UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.)
Filed by the Registrant x
Filed by a Party other than the Registrant ¨
Check the appropriate box:
| ¨ Preliminary Proxy Statement | ¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
|
| x Definitive Proxy Statement | |
| ¨ Definitive Additional Materials | |
| ¨ Soliciting Material Pursuant to Rule §240.14a-12 |
SALEM MEDIA GROUP, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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| 5. | Total fee paid: | |
SEC 1913 (04-05)
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| ¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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4880 Santa Rosa Road
Camarillo, CA 93012
(805) 987-0400
April 8, 2016
March 29, 2018
Dear Stockholder:
You are cordially invited to attend the 20162018 Annual Meeting of Stockholders (the “Annual Meeting”) of Salem Media Group, Inc. (“Salem” or the “Company”). The Annual Meeting is scheduled to be held on Wednesday, May 18, 2016,9, 2018, at Salem’s corporate offices, which are located at 4880 Santa Rosa Road, Camarillo, California, at 9:30 a.m. P.D.T. As described in the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement, the agenda for the Annual Meeting includes:
| 1. | The election of the nine (9) |
| 2. |
| 3. | To transact |
The Board of Directors recommends that you voteFOR the election of the slate of Director nominees andFOR the approvalproposal to ratify the appointment of Crowe Horwath LLP as the advisory (non-binding) resolution approving executive compensation.Company’s independent registered public accounting firm. Please refer to the Proxy Statement for detailed information on the above proposals. Directors and executive officers of Salem will be present at the Annual Meeting to respond to questions that our stockholders may have regarding the business to be transacted.
As we have done in prior years, we are using the U.S. Securities and Exchange Commission rule that permits companies to furnish their proxy materials over the Internet. Unless you have opted out of receiving Notices, instead of mailing you a paper copy of the proxy materials, we will be mailing to you a Notice containing instructions on how to access our proxy materials over the Internet. Therefore, a proxy card was not sent to you and you may vote only via telephone or online if you do not attend the Annual Meeting.
We urge you to vote your proxy as soon as possible. Your vote is very important, regardless of the number of shares you own. Whether or not you plan to attend the Annual Meeting in person, we urge you to vote your shares online, by telephone or, if you have chosen to receive paper copies of the proxy materials by mail, by signing, dating and returning the enclosed proxy card promptly in the accompanying postage prepaid envelope. You may, of course, attend the Annual Meeting and vote in person even if you have previously returned your proxy card. The approximate date on which this Proxy Statement and the enclosed proxy card and Notice are first being sent or made available to stockholders is April 8, 2016.March 29, 2018. On behalf of the Board of Directors and all of the employees of Salem, we wish to thank you for your support.
| Sincerely yours, |
|
STUART W. EPPERSON Chairman of the Board |
|
EDWARD G. ATSINGER III Chief Executive Officer |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to Be Held on
May 18, 2016:9, 2018: Our Proxy Statement for the 20162018 Annual Meeting of Stockholders and Annual Report on Form 10-K for
the year ended December 31, 20152017 are available atwww.proxyvote.com.
If you have any questions concerning the Proxy Statement or the accompanying proxy card, or if you need any help in
voting your shares, please telephone Christopher J. Henderson of Salem at (805) 987-0400.
PLEASE VOTE YOUR SHARES
ONLINE, BY TELEPHONE OR BY
SIGNING, DATING AND RETURNING
THE ENCLOSED PROXY CARD TODAY.
4880 Santa Rosa Road
Camarillo, CA 93012
(805) 987-0400
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 18, 20169, 2018
NOTICE IS HEREBY GIVEN that the 20162018 Annual Meeting of Stockholders (the “Annual Meeting”) of Salem Media Group, Inc. (“Salem” or the “Company”) will be held on Wednesday, May 18, 20169, 2018 at 9:30 a.m. P.D.T. at Salem’s corporate offices located at 4880 Santa Rosa Road, Camarillo, California, subject to adjournment or postponement by the Board of Directors, for the following purposes:
| 1. | The election of the nine (9) |
| 2. |
| 3. | To transact |
Only holders of record of Salem’s Class A common stock, par value $0.01 per share, and Class B common stock, par value $0.01 per share, on March 23, 2016,14, 2018, the record date of the Annual Meeting, are entitled to notice of, and to vote at, the Annual Meeting and any adjournments or postponements thereof. A list of such stockholders will be available for examination by any stockholder at the time and place of the Annual Meeting.
