shares subject to the Option shall become exercisable on the fourth
anniversary of the date of grant and shall remain exercisable until the
Option expires, terminates, or is
cancelled.
|
e.
Death
. If a Key
Employee’s employment with the Company or a Related Entity terminates due to the
death of such Key Employee, the estate of such Key Employee, or a Person who
acquired the right to exercise such Option by bequest or inheritance or by
reason of the death of the Key Employee, shall have the right to exercise such
Option, to the extent such Option was vested on the date the Key Employee’s
employment terminated, in accordance with the terms of the Option Agreement at
any time and from time to time before the earlier to occur of the following (1)
the expiration of 365 days after the date the Key Employee’s employment with the
Company or a Related Entity terminated by reason of his death, or (2) the
expiration date of such Option, unless a shorter period is expressly provided in
the Option Agreement evidencing such Option or is established by the Committee
pursuant to Section 10 (but in no event after the expiration date of the
Option).
f.
Disability
. If any
Key Employee’s employment with the Company or a Related Entity terminates
because of his Disability (as defined in Section 21 hereof), such Participant or
his legal representative shall have the right to exercise the Option, to the
extent the Option was vested as of the date the Key Employee’s employment
terminated, in accordance with the terms of the Option Agreement at any time and
from time to time before the earlier to occur of the following (1) the
expiration of 365 days after the date the Key Employee’s employment with the
Company or a Related Entity terminated by reason of his Disability, or (2) the
expiration date of such Option, unless a shorter period is expressly provided in
such Option or established by the Committee pursuant to Section 10:
g.
Termination for
Cause
. Unless a Key Employee’s Option expressly provides otherwise, such
Key Employee shall immediately forfeit all rights under his Option, except as to
the Shares previously acquired thereunder, if the employment of such Key
Employee with the Company or a Related Entity is terminated by the Company or
any Related Entity for Cause (as defined in Section 21 hereof). The
determination that Cause for termination exists shall be made by the Committee
(unless otherwise agreed to in the Option Agreement or in writing by the Company
and the Key Employee);
h.
Other Termination of
Employment
. If the employment of a Key Employee with the Company or a
Related Entity terminates for any reason other than those specified in
subsection (e), (f) or (g) above, such Key Employee shall have the right to
exercise his Option, to the extent the Option was vested as of the date of
termination of employment, in accordance with the terms of the Option Agreement,
before the first to occur of the following (1) the expiration of 60 days after
the date of such termination of employment, or (2) the expiration date of the
Option, unless a longer or shorter period is expressly provided in the Option
Agreement or is established by the Committee (but in no event shall such period
continue after the expiration date of the Option); provided, that no Incentive
Stock Option shall be exercisable more than three months after such
termination.
i.
Maximum Exercise
. To
the extent the aggregate Fair Market Value (determined as of the time the Option
is granted) of Shares subject to a Key Employee’s Incentive Stock Options that
first become exercisable during a calendar year (under all option plans of the
Company and of any Parent Corporation or Subsidiary Corporation ) exceeds
$100,000, such Incentive Stock Options shall be treated as Non-Qualified Stock
Options. For purposes of the preceding sentence, Incentive Stock Options shall
be taken into account in the order in which they are granted. To the extent an
Option that is intended to be treated as an Incentive Stock Option does not
satisfy any requirement of Section 422 of the Code such Option shall be treated
as a Non-Qualified Stock Option.
j.
Continuation of
Employment
. Each Incentive Stock Option shall require the Key Employee to
remain in the continuous employ of the Company or any Related Entity from the
date of grant of the incentive Stock Option until no more than three months
prior to the date of exercise of the Incentive Stock Option, subject to the
maximum exercise periods described in subsections (e), (f), (g), and (h), above.
The Committee may, in its sole discretion, permit the exercise of an Option that
is intended to be an Incentive Stock Option more than three months after the
date the Participant ceases to be employed by the Company or any Related Entity,
provided that the Option shall be treated as a Non-Qualified Stock Option if it
is exercised more than three months after the date the Key Employee’s employment
with the Company or a Related Entity terminates, except as provided in
subsections (e) and (f), above.
7. STOCK
AWARDS
a.
Generally
. The
Committee may, in its discretion, grant Stock Awards (which may include
mandatory payment of any bonus in stock) consisting of Shares issued or
transferred to Key Employees or Eligible Non-Employees with or without other
payments therefor. A Stock Award shall be construed as an offer by the Company
to the Participant to purchase the number of Shares subject to the Stock Award
at the purchase price, if any, established therefor.
b.
Payment of the Purchase
Price
. If the Stock Award Agreement requires payment for Shares acquired
pursuant to the Stock Award, the purchase price of any Shares subject to the
Stock Award may be paid in any manner authorized by the Committee, which may
include any manner authorized under the Plan for the payment of the exercise
price of an Option.
c.
Additional Terms
.
Stock Awards shall be subject to such terms and conditions as the Committee
determines appropriate, including restrictions on the sale or other disposition
of such shares and the right of the Company to reacquire such shares for no
consideration upon termination of the Participant’s employment or service within
specified periods. The Committee may require the Participant to deliver a duly
signed stock power, endorsed in blank, relating to the Common Stock covered by
such an Award. The Committee may also require that the stock certificates
evidencing such shares be held in custody or bear restrictive legends until the
restrictions thereon shall have lapsed.
d.
Rights as a
Shareholder
. The Stock Award Agreement shall specify whether the
Participant shall have, with respect to Shares subject to the Stock Award, all
of the rights of a holder of Shares, including the right to receive dividends
and to vote the Shares.
8. PERFORMANCE-BASED
AWARDS
a.
Stock Awards or
Options
. The Committee may, in its discretion, grant Stock Awards or
Options that are intended to meet the requirements applicable to “qualified
performance-based compensation” for purposes of the exemption from the
compensation deduction limitation described in Section 162(m) of the Code
(“Performance-Based Awards”). It is the intent of the Company that
Performance-Based Awards made to Persons who are “covered employees” within the
meaning of Section 162(m) of the Code shall constitute “qualified
performance-based compensation” satisfying the requirements of Section 162(m) of
the Code. Options granted to Participants who are “covered employees” within the
meaning of Section 162(m) of the Code shall be intended to be Performance-Based
Awards, except as otherwise provided by the Committee. Accordingly, the
provisions of the Plan shall be interpreted in a manner consistent with Section
162(m) of the Code with respect to Performance-Based Awards. If any other
provision of the Plan or a Performance-Based Award is intend to but does not
comply with, or is inconsistent with, the requirements of Section 162(m) of the
Code, such provision shall be construed or deemed amended to the extent
necessary to conform to and comply with such requirements. Nothing in this
Section 8 shall subject a Performance-Based Award to terms or conditions in
excess of the minimum requirements necessary for the Performance-Base Award to
comply with the requirements of Section 162(m) of the Code.
b.
