TABLE OF CONTENTS
2601 South Bayshore Drive, PH 2
Coconut Grove, Florida 33133
April 22, 201021, 2011
Dear Stockholders:
At the meeting, stockholders of SBS will be asked to considervote on the following proposals:
| 1. | the election of six members of the Board of Directors to serve until our next annual meeting of stockholders or until their respective successors are elected and qualify; |
| 2. | to authorize the Board of Directors in its sole discretion to approve an amendment to Spanish Broadcasting System Inc.’s certificate of incorporation to effect a reverse stock split of our Class A common stock and Class B common stock by a ratio of not less than one-for-five and not more than one-for-ten, with the exact ratio to be set at a whole number within this range as determined by our Board of Directors in its discretion; and |
| 3. | to ratify the appointment by the Board of Directors of KPMG LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2011. |
The Board of Directors recommends a vote FOR each of proposals 1, 2 and act upon the election of directors and any other matters that may properly come before the Annual Meeting.3. These mattersproposals are described in detail in the attached Notice of Annual Meeting of Stockholders and Proxy Statement.Statement, which you are encouraged to read fully. We will also consider any additional business that may be properly brought before the Annual Meeting.
Your vote is important regardless of the number of shares you own, and we strongly encourage you to participate by voting your shares whether or not you plan to attend the Annual Meeting.
Included with the attached Proxy Statement is a copy of SBS’ Annual Report on Form 10-K for fiscal year ended December 31, 2009 (the “Annual Report”).2010. We encourage you to read the Annual Report. It includes information on SBS’ operations and markets, as well as SBS’ audited consolidated financial statements.
We look forward to seeing you at the Annual Meeting.Meeting and appreciate your continued support.
| Sincerely, | ||
 | ||
Raúl Alarcón, Jr.
Chairman of the Board of Directors,
President and Chief Executive Officer
President and Chief Executive Officer
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2601 South Bayshore Drive, PH 2
Coconut Grove, Florida 33133
Coconut Grove, Florida 33133
April 22, 201021, 2011
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
| TIME AND DATE | ||
| PLACE | SBS Tower 2601 South Bayshore Drive, PH2 Coconut Grove, Florida 33133 | |
| ITEMS OF BUSINESS | 1. To elect | |
| 2. To authorize the Board of Directors in its sole discretion to approve an amendment to our certificate of incorporation to effect a reverse stock split of our Class A common stock and Class B common stock by a ratio of not less than one-for-five and not more than one-for-ten, with the exact ratio to be set at a whole number within this range as determined by our Board of Directors in its discretion. | ||
| 3. To ratify the appointment by the Board of Directors of KPMG LLP as our independent registered public accounting firm for our fiscal year ending on December 31, 2011. | ||
| 4. To transact any such other business | ||
| ADJOURNMENTS AND POSTPONEMENTS | Any action on the items of business described above may be considered at the Annual Meeting at the time and on the date specified above or at any time and date to which the Annual Meeting may be properly adjourned or postponed. | |
| ANNUAL REPORT | Our Annual Report, which is not part of the proxy soliciting materials, is enclosed if the proxy materials were mailed to you. The Annual Report is accessible on the Internet by visitinghttp://ww3.ics.adp.com/streetlink/SBSA, | |
| RECORD DATE | You are entitled to vote if you were a stockholder of record at the close of business on Friday, April | |
| MEETING ADMISSION | Either an admission ticket or proof of ownership of our stock, as well as a form of personal identification, must be presented in order to be admitted to the Annual Meeting. If you are a stockholder of record, your admission ticket is included on the back cover of the Proxy Statement. If your shares are held in the name of a bank, broker or other holder of record, you must bring a brokerage statement or other proof of ownership with you to the Meeting, or you may request an admission ticket in advance. Please refer to the section entitled “Annual Meeting Admission” in the Proxy Statement for further details. | |
| VOTING | For instructions on voting, please refer to the instructions on the E-Proxy Notice you received in the mail or, if you requested or received a hard copy of the Proxy Statement, on your enclosed proxy card. | |
| If your shares are held on your behalf by |
 | ||
By Order of the Board of Directors, Joseph A. García Sr. Executive Vice President, Chief Financial Officer, Chief Administrative Officer and Secretary |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 3, 2010:1, 2011: The Notice of Annual Meeting, Proxy Statement and the Annual Report are available athttp://ww3.ics.adp.com/streetlink/SBSA.
THIS PROXY STATEMENT AND PROXY CARD WILL BE MADE AVAILABLE ON OR ABOUT APRIL 22, 2010.21, 2011.
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PROXY STATEMENT
The Board of Directors (the “Board”) of Spanish Broadcasting System, Inc., a Delaware corporation (“SBS” or the “Company”) is soliciting proxies for the annual meeting of stockholders (the “Annual Meeting”). We are furnishing you with a Proxy Statement because you own shares of our common stock that entitle you to vote at the Annual Meeting. By use of a proxy, you can vote, whether or not you attend the Annual Meeting. The Proxy Statement describes the matters we would like you to vote on and provides information on those matters so you can make an informed decision. All references in this Proxy Statement to “we”, “our”,“we,” “our,” or “us” refer to SBS.
Annual Meeting Admission
Only stockholders are invited to attend the meeting. An admission ticket or proof of ownership of our stock, along with personal identification, must be presented in order to be admitted to the Annual Meeting. If you are a stockholder of record, your admission ticket is on the back of this Proxy Statement. If your shares are held in the name of a bank, broker or other holder of record, you must bring a brokerage statement or other proof of ownership with you to the Annual Meeting, or obtain an admission ticket in advance. If you do not provide photo identification or comply with the other procedures outlined above, you will not be admitted to the Annual Meeting.
No cameras (including cell phone cameras), recording equipment, electronic devices, large bags, briefcases, or packages will be permitted in the Annual Meeting.
Information About the Notice of Internet Availability of Proxy Materials
We have again elected to take advantage of the Securities and Exchange Commission (the “SEC”) rules that allow us to furnish proxy materials to our stockholders on the Internet. Instead of mailing a printed copy of our proxy materials, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and its subsequent amendment on Form 10-K/A2010 (the “Annual Report on Form 10-K”), to stockholders, we are able to distribute these materials to our stockholders in a fast and efficient manner via the Internet. We believe that this method helps conserve natural resources and reduces the amount of paper delivered to a stockholder’s address and the cost of sending these materials by mail. We will send electronically a Notice of Internet Availability of Proxy Materials (the “E-Proxy Notice”) to those stockholders who have previously signed up to receive their proxy materials on the Internet. If you receive the E-Proxy Notice by mail, you will not automatically receive a printed copy of the proxy materials or the Annual Report on Form 10-K. Instead, the E-Proxy Notice instructs you as to how you may access and review all of the important information contained in the proxy materials, including our Annual Report on Form 10-K. The E-Proxy Notice also instructs you as to how you may access your proxy card to vote on the Internet. If you received the E-Proxy Notice by mail and would like to receive a printed copy of our proxy materials, including our Annual Report on Form 10-K, you should follow the instructions included in the E-Proxy Notice. In addition, we may choose to mail written proxy materials, including our Annual Report on Form 10-K, to one or more stockholders. The accompanying Notice of Annual Meeting of Stockholders and this Proxy Statement are first being sent to stockholders on April 21, 2011.
Stockholders may also sign up to receive future proxy materials, including our annual reports, E-Proxy Notices, and other stockholder communications electronically instead of by mail. This will reduce our printing and postage costs, eliminate bulky paper documents from your personal files and conserve natural resources. In order to receive the communications electronically, you must have an E-mail account, access to the Internet through an Internet service provider and a Web browser that supports secure connections. Visithttp://investordelivery.com for additional information regarding electronic delivery enrollment and follow the instructions therein.
Purpose of the Annual Meeting
The purpose of the Annual Meeting is to vote on the following proposals:
| 1. | the election of six members of the Board of Directors to serve until our next annual meeting of stockholders or until their respective successors are elected and qualify; |
| 2. | the authorization of the Board of Directors in its sole discretion to approve an amendment to our certificate of incorporation to effect a reverse stock split of our Class A common stock and Class B common stock by a ratio of not less than one-for-five and not more than one-for-ten, with the exact ratio to be set at a whole number within this range as determined by our Board of Directors in its discretion; and |
| 3. | the ratification of the Board of Directors’ appointment of KPMG LLP as our independent registered public accounting firm for our fiscal year ending on December 31, 2011 (“Fiscal Year 2011”). |
No matters other than those referred to above are presently scheduled to be considered at the Annual Meeting.
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Recommendations of Our Board of Directors
Our Board of Directors recommends that you vote your shares as follows:
| 1. | FORthe election of six members of the Board of Directors to serve until our next annual meeting of stockholders or until their respective successors are elected and qualify (PROPOSAL 1); |
| 2. | FORthe approval of an amendment to our certificate of incorporation which will effect a reverse stock split of our Class A common stock and Class B common stock (PROPOSAL 2); and |
| 3. | FORthe ratification of the appointment by the Board of Directors of KPMG LLP as our independent registered public accounting firm for Fiscal Year 2011 (PROPOSAL 3). |
Stockholders Entitled to Vote at the Annual Meeting
Stockholders of Record
All holdersstockholders of record of our Class A common stock, par value $0.0001 per share (the “Class A common stock”) and Class B common stock, par value $0.0001 per share (the “Class B common stock”), at the close of business on April 16, 201011, 2011 (the “Record Date”), will beare entitled to receive notice and to vote at the Annual Meeting on each matter properly brought before the meeting. At the close of business on the Record Date, there were 41,596,51341,669,805 shares of Class A common stock outstanding and entitled to vote and 23,403,500 shares of Class B common stock outstanding and entitled to vote. The Class A common stock and the Class B common stock are entitled to 41,669,805 and 234,035,000 votes, respectively.