Holders of a majority of the voting power of the outstanding shares of the Class A common stock and of the Class B common stock must be present in person or represented by proxy in order to constitute a quorum for the transaction of business at the Annual Meeting to be held.Meeting. Therefore, we urge you to review the accompanying proxy card and either vote by (a) Internet or by telephone as instructed in this Proxy Statement, or (b) if you have opted out of receiving Notices,a notice containing instructions on how to access our proxy materials over the Internet (the “Notice”) and have thus received a paper copy of the proxy materials, by signing, dating and returning your completed proxy in the enclosed postage prepaid envelope whether or not you expect to attend the Annual Meeting in person. If you received only the Notice, of how to access the Proxy Statement via the Internet, a proxy card was not sent to you, and you may vote only via the Internet if you do not attend the Annual Meeting, or you may request that a proxy card be mailed to you. If you attend the Annual Meeting and wish to vote your shares personally, you may do so by validly revoking your proxy as described below.
Prior to the voting thereof, a proxy may be revoked by the person executing such proxy by: (i) filing with the Secretary of Salem either a duly executed written notice dated subsequent to suchthe proxy revoking the sameit or a duly executed proxy bearing a later date, or (ii) attending the Annual Meeting and voting in person.
| By order of the Board of Directors, | ||
  | ||
| CHRISTOPHER J. HENDERSON | ||
| Secretary |
Camarillo, California
April 8, 2016March 29, 2018
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to
Be Held on May 18, 2016:9, 2018: Our Proxy Statement for the 20162018 Annual Meeting of Stockholders and Annual
Report on Form 10-K for the year ended December 31, 2015,2017 are available at
www.proxyvote.com
YOUR VOTE IS IMPORTANT.
TO VOTE YOUR SHARES, PLEASE VOTE
ONLINE, BY TELEPHONE OR BY
SIGNING AND DATING THE ENCLOSED PROXY CARD
AND MAILING IT PROMPTLY
IN THE ENCLOSED RETURN ENVELOPE.
SALEM MEDIA GROUP, INC.
4880 Santa Rosa Road
Camarillo, CA 93012
(805)(805) 987-0400
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 18, 20169, 2018
TABLE OF CONTENTS
| STOCKHOLDERS’ PROPOSALS FOR | ||
| OTHER MATTERS | ||
| SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE | ||
| ANNUAL REPORT ON FORM 10-K | ||
This proxy statement (“Proxy Statement”) is furnished in connection with the solicitation by the Board of Directors (the “Board” or the “Board of Directors”) of Salem Media Group, Inc., a Delaware corporation (“Salem” or the “Company”), of proxies for use at the 20162018 Annual Meeting of Stockholders of the Company (the “Annual Meeting”) scheduled to be held at the time and place and for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders.
INFORMATION REGARDING VOTING AT THE ANNUAL MEETING
At the Annual Meeting, theour stockholders of the Company are being asked to consider and to vote upon the following proposals:
| Proposal 1 | The election of the nine (9) |
For information regarding this proposal, see the section of this Proxy Statement entitled “PROPOSAL 1—ELECTION OF DIRECTORS.”
| Proposal 2 |
For information regarding this proposal, see the section of this Proxy Statement entitled “PROPOSAL 2—ADVISORY (NON-BINDING) VOTE ON A RESOLUTION APPROVING EXECUTIVE COMPENSATIONPROPOSAL TO RATIFY THE APPOINTMENT OF CROWE HORWATH LLP AS DISCLOSED PURSUANT TO ITEM 402 OF REGULATION S-K.THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.”