Performance Goals
. As
determined by the Committee in its sole discretion, either the granting of,
vesting of, or other lapsing of restrictions related to Performance-Based Awards
shall be based on achievement of hurdle rates and/or growth rates in one or mere
business criteria, that apply to the individual Participant, one or more
business units or the Company as a whole. The business criteria shall be as
follows, individually or in combination: (i) net earnings, (ii) earnings per
share; (iii) net sales growth; (iv) market share; (v) net operating profit; (vi)
expense targets, (vii) working capital targets; (viii) operating margin; (ix)
return on equity; (x) return on assets; (xi) planning accuracy (as measured by
comparing planned results to actual results); (xii) market price per share;
(xiii) total return to stockholders and (xiv) broadcast cash flow (as defined
below). Broadcast cash flow is defined as operating income plus corporate
expenses plus depreciation and amortization of intangible assets and
amortization of program rights plus other non-cash expenses or credits, minus
cash program payments. In addition, Performance-Based Awards may include
comparisons to the performance of other companies, such performance to be
measured by one or more of the foregoing business criteria. Such performance
goals may be adjusted to exclude any one or more of (i) extraordinary items,
(ii) gains or losses on the dispositions of discontinued operations, (iii) the
cumulative effects of changes in accounting principles, (iv) the writedown of
any asset, and (v) charges for restructuring and rationalization
programs.
c.
Exercise Price
. The
per Share exercise price of Performance-Based Awards that are Options shall not
be less than the Fair Market Value of a Share on the grant date of such
Option.
d.
Objective Formula
.
With respect to Performance Based Awards that are Stock Awards, the Committee
shall establish in writing (i) the performance goals applicable to a given
period and (ii) the individual employees or class of employees to which the
performance goals apply. Such performance goals shall state in terms of an
objective formula or standard the method for computing the amount of
compensation payable to the Participant if such performance goals are obtained
and shall be established in writing no later than ninety (90) days after the
commencement of such.
e.
Committee
Certification
. No Performance-Based Awards shall be payable to or vest
with respect to, as the case may be, any Participant for a given period until
the Committee certifies in writing that the objective performance goals (and any
other material terms) applicable to such period have been
satisfied.
f.
No Increase
. After
establishment of a performance goal, the Committee shall not revise such
performance goal or increase the amount of compensation payable thereunder (as
determined in accordance with Section 162(m) of the Code) upon the attainment of
such performance goal. Notwithstanding the preceding sentence, the Committee may
reduce or eliminate the number of Shares subject to a Performance-Based Award or
the number of shares of Common Stock vested upon the attainment of such
performance goal.
9. OPTIONS
GRANTED TO ELIGIBLE NON-EMPLOYEES
Subject
to the express provisions of this Plan, the Committee shall have the authority
to grant Non-Qualified Stock Options (and not Incentive Stock Options) to
Eligible Non-Employees. The terms and conditions of the Non-Qualified Stock
Options granted under this Section 9 shall be determined from time to time by
the Committee; provided, however, that the Non-Qualified Stock Options granted
under this Section 9 shall’ be subject to all terms and provisions of the Plan
(other than Section 6, 7, or 8 (except as otherwise provided in an Option
Agreement) hereof), including the following:
a.
Option Exercise
Price
. Subject to Section 4, the Committee shall establish the exercise
price of a Non-Qualified Stock Option at the time the Non-Qualified Stock Option
is granted at such amount as the Committee shall determine in its sole
discretion. The exercise price of a Non-Qualified Stock Option shall be subject
to adjustment in accordance with the provisions of Section 11 of the
Plan.
b.
Option Term
. Each
Option Agreement shall specify the period during which the Non-Qualified Stock
Option may be exercised and shall provide that the Non-Qualified Stock Option
shall expire at the end of such period. No Non-Qualified Stock Option by its
terms shall be exercisable after the expiration of ten years after the date of
grant of the Non-Qualified Stock Option.
c.
Payment
. The exercise
price per Share subject to a Non-Qualified Stock Option shall be payable at the
time of such exercise. Such exercise price shall be payable in cash or by any
other means acceptable to the Committee, including delivery to the Company of
Shares previously acquired by the Eligible Non-Employee or by the delivery or
withholding of Shares pursuant to a procedure created pursuant to Section
5(a)(iii), (iv) or (v) of the Plan. If Shares are delivered to or withheld by
the Company in payment of the Non-Qualified Stock Option exercise price, such
Shares shall be valued at the Fair Market Value of the Shares on the day
preceding the date of the exercise of the Non-Qualified Stock
Option,
d.
Exercisability of Stock
Option
. Subject to Section 10 hereof, each Non-Qualified Stock Option
shall become exercisable in one or more installments, as the Committee may
determine at the time of the grant.
e.
Death
. If the
retention by the Company or any Related Entity of the services of any Eligible
Non-Employee terminates because of his death, the estate of such Eligible
Non-Employee, or a Person who acquired the right to exercise a Non-Qualified
Stock Option by bequest or inheritance or by reason of the death of the Eligible
Non-Employee, shall have the right to exercise such Option in accordance with
the terms of the Option Agreement to the extent such Option was vested as of the
date the Eligible Non-Employee’s services terminated because of his death, at
any time and from time to time before the earlier to occur of the following (1)
the expiration of 365 days after the date of the Eligible Non-Employee’s death,
or (2) the expiration date of the Option, unless a longer or shorter period is
expressly provided in such Option Agreement or established by the Committee
pursuant to Section 10 (but in no event after the expiration date of the
Option).
f.