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Shares Held with a Broker, Bank, Trustee or Other Nominee
Most of our stockholders hold their shares through a stockbroker, bank, trustee, or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially:
| • | STOCKHOLDER OF RECORD — If your shares are registered directly in your name with our Transfer Agent, | ||
| • | BENEFICIAL OWNER — If your shares are held in a stock brokerage account, by a broker, bank, trustee, or other nominee, you are considered the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by your broker, bank, trustee, or nominee who is considered the stockholder of record of those shares. As the beneficial owner, you have the right to direct your broker, bank, trustee, or nominee on how to vote and are also invited to attend the meeting. However, since you are not the stockholder of record, you may not vote these shares in person at the meeting. Your broker, bank, trustee, or nominee is obligated to provide you with a voting instruction card for you to use. You will receive a form from your broker, bank, trustee or other nominee seeking instructions as to how your shares should be voted. We urge you to complete the form and instruct your broker, bank, trustee or other nominee to vote on your behalf. |
Stockholders are entitled to one vote for each share of Class A common stock they hold and ten votes for each share of Class B common stock they hold, on each matter presented. Shares of Class A common stock and Class B common stock may not be voted cumulatively.
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Votes Required with Respect to Each Proposal
The election of directors requires the affirmative vote of the holders of a majority of shares present in person or represented by proxy at the Annual Meeting. All other proposals also require the majority vote of the holders of a majority of shares present in person or represented by proxy at the Annual Meeting. Holders who abstain will be considered present at the Annual Meeting for quorum purposes, but their votes will not be counted as affirmative votes. Abstaining, therefore, will have the practical effect of voting against the proposalproposals because the affirmative vote of a majority of the shares present at the Annual Meeting and entitled to vote with respect to this matterthese matters is required to approve the proposal.proposals. A “broker non-vote” occurs when a bank, broker, or other holder of record holding shares for a beneficial owner does not vote on a particular proposal because that holder does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. “Broker non-votes” are counted for the purpose of determining whether quorum exists. There is no cumulative voting for the election of directors.
Election of Directors— The nominees for election as directors at the Annual Meeting will be elected by a majority of the votes cast at the meeting. This means that the director nominee with a majority of the votes for a particular slot is elected for that slot. Votes withheld from one or more director nomineenominees will have the practical effect of voting against such director nominee because the affirmative vote of a majority of the shares present at the Annual Meeting and entitled to vote for the election of directors is required.
All Other Proposals— The affirmative “FOR” vote of a majority of those shares present in person or represented by proxy at the meeting and entitled to vote on the matter is required to approve all other proposals.an amendment to our certificate of incorporation which will effect a reverse stock split of our Class A common stock and Class B common stock (Proposal 2) and to ratify the Board of Directors’ appointment of KPMG LLP as our independent registered public accounting firm for Fiscal Year 2011 (Proposal 3). In tabulating the voting result for any particular proposal, abstaining will have the practical effect of voting against the proposal.
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Information to Rely Upon When Casting Your Votes
You should rely only on the information contained in this Proxy Statement when casting your votes. We have not authorized anyone to give any information or to make any representations in connection with this proxy solicitation other than those contained in this Proxy Statement. You should not rely on any information or representation not contained in this Proxy Statement as having been authorized by us. You should not infer that there has not been a change in the facts set forth in this Proxy Statement or in our affairs since the date of this Proxy Statement. This Proxy Statement does not constitute a solicitation by anyone in any jurisdiction in which the solicitation is not authorized or in which the person making the solicitation is not qualified to do so or to anyone to whom it is unlawful to make a solicitation.
Voting Methods
If you hold shares directly as the stockholder of record, you may vote by granting a proxy or vote in person at the Annual Meeting by requesting a ballot. If you hold shares beneficially in street name, you may vote by submitting voting instructions to your broker or nominee pursuant to the instruction provided by your broker, bank, trustee or other nominee. In most instances, you will be able to do this over the Internet, by telephone, or by mail. Even if you plan to attend the Annual Meeting, we recommend that you vote your shares in advance as described below so that your vote will be counted if you later decide not to attend the Annual Meeting. Please refer to the summary instructions below and those included on your E-Proxy Notice or proxy card or, for shares held in street name, the voting instruction card included by your broker or nominee.
The Internet and telephone voting procedures are designed to authenticate stockholders by use of a control number and to allow you to confirm that your instructions have been properly recorded. If you vote by telephone or on the Internet, you do not need to return your proxy card. Telephone and Internet voting for stockholders of record will be available 24 hours a day, up until 11:59 p.m. (Eastern Daylight Time) on June 2, 2010.May 30, 2011.
| • | VOTE BY INTERNET—www.proxyvote.com — If you have Internet access, you may submit your proxy from any location 24 hours a day, 7 days a week. Have your proxy card or E-Proxy Notice when you access the Web site and follow the instructions to obtain your records and to create an electronic voting instruction form. | ||
| • | VOTE BY TELEPHONE— 1-800-690-6903 — You may use any touch-tone telephone to vote your proxy, toll-free, 24 hours a day, 7 days a week. Have your proxy card or E-Proxy Notice in hand when you call and then follow the instructions. | ||
| • | VOTE BY MAIL— You may do this by signing your proxy card or, for shares held in street name, the voting instruction card included by your broker or nominee and mailing it. If you provide specific voting instructions, your shares will be voted as you instruct. If you sign, but do not provide instructions, your shares will be voted as the Board recommends. Vote, sign, and date your proxy card and return it in the postage-paid envelope provided, so that it is received by |
All shares that have been properly voted and not revoked will be voted at the Annual Meeting.
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Voting instructions are included on your proxy card. If you properly submit your proxy by telephone, the Internet or by mail in time for it to be voted at the Annual Meeting, one of the individuals named as your proxy, each of whom is one of our officers, will vote your shares as you have directed.If you submit your proxy by telephone, the Internet or by mail, but do not indicate how your shares are to be voted with respect to one or more of the proposals to be voted on at the Annual Meeting, as necessary to vote your shares on each proposal, your shares will be voted in accordance with the recommendations of our Board of Directors: (1) FOR the election of the director nominees, (2) FOR the approval of an amendment to our certificate of incorporation which will effect a reverse stock split of our Class A common stock and Class B common stock, (3) FOR the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for Fiscal Year 2011, and (4) in accordance with the best judgment of the named proxies on other matters properly brought before the Annual Meeting.
Our Board of Directors has no knowledge of any matters that will be presented for consideration at the Annual Meeting other than those described herein. The named proxies will also have discretionary authority to vote upon any adjournment or postponement of the Annual Meeting, including for the purpose of soliciting additional proxies.
Changing Your Vote
You may change your proxy instructions at any time prior to the vote at the Annual Meeting. For shares held directly in your name, you may enter a new vote by using the Internet or the telephone, by mailing a new proxy card bearing a later date (which will automatically revoke your earlier voting instructions) or by voting in person at the Annual Meeting. For shares held beneficially by you in “street name,” you may change your vote by submitting new voting instructions to your broker or nominee, or by any other method instructed by your broker or nominee.
Subject to such revocation, all proxies duly executed and received prior to, or during the Annual Meeting, will be voted in accordance with the specification on the proxy card. If no specification is made, proxies will be voted in favor of the proposal listed on the proxy card. As to other matters, if any, to be voted upon at the Annual Meeting, the persons designated as proxies, who were selected by the Board, will take such actions as they, in their discretion, may deem advisable.
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Counting the Vote
In the election of directors, you may vote “FOR” all of the nominees, you may “WITHHOLD AUTHORITY FOR ALL” the nominees or you may vote “FOR” all except one or more of theany individual nominees. For the other proposals, you may vote “FOR,” “AGAINST,” or “ABSTAIN.” If you “ABSTAIN,” it has the same effect as a vote “AGAINST.” If you hold your shares directly as the stockholder of record and you sign your proxy card with no further instructions, your shares will be voted in accordance with the recommendations of the Board. The inspector of elections will tabulate the votes. If you hold your shares beneficially in street name and you sign your broker instruction card with no further instructions, under the rules of various securities exchanges, your nominee generally may vote on routine matter,matters, but cannot vote on non-routine matters. The election of our directors is considered a non-routine matter. Therefore, if you hold your shares beneficially in street name, it is critical that you give instructions on how to cast your vote if you want it to count in the director election. If you do not instruct your bank, brokerage firm or other nominee how to vote in the election of directors, no vote will be cast on your behalf.
With regards to Proposal 1 (election of directors), shares represented by proxies that are marked “WITHHELD” and shares that are not voted will have the effect of a vote against this proposal because approval of this proposal requires the affirmative vote of the holders of a majority of the shares of Class A common stock and Class B common stock present in person or represented by proxy at the Annual Meeting. With regards to Proposal 2 (amendment to our certificate of incorporation) and Proposal 3 (ratification of KPMG LLP’s appointment as auditor), shares marked as “ABSTAIN” and shares which are not voted will be considered present in person or represented by proxy at the Annual Meeting and will have the effect of a vote against this proposal because approval of this proposal requires the affirmative vote of the holders of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting.
Confidentiality
All stockholder proxies, ballots, and tabulations that identify stockholders are maintained in confidence. No such document will be available for examination, and the identity and vote of any stockholder will not be disclosed, except as necessary to meet legal requirements and allow the inspectors of election to certify the results of the stockholder vote.
Results of the Vote
We will announce the preliminary voting results at the Annual Meeting and publish final results in Form 8-K within four business days of the Annual Meeting.
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The SEC rules now allow us to deliver a single copy of an annual report and proxy statement to any household not participating in electronic proxy material delivery at which two or more stockholders reside if we believe the stockholders are members of the same family. This rule benefits both you and SBS. We believe it eliminates irritating duplicate mailings that stockholders living at the same address receive, and it reduces our printing and mailing costs. This rule applies to any annual reports, proxy statements, proxy statements combined with a prospectus, or information statements. Each stockholder will continue to receive a separate proxy card or voting instruction card.
If your household has multiple stockholders of record and your household receives a single set of proxy materials this year and you prefer to receive your own copy of the proxy materials now or in future years, please request a duplicate set by calling 1-800-579-1639, visiting www.proxyvote.com, sending an E-mail tosendmaterial@proxyvote.com, or writing to Spanish Broadcasting System, Inc., 2601 South Bayshore Drive, PH 2, Coconut Grove, Florida 33133, ATTN: Proxy Materials/Investor Relations.Relations; Legal Department.