Shares represented by properly executed proxies received by the Companyus will be voted at the Annual Meeting in the manner specified therein or, if no instructions are marked on the enclosed proxy card,in accordance with the recommendation of the Board of Directors on all matters presented in this Proxy Statement. Although management does not know of any matter other than the proposalproposals described above to be acted upon at the Annual Meeting, unless contrary instructions are given, shares represented by valid proxies will be voted by the persons named on the accompanying proxy card in accordance with their respective best judgment in respect of any other matters that may properly be presented for a vote at the Annual Meeting.
Execution of a proxy will not in any way affect a stockholder’s right to attend the Annual Meeting and vote in person, and any person giving a proxy has the right to revoke it at any time before it is exercised by: (a) filing with the Secretary of Salem either a duly executed written notice dated subsequent to suchthe proxy revoking the sameit or a duly executed proxy bearing a later date, or (b) attending the Annual Meeting and voting in person.
The mailing address of the principal executive offices of the Company is 4880 Santa Rosa Road, Camarillo, California 93012, and its telephone number is (805) 987-0400.
Record Date, Quorum and Voting
Only stockholders of record on March 23, 201614, 2018 (the “Record Date”) will be entitled to notice of and to vote at the Annual Meeting. There were outstanding on the Record Date 19,931,95920,615,426 shares of Class A common stock, par value $0.01 per share (“Class A common stock”), and 5,553,696 shares of Class B common stock, par value $0.01 per share (“Class B common stock”) (the Class A common stock and the Class B common stock are collectively referred to as the “common stock”). Each share of outstanding Class A common stock is entitled to one (1) vote on each matter to be voted on at the Annual Meeting and each share of outstanding Class B common stock is entitled to ten (10) votes on each matter to be voted on at the Annual Meeting, except that, as provided in the Company’sour Amended and Restated Certificate of Incorporation, the holders of Class A common stock shall be entitled to vote as a class, exclusive of the holders of the Class B common stock, to elect two (2) “Independent Directors.” The two (2) Independent Directors shall be elected by a majority of the votes of the shares of Class A common stock present in person or represented by proxy and entitled to vote on the election of the Independent Directors; the remaining seven (7) Directors will be elected by a majority of the votes of the shares of Class A common stock and Class B common stock present in person or represented by proxy and entitled to vote on the election of such Directors. For information regarding the election of Directors, see the section of this Proxy Statement entitled “PROPOSAL 1—ELECTION OF DIRECTORS.”
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The presence in person or representation by proxy of the holders of at least a majority of the voting power of the common stock issued and outstanding and entitled to vote is necessary to constitute a quorum for the transaction of business at the Annual Meeting. In the eventIf there are not sufficient shares for a quorum at the time of the Annual Meeting, the Annual Meeting may be adjourned in order to permit the further solicitation of proxies.
Only votes cast in person at the Annual Meeting or received by proxy before the beginning of the Annual Meeting will be counted. Giving us your proxy means you authorize the proxy holders to vote your shares at the Annual Meeting in the manner you direct. If your shares are held in your name, you can vote by proxy in three (3) convenient ways as follows:
| • | Go tohttp://www.proxyvote.comand follow the instructions |
| • | |
| Call toll-free 1-800-690-6903 and follow the instructions |
| • | |
| Complete, sign, date and return your proxy card in the enclosed envelope |
Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day and will close at 11:59 p.m. on May 17, 2016.8, 2018.
Under Delaware law and the Company’sour Amended and Restated Certificate of Incorporation and Bylaws, abstentions and broker non-votes are counted for the purpose of determining the presence or absence of a quorum for the transaction of business. With regard to Proposal 1, votes may be cast in favor of or against any particular Director nominee. With regard to Proposal 2, votes may be cast in favor of or against or abstaining with respect to the advisory (non-binding) resolution approving the executive compensation of the Company’s named executive officers as disclosed pursuant to Item 402 of Regulation S-K. Proposalsproposal. Proposal 1, Proposal 2 and any other stockholder proposals that properly come before the Annual Meeting require, in general, the affirmative vote of a majority of the voting power of the shares of Class A common stock and Class B common stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the subject matter. For ProposalsProposal 1 and Proposal 2, abstentions will be counted in tabulations of the votes cast on a proposal and will have the same effect as a vote against the proposal. For each proposal, whereas broker non-votes will not be counted for purposes of determining whether the proposal has been approved. If you hold shares of our common stock through a broker, bank or other nominee, then you hold shares in street name. Thus, you must instruct the broker, bank or other nominee as to how to vote your shares. Under the rules of the New York Stock Exchange (“NYSE”), ifIf you do not provide suchthese instructions, the firm that holds your shares will have discretionary authority to vote your shares with respect to “routine” matters. Pursuant to NYSE rules, ProposalsProposal 1 and Proposal 2 are not considered “routine” matters; thus, your broker will not have discretionary authority to vote your shares in connection with Proposal 1 or Proposal 2 if you do not provide it with instructions.