Disability
. If the
retention by the Company or any Related Entity of the services of any Eligible
Non-Employee terminates because of his disability, as determined by the
Committee in its sole discretion, such Eligible Non-Employee or his legal
representative shall have the right to exercise a Non-Qualified Stock Option in
accordance with the terms of the Option Agreement to the extent the
Non-Qualified Stock Option was vested as of the date the Eligible Non-Employee’s
service with the Company or a Related Entity terminated because of his
disability, at any time and from time to time within the earlier to occur of the
following (1) the expiration of 365 days after the date of the Eligible
Non-Employee’s services were terminated, or (2) the expiration date of the
Option, unless a longer or shorter period is expressly provided in such Option
Agreement or established by the Committee pursuant to Section 10 (but not after
the expiration of the Option).
g.
Cause
. If the
retention by the Company or any Related Entity of the services of any Eligible
Non-Employee is terminated (i) for Cause, or (ii) as a result of the removal of
the Eligible Non-Employee from office as a director of the Company or of any
Related Entity for cause action of the stockholders of the Company or such
Related Entity in accordance with the by-laws of the Company or such Related
Entity, as applicable, and the corporate law of the jurisdiction of
incorporation of the Company or such Related Entity, then such Eligible
Non-Employee shall forfeit his rights under his Options except as to Shares
previously acquired through the exercise of the Option. The determination that
Cause for the termination of the Eligible Non Employee’s services exists shall
be made by the Committee (unless otherwise provided in the Option Agreement or
as otherwise agreed to in writing by the Company and the Eligible
Non-Employee).
h.
Other Termination of
Relationship
. If the retention by the Company or any Related Entity of
the services of any Eligible Non-Employee terminates for any reason other than
those specified in subsections (e), (f), or (g) above, such Participant shall
have the right to exercise his or its Non-Qualified Stock Option, to the extent
such Option was vested on the date of such termination, in accordance with the
terms of the Option Agreement within 60 days after the date of such termination,
unless a longer or shorter period is expressly provided in such Option Agreement
or established by the Committee pursuant to Section 10 (but not after the
expiration date of the Option).
10. CHANGE
OF CONTROL
If (i) a
Change of Control shall occur, (ii) the Company shall enter into an agreement
providing for a Change of Control, or (iii) any member of the HMC Group shall
enter into an agreement providing for a Change of Control, then the Committee
may declare any or all Options outstanding under the Plan to be exercisable in
full, to the extent such Options were not previously exercisable, at such time
or times as the Committee shall determine, notwithstanding the express
provisions of any Option Agreement; similarly, the Committee may declare that
any restrictions applicable to any Stock Award shall completely lapse (to the
extent not then lapsed), at such time or times as the Committee shall determine,
notwithstanding the terms of any Stock Award Agreement. Each Option accelerated
by the Committee pursuant to the preceding sentence shall terminate,
notwithstanding any express provision thereof or any other provision of the
Plan, on such date (not later than the stated exercise date) as the Committee
shall determine.
11. ADJUSTMENT
OF SHARES
Unless
otherwise expressly provided in a particular Option Agreement or Stock Award
Agreement, in the event that, by reason of any merger, consolidation,
combination, liquidation, reorganization, recapitalization, stock dividend,
stock split, split-up, split-off, spin-off, combination of shares, exchange of
shares or other like change in capital structure of the Company (collectively, a
“Reorganization”), the Common Stock is substituted, combined, or changed into
any cash, property, or other securities, or the shares of Common Stock are
changed into a greater or lesser number of shares of Common Stock, the number
and/or kind of shares and/or interests subject to an Option or Stock Award and
the per share price or value thereof shall be appropriately adjusted by the
Committee to give appropriate effect to such Reorganization. Any fractional
shares or interests resulting from such adjustment shall be eliminated.
Notwithstanding the foregoing, (i) each such adjustment with respect to an
Incentive Stock Option shall comply with the rules of Section 424(a) of the
Code, and (ii) in no event shall any adjustment be made which would render any
Incentive Stock Option granted hereunder other than an “incentive stock option”
for purposes of Section 422 of the Code.
In the
event the Company is not the surviving entity of a Reorganization and, following
such Reorganization, any Participant holding Options or Stock Awards issued
pursuant to this Plan which have not been exercised, cancelled, or terminated in
connection therewith, the Company shall cause such Options and Stock Awards to
be assumed (or cancelled and replacement Options and Stock Awards issued) by the
surviving entity or a Related Entity.
12. ASSIGNMENT
OR TRANSFER
Except as
otherwise expressly provided in the Option Agreement for a Non-Qualified Stock
Option, no Option granted under the Plan or any rights or interests therein
shall be assignable or transferable by a Participant except by will or the laws
of descent and distribution, and during the lifetime of a Participant, Options
granted to him or her hereunder shall be exercisable only by the Participant or,
in the event that a legal representative has been appointed in connection with
the disability of a Participant, such legal representative. The Committee may,
on a case by case basis, permit a Participant to transfer a Non-Qualified Stock
Option, in whole or in part, during the Participant’s lifetime to one or more
members of the Participant’s immediate family or to a trust established
exclusively for one or more such family members, and the extent of such
permission shall be enumerated in the Participant’s Option Agreement. The
transferred portion of the Non-Qualified Stock Option may be exercised only by
the person or persons who acquire a proprietary interest in the Non-Qualified
Stock Option pursuant to the transfer. The terms applicable to the transferred
portion of the Non-Qualified Stock Option shall be the same as those in effect
for the Non-Qualified Stock Option under the Participant’s Option Agreement
immediately prior to the transfer. The Committee may impose on any transferable
Non-Qualified Stock Option such limitations and conditions as the Committee
deems appropriate in its sole discretion. Any attempt to transfer an Option in
violation of this Section 12 shall be null and void and shall be disregarded by
the Company.
13. OTHER
PROVISIONS
The grant
of any Option or any Stock Award under the Plan may also be subject to such
other provisions (whether or not applicable to an Option granted or a Stock
Award made to any other Participant) as the Committee determines appropriate,
including provisions relating to compliance with federal and state securities
laws, or and provisions and conditions relating to a Participant’s employment or
retention which may be in addition to those specifically provided for under the
Plan.