If a broker or other nominee holds your shares, you may continue to receive some duplicate mailings. Certain brokers will eliminate duplicate account mailings by allowing stockholders to consent expressly to such elimination or to consent implicitly by not requesting continuation of duplicate mailings. Since not all brokers and nominees may offer stockholders the opportunity this year to eliminate duplicate mailings, you may need to contact your broker or nominee directly to discontinue duplicate mailings to your household.
List of Stockholders
The names of stockholders of record entitled to vote at the Annual Meeting will be available at the Annual Meeting and for ten days prior to the meeting for any purpose germane to the meeting, between the hours of 9:30 a.m. and 4:30 p.m. (Eastern Daylight Time), at our principal executive offices at Spanish Broadcasting System, Inc., 2601 South Bayshore Drive, PH 2, Coconut Grove, Florida 33133, by contacting the Secretary of the Company.
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Cost of Proxy Solicitation
We, on behalf of the Board of Directors, are soliciting proxies in connection with this Annual Meeting. We will pay for the cost of preparing, assembling, printing, mailing, and distributing these proxy materials. You will need to obtain your own Internet access if you choose to access the proxy materials and/or vote over the Internet. In addition to mailing these proxy materials, the solicitation of proxies or votes may be made in person, by telephone, or electronic communication by our directors, officers, and employees, who do not receive any additional compensation for these solicitation activities. We have retained Morrow & Co., Inc. to assist us in the distribution of proxy materials and the solicitation of votes. We will pay Morrow & Co., Inc. a fee of approximately $3,000, plus out-of-pocket expenses. We will also reimburse brokerage houses and other custodians, nominees, and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to beneficial owners of stock.
Transfer Agent
Our Transfer Agent is American Stock Transfer & Trust Company.Broadridge Corporate Issuer Solutions, Inc. All communications concerning stockholders of record accounts, including address changes, name changes, common stock transfer requirements, and similar issues can be handled by contacting American Stock Transfer & Trust CompanyBroadridge Corporate Issuer Solutions, Inc. at 1-800-937-5449,www.amstock.com,610-649-7300, or in writing to American Stock Transfer & Trust Company, 6201 15thBroadridge Corporate Issuer Solutions, Inc. Attn: Angela Lamb, 44 West Lancaster Avenue, Brooklyn, New York 11219.Telephone: (610) 649-7300, Fax: (610) 649-7302.
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| Class A Shares | Class B Shares | Percent of | Percent of | |||||||||||||||||||||
| Percent of | Percent of | Total | Total | |||||||||||||||||||||
| Name and | Number of | Class A | Number of | Class B | Economic | Voting | ||||||||||||||||||
| Address(1)(2) | Shares | Shares | Shares | Shares | Interest | Power | ||||||||||||||||||
| Raúl Alarcón, Jr.(3) | 1,132,000 | 2.3 | % | 23,400,000 | 100 | % | 33.3 | % | 82.7 | % | ||||||||||||||
| Joseph A. García(4) | 516,750 | 1.0 | % | — | * | * | * | |||||||||||||||||
| Frank Flores(6) | 25,000 | * | — | * | * | * | ||||||||||||||||||
| Cynthia Hudson(6) | 16,667 | * | — | * | * | * | ||||||||||||||||||
| Mitchell A. Yelen(5) | 35,000 | * | — | * | * | * | ||||||||||||||||||
| Jose A. Villamil(6) | 50,000 | * | — | * | * | * | ||||||||||||||||||
| Jason L. Shrinsky(7) | 65,000 | * | — | * | * | * | ||||||||||||||||||
| All named executive officers and directors as a group(8) | 1,840,417 | 3.6 | % | 23,400,000 | 100.0 | % | 34.0 | % | 82.8 | % | ||||||||||||||
| CBS Corporation(9) | 7,600,000 | 15.4 | % | — | — | 10.5 | % | 2.7 | % | |||||||||||||||
| Columbia Wanger Asset Management, L.P.(10) | 3,678,600 | 7.5 | % | — | — | 5.1 | % | 1.3 | % | |||||||||||||||
| Attiva Capital Partners, LTD(11) | 3,190,246 | 6.5 | % | — | — | 4.4 | % | 1.1 | % | |||||||||||||||
| Beach Point Capital Management(12) | 2,806,753 | 5.7 | % | — | — | 3.9 | % | 1.0 | % | |||||||||||||||
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CORPORATE GOVERNANCE
The Board of Directors
Our business and affairs are managed under the direction of the Board. The Board meets on a regularly scheduled basis during our fiscal year to review significant developments affecting us and to act on matters requiring its approval. The Board also holds special meetings as required from time to time when important matters arise between scheduled meetings that require action by the Board. During 2009,2010, the Board consisted of Raúl Alarcón, Jr., Joseph A. García, Antonio S. Fernandez, José A. Villamil, Mitchell A. Yelen, Manuel E. Machado and Jason L. Shrinsky. Messrs. Villamil, FernandezMachado and Yelen were deemed to be independent as defined under Rule 5605(a)(2) of the National Association of Securities Dealers’ (“Nasdaq”) Listing Rules. Mr. Fernandez resigned as a member ofMachado was appointed to the Board, the Audit Committee and the Compensation Committee as of August 12, 2009.on June 3, 2010.
The Board held a total of fivenine meetings during the fiscal year ended December 31, 2009.2010 (“Fiscal Year 2010”). Each incumbent director who was a director of SBS during fiscal year ended December 31, 2009Fiscal Year 2010 attended 75% or more of the aggregate number of meetings of the Board and the meetings of all committees of the Board on which he served during the period of time in which he served. The independent members of the Board regularly meet in executive session without any employee directors or other members of management in attendance.
Our Board has a separately-designated standing Audit Committee established in accordance with Section 3(a)58(A) of the Securities Exchange Act of 1934 (the “Exchange Act”) and a Compensation Committee. The functions and membership of each committee of the Board are set forth below. Our Board does not have, and as a controlled company, the Nasdaq Listing Rules do not require us to have, a standing nominating committee.
Controlled Company Exemption
We are a “controlled company” as defined in Rule 5615(c)(1) of the Nasdaq Listing Rules because more than 50% of our voting power is held by Raúl Alarcón, Jr., our Chairman of the Board, President and Chief Executive Officer (“CEO”). As a “controlled company,” we are exempt from the requirements of Rule 5605(b), (d) and (e) of the Nasdaq listing standards that would otherwise require us to have (i) a majority of independent directors on the Board, (ii) compensation and nominating committees composed solely of independent directors, (iii) the compensation of executive officers determined by a majority of the independent directors or a compensation committee composed solely of independent directors, and (iv) director nominees selected or recommended to the Board for selection, either by a majority of the independent directors, or a nominating committee composed solely of independent directors. Consequently, we are exempt from independent director requirements of Rule 5605(b), (d) and (e) of the Nasdaq Listing Rules, except for the requirements under subsection (b)(2) thereof pertaining to executive sessions of independent directors and those under subsection (c) thereof pertaining to the Audit Committee. Currently, we have an Audit Committee and Compensation Committee composed solely of independent directors.
Board Leadership Structure
Raúl Alarcón, Jr. serves as our Chairman of the Board, President and CEO. Our Board believes that combining the role of Chairman of the Board and CEO furthers development and execution of the Company’s strategy, facilitates information flow between management and the Board and promotes efficiency given the size of the Company and its operations. Our Board believes that Mr. Alarcón’s service as both Chairman of the Board and CEO is in our and our stockholders’ best interests. In addition, Mr. Alarcón has extensive experience in radio broadcasting and possesses detailed and in-depth knowledge of the issues, opportunities and challenges that we face. Our Board believes that he is, therefore, best positioned to develop agendas that ensure that our Board’s time and attention are focused on the most critical matters.
Mr. Alarcón is not an independent director. We do not have a lead independent director. We believe the governance structure we have is customary for public companies in which the lead stockholder continues to retain a majority voting interest, and we regard Mr. Alarcón’s leadership role on the Board as positive for the Company in that it fosters stability and encourages consensus-building between Board initiatives and stockholder support.
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Although our Board believes that the combination of the Chairman of the Board and CEO roles is appropriate in the current circumstances, our Board has not established this approach as policy, and will routinely review its determination as circumstances dictate and from time to time.
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Risk Oversight
Our Board as a whole has responsibility for risk oversight. Our Board meets regularly to discuss the strategic direction and the issues and opportunities facing our company in light of trends and developments in the broadcasting industry and general business environment. Throughout the year, our Board provides guidance to management regarding our strategy and helps to refine our operating plans to implement our strategy. The involvement of the Board in setting our business strategy is critical to the determination of the types and appropriate levels of risk undertaken by the Company. Our Board is responsible for risk oversight as part of its fiduciary duties to the stockholders and the Company, and our Board administers its risk oversight function as a whole and through its committees. For example, the Audit Committee is charged with the task of overseeing the Company’s risk management process on behalf of the Board. The Audit Committee periodically meets with the Company’s senior management to review the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures. In addition, the Compensation Committee considers the risks that may be affected by the Company’s executive compensation programs. While the full Board, and its committees, oversee the Company’s risk management, the Company’s management is responsible for the implementation of the Company’s risk management guidelines and policies and the Company’s day-to-day risk management process. Finally, the Board believes that the combined Chairman and CEO leadership structure of the Board allows for quick and definitive assessment of issues that should be brought to the Board’s attention.
Committees of our Board of Directors
Audit Committee
The Audit Committee currently consists of José A. Villamil, Manuel E. Machado and Mitchell A. Yelen, each of whom has been determined to be independent as defined under Rule 5605(a)(2) of the Nasdaq Listing Rules and the SEC’s director independence standards for Audit Committee members. Mr. Fernandez served as the Chairman ofMachado was elected to serve on the Audit Committee until his resignation on August 12, 2009.June 3, 2010.