Electronic Access to Proxy Materials
Pursuant to applicable United States Securities and Exchange Commission (“SEC”) rules, the Company iswe are making this Proxy Statement and its Annual Report on Form 10-K, as amended, available to its stockholders electronically via the Internet atwww.proxyvote.com. On or about April 8, 2016,March 29, 2018, we will mail to stockholders a Notice containing instructions on how to access this Proxy Statement along with our Annual Report on Form 10-K as well as instructions on how to vote online. The Notice also instructs you on how you may submit your proxy vote securely over the Internet or by telephone. If you received a Notice, you will not automatically receive a printed copy of the Proxy Statement and Annual Report. If you would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials as set forth in the Notice.
The cost of preparing, assembling and sending the Notice of Annual Meeting of Stockholders, this Proxy Statement and the enclosed proxy card will be paid by the Company.us. Following the delivery of this Proxy Statement, Directors, Officers and other employees of the Company may solicit proxies by mail, telephone, facsimile or other electronic means, or by personal interview. SuchThese persons will receive no additional compensation for suchtheir services. Brokerage houses and other nominees, fiduciaries and custodians nominally holding shares of Class A common stock of record will be requested to forward proxy soliciting material to the beneficial owners of suchthe shares and will be reimbursed by the Companyus for their reasonable charges and expenses in connection therewith.
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With regard to the delivery of Annual Reports and Proxy Statements, under certain circumstances the SEC permits a single set of suchthese documents or, where applicable, one Notice, to be sent to any household at which two or more stockholders reside if they appear to be members of the same family. Each stockholder, however, still receives a separate proxy card. This procedure, known as “householding,” reduces the amount of duplicate information received at a household and reduces delivery and printing costs as well. A number of banks, brokers and other firms have instituted householding and have previously sent a notice to that effect to certain of the Company’sour stockholders whose shares are registered in the name of suchthe bank, broker or other firm. As a result, unless the stockholders receiving suchthe notice gave contrary instructions, only one Annual Report and/or Proxy Statement, as applicable, will be delivered to an address at which two (2) or more stockholders reside. If any stockholder residing at such anthe address wishes to receive a separate Annual Report or Proxy Statement for the Annual Meeting or for future stockholder meetings, suchthe stockholder should telephone toll-free 1-800-579-1639, or write to Salem Media Group, Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. A separate set of proxy materials relating to the Annual Meeting will be sent promptly following receipt of your request. In addition, if any stockholder who previously consented to householding desires to receive a separate copy of a Proxy Statement or Annual Report, as applicable, for each stockholder at his or her same address, suchthe stockholder should contact his or her bank, broker or other firm in whose name the shares are registered or contact the Companyus at the address or telephone number listed on page 1 of this Proxy Statement. Similarly, a stockholder may use any of these methods if suchthe stockholder is receiving multiple copies of a Proxy Statement or Annual Report and would prefer to receive a single copy in the future.