14. WITHHOLDING
TAXES
By
acceptance of an Option or a Stock Award, a Participant shall be deemed to (i)
agree to reimburse the Company or Related Entity by which the Participant is
employed or retained for any federal, state, or local taxes or other amounts
required by any government to be withheld or otherwise deducted by such
corporation in respect of the Participant’s exercise of all or a portion of the
Option or the grant of or lapse of any restrictions related to a Stock Award;
(ii) authorize the Company or any Related Entity by which the Participant is
employed or retained to withhold from any cash compensation paid to the
Participant or in the Participant’s behalf, an amount sufficient to discharge
any federal, state, and local taxes or other amounts imposed on the Company, or
the Related Entity by which the Participant is employed or retained, and which
otherwise has not been reimbursed by the Participant, in respect of the
Participant’s exercise of all or a portion of the Option or the grant of or
lapse of any restrictions related to a Stock Award; and (iii) agree that the
Company may, in its discretion, hold the stock certificate to which the
Participant is entitled upon exercise of the Option (or refuse to release from
escrow certificate related to any restricted Stock Award), until cash sufficient
to pay that liability has been accumulated, and may, in its discretion, effect
such withholding by retaining shares issuable upon the exercise of the Option
having a Fair Market Value on the date of exercise which is equal to the amount
to be withheld or in the case of a Stock Award, require the Participant to
return to the Company a number of shares of Common Stock sufficient to satisfy
the withholding requirement.
15. COSTS
AND EXPENSES
The costs
and expenses of administering the Plan shall be borne by the Company and shall
not be charged against any Option or Stock Award or to any Participant receiving
an Option or Stock Award .
16. FUNDING
OF PLAN
The Plan
shall be unfunded. The Company shall not be required to make any segregation of
assets to assure the payment of any Option or Stock Award under the
Plan.
17. OTHER
INCENTIVE PLANS
The
adoption of the Plan does not preclude the adoption by appropriate means of any
other incentive plan for employees.
18. EFFECT
ON TENURE
Nothing
contained in the Plan or any Option Agreement or Stock Award Agreement shall
affect, or be construed as affecting, the terms of employment of any Key
Employee (or the terms of the relationship between the Company or any Related
Entity and any Eligible Non-Employee) except to the extent specifically provided
herein or therein. Nothing contained in the Plan or any Option Agreement or
Stock Award Agreement shall impose, or be construed as imposing, an obligation
on (i) the Company or any Related Entity to continue the employment of any Key
Employee (or retention of any Eligible Non-Employee), and (ii) any Key Employee
to remain in the employ (or any Eligible Non-Employee to remain in the service)
of the Company or any Related Entity.
19. NO
FRACTIONAL SHARES
No
fractional Shares shall be issued or delivered under the Plan or any Option or
Stock Award. The Committee shall have full discretion to determine whether cash,
other securities, or other property shall be paid or transferred in lieu of any
fractional Shares or whether such fractional Shares or any rights thereto shall
be canceled or terminated.
20. EXCHANGE
PROGRAMS; REPRICINGS
a.
Exchange Programs
.
The Committee may, without stockholder approval, cancel any outstanding Option
and grant in exchange therefor a new Option or Stock Award covering the same or
a different number of shares of Common Stock and having an exercise price per
share lower than the then-current exercise price per share of the cancelled
Option.
b.
Repricings
. The
Committee may, without stockholder approval, amend any outstanding option
granted under the Plan to provide an exercise price per share that is lower than
the then-current exercise price per share of such outstanding option; provided,
however, that the exercise price per share shall not be less than the Fair
Market Value per Share on the date the Option is amended.
21. DEFINITIONS
In
addition to the terms specifically defined elsewhere in the Plan, as used in the
Plan, the following terms shall have the respective meanings
indicated:
“Affiliate”
shall mean, as to any Person, a Person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, such Person. “Board of Directors” shall have the meaning set forth
in Section 2 hereof.
“Cause”,
with respect to any Key Employee, shall mean (unless another definition is
agreed to in writing by the Company and the Participant) termination by action
of the Board of Directors because of: (A) the Participant’s conviction of, or
plea of nolo contendere to, a felony or a crime involving moral turpitude; (B)
the Participant’s personal dishonesty, incompetence, willful misconduct, willful
violation of any law, rule, or regulation (other than minor traffic violations
or similar offenses) or breach of fiduciary duty which involves personal profit;
(C) the Participant’s commission of material mismanagement in the conduct of his
duties as assigned to him by the Board of Directors or the Participant’s
supervising officer or officers of the Company; (D) the Participant’s willful
failure to execute or comply with the policies of the Company or his stated
duties as established by the Board of Directors, or the Participant’s
supervising officer or officers of the Company, or the Participant’s intentional
failure to perform the Participant’s stated duties; or (E) substance abuse or
addiction on the part of the Participant. “Cause”, with respect to any Eligible
Non-Employee, shall mean (unless another definition is agreed to in writing by
the Company and the Participant) termination by action of the Board of Directors
because of: (A) the Participant’s conviction of, or plea of nolo contendere to,
a felony or a crime involving moral turpitude; (B) the Participant’s personal
dishonesty, incompetence, willful misconduct, willful violation of any law,
rule, or regulation (other than minor traffic violations or similar offenses) or
breach of fiduciary duty which involves personal profit; (C) the Participant’s
commission of material mismanagement in providing services to the Company or any
Related Entity; (D) the Participant’s willful failure to comply with the
policies of the Company in providing services to the Company or any Related
Entity, or the Participant’s intentional failure to perform the services for
which the Participant has been engaged; (E) substance abuse or addiction on the
part of the Participant; or (F) the Participant’s willfully making any material
misrepresentation or willfully omitting to disclose any material fact to the
board of directors of the Company or any Related Entity with respect to the
business of the Company or any Related Entity.
“Change
of Control” shall mean the first to occur of the following events: (i) any sale,
lease, exchange, or other transfer (in one transaction or series of related
transactions) of all or substantially all of the assets of the Company to any
Person or group of related Persons for purposes of Section 13(d) of the Exchange
Act other than one or more members of the HMC Group, (ii) a majority of the
Board of Directors of the Company shall consist of Persons who are not
Continuing Directors; or (iii) the acquisition by any Person or Group (other
than one or more members of the HMC Group) of the power, directly or indirectly,
to vote or direct the voting of securities having more than 50% of the ordinary
voting power for the election of directors of the Company.
“Code”
shall have the meaning set forth in Section 1 hereof.
“Committee”
shall have the meaning set forth in Section 2 hereof.
“Common
Stock” shall have the meaning set forth in Section 3 hereof.