The Audit Committee has not designateddetermined that Mr. Yelen qualifies as an “audit committee financial expert” as that term is defined by applicable SEC rules and regulations. Bothregulations and serves as the Chairman of the Audit Committee. All members of the Audit Committee are able to read and understand basic financial statements, including a balance sheet, income statement, and cash flow statement and the Audit Committee believes that both members qualify as an “audit committee financial expert”. It is anticipated that when a third independent director is elected, the Audit Committee will officially designate an “audit committee financial expert”.statement. The Audit Committee held four meetings during the fiscal year ended December 31, 2009.
The primary purpose of the Audit Committee is to assist the Board in its oversight of the integrity of our financial statements, our compliance with legal and regulatory requirements, and the qualifications, independence, financial reporting process, and performance of the Company’s independent registered public accounting firm (the “Independent Registered Public Accounting Firm”). In fulfilling its oversight responsibilities, the Audit Committee:
| • | reviews our annual audited and quarterly unaudited consolidated financial statements; | ||
| • | reviews and approves related party transactions; |
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| • | reviews our financial reporting process and disclosure and internal controls and procedures, including major issues regarding accounting principles and financial statement presentation, and critical accounting policies to be used in the consolidated financial statements; | ||
| • | reviews and discusses with management and the Independent Registered Public Accounting Firm the Company’s internal controls and the Independent Registered Public Accounting Firm’s attestation of the report; | ||
| • | appoints, oversees, and approves the fees paid to the Independent Registered Public Accounting Firm; | ||
| • | reviews with the Independent Registered Public Accounting Firm the scope of the annual audit, including fees and staffing, and approves all audit and permitted non-audit services provided by the Independent Registered Public Accounting Firm; | ||
| • | reviews findings and recommendations of the Independent Registered Public Accounting Firm and management’s response to the recommendations of the Independent Registered Public Accounting Firm; | ||
| • | discusses policies with respect to risk assessment and risk management, our major risk exposures, and the steps management has taken to monitor and mitigate such exposures; and | ||
| • | reviews compliance with the Company’s Code of Business Conduct and Ethics (“Code of Ethics”) and whistleblower policies. |
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A full description of the Audit Committee’s primary responsibilities is contained in its written charter, which is publicly available on our Internet website atwww.spanishbroadcasting.com under the tab entitled “Investor Info/Information/Audit Committee Charter.”
Compensation Committee
The Compensation Committee currently consists of Messrs. Villamil, Machado and Yelen, each of whom has been determined to be independent as defined under Rule 5605(a)(2) of the Nasdaq Listing Rules. Antonio Fernandez was a member of the Compensation Committee until his resignation from the Board on August 12, 2009. Mr. Villamil serves as the Chairman of the Compensation Committee. Mr. Machado was elected to serve on the Compensation Committee on June 3, 2010. The Compensation Committee held fourfive meetings during the fiscal year ended December 31, 2009.Fiscal Year 2010.
The Board has determined that all Compensation Committee members are “independent” under the Nasdaq Listing Rules listing standards. The Board has also determined that each Compensation Committee member qualifies as a “Non-Employee Director” under Rule 16b-3 of the Exchange Act and that each member, qualifies as an “outside director” under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).
The Compensation Committee reviews our compensation practices and policies, annually reviews performance and approves the compensation for the CEO and other senior executives, and reviews and discusses with management the compensation disclosures prepared in accordance with the SEC’s disclosure rules for executive compensation. In addition, the Compensation Committee:
| • | reviews and makes recommendations to management with respect to our overall compensation programs and policies; | ||
| • | approves the adoption, amendment, and termination of incentive compensation and deferred compensation programs for our employees; | ||
| • | approves employment agreements and severance arrangements for the CEO, as appropriate; | ||
| • | approves employment agreements and severance arrangements for our senior executives (other than the CEO), as appropriate; | ||
| • | interprets and supervises the administration of our stock and long-term incentive compensation programs; and | ||
| • | exercises all authority of the Board under our equity-based plans. |
A full description of the Compensation Committee’s primary responsibilities is contained in its written charter, which is publicly available on our Internet website atwww.spanishbroadcasting.com under the tab entitled “Investor Info/Compensation Committee Charter.”
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The Role of Executive Officers in Determining Executive Compensation
Our CEO develops recommendations regarding executive compensation, including proposals relative to compensation for individual executive officers, using internal and external resources. These resources include such things as compensation surveys, external data and reports from consultants and data, reports and recommendations from internal staff. Recommendations from our CEO include and consider all aspects of the compensation program — philosophy, design, compliance and competitive strategy — as well as specific actions regarding individual executive officer compensation. The Compensation Committee reviews these recommendations, and decides whether to accept, reject, or revise the proposals.
Our CEO and Chief Financial Officer (“CFO”) assist the Compensation Committee in understanding key business drivers included in program designs, especially incentive programs. This may include defining related measures and explaining the mutual influence on or by other business drivers and the accounting and tax treatment relating to certain awards. Our CEO and CFO also provides regularprovide updates to the Compensation Committee regarding current and anticipated performance outcomes and their impact on executive compensation.
Our CorporateGeneral Counsel, with the assistance of our outside counsel for the Compensation Committee, ensures that appropriate plan documentation and approvals are received in order to keep executive pay programs in compliance with applicable laws and stock exchange listing requirements. Our CorporateGeneral Counsel and outside counsel also advise the Audit Committee, the Compensation Committee and our Board regarding compliance with appropriate governance standards and requirements.
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Role of the Compensation Committee Advisor
The Compensation Committee has retained an outside consultant, Towers Watson, (“to assist it in formulating and evaluating our executive compensation program for Fiscal Year 2011. Towers Watson”), a human resources consulting firm, is engaged byWatson will work with the Compensation Committee to:
Provide comparative market data for our peer group, developed with the Compensation Committee and management, with respect to compensation matters;
Analyze our compensation and benefit programs relative to our peer group;
Advise the Compensation Committee on compensation matters;
Summarize the results of the benchmarking and peer group analysis in a report to the Compensation Committee and members of management, as appropriate; and
Participate in meetings with the full Board to present the results of the peer group analysis.
In order to encourage an “as needed” basisindependent view point, the Compensation Committee and its members have access to answer questions posed by itTowers Watson at any time without management present and have consulted from time to time and undertake analysis of compensation matters. Specifically, if requestedwith Towers Watson without management present.
If the Company wishes to engage Tower Watson for services other than those that Tower Watson provides to the Compensation Committee, such services will be subject to approval by the Compensation Committee, TowersCommittee. Tower Watson will answer questions pertainingdid not provide any services to certain executive compensation matters, the Company’s employment arrangements with certain senior executives and other related executive pay policies. For the 2009 fiscal year, the Compensation Committee requested Towers Watsons’ advice on one matter. Apart from advising the Compensation Committee from time to time when requested, Towers Watson provides no services toor the Company or management.during Fiscal Year 2010.
Disclosure Committee
The Disclosure Committee, as described below, was established by us to ensure compliance with the reporting requirements established by the SEC and is made up of certain key employees of the Company. The Disclosure Committee currently consists of Joseph A. García (Senior Executive Vice President, CFO, Chief Administrative Officer and Secretary), the chairman of the committee, Melanie M. Montenegro (Corporate(Executive Vice President and General Counsel), Frank FloresAlbert Rodriguez (Chief Revenue Officer of Radio Segment)the Company), Frank Soricelli (Corporate Controller)Marko Radlovic (Chief Revenue Officer of the radio segment), José Molina (Vice President of Finance), Frank Soricelli (Corporate Controller), and Nelson Santos (Vice President of Management Information Systems).
The general purpose of the Disclosure Committee is to design, establish and maintain a system of controls and procedures to ensure that information required to be disclosed in the reports and statements filed by us pursuant to the Exchange Act, is reported in conformity with the rules and forms of the SEC. The Disclosure Committee assists the CEO, CFO and the Audit Committee in monitoring (i) the integrity of the financial statements, policies, procedures and the internal financial and disclosure controls and risks of the Company, and (ii) our compliance with regulatory requirements, to the extent that these policies, procedures and controls may generate either financial or non-financial disclosures in our filings with the SEC.
Nominating Committee
Our Board does not have a standing nominating committee or a committee serving a similar function. As a controlled company, the Nasdaq Listing Rules do not require us to have such a committee. The Board has determined that rather than a nominating committee, it is the most appropriate body for identifying director candidates and selecting nominees to be presented at the annual meeting of stockholders.
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Director Nominations
As noted above, because Raúl Alarcón, Jr., our CEO, President and Chairman of the Board, holds more than 50% of our voting power, we are deemed to be a “controlled company” under the Nasdaq Listing Rules. Because we are a controlled company, the Board has not elected to establish a separate nominating committee or formal rules governing director nominations from stockholders. The functions of evaluating and nominating director candidates are performed by the Board as a whole. The Board will, from time to time, review biographical information and background material relating to potential candidates and interview selected candidates. The Board does not currently have a charter or written policy with regard to the nomination process. We have not engaged a third party to assist us in identifying and evaluating the individuals nominated for election as directors at this Annual Meeting.
The Board has not set specific, minimum qualifications that must be met by director candidates. In deciding whether to nominate any particular candidate for election to the Board, the Board considers the appropriate skills and personal characteristics needed in light of the makeup of the current Board, including considerations of each candidate’s integrity, character, sound judgment, business acumen, professional skills and experience, knowledge of our business and industry, differences in viewpoint, education, possible conflicts of interest, the ability to act in the interests of our stockholders and other individual qualities and attributes. Further, while the Board does not have a formal diversity policy, it identifies qualified potential candidates without regard to any candidate’s race, color, disability, gender, national origin, sexual orientation, religion or creed. The Board seeks to ensure the fair representation of all stockholder interests on the Board. The Board believes that the use of these general criteria, along with a non-discriminatory policy, will best result in a Board that evidences that diversity in many respects. The Board believes that it currently maintains that diversity. The Board also considers whether a potential nominee would satisfy the Nasdaq Listing Rules’ definition of “independent” and the SEC’s definition of “audit committee financial expert.” We believe that the backgrounds and qualifications of our directors, considered as a group, provides a composite mix of experience, knowledge and abilities that allows the Board to fulfill its responsibilities.