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THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
TheOur Board of Directors presently consists of seven (7) members and may be increased to nine (9) members in connection with the Annual Meeting (each, a “Director” or “Director Nominee”, as applicable)). Director Nominees Edward C. Atsinger and Stuart W. Epperson Jr. will each be standing for election at the Annual Meeting. The following table sets forth certain information as of March 23, 2016,29, 2018, except where otherwise indicated, with respect to the Directors of the Company.our Directors. Each of theour Directors of the Company serves a one (1) year term and all Directors are subject to re-election at each annual meeting of stockholders.
| Name of Director | Age | First Became Company Director | Position(s) Held with the Company | |||
| Stuart W. Epperson | 79 | 1986 | Chairman of the Board | |||
| Edward G. Atsinger III | 76 | 1986 | Chief Executive Officer and Director | |||
| Roland S. Hinz | 76 | 1997 | Director | |||
| Richard A. Riddle | 71 | 1997 | Director | |||
| Jonathan Venverloh | 44 | 2011 | Director | |||
| James Keet Lewis | 62 | 2014 | Director | |||
| Eric H. Halvorson | 66 | 2015 | Director | |||
| Edward C. Atsinger | 41 | N/A | Director Nominee | |||
| Stuart W. Epperson Jr. | 45 | N/A | Director Nominee |
| Name of Director | Age | First | Position(s) Held with the Company | |||
| Stuart W. Epperson | 81 | 1986 | Chairman of the Board | |||
| Edward G. Atsinger III | 78 | 1986 | Chief Executive Officer and Director | |||
| Roland S. Hinz | 79 | 1997 | Director | |||
| Richard A. Riddle | 73 | 1997 | Director | |||
| Jonathan Venverloh | 46 | 2011 | Director | |||
| James Keet Lewis | 64 | 2014 | Director | |||
| Eric H. Halvorson | 68 | 2015 | Director | |||
| Edward C. Atsinger | 43 | 2016 | Director | |||
| Stuart W. Epperson Jr. | 47 | 2016 | Director |
As a national media presence with integrated operations including radio broadcasting, digital media, and publishing emphasizing Christian values, conservative family themesthemed content and conservative news, our business involves an operational structure that operates on a broad scale and encompasses research, technical developments, and marketing functions in a context characterized by rapidly evolving technologies, exposure to business cycles, and significant competition. The Company’sOur Nominating and Corporate Governance Committee is responsible for reviewing and assessing with the Board the appropriate skills, experience, and background sought of Board members in the context of our business and the then-current membership on the Board. This assessment of Board skills, experience, and background includes numerous diverse factors, such as an understanding of and experience in radio and new media, an understanding of our audience and the ministries that serve it, and finance, marketing and advertising experience. The priorities and emphasis of the Nominating and Corporate Governance Committee and of the Board with regard to these factors may change from time to time to take into account changes in the Company’sour business and other trends, as well as the portfolio of skills and experience of current and prospective Board members. The Nominating and Corporate Governance Committee and the Board will review and assess the continued relevance of and emphasis on these factors as part of the Board’s annual self-assessment process and in connection with candidate searches to determine if they are effective in helping to satisfy the Board’s goal of creating and sustaining a Board that can appropriately support and oversee the Company’sour activities.
We believe that it is important for our Board members to have diverse backgrounds, skills and experiences and seek suchthis diversity in nominating Director candidates. One goal of this diversity of backgrounds, skills and experience is to assist the Board in its oversight concerning our business and operations. We consider the key skills, qualifications and experience listed below as important for our Directors to collectively have in light of our current business and structure. The Directors’ biographies provided later in this Proxy Statement note each Director’s relevant skills, qualifications and experience. As part of an annual effectiveness review, the Board evaluates its composition to ensure that the Board as a whole sufficiently represents a diverse set of relevant backgrounds, skills and experience.