“Company”
shall have the meaning set forth in Section 1 hereof,
“Continuing
Director” shall mean, as of the date of determination, any Person who (i) was a
member of the Board of Directors of the Company on the date of adoption of this
Plan, (ii) was nominated for election or elected to the Board of Directors of
the Company with the affirmative vote of a majority of the Continuing Directors
who were members of such Board of Directors at the time of such nomination or
election, or (iii) is a member of the HMC Group.
“Disability”
shall mean permanent disability as defined under the appropriate provisions of
the applicable long-term disability plan maintained for the benefit of employees
of the Company or any Related Entity who are, regularly employed on a salaried
basis unless another meaning shall be agreed to in writing by the Committee and
the Participant; provided, however, that in the case of an Incentive Stock
Option “disability” shall have the meaning specified in Section 22(e)(3) of the
Code.
“Eligible
Non-Employee” shall have the meaning set forth in Section 4 hereof.
“Exchange
Act” shall have the meaning set forth in Section 2 hereof.
“Fair
Market Value” shall, as it relates to the Common Stock, mean the average of the
high and low prices of such Common Stock as reported on the principal national
securities exchange on which the shares of Common Stock are then listed on the
date specified herein, or if there were no sales on such date, on the next
preceding day on which there were sales, or if such Common Stock is not listed
on a national securities exchange, the last reported bid price in the
over-the-counter market, or if such shares are not traded in the
over-the-counter market, the per share cash price for which all lathe
outstanding Common Stock could be sold to a willing purchaser in an arms length
transaction (without regard to minority discount, absence of liquidity, or
transfer restrictions imposed by any applicable law or agreement) at the date of
the event giving rise to a need for a determination. Except as may be otherwise
expressly provided in a particular Option, Fair Market Value shall be determined
in good faith by the Committee.
“HMC
Group” shall mean Hicks, Muse, Tate & Furst Incorporated, its Affiliates and
their respective employees, officers, and directors (and members of their
respective families and trusts for the primary benefit of such family
members).
“Incentive
Stock Options” shall have the meaning set forth in Section 6
hereof.
The term
“including” when used herein shall mean “including, but not limited
to”.
“Key
Employee” shall have the meaning set forth in Section 4 hereof.
“Non-Qualified
Stock Options” shall have the meaning set forth in Section 6
hereof.
“Option
Agreement” shall mean the written agreement or other written instrument(s)
evidencing the grant of an Option.
“Options”
shall have the meaning set forth in Section 1 hereof.
“Participant”
shall mean a Person who has received an Option or a Stock Award under the
Plan.
“Performance-Based
Award” shall have the meaning set forth in Section 8 hereof.
“Person”
shall have the meaning set forth in Section 4 hereof.
“Plan”
shall have the meaning set forth in Section 1 hereof.
“Related
Entities” shall have the meaning set forth in Section 1 hereof.
“Reorganization”
shall have the meaning set forth in Section 11 hereof.
“Rule
16b-3” shall have the meaning set forth in Section 2 hereof.
“Stock
Award” shall have the meaning set forth in Section 1 hereof.
“Stock
Award Agreement” shall mean the written agreement or other written instrument(s)
evidencing a Stock Award.
“Subsidiary”
shall mean, with respect to any Person, any other Person of which such first
Person owns or has the power to vote, directly or indirectly, securities
representing a majority of the votes ordinarily entitled to be cast for the
election of directors or other governing Persons.
22. AMENDMENT
OF PLAN
The Board
of Directors shall have the right to amend, modify, suspend or terminate the
Plan at any time; provided that, an amendment that would: (i) disqualify any
Incentive Stock Options granted under the Plan; (ii) increase the aggregate
number of Shares reserved for issuance pursuant to the Plan; (iii) increase the
annual per-Participant limit set forth in Section 3(a) hereof; or (v) modify the
requirements as to eligibility for participation in the Plan shall not become
effective without the approval of a majority of the stockholders of the Company.
Notwithstanding the preceding sentence, the Board of Directors shall be
authorized to amend the Plan and the Options granted thereunder (i) to the
extent necessary to cause Incentive Stock Options to satisfy the requirements
applicable to “incentive stock options” under Section 422 of the Code, (ii) to
comply with Rule 16b-3 (or any successor rule) under the Exchange Act (or any
successor law) and the regulations (including any temporary regulations)
promulgated thereunder, (iii) to cause the Options or Stock Awards intended to
be Performance-Based Awards to qualify as “performance-based compensation”
within the meaning of Section 162(m)(4)(C) of the Code. No amendment,
modification, suspension or termination of the Plan shall cause, without the
consent of the holder, any previously-granted Options or Stock Awards to be
forfeited or altered in a way that materially and adversely affects the holder
thereof or his rights or benefits under such Option or Stock Award.
23. GOVERNING
LAW
The
validity and construction of the Plan and any agreement evidencing the grant of
an Option or Stock Award thereunder shall be governed by the laws of the State
of Delaware, excluding any conflicts or choice of law rules or principles that
might otherwise refer construction or interpretation of any provision of the
Plan or any such agreement to the substantive law of another jurisdiction,
except to the extent superseded by any applicable federal law.
24. EFFECTIVE
DATE
The 2002
Stock Plan was effective as of May 1, 2002 and was amended and restated as of
May 4, 2005 (the “Amended Plan”). The Plan shall be effective as of
[ ], and shall be void ab initio if not approved by the
stockholders of the Company within twelve months thereafter and the terms of the
Amended Plan shall remain in full force effect.
2002
Stock Plan,
Approved
by stockholder on May 1, 2002;
Further
amended by the Board of Directors on March 1, 2005,
and such
amendment was approved by stockholders effective as of May 4, 2005;
Further
amended by the Board of Directors on December 22, 2008;
Further
amended by the Board of Directors on March 31, 2010,
And such
amendment was approved by stockholders effective as of May [ ],
2010
Appendix C
LIN TV
CORP.
2010 EMPLOYEE STOCK PURCHASE
PLAN
LIN
TV CORP.
2010
EMPLOYEE STOCK PURCHASE PLAN
LIN TV
Corp., a Delaware corporation, (the “Company”) does hereby establish the LIN TV
Corp. 2010 Employee Stock Purchase Plan (“Plan”) as follows:
1.