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Stockholder recommendations relating to director nominees may be submitted in accordance with the procedures set forth below under the heading “Stockholder Proposals for Next Annual Meeting.” Stockholders may also send communications to the Board in accordance with the procedures set forth below under the heading “Stockholder Communications with the Board of Directors.”
Stockholder Communications with the Board of Directors
Stockholders of SBS seeking to communicate with the Board, the chairs of the Audit and Compensation Committees of the Board, or with any of our other directors, should submit any communications in writing to the following address: Spanish Broadcasting System, Inc., c/o Melanie M. Montenegro, CorporateGeneral Counsel, 2601 South Bayshore Drive, PH 2, Coconut Grove, Florida 33133. The mailing envelope must contain a clear notation indicating that the enclosed letter is a “Stockholder-Board Communication.” Any such communication must identify the author as a stockholder, must include the stockholder’s full legal name, address, valid telephone number, the number of shares beneficially owned by the stockholder and, if applicable, the name of any specific intended recipient. We will forward any such communication to the full Board or to any individual director or directors to whom the communication is directed following its clearance through normal review and appropriate security procedures.
Code of Business Conduct and Ethics
We have a Code of Ethics, which is within the meaning of Item 406(b) of Regulation S-K. All of our directors, officers and employees, including our CEO and CFO, are required to abide by our business conduct policies to ensure that our business is conducted in a consistently legal and ethical manner.
The purpose of the Code of Ethics is to deter wrongdoing and to promote (i) honest and ethical conduct, including the ethical handling of conflicts of interest; (ii) full, fair, accurate, timely and understandable disclosures in reports and documents filed by us with, or submitted to, the SEC or otherwise publicly communicated by us; (iii) compliance with applicable governmental laws, rules and regulations; (iv) the prompt internal reporting of violations to the Code of Ethics to appropriate persons identified therein and (v) accountability for adherence to the Code of Ethics. Employees are required to report any conduct that they believe in good faith to be an actual or apparent violation of the Code of Ethics.
This Code of Ethics is publicly available on our Internet website atwww.spanishbroadcasting.com under the tab entitled “Investor Info/Code of Conduct.” If we make substantive amendments to the Code of Ethics or grant any waiver from its provisions to our principal executive, financial or accounting officers, or persons performing similar functions, including any implicit waiver, we will disclose the nature of such amendment or waiver on our website or in a report on Form 8-K within four business days of such amendment or waiver.
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Whistleblower Hotline
We have a whistleblower policy (the “Whistleblower Policy”), which establishes procedures for (i) the receipt, retention and treatment of complaints received by our company regarding accounting, internal accounting controls or auditing matters, and (ii) the confidential and anonymous submission by our employees of concerns regarding questionable accounting or auditing matters.
If you wish to contact our Audit Committee to report complaints or concerns relating to the financial reporting of our company, you may do so by using the various alternatives provided by us, such as (i) writing directly to the Chairman of the Audit Committee, c/o Director of Internal Audit, Spanish Broadcasting System, Inc., 2601 South Bayshore Drive, PH 2, Coconut Grove, Florida 33133 or (ii) confidentially and anonymously by calling a toll free telephone “hotline” operated by an independent party at (866) 789-1229. A copy of our Whistleblower Policy is available on our Internet website atwww.spanishbroadcasting.com under the tab entitled “Investor Info/Ethics and Compliance Hotline.”
Board of Directors Attendance at Annual Meetings of Stockholders
Although we do not have a formal policy requiring director attendance at our Annual Meeting, all directors and all nominees for election as directors are encouraged to attend the Annual Meeting. Last year, all of our incumbent directors and director nominees attended our Annual Meeting.
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The Board of Directors currently has fiveconsists of six members. Each of the Board members is standing for reelection to hold office until the next Annual Meeting of Stockholders. Each nominee elected as a director will continue in office until his or her successor has been elected and qualified, or until his or her earlier death, resignation, or retirement. The Board has designated as nominees: Raúl Alarcón, Jr., Joseph A. García, José A. Villamil, Mitchell A. Yelen, Manuel E. Machado and Jason L. Shrinsky, each of whom currently serves as a member of the Board.
Other than the proposals described in this Proxy Statement, the Board is not aware of any other matters to be presented for a vote at the Annual Meeting. If you grant a proxy by telephone, Internet, or by signing and returning your proxy card, either of the persons named as proxy holders — Raúl Alarcón, Jr., our Chairman, President and CEO, and Joseph A. García, our Senior Executive Vice President, CFO, Chief Administrative Officer (“CAO”) and Secretary — will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting. If any of our nominees are unavailable as a candidate for director, the above-named proxy holders will vote your proxy for another candidate or candidates as may be nominated by the Board.
NOMINEES FOR DIRECTOR AND EXECUTIVE OFFICERSELECTION TO THE BOARD OF DIRECTORS
The following table sets forth information concerning the fivesix nominees for director followed by information concerning our executive officers as of the date of this Proxy Statement. Each of our directors serves until their successor is elected and qualifies, and all executive officers hold office until their successors are appointed.
| Name | Age | Position with SBS | ||||
Incumbent Nominees for Director | ||||||
| Raúl Alarcón, Jr. | Chairman of the Board of Directors, CEO and President | |||||
| Joseph A. García | Senior Executive Vice President, CFO, CAO, Secretary and | |||||
| José A. Villamil | Director | |||||
| Mitchell A. Yelen | Director | |||||
| Manuel E. Machado | 43 | Director | ||||
| Jason L. Shrinsky | Director | |||||
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  | Raúl Alarcón, Jr.joined us in 1983 as an account executive and has been our President and a director since October 1985 and our CEO since June 1994. On November 2, 1999, Mr. Alarcón, Jr. became our Chairman of the Board and continues as our CEO and President. Currently, Mr. Alarcón, Jr. is responsible for our long-range strategic planning and operational matters and is instrumental in the acquisition and related financing of each of our stations. Mr. Alarcón, Jr. is the son of the late Pablo Raúl Alarcón, Sr. We nominated Mr. Alarcón, Jr. as a director because we believe he provides an historical perspective to our long operating history, having joined us in 1983 and has extensive experience in Spanish-language media broadcasting. | |
  | Joseph A. Garcíahas been our CFO since 1984, Executive Vice President since 1996 to 2008, and Secretary since November 2, 1999. On June 3, 2008, Mr. García was elected to the Board and on August 4, 2008, became our Chief Administrative Officer and Senior Executive Vice President. Mr. García is responsible for our financial affairs, operational and administrative matters, investor relations, and has been instrumental in the acquisition and related financing of our stations. Before joining us in 1984, Mr. García spent thirteen years in international financial planning positions with Philip Morris Companies, Inc. and with Revlon, Inc., where he was manager of financial planning for Revlon — Latin America. We nominated Mr. García because we believe he provides a historical perspective to our long operating history, having joined us in 1984. |
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  | José A. Villamilbecame one of our directors on June 30, 2004. Mr. Villamil has over 30 years of successful experience as a | |
  | Mitchell A. Yelenbecame one of our directors on September 28, 2007. Mr. Yelen is currently the Director of tax services at Pinchasik, Strongin, Muskat, Stein & Company, P.A., a CPA firm, where he has been employed since 1984 specializing in litigation support, complex tax research and financial planning. Mr. Yelen previously held positions at CPA firms: Kaufman, Rossin & Co., P.A. and Alexander Grant & Co., P.A. Among other degrees, he holds an M.B.A. in Finance from Northwestern University and a J.D. and L.L.M. in taxation from the University of Miami. We nominated Mr. Yelen because of his knowledge of accounting and finance. |
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  | Manuel E. Machadobecame one of our directors on June 3, 2010. Mr. Machado has been the Chief Executive Officer and Co-Chairman of MGSCOMM, an integrated marketing communications agency, one of the fastest-growing marketing communications agencies in the country, since its formation in March 2003. Mr. Machado was also elected to the board of directors of Worldwide Partners, Inc. (worldwidepartners.com) on May 26, 2010. MGSCOMM and Worldwide Partners, Inc. are not affiliates of the Company. Prior to the formation of MGSCOMM in 2003, Mr. Machado developed successful communications programs for some of the world’s most renowned brands such as McDonald’s Corporation, Coors Brewing, Ford Motor Co., Bacardi, Coca Cola, MasterCard International, Ralston Purina, Proctor & Gamble, Nike, Pisco Chile and the Government of Chile. He is also the founder of The Meka Group, a marketing communications agency later known as BVK/Meka, and served as its CEO from 1994 to 2003. Mr. Machado has also held key positions in companies of worldwide recognition such as Univision Network, Burson-Marsteller and Bacardi. Mr. Machado is a Past Chairman of the Association of Hispanic Advertising Agencies (AHAA), www.ahaa.org. He has been involved with the community through several organizations, including being named Trustee of the Vizcaya Museum and Gardens, the Latin Grammy’s Host Committee, the WLRN Board of Trustees, the Voices for Children Foundation Board of Directors, the Miami-Dade County Sister Cities Program, the Mercy Foundation Ambassadors Board of Directors, the Hialeah Foundation Board of Directors, Trustee of the Greater Miami Chamber of Commerce, and Trustee of the Beacon Council. We nominated Mr. Machado because of his knowledge of media advertising and marketing communications. | |
 | Jason L. Shrinskybecame one of our directors on November 2, 1999. Mr. Shrinsky is a retired partner from the law firm Kaye Scholer LLP, which he joined as a partner in 1986. Mr. Shrinsky has been a lawyer counseling corporations and high net worth individuals on financings, mergers and acquisitions, other related financial transactions and regulatory procedures since 1964. Kaye Scholer LLP has served as our legal counsel for more than 20 years. We nominated Mr. Shrinsky because of his knowledge of financial transactions and regulatory procedures. |
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EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
In addition to those directors named above who are also our executive officers, the following table sets forth information concerning non-director employees who serve as our executive officers as of the date of this Proxy Statement. Our executive officers serve at the discretion of the Board of Directors.