| • | Senior Executive Leadership Experience. Directors who have served in senior executive leadership positions are important to us, as they bring experience and perspective in analyzing, shaping, and overseeing the execution of important operational and policy issues at a senior level. The insights and guidance of these Directors, particularly those Directors who have experience at businesses or organizations that have operated on a global scale, faced significant competition, and/or involved technology or other rapidly evolving business models enhance our Board’s ability to assess and respond to situations faced by the Company. |
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| • | Public Company Board Experience. Directors who have served on other public company boards can offer insights with regard to the dynamics and operation of a board of directors, corporate governance matters (including experience with respect to the relationship of a |
| • | Business Development Experience. Directors who have a background in business development can provide insight into developing and implementing strategies for growing our business through acquisitions. |
| • | Accounting and Financial Reporting Experience. Knowledge of accounting and financial reporting processes, as well as the financial markets, financing and funding operations, is important because it assists our Directors in understanding and overseeing |
| • | Relevant Experience with our Audiences and Programmers. Directors who have relevant experience with the Christian and family-themed audience and the conservative news talk audience can provide insight and expertise in assisting the Board’s implementation of Company strategies for growing our business by providing an engaging experience with our radio stations, Internet sites and other services. Directors with experience and knowledge of the business of our programmers and content providers can also assist the Board with analyzing, reviewing and approving mutually beneficial and significant relationships between these content providers and the Company. |
| • | Legal Expertise. Directors who have legal education and experience can assist the Board in fulfilling its responsibilities related to the oversight of |
| • | Radio Experience. Knowledge of the radio industry and the challenges and opportunities of radio broadcasting companies is vitally important because it enables our Directors to understand and oversee many aspects of |
| • | New Media Experience. As the radio industry is faced with challenges and opportunities created by the emergence of “new media”, the Board benefits from including Directors who have relevant experience with these new and emerging means of distributing programming and enhancing our audience’s ability to access information provided by |
Set forth below is certain information concerning the principal occupation and business experience of each of the Directors during the past five (5) years and other relevant experience.
Stuart W. Epperson
Mr. Epperson has been our Chairman of the Board of the Company since itsour inception. He is also a Director of Salem Communications Holding Corporation, a wholly-owned subsidiary of the Company.ours. Mr. Epperson has been engaged in the ownership and operation of radio stations since 1961 and currently serves as a Director and President of Roanoke-Vinton Radio Incorporated; as President of Sonsinger Management, Inc.; and as a Partner of Sonsinger Properties, Sonsinger Broadcasting Company of Houston, L.P. and Salem Broadcasting Company.Company; and as a member of East Bay Broadcasting, LLC. Mr. Epperson has been a member of the Boardboard of Directorsdirectors of the National Religious Broadcasters for a number of years and was re-elected to a three (3) year term on that Boardboard in February 2013.2016. Mr. Epperson is married to Nancy A. Epperson, who is Mr. Atsinger’s sister. Additionally, Mr. Epperson is the father of Director Nominee Stuart W. Epperson Jr. (Director) and uncle of Director Nominee Edward C. Atsinger.Atsinger (Director).
As co-founderone of the Company,our co-founders, Mr. Epperson provides the Board with extensive and valuable radio and senior executive leadership experience, business development experience and insight into theour background and vision of the Company.vision. His past political experience as well as his continuing operation of radio stations for related businesses provide the Board with valuable relevant experience with the needs and goals of our audience and our programmers and enable Mr. Epperson to contribute to the Board by assessing the many and varied strategic opportunities presented to the Company.us.
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Edward G. Atsinger III
Mr. Atsinger has been our Chief Executive Officer, a Director of the Company and a Directordirector of each of the Company’sour subsidiaries since their inception. He was President of Salem from its inception through June 2007. He has been engaged in the ownership and operation of radio stations since 1969 and currently serves as a Partner of Salem Broadcasting Company, Sonsinger Properties, Sonsinger Broadcasting Company of Houston, L.P.; as a member of East Bay Broadcasting, LLC, Atsinger Aviation, LLC, Sun Air Jets, LLC, Allyson Aviation, LLC, Greenbelt Property Management; and as President of Sonsinger Management, Inc. Mr. Atsinger has been a member of the Boardboard of Directorsdirectors of the National Religious Broadcasters for a number of years and was re-elected to a three (3) year term on that Boardboard in February 2013.2016. He was also a member of the National Association of Broadcasters Radio Board from 2008 through 2014. Mr. Atsinger has been a member of the Board of Directors of Oaks Christian School in Westlake Village, California since 1999. Mr. Atsinger is the brother-in-law of Mr. Epperson. Additionally, Mr. Atsinger is the father of Director Nominee Edward C. Atsinger (Director) and uncle of Director Nominee Stuart W. Epperson Jr. (Director).