Purpose
The
purpose of the Plan is to encourage stock ownership among eligible employees by
providing a convenient method of purchasing the Company’s common stock through
participation payroll deduction. The Plan is designed to meet the requirements
of Section 423 of the Internal Revenue Code of 1986, as amended (“Code”). The
provisions of the Plan shall be construed so as to extend and limit
participation in a manner consistent with the requirements of Section 423 of the
Code.
2.
Definitions
Capitalized
terms in the Plan shall have the meanings assigned to such terms in the Plan,
unless the context clearly requires another construction.
(a)
“Account”
shall mean the
dollar amount accumulated with respect to an Eligible Employee as a result of
deductions from his paycheck for the purpose of purchasing shares of Common
Stock under the Plan. The amounts allocated to an Eligible Employee’s account
under the Plan shall remain the property of the respective Eligible Employee at
all times but may be commingled with the general assets of the
Company.
(b)
“Base Pay”
shall mean regular
straight time earnings, overtime, and commissions (excluding bonuses and other
special payments except to the extent that any such excluded item is
specifically included by the Board).
(c)
“Board”
shall mean the Board
of Directors of the Company.
(d)
“Broker”
shall mean the
entity selected by the Committee, as provided in Section 7, to hold shares of
Common Stock purchased by or on behalf of a Participant pursuant to the
Plan.
(e)
“Code”
shall mean the
Internal Revenue Code of 1986, as amended.
(f)
“Committee”
shall mean the
Committee administering the Plan, as described in Section 8 hereof.
(g)
“Common Stock”
shall mean the
Class A Common Stock, par value $.01 per share, of the Company.
(h)
“Corporate Reorganization”
shall mean any merger, consolidation, combination, liquidation,
reorganization, recapitalization, stock dividend, stock split, split-up,
split-off, spin-off, combination of shares, exchange of shares or other like
change in capital structure of the Company.
(i)
“Effective Date”
shall mean
July 1, 2010.
(j)
“Eligible Employee”
shall
mean any employee of the Company or any Participating Subsidiary whose customary
employment is for more than 20 hours per week and for more than five months in a
particular calendar year, excluding (i) any individual whose earnings for
services performed by such individual for the Company or a Participating
Subsidiary are not treated as wages for purposes of Section 3401(a) of the Code,
or (ii) any person who is a Five Percent Owner.
(k)
“Fair Market Value”
shall
mean, as to a share of Common Stock, the average of the high and low prices of
such Common Stock as reported on the principal national securities exchange on
which the shares of Common Stock are then listed on the date specified herein,
or if there were no sales on such date, on the next preceding day on which there
were sales, or if such Common Stock is not listed on a national securities
exchange, the last reported bid price in the over-the-counter market, or if such
shares are not traded in the over-the-counter market, the per share cash price
for which all of the outstanding Common Stock could be sold to a willing
purchaser in an arms length transaction (without regard to minority discount,
absence of liquidity, or transfer restrictions imposed by any applicable law or
agreement) at the date of the event giving rise to a need for a determination.
Fair Market Value shall be determined in good faith by the
Committee.
(l)
“Five Percent Owner”
shall
mean an employee who, as of the date an option would be granted under the Plan,
owns stock possessing 5 percent or more of the total combined voting power or
value of all classes of stock of the Company (or of its Parent or Subsidiary).
For purposes of determining ownership, stock owned by certain relatives and
entities owned or controlled by an employee shall be counted as owned by the
employee in accordance with the rules of Section 424(d) of the Code, and stock
which the employee may purchase under outstanding options (without regard to
whether such options are granted under the Plan) shall be treated as stock owned
by the employee.
(m)
“Offering Date”
shall mean a
date that securities are offered for sale under the Plan, in accordance with
Sections 3 and 5 of the Plan, and as otherwise determined by the
Committee.
(n)
“Offering Period”
shall mean
a three consecutive month period commencing on each January 1, April 1, July 1
and October 1 (or if such day is not a regular business day, the first regular
business day thereafter) of each calendar year that occurs on or after the
Effective Date and before the date the Plan terminates pursuant to Section 9(b)
hereof.
(o)
“Parent”
shall mean a “parent
corporation” of the Company within the meaning of Section 424(e) of the
Code.
(p)
“Participant”
shall mean an
Eligible Employee who is enrolled in the Plan pursuant to the procedures
described in Section 3 hereof.
(q)
“Participating Subsidiary”
shall mean a Subsidiary designated by the Board or the Committee and
described on Appendix A hereto.
(r)
“Plan”
shall mean the LIN TV
Corp. 2010 Employee Stock Purchase Plan, as amended from time to
time.
(s)
“Subsidiary”
shall mean a
“subsidiary corporation” of the Company within the meaning of Section 424(f) of
the Code.
(t)
“Transfer”
shall mean
disposition by means of a sale, exchange, gift or transfer of legal title, but
shall not include any disposition following a Participant’s death by virtue of
the laws of descent and distribution.
3.
Participation
(a)
Offering Date
.
(1) Each
individual who is an Eligible Employee on the start date of an Offering Period
under the Plan may enter the Offering Period on such date, provided that the
individual remains an Eligible Employee.
(2) Each
individual who first becomes an Eligible Employee after the start date of an
Offering Period may enter the Offering Period as of the later of the Eligible
Employee’s hire date or the date the individual becomes an Eligible
Employee.
(3) The
date an Eligible Employee enters an Offering Period shall be designated as his
Offering Date for purposes of the Offering Period.
(b)
Enrollment
.
To participate in the
Plan for a particular Offering Period, an Eligible Employee must complete and
return to the Company enrollment forms prescribed by the Committee on or before
the Eligible Employee’s scheduled Offering Date, in accordance with procedures
established by the Committee from time to time. An Eligible Employee’s
enrollment form shall authorize the Company to deduct from his pay 2%, 4%, 6%,
8% or 10% of Base Pay during the Offering Period to which the enrollment
agreement is applicable, unless the Participant’s participation is sooner
terminated as provided Section 3(f) hereof. The Plan shall not accept any cash
payments to the Plan by the Participant other than the deductions authorized
under the Participant’s enrollment form, except as provided in Section 3(g)
hereof.
(c)
Payroll Deductions
.