| Name | Age | Position with SBS | ||||
 | ||||||
| Albert Rodriguez | 46 | Chief Revenue Officer of | ||||
| Marko Radlovic | 47 | Chief Revenue Officer of Radio Segment and General Manager | ||||
| Melanie M. Montenegro | 36 | Executive Vice President | ||||
Albert Rodriguezbecame the Chief Revenue Officer of the Company’s consolidated operations on January 3, 2011 and continued in his position as the General Manager of the Miami television market. Mr. Rodriguez is responsible for overseeing the revenue and profit performance of the Company’s consolidated operations, including radio, television, interactive and entertainment divisions, and the day-to-day operational matters of the Miami television market. From October 12, 2010 to January 2, 2011, Mr. Rodriguez was the Chief Revenue Officer of the television segment and General Manager of the Miami television market, and he was General Manager of the Miami television market from January 21, 2010 through October 11, 2010. From November 1999 through January 2010, Mr. Rodriguez was the General Sales Manager for the Company’s radio properties in Miami — WCMQ-FM 92.3 “Clásica 92,” WRMA-FM 106.7 “Romance,” and WXDJ-FM 95.7 “El Zol 95.7.” Under Mr. Rodriguez’s management, El Zol 95.7 set the record for being the highest billing station in Florida’s history in 2005.
Marko Radlovicbecame our Chief Revenue Officer of the Company’s radio segment and General Manager and Senior Vice President of the Los Angeles radio market on July 19, 2010. Mr. Radlovic is responsible for overseeing the revenue and profit performance of the Company’s radio segment and the day-to-day operational matters of the Los Angeles radio market. Previously, Mr. Radlovic was the Company’s Chief Operating Officer from July 21, 2005 through November 6, 2007 and the Chief Revenue Officer from December 2003 through July 2005. Mr. Radlovic was Vice President/General Manager for our Los Angeles radio cluster from January 2002 until November 2003 and previously served as Vice President of Sales for the Los Angeles cluster. Prior to joining us, he was Market Manager for Cumulus Media in Southern California from January 2001 until August 2001 and was Vice President/General Manager for AM/FM Inc. in Los Angeles from October 1998 to October 2000.
Melanie M. Montenegrobecame our Executive Vice President and General Counsel on December 14, 2010. As executive vice president and general counsel, Ms. Montenegro is responsible for a wide range of corporate functions, including legal, governance, securities, mergers and acquisitions, litigation, business development, and compliance. Previously, Ms. Montenegro served as corporate counsel for the Company managing the day-to-day activities and operations of the legal department. Prior to joining the Company in 2006, Ms. Montenegro was an attorney with the law firm Kaye Scholer, LLP in New York City from August 1999 to May 2005. She received her J.D., from Hofstra University School of Law and also holds a B.A. in Political Science, Spanish Language and Literature.
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SUMMARY COMPENSATION TABLE
The following table discloses compensation for the fiscal years ended December 31, 20092010 and December 31, 20082009 received by our (i) President and CEO, Raúl Alarcón, Jr., (ii) Senior Executive Vice President, CFO, Chief Administrative OfficerCAO and Secretary, Joseph A. García, (iii) our former Chief Revenue Officer of the radio segment and General Manager of the New York market, Frank Flores, and (iv) our former Chief Creative Officer of MegaTV, Cynthia Hudson, who resigned on MarchJuly 19, 2010.2010, and (iv) Chief Revenue Officer of the radio segment and General Manager of the Los Angeles market, Marko Radlovic. These individuals are also referred to in this Proxy Statement as our “named executive officers.officers” or “NEOs.”
| Stock | Option | All Other | ||||||||||||||||||||||||||
| Salary | Bonus | Awards | Awards | Compensation | Total | |||||||||||||||||||||||
| Name and Principal Position | Year | ($) | ($) | ($)(a) | ($)(a) | ($) | ($) | |||||||||||||||||||||
| Raul Alarcon, Jr. | 2009 | 1,250,000 | 1,002,295 | (b) | — | 61,560 | 172,503 | (c) | 2,486,358 | |||||||||||||||||||
Chief Executive Officer, President and | 2008 | 1,250,000 | — | 141,300 | 12,910 | 118,218 | 1,522,428 | |||||||||||||||||||||
Chairman of the Board of the Directors | ||||||||||||||||||||||||||||
| Joseph A. Garcia | 2009 | 525,000 | 100,000 | (d) | — | — | 37,027 | (e) | 662,027 | |||||||||||||||||||
Senior Executive Vice President, Chief | 2008 | 504,518 | — | 56,250 | 34,313 | 17,153 | 612,234 | |||||||||||||||||||||
Financial Officer, Chief Administrative Officer and Secretary | ||||||||||||||||||||||||||||
| Frank Flores(f) | 2009 | 292,310 | 317,381 | (g) | — | — | 2,423 | (h) | 612,114 | |||||||||||||||||||
Chief Revenue Officer of the radio segment and General Manager of the New York market | ||||||||||||||||||||||||||||
| Cynthia Hudson(i) | 2009 | 401,923 | (j) | — | — | — | 21,178 | (k) | 423,101 | |||||||||||||||||||
Chief Creative Officer of MegaTV | 2008 | 500,000 | — | — | — | — | 500,000 | |||||||||||||||||||||
| Stock | Option | All Other | ||||||||||||||||||||||||
| Salary | Bonus | Awards | Awards | Compensation | Total | |||||||||||||||||||||
| Name and Principal Position | Year | ($) | ($) | ($)(a) | ($)(a) | ($) | ($) | |||||||||||||||||||
| Raul Alarcon, Jr. | 2010 | 1,250,000 | 518,133 | (b) | — | 64,360 | 150,390 | (c) | 1,982,883 | |||||||||||||||||
Chief Executive Officer, President and Chairman of the Board of the Directors | 2009 | 1,250,000 | 1,002,295 | — | 61,560 | 172,503 | 2,486,358 | |||||||||||||||||||
| Joseph A. Garcia | 2010 | 525,000 | 50,000 | (d) | — | — | 47,513 | (e) | 622,513 | |||||||||||||||||
Senior Executive Vice President, Chief Financial Officer, Chief Administrative Officer and Secretary | 2009 | 525,000 | 100,000 | — | — | 37,027 | 662,027 | |||||||||||||||||||
| Frank Flores(f) | 2010 | 129,427 | (f) | — | — | — | 11,716 | (g) | 141,143 | |||||||||||||||||
Chief Revenue Officer of the radio segment and General Manager of the New York market | 2009 | 292,310 | 317,381 | — | — | * | 609,691 | |||||||||||||||||||
| Marko Radlovic(h) | 2010 | 275,000 | (h) | 72,273 | (i) | — | — | 15,552 | (j) | 362,825 | ||||||||||||||||
Chief Revenue Officer of the radio segment and General Manager of the Los Angeles market | ||||||||||||||||||||||||||
| * | Indicates amounts less than $10,000. | |
| (a) | Represents the aggregate grant date fair value computed in accordance with FASB Topic ASC 718 (“ASC 718”). See Note | |
| (b) | For | |
| (c) | Per Mr. Alarcón’s employment agreement, he is entitled to the use of an automobile and driver, personal tax services, telecommunication services, health insurance benefits and a separate life insurance policy. In | |
| (d) | For | |
| (e) | Per Mr. García’s employment agreement, he is entitled to the use of an automobile, related car expenses, health insurance benefits and telecommunication services. In | |
| (f) | Mr. Flores resigned on July 19, 2010. | |
| (g) | Per Mr. Flores’ employment agreement, he was entitled to automobile related allowance and certain health insurance benefits. For Fiscal Year 2010, we incurred expenses of $2,700 related to the automobile related allowance and health insurance premiums of $9,016, respectively. | |
| (h) | Mr. Radlovic was appointed Chief Revenue Officer of the radio segment and General Manager of the | |
| (i) | ||
| (j) | ||
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Employment Agreements
To further assist our stockholders in understanding the elements of compensation disclosed in the Summary Compensation Table, the material terms of our employment agreements with Messrs. Alarcon, Garcia, and Flores and Ms. HudsonRadlovic are described below.
The Compensation Committee seeks to ensure that our executive compensation aligns with our corporate strategies, business objectives and the long-term interests of our stockholders and helps attract, retain and motivate the key personnel it needs to conduct its business. Compensation levels are intended to fairly compensate the Company’s named executive officers. We use base salary to provide each named executive officer a fixed amount of money during the year with the expectation that he will perform his job to the best of his ability and in the best interests of the Company. Executive salaries for Fiscal Year 2010 were not increased. For Fiscal Year 2010, discretionary performance bonuses were intended to reward the named executive officers for both Company and individual performance for the year. In evaluating performance for Fiscal Year 2010 for purposes of making a subjective determination of appropriate bonus amounts, the Compensation Committee considered the Company’s Fiscal Year 2010 operating results. We believe that by providing our executives the opportunity to increase their ownership of stock, the benefits of stockholders and executives will be more aligned, and we will encourage long-term performance. We provide executive officers with limited personal benefits and perquisites that are intended to enhance the attraction and overall retention value of the compensation program. The Compensation Committee believes that severance benefits help retain qualified executives and are an important component of a competitive compensation program.
Raúl Alarcón, Jr.
The compensation of Mr. Alarcón, Jr., our Chairman of the Board, CEO and President, in 2009Fiscal Year 2010 was primarily determined by the amended and restated employment agreement we entered into with him on October 25, 1999 (the “Alarcón Employment Agreement”). The Alarcón Employment Agreement has automatically renewed for successive one-year periods since December 31, 2004, and will continue to do so unless terminated by either party on 90-day’s notice prior to December 31 of any year.