As co-founderone of the Company,our co-founders, Mr. Atsinger provides the Board with extensive and valuable radio and senior executive leadership experience, business development experience and insight into theour background and vision of the Company.vision. His longstanding association with and service on many broadcasting-related Boardsboards of Directorsdirectors over the years also provides valuable radio and new media experience as well as an understanding of the broader needs and challenges facing our industry.
Roland S. Hinz
Mr. Hinz has been a Director of the Company since September, 1997. Mr. Hinz has been the owner, President and Editor-in-Chief of Hi-Torque Publishing Company, a publisher of seven (7) monthly magazines covering the motorcycling and bikingbicycling industries, since 1982. Mr. Hinz is also the managing member of Hi-Favor Broadcasting, LLC, the licensee of radio stations KLTX-AM, Long Beach, California, and KEZY-AM, San Bernardino, California (which were acquired from the Companyus in August 2000 and December 2001, respectively), and radio station KSDO-AM, San Diego, California. These radio stations are programmed in a Spanish language format. Mr. Hinz alsocurrently serves on the Boardboard of Directorsdirectors of the Association for Community Education, Inc., a not-for-profit corporation operatingthat owns the Radio Nueva Vida radio network and operates 25 Spanish Christian radio stations in California.language stations. Mr. Hinz alsopreviously served on the Boardboard of Directorsdirectors of Truth for Life, a non-profit organization that is a customerone of the Company,our customers, from 2000 through September 2010.
Mr. Hinz’s qualifications to serve on the Board include his extensive business experience, skillsskill and acumen reflected in his senior executive management experience as President and Editor-in-Chief of a magazine publishing company.company and licensee of several Spanish language radio broadcasting stations. He has also has served as a Boardboard member for several not-for-profit organizations, enabling him to bring valuable cross-Boardcross-board experience as well as relevant experience with our audience and programmers.
Richard A. Riddle
Mr. Riddle has been a Director of the Company since September 1997. Mr. Riddle is an independent businessman specializing in providing financial assistance and consulting to individuals and manufacturing companies. He was President and majority stockholder of I.L. Walker Company from 1988 to 1997 when that company was sold. He also was Chief Operating Officer and a major stockholder of Richter Manufacturing Corp. from 1970 to 1987. In October 2010, Mr. Riddle joined the Boardboard of Directorsdirectors of Truth for Life, a non-profit organization that is a customer of the Company.our customer. Additionally, in 2010, Mr. Riddle joined the Boardboard of Directorsdirectors of Know the Truth, a non-profit organization that is also a customerone of the Company.our customers.
Having an extensive career in financial matters, Mr. Riddle brings to the Board significant financial experience enabling him to assess and provide oversight concerning business and financial matters addressed by the Company.us.
Jonathan Venverloh
Mr. Venverloh has been a Director of the Company since September 2011. Mr. Venverloh has worked in digital media and advertising since 1994, including more than thirteen (13)fifteen (15) years at Google and stints at a major news website and global advertising agencies. Mr. Venverloh currently serves as Director Global Salesof Operations within Google Shopping, and from 2000-2010 he served as Google’s Head of Distribution Partnerships and launched Google’s Enterprise Division. From 1997 to 1999, Mr. Venverloh led Weather.com’s sales efforts for the West Coast. From 1994 to 1996 he worked at global ad agencies Saatchi & Saatchi and DDB Needham. Mr. Venverloh has also served as an advisor to digital media startups and served on the Boardsboards of Directorsdirectors of several non-profits. Mr. Venverloh currently serves on the Board of Pacific Excel 2, LLC. He earned a Bachelor of Arts in Advertising from Southern Methodist University and a Master’s Degree in Management from the Stanford Graduate School of Business.
Mr. Venverloh brings to the Board valuable senior executive leadership experience and extensive digital media and advertising expertise. With senior management experience at a large public Internet company as well as service as an advisor to smaller digital media startups, Mr. Venverloh is well-positionedwell positioned to advise the Board on a wide cross-section of new media matters.