The deduction rate
authorized by the Participant under his enrollment form shall continue in effect
throughout the Offering Period except as follows:
(1) The
Participant may reduce his rate of payroll deduction to zero and withdraw from
the Plan during an Offering Period by delivering a withdrawal notice to the
Company in accordance with the withdrawal procedures then in effect. Payroll
deductions shall cease in connection with the Participant’s withdrawal from the
Plan effective as soon as practicable following the date the withdrawal notice
is received by the Committee. No other changes may be made during an Offering
Period and, specifically a Participant may not alter the amount or rate of
payroll deductions during an Offering Period.
(2) The
Participant may, prior to the commencement of any new Offering Period, change
the rate of payroll deductions for future Offering Periods by filing a new
enrollment form with the Committee.
(d)
Treatment of Payroll
Deductions
. A Participant’s payroll deductions shall be credited to his
Account under the Plan, but shall not be held in a trust fund and may be
commingled with the general assets of the Company. No interest shall be paid or
allowed on any amounts in a Participant’s Account.
(e)
Re-enrollment Following Withdrawal.
An Eligible Employee who has previously withdrawn from the Plan may again
become a Participant by filing a new enrollment form with the Committee. The
Eligible Employee shall not become a Participant until the first Offering Period
that begins after the date the enrollment form is received by the Committee or,
if the withdrawing employee is an officer of the Company within the meaning of
Section 16 of the Securities Exchange Act of 1934, as amended (“Exchange Act”),
until the second Offering Period beginning after the date of his withdrawal (if
such date is later), to the extent required under the Exchange Act.
(f)
Termination of Employment.
An
individual’s participation in the Plan shall terminate upon a Participant’s
termination of employment for any reason, including but not limited to a
Participant’s death or retirement. As soon as practicable following the date a
Participant’s employment with the Company or a Participating Subsidiary is
terminated, the Company shall refund to the terminating Participant the balance
in his Account as of the date such refund is made.
(g)
Leaves of Absence
.
During leaves of
absence approved by the Company and meeting the requirements of Treasury
Regulation Section 1.421-7(h)(2), a Participant may continue participation in
the Plan by making cash payments to the Company on the Participant’s normal
paydays equal to the amount of the Participant’s payroll deduction as if the
Participant had not taken a leave of absence.
4.
Shares
Authorized
(a)
Maximum.
The maximum number
of shares of Common Stock that may be offered under the Plan is 350,000 shares
of Common Stock. The shares of stock to be sold to Participants under the Plan
shall be shares of Common Stock. If the total number of shares of Common Stock
for which options are to be granted under the Plan on any date, in accordance
with Section 5 hereof, exceeds the number of shares of Common Stock then
available under the Plan (after deduction of all shares of Common Stock for
which options have been exercised or are then outstanding), the Company shall
make a
pro rata
allocation of the shares of Common Stock remaining available in as nearly
a uniform manner as shall be practicable and as it shall determine to be
equitable. In such event, the payroll deductions to be made pursuant to
Participants’ authorizations shall be reduced accordingly and the Company shall
give written notice of such reduction to each affected Participant.
(b)
Corporate Reorganization.
In
the event that, by reason of a Corporate Reorganization, the Common Stock is
substituted, combined, or changed into any cash, property, or other securities,
or the shares of Common Stock are changed into a greater or lesser number of
shares of Common Stock, the number and/or kind of shares and/or interests
subject to an option and the per share price or value thereof shall be
appropriately adjusted by the Committee to give appropriate effect to such
Corporate Reorganization. Any fractional shares or interests resulting from such
adjustment may be eliminated.
5.
Options
(a)
Grant of an Option.
A
Participant shall be deemed to have been granted a separate option for each
Offering Period in which he participates in the Plan. The option shall be
granted effective as of the Participant’s Offering Date with respect to the
Offering Period and shall provide the Participant with the right to purchase
shares of Common Stock, in a series of successive installments during the
Offering Period on the terms described in this Section 5. Under no circumstances
shall an option be granted under the Plan to any Eligible Employee if such
individual would, immediately after the grant, be a Five Percent
Owner.
(b)
Exercise Price.
The exercise
price per share of Common Stock shall be equal to 85% of the Fair Market Value
of a share of Common Stock as of the final trading date of each calendar month
within the Offering Period (“Exercise Price”). Each option shall be
automatically exercised in installments on each successive purchase date within
the Offering Period, provided that “purchase date” shall mean the final trading
date of each calendar month within the Offering Period (“Purchase Date”). The
purchase of shares of Common Stock shall be effected by applying the amount in
the Participant’s Account as of the Purchase Date to the purchase of shares of
Common Stock at the Exercise Price in effect for such Purchase
Date.
(c)
Purchasable Shares.
The
number of shares of Common Stock purchasable by a Participant on each Purchase
Date during the Offering Period shall be the number of shares (including a
portion of a whole share) obtained by dividing the amount collected from the
Participant through payroll deductions during the month ending with such
Purchase Date by the Exercise Price in effect for such Purchase Date; provided
however that the maximum number of shares of Common Stock a Participant may
purchase during an Offering Period shall not exceed 10,000 shares.
(d)
Limitation.
Notwithstanding
anything herein to the contrary, a Participant shall not be granted an option
pursuant to this Section 5 to purchase Common Stock under this Plan if such
option grant would cause the Participant to have the right to purchase stock
under all employee stock purchase plans of the Company (and of any Subsidiary or
Parent) at a rate that exceeds $25,000 of the Fair Market Value of such shares
(determined at the time such right to purchase is granted) for each calendar
year in which such option would be outstanding. The foregoing sentence shall be
interpreted so as to comply with Code Section 423(b)(8).
(e)
Termination of Option.
The
following provisions shall govern the termination of an outstanding option
granted under the Plan:
(1) A
Participant may, prior to the next scheduled Purchase Date in the Offering
Period, terminate his outstanding option by filing a withdrawal notice with the
Committee in accordance with the withdrawal procedures then in effect . Payroll
deductions with respect to the Participant shall thereafter cease, as provided
in Section 3(c)(1) hereof. As soon as practicable following the Committee’s
receipt of a withdrawal notice from a Participant, the Company shall refund to
the withdrawing Participant the balance in his Account as of the date such
refund is made.
(2) The
termination of an option shall be irrevocable, and the Participant shall not
subsequently rejoin the Offering Period for which the terminated option was
granted.