Base Salary.Pursuant to the Alarcón Employment Agreement, Mr. Alarcón, Jr. is entitled to an annual base salary of not less than $1,250,000.$1,000,000. On March 10, 2007, the Compensation Committee increased Mr. Alarcón Jr.’s base salary to $1,250,000, effective April 1, 2007.
Bonus.Under the Alarcón Employment Agreement, Mr. Alarcón, Jr. is entitled to an annual contractual bonus equal to 7.5% of same station annual broadcast cash flow (now known as station operating income) growth, including (on a pro rata basis from the date the station was acquired) acquired stations on a pro forma basis or a greater amount in the discretion of the Board. For the fiscal year ended December 31, 2009,Fiscal Year 2010, Mr. Alarcón, Jr. received a contractual bonus of $1,002,295.$18,133 and a discretionary performance bonus of $500,000. Mr. Alarcón’s discretionary bonus was determined by the Compensation Committee after a thorough review of the Company’s financial results for 2010, Mr. Alarcón’s management of the Company’s affairs and his efforts to promote the Company’s interests and guide its business and programming. The Compensation Committee commended his tireless efforts to seek opportunities for the Company’s growth. In particular, the Compensation Committee cited with approval his work with the Puerto Rico operations and his identification of acquisition opportunities.
Securities.During each year of his employment term, Mr. Alarcón, Jr. is entitled to receive an option to purchase 100,000 shares of Class A common stock, which vests immediately, at an exercise price equal to the fair market value of the Class A common stock on the applicable grant date. On October 27, 2009,2010, Mr. Alarcón, Jr. received an option to purchase 100,000 shares of Class A common stock, at an exercise price of $0.73$0.77 per share.
Benefits; Perquisites.Mr. Alarcón, Jr. is entitled to receive executive medicalhealth insurance benefits provided to all of our executives, such as life and long-term disability insurance for himself and health insurance for himself and his family. In addition, Mr. Alarcón, Jr. is entitled to certain perquisites, such as life insurance, reimbursement for personal tax, accounting expenses, telecommunications services and the use of a company car and a driver.
The Compensation Committee determined that Mr. Alarcón, Jr.’s compensation for Fiscal Year 2010 was fair and reasonable based on his individual performance and his unique contribution to our operational, financial and strategic results for 2009, Mr. Alarcón, Jr.’s salaryFiscal Year 2010 and that his compensation for the year was in line with ourthe Company’s overall compensation objectives, which provided compensation in a format that is competitive, fair and reasonable from our perspective.objectives.
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Joseph A. García
The compensation of Mr. García, our Senior Executive Vice President, CFO, CAO and Secretary, in 2009 was determined by the employment agreement we entered into with him on December 7, 2000 (the “García Employment Agreement”) and after August 4, 2008, Mr. Garcia’s compensationFiscal Year 2010 was determined by the amended and restated employment agreement (“Amended Agreement”). The García Employment Agreement became effectivewe entered into with him on December 7, 2000 and was automatically renewed for successive one-year periods from December 7, 2005 until August 4, 2008, and wasas amended and restated by the Amended Agreement.on April 19, 2011 (the “Employment Agreement”). The term of the AmendedEmployment Agreement is for three years and will automatically renew for additional one-year periods, unless either party gives notice at least 60 days prior to the end of the then-current term.
Base Salary.On August 4, 2008, pursuant to the AmendedEmployment Agreement, Mr. García’s annual base salary was increased to $525,000. The base salary is subject to an annual review and may be increased from time to time as recommended by the CEO and approved by the Compensation Committee. The Compensation Committee did not increase Mr. Garcia’s base salary in 2009.Fiscal Year 2010.
Bonus.Under the AmendedEmployment Agreement, if the threshold level of performance is achieved, Mr. García is eligible to receive an annual cash bonus upon the attainment of individual pre-established goals and the Company’s performance goals, of no less than $100,000 and no more than $300,000 for each fiscal year completed during the term. No bonus is guaranteed for performance that fails to meet the threshold level of performance. In the event that the Company is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the Federal securities laws, Mr. García is required to reimburse the Company for the amount of any annual bonus or any other incentives paid to him based on the financial results that are materially restated downward. For the fiscal year ended December 31, 2009,In Fiscal Year 2010, Mr. García received a discretionary bonus of $100,000.$50,000. Mr. Garcia’s bonus was determined by the Compensation Committee after a thorough review of the Company’s financial results for 2010, management’s recommendations and his handling of the Company’s finances, cash flow and expenses. The Compensation Committee commended his efforts to manage expenses and begin the process of refinancing the Company’s debt in 2012.
Securities.Mr. Garcia received equity grants in 2000, pursuant to the García Employment Agreement, and in 2008, pursuant to the AmendedEmployment Agreement. The AmendedEmployment Agreement did not provide for equity grants in 2009.Fiscal Year 2010.
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Benefits; Perquisites.Mr. García is entitled to receive executive medicalhealth insurance benefits provided to all of our executives, such as life and long-term disability insurance for himself and health insurance for himself and his family. In addition, under the Employment Agreement Mr. García is entitled to certain perquisites, such as the use of an automobile, related car expenses and telecommunications services. As of March 2009,On April 19, 2010, the Compensation Committee amended this automobile perquisite, Mr. Garcia is now entitled to an annual automobile allowance equal to $20,400.
Severance. Mr. García voluntarily agreedis entitled to suspend the automobile perquisite.receive severance benefits upon termination in certain circumstances. The severance benefits are described in “Potential Payments upon Termination or Change in Control” table below.
Frank Flores
The compensation of Mr. Flores, our former Chief Revenue Officer and General Manager of the New York market, in 2009Fiscal Year 2010 was primarily determined by the amended and restated employment agreement we entered into with him on April 6, 2009 and effective April 1, 2009, (the “Flores Employment Agreement”). Mr. Flores resigned effective June 19, 2010.
Base Salary.Pursuant to the Flores Employment Agreement, Mr. Flores iswas entitled to receive an annual base salary of $250,000.
Bonus.Under the Flores Employment Agreement, Mr. Flores iswas entitled to (i) an annual New York consolidated station operating income performance bonus and (b) an annual radio consolidated station operating income performance bonus, based on achieving certain station operating income targets based upon the CEO’s recommendation and subject to the Compensation Committee’s approval. For the fiscal year ended December 31, 2009,In Fiscal Year 2010, Mr. Flores receiveddid not receive a contractual New York consolidated station operating income performance bonus as a result of $62,559 and a radio consolidated station operating income discretionary bonus of $254,822.his resignation.
Benefits; Perquisites.Mr. Flores was entitled to receive executive medical insurance benefits provided to all of our executives, such as life and long-term disability insurance for himself and health insurance for himself and his family.
Severance. Mr. Flores did not receive severance or any other post-termination benefits in connection with his resignation.
The Compensation Committee determined that Mr. Flores’ compensation for Fiscal Year 2010 was fair and reasonable based on his individual performance and contribution to our operational, financial and strategic results for Fiscal Year 2010 and that his compensation for the year would have been in line with its overall compensation objectives.
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Marko Radlovic
The compensation of Mr. Radlovic, our Chief Operating Officer of the radio segment and General Manager of the Los Angeles radio market, in Fiscal Year 2010 was primarily determined by a letter agreement we entered into with him on July 19, 2010 (the “Letter Agreement”).
Base Salary.Pursuant to the Letter Agreement, Mr. Radlovic is entitled to receive an annual base salary of $275,000.
Bonus.Under the Letter Agreement, Mr. Radlovic is eligible to receive an annual performance bonus based on achieving certain performance targets for the Los Angeles radio market and the Company’s radio segment. In Fiscal Year 2010, Mr. Radlovic received a $72,273 discretionary performance bonus in his role as General Manager of the Los Angeles market for achieving certain targets of his station operating income performance budget.
Benefits; Perquisites.Mr. Radlovic is entitled to receive executive medical insurance benefits provided to all of our executives, such as life and long-term disability insurance for himself and health insurance for himself and his family. In addition, Mr. Radlovic is entitled to certain perquisites, including a monthly automobile allowance.
The Compensation Committee determined that in light of Mr. Flores’Radlovic’s compensation for Fiscal Year 2010 was fair and reasonable based on his individual performance and contribution to our operational, financial and strategic results for 2009, Mr. Flores’ salaryFiscal Year 2010 and that his compensation for the year was in line with ourthe Company’s overall compensation objectives, which provided compensation in a format that is competitive, fair and reasonable from our perspective.
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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 20092010
The following table summarizes equity awards outstanding as of December 31, 20092010 for each of our NEOs.named executive officers. The closing price of our Class A common stock on December 31, 20092010 was $0.78.$0.72.
| Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||
| Number of | Number of | Number of | Market Value | Number of | Number of | Number of | Market Value | |||||||||||||||||||||||||||||||||||||||||
| Securities | Securities | Shares or | of Shares or | Securities | Securities | Shares or | of Shares or | |||||||||||||||||||||||||||||||||||||||||
| Underlying | Underlying | Units of | Units of | Underlying | Underlying | Units of | Units of | |||||||||||||||||||||||||||||||||||||||||
| Unexercised | Unexercised | Option | Stock That | Stock That | Unexercised | Unexercised | Option | Stock That | Stock That | |||||||||||||||||||||||||||||||||||||||
| Options | Options | Exercise | Option | Have Not | Have Not | Options | Options | Exercise | Option | Have Not | Have Not | |||||||||||||||||||||||||||||||||||||
| Exercisable | Unexercisable | Price | Expiration | Vested | Vested | Exercisable | Unexercisable | Price | Expiration | Vested | Vested | |||||||||||||||||||||||||||||||||||||
| Name | (#) | (#) | ($) | Date (a) | (#) | ($) | (#) | (#) | ($) | Date (a) | (#) | ($) | ||||||||||||||||||||||||||||||||||||
| Raul Alarcon, Jr. | 100,000 | — | $ | 9.47 | 10/27/2010 | 100,000 | — | $ | 7.77 | 10/27/2011 | — | — | ||||||||||||||||||||||||||||||||||||
| 100,000 | — | $ | 7.77 | 10/27/2011 | 100,000 | — | $ | 6.13 | 10/27/2012 | — | — | |||||||||||||||||||||||||||||||||||||
| 100,000 | — | $ | 6.13 | 10/27/2012 | 100,000 | — | $ | 8.69 | 10/25/2013 | — | — | |||||||||||||||||||||||||||||||||||||
| 100,000 | — | $ | 8.69 | 10/25/2013 | 100,000 | — | $ | 9.98 | 10/27/2014 | — | — | |||||||||||||||||||||||||||||||||||||
| 100,000 | — | $ | 9.98 | 10/27/2014 | 100,000 | — | $ | 6.27 | 10/25/2015 | — | — | |||||||||||||||||||||||||||||||||||||
| 100,000 | — | $ | 6.27 | 10/25/2015 | 100,000 | — | $ | 4.79 | 10/27/2016 | — | — | |||||||||||||||||||||||||||||||||||||
| 100,000 | — | $ | 4.79 | 10/27/2016 | 100,000 | — | $ | 2.62 | 10/27/2017 | — | — | |||||||||||||||||||||||||||||||||||||
| 100,000 | — | $ | 2.62 | 10/27/2017 | 100,000 | — | $ | 0.20 | 10/27/2018 | — | — | |||||||||||||||||||||||||||||||||||||
| 100,000 | — | $ | 0.20 | 10/27/2018 | 100,000 | — | $ | 0.73 | 10/27/2019 | — | — | |||||||||||||||||||||||||||||||||||||
| 100,000 | — | $ | 0.73 | 10/27/2019 | 100,000 | — | $ | 0.77 | 10/27/2020 | — | — | |||||||||||||||||||||||||||||||||||||
| 30,000 | (b) | 23,400 | 30,000 | (b) | 21,600 | |||||||||||||||||||||||||||||||||||||||||||
| Joseph A. Garcia | 100,000 | — | $ | 4.81 | 12/7/2010 | 150,000 | — | $ | 9.10 | 1/16/2012 | — | — | ||||||||||||||||||||||||||||||||||||
| 150,000 | — | $ | 9.10 | 1/16/2012 | 50,000 | — | $ | 11.78 | 1/21/2014 | — | — | |||||||||||||||||||||||||||||||||||||
| 50,000 | — | $ | 11.78 | 1/21/2014 | 25,000 | — | $ | 10.79 | 3/7/2015 | — | — | |||||||||||||||||||||||||||||||||||||
| 25,000 | — | $ | 10.79 | 3/7/2015 | 125,000 | — | $ | 0.45 | 9/3/2018 | — | — | |||||||||||||||||||||||||||||||||||||
| 83,375 | 41,625 | (c) | $ | 0.45 | 9/3/2018 | |||||||||||||||||||||||||||||||||||||||||||
| Marko Radlovic | 20,000 | — | $ | 9.20 | 8/30/2011 | — | — | |||||||||||||||||||||||||||||||||||||||||
| 41,625 | (d) | 32,468 | 15,000 | — | $ | 9.10 | 1/16/2012 | — | — | |||||||||||||||||||||||||||||||||||||||
| 90,000 | — | $ | 9.44 | 11/6/2013 | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Frank Flores | 25,000 | — | $ | 8.67 | 8/3/2014 | |||||||||||||||||||||||||||||||||||||||||||
| 62,500 | — | $ | 10.10 | 11/3/2014 | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Cynthia Hudson | 16,667 | — | $ | 2.55 | 6/19/2010 | |||||||||||||||||||||||||||||||||||||||||||
| 25,000 | — | $ | 8.50 | 7/21/2015 | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 62,500 | — | $ | 5.08 | 11/23/2015 | — | — | ||||||||||||||||||||||||||||||||||||||||||
| (a) | The expiration date of each option occurs 10 years after the stock option grant date. If a NEO is terminated, the stock | |
| (b) | Restricted stock | |
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Elements of Post-Termination Compensation
We do not have a practice of providing retirement benefits, including any supplemental executive retirement plans, to our NEOs. Our NEOs have entered into employment agreements with us in which these agreements each contain certain post-termination compensation, such as severance payments or change-in-control provisions. In addition, we retain the discretion to utilize the offer of severance and/or change-in-control protection as an incentive in hiring our NEOs.
Pension Benefits
We do not provide pension arrangements or post-retirement health coverage for our executives or employees. Our executive officers are eligible to participate in our 401(k) contributory defined contribution plan.
Nonqualified Deferred Compensation
We do not provide any nonqualified defined contribution or other deferred compensation plans.
Potential Payments upon Termination or Change in Control
In accordance with the rules of the SEC, the following table presents our estimate of amounts payable to the NEOs, under our 1999 Stock Option Plan, Omnibus Plan and their employment agreements, assuming that each of the indicated triggering events discussed in the table below occurred on December 31, 2009,2010, and the equity awards under the 1999 Stock Option Plan and Omnibus Plan were neither assumed by a successor corporation nor replaced with a cash retention program.
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The following table describes and quantifies the benefits and compensation to which the NEOs would have been entitled to under their employment agreements and other existing plans and arrangements if their employment had terminated on December 31, 2009,2010, based on their compensation and services on that date. The amounts shown on the table do not include payments and benefits available generally to salaried employees upon termination of employment, such as accrued vacation pay, distribution from the 401(k) plan, or any death, disability or health benefits available under broad-based employee plans. Post-termination benefits vary by executive and type of termination.
Potential Payments Upon Termination or Change of Control
| Value of | Value of | Value of | Value of | |||||||||||||||||||||||||||||||||||||||||||||
| Severance | Severance | Stock | Option | Other | Severance | Severance | Stock | Option | Other | |||||||||||||||||||||||||||||||||||||||
| (Salary) | (Bonus) | Acceleration | Acceleration | Benefits | Total | (Salary) | (Bonus) | Acceleration | Acceleration | Benefits | Total | |||||||||||||||||||||||||||||||||||||
| Name | ($) | ($) | ($)(a) | ($)(b) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||||||||||||||||
Raúl Alarcón, Jr. | ||||||||||||||||||||||||||||||||||||||||||||||||
| Without Cause | 917,808 | (c) | — | 23,400 | — | 35,099 | (d) | 976,307 | 917,808 | (a) | — | — | — | 31,866 | (b) | 949,674 | ||||||||||||||||||||||||||||||||
| With Cause | 458,904 | (e) | — | — | — | — | 458,904 | 458,904 | (c) | — | — | — | — | 458,904 | ||||||||||||||||||||||||||||||||||
| Death | 917,808 | (c) | — | 23,400 | — | 19,562 | (d) | 960,770 | 917,808 | (a) | — | — | — | 18,858 | (b) | 936,666 | ||||||||||||||||||||||||||||||||
| Disability | 917,808 | (c) | — | 23,400 | — | 35,099 | (d) | 976,307 | 917,808 | (a) | — | — | — | 31,866 | (b) | 949,674 | ||||||||||||||||||||||||||||||||
Joseph A. García | ||||||||||||||||||||||||||||||||||||||||||||||||
| Death or Disability | 1,050,000 | (f) | — | 32,468 | 13,736 | — | 1,096,204 | 1,050,000 | (d) | — | — | — | — | 1,050,000 | ||||||||||||||||||||||||||||||||||
| Prior to a Change of Control: Without Cause /With Good Reason/Non-Renewal by Company | 1,050,000 | (g) | — | 32,468 | 13,736 | 26,243 | (h) | 1,122,447 | 1,050,000 | (e) | — | — | — | 27,866 | (f) | 1,077,866 | ||||||||||||||||||||||||||||||||
| Prior to the Second Anniversary of a Change of Control: Without Cause /With Good Reason/Non-Renewal by Company | 1,250,000 | (i) | — | 32,468 | 13,736 | 26,243 | (h) | 1,322,447 | 1,050,000 | (g) | 100,000 | (g) | — | — | 27,866 | (f) | 1,177,866 | |||||||||||||||||||||||||||||||
Frank Flores | ||||||||||||||||||||||||||||||||||||||||||||||||
Marko Radlovic | ||||||||||||||||||||||||||||||||||||||||||||||||
| Without Cause | 62,500 | (j) | — | — | — | — | 62,500 | 47,596 | (h) | — | — | — | — | 47,596 | ||||||||||||||||||||||||||||||||||
Cynthia Hudson | ||||||||||||||||||||||||||||||||||||||||||||||||
| Without Cause | 26,923 | (j) | — | — | — | — | 26,923 | |||||||||||||||||||||||||||||||||||||||||
| (a) | ||
| Represents the aggregate base salary payments which the executive would have received during the employment term if such termination had not occurred. | ||
| Represents the aggregate value of the continuation of the executive’s health and life insurance benefits for up to the employment term. | ||
| Represents 50% of the aggregate base salary payments which the executive would have received during the employment term if such termination had not occurred. | ||
| Represents two times the aggregate base salary payments which the executive would have received during a one-year period, provided we receive a release in a form acceptable to us. | ||
| Represents the aggregate base salary payments of the greater of the remainder of the term or 24 months, which the executive would have received if such termination had not occurred, provided we receive a release in a form acceptable to us. | ||
| Represents the aggregate value of the continuation of executive health insurance benefits for up to 12 months after such date of termination. | ||
| Represents two times the aggregate base salary and bonus payments which the executive would have received during a one-year period, provided we receive a release in a form acceptable to us. | ||
| At December 31, |
While we believe that the amounts shown above and the assumptions upon which they are based provide reasonable estimates of the amounts that would have been due to the NEOs in the event that any of the circumstances described above had occurred on December 31, 2009,2010, the actual amounts due to the NEOs upon a triggering event will depend upon the actual circumstances and the then applicable provisions of the 1999 Stock Option Plan, Omnibus Plan and the employment agreements.
Change of Control Triggering Event
A change of control for purposes of Mr. García’s employment agreement is a change of control as defined under the Omnibus Plan. Pursuant to the Omnibus Plan, a change of control means a change in the ownership of the voting power or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company within the meaning of Section 409A of the Internal Revenue Code.
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