(3) Except
as provided in Section 3(g) hereof, if the Participant ceases to remain an
Eligible Employee for any reason (including death, disability, or change in
status) while his option is outstanding, the option shall terminate as of the
date the individual ceases to be an Eligible Employee, and the balance in the
Participant’s Account shall be refunded in accordance with subparagraph (f)(1)
above.
6.
Exercise of
Option
(a)
Exercise of Option
. On each
Purchase Date during an Offering Period, unless the Participant has previously
withdrawn from the respective Offering Period, each Participant shall be deemed
to have exercised the option granted to the Participant under Section 5(b)
hereof and shall be deemed to have delivered to the Company the Exercise Price
with respect to the option from the accumulated payroll deductions in his
Account.
(b)
Company’s Obligations
. The
Company’s obligations to offer, sell and deliver Shares under the Plan at any
time is subject to (i) the approval of any governmental authority required in
connection with the authorized issuance or sale of such Shares, (ii)
satisfaction of the listing requirements of any national securities exchange or
securities market on which the Common Stock is then listed and (iii) compliance,
in the opinion of Company’s legal counsel, with all applicable federal and state
securities and other laws.
7.
Stock
Ownership
A
Participant shall have no rights as a shareholder of the Company with respect to
shares of Common Stock subject to an option granted under the Plan until the
shares of Common Stock subject to the option are purchased on the Participant’s
behalf in accordance with the terms of the Plan and the Participant has become a
shareholder of record with respect to the purchased shares of Common Stock.
Shares of Common Stock purchased by or on behalf of a Participant shall be
credited to a brokerage account established in the Participant’s name at the
Broker as soon as practicable following the closing of each Offering
Period.
8.
Administration
(a)
Committee.
The Plan shall be
administered by the Compensation Committee of the Board or such other committee
as may be designated by the Board, provided that the committee shall consist of
at least two (2) members; further provided that if no such committee is
designated by the Board, the Board shall act as the Committee. The Committee may
delegate to one or more of its members, or to one or more agents, such
administrative duties as it may deem advisable, and the Committee or any person
to whom it has delegated duties as aforesaid may employ one or more persons to
render advice with respect to any responsibility the Committee or such person
may have under the Plan.
(b)
Responsibilities.
The
Committee is vested with full authority to administer and interpret the
provisions of the Plan, and to make any rules, procedures and decisions in
connection therewith. Any determination, decision or action of the Committee in
connection with the construction, interpretation, administration or application
of the Plan shall be final, conclusive and binding.
(c)
Indemnification.
No member of
the Committee and no employee of the Company shall be liable for any act or
failure to act hereunder, except in circumstances involving his bad faith, gross
negligence or willful misconduct, or for any act or failure to act hereunder by
any other member or employee or by any agent to whom duties in connection with
the administration of this Plan have been delegated. The Company shall indemnify
members of the Committee and any agent of the Committee who is an employee of
the Company or of a Parent or a Subsidiary against any and all liabilities or
expenses to which he may be subjected by reason of any act or failure to act
with respect to his duties on behalf of the Plan, except in circumstances
involving such person’s bad faith, gross negligence or willful
misconduct.
9.
Amendment and
Termination
(a)
Amendment.
The Board of
Directors shall have the right to amend, modify, suspend or terminate the Plan
at any time, provided that no amendment shall impair existing rights of
Participants with respect to offerings already made to such Participants;
further provided that if stockholder approval of an amendment is required for
the Plan to continue to meet the requirements of Section 423 of the Code such
amendment shall not become effective prior to obtaining such stockholder
approval. If the Board amends the Plan to increase the aggregate number of
shares of Common Stock that may be issued under the Plan (other than as
permitted in Section 4(b) hereof), no shares of Common Stock shall be issued
under the increased shares limit until the amendment is approved by the
stockholders of the Company. In the event such stockholder approval is not
obtained within twelve months after the date on which the amendment increasing
the share limit is adopted by the Board, the amendment shall terminate and have
no further force or effect, and all sums collected from Participants to purchase
the additional shares shall be refunded. The Board or the Committee may
authorize a Subsidiary to become a Participating Subsidiary, or may revoke a
Subsidiary’s status as a Participating Subsidiary, from time to time without
stockholder approval.
(b)
Termination.
This Plan shall
terminate at the earliest of: (i) the date of any Corporate Reorganization in
which the Company is not the surviving corporation, (ii) the date all shares of
Common Stock reserved under the Plan have been purchased, (iii) the Board
terminates the Plan pursuant to Section 9(a) hereof. In the event the Plan
terminates due to a Corporate Reorganization, the Committee may permit
Participants to exercise outstanding options to purchase shares of Common Stock
for as many full shares of Common Stock as may be purchased with the balance of
the Participant’s Account on such date prior to the Corporate Reorganization as
the Committee determines. Any balance remaining in a Participant’s Account
following termination of the Plan shall be refunded to the
Participant.
10.
Miscellaneous
(a)
Withholding.
The Company may
withhold any tax (or other governmental obligation) as a result of a
Participant’s participation in the Plan and the Participant shall take such
actions as are necessary to enable the Company to satisfy all such withholding
requirements.
(b)
Tenure.
Nothing contained in
the Plan shall affect, or be construed as affecting, the terms of employment
with respect to any employee. Nothing contained in the Plan shall impose, or be
construed as imposing, an obligation on the Company or any Parent or Subsidiary
continue the employment of any employee.
(c)
Assignability.
An option
granted under the Plan to a Participant shall not be assignable or transferable
by the Participant and shall be exercisable only by the
Participant.
(d)
Governing Law.
The validity
and construction of the Plan shall be governed by the laws of the State of
Delaware, excluding any conflicts or choice of law rules or principles that
might otherwise refer construction or interpretation of any provision of the
Plan or any such agreement to the substantive law of another jurisdiction,
except to the extent superseded by any applicable federal law
(e)
Construction.
This Plan is
intended to qualify as an employee stock purchase plan under the provisions of
Section 423 of the Code. Any reference to the masculine gender shall refer to
the feminine gender where appropriate.
(f)
Compliance with Laws.
The
Company’s obligation to sell and deliver shares of Common Stock under the Plan
is subject to the approval of any governmental authority required in connection
with the authorization, issuance or sale of such shares.
11.
Effective
Date
The Plan
shall be effective as of July 1, 2010, but shall be void
ab initio
if not approved by
the majority of stockholders of the Company within twelve months before or after
its adoption by the Board.
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