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James Keet Lewis
Mr. Lewis has been a Director of the Company since May 2014. Mr. Lewis is co-owner of Lewis Group International, which has since 1990 been involved in several new product introductions in the health and wellness industry. Mr. Lewis was also the founder and president of Cool Pool Solutions, Inc. and is co-developer of a patent on a swimming pool maintenance product, The Skimmer Basket Buddy. Most recently, Mr. Lewis has focused a significant amount of his consulting time on international energy projects. Mr. Lewis serves or has served on various political, ministry and charity boards, including the Christian Film and Television Commission, Liberty Institute, The Criswell College, Heritage Alliance, Heritage Alliance PAC, Texas Life Connections, Goodwill of Dallas, The Heidi Group, World Link Ministries, Dallas Council For LifeHope for the Heart Ministries and The Caring Peoples Network. Mr. Lewis currently servespreviously served as a trustee of Houston Christian Broadcasting, Inc., which operates 18eighteen (18) non-commercial Christian radio stations, including its flagship station KHCB, in Houston, Texas. He is also currently serves on the Boardboard of Bott Radio Network, in Kansas City, MO.First Liberty, Council for Life and is the co-managing member of GST Advisors LLC. Additionally, since 2009,2016, Mr. Lewis has served on the Board of Hope forKnow the Heart Ministries,Truth, a non-profit organization that is a customerone of the Company.our customers. Mr. Lewis received his B.B.A. in 1977 from the University of Texas.
Mr. Lewis brings to the Board valuable leadership experience and relevant experience with our audience and programmers by virtue of his Boardboard service on several political, charitable and ministry organizations.
Eric H. Halvorson
Mr. Halvorson has been Dean of Trinity Law School since 2016. Additionally, Mr. Halvorson has been an Attorneyattorney at the Law Office of Eric H. Halvorson since 2010 and focuses his practice on business law and estate planning. Mr. Halvorson is also of counsel to Stowell, Zeilenga, Ruth, Vaughn, and Treiger LLP, a boutique business law firm in Westlake Village. Mr. Halvorson has beenwas an Adjunct Professor at the Pepperdine University School of Law for the 2006-2007, 2009-2010, 2010-2011, and 2013-2014 academic years. He was an Executive in Residence at Pepperdine University Seaver College of Letters, Arts and Sciences from 2000-2003 and from 2005-2007. Mr. Halvorson was our President and Chief Operating Officer of the Company from 2007-2008, our Chief Operating Officer from 1996-2000 and our Executive Vice President of the Company from 1991-2000. From 1991-1999 and 1985-1988, Mr. Halvorson also served as our General Counsel to the Company.Counsel. Mr. Halvorson was the managing partner of the law firm of Godfrey & Kahn, S.C.-Green Bay from 1988 until 1991. From 1985 to 1988, he was our Vice President and General Counsel of the Company.Counsel. From 1976 until 1985, he was an associate and then a partner of Godfrey & Kahn, S.C.-Milwaukee. Mr. Halvorson was a Certified Public Accountant with Arthur Andersen & Co. from 1971 to 1973. Mr. Halvorson iswas previously a member of the Boardboard of Directorsdirectors of Intuitive Surgical, Inc., from 2003-2016 and Pharmacyclics, Inc. from 2011-2015. Mr. Halvorson is currently a member of the board of directors of Friends of Spanish Hills, LLC and Spanish Hills Country Club. Mr. Halvorson was previously aour Director of the Company from 1988-2008.
Mr. Halvorson brings valuable legal and financial expertise and extensive historical knowledge of the Company to the Board. He has also served as a Boardboard member for several for-profit companies which enables him to bring relevant cross-Boardcross-board experience to the Company.us.
Edward C. Atsinger
Edward C. “Ted” Atsinger is co-founder, and Chief Operating Officer, and in the first quarter of 2017 became an equity owner of Greytek, LLC, a counterintelligence and security services company focusing on the Defense and Industrial Security sectors. A veteran of multiple combat deployments, Mr. Atsinger dedicated himself to serving the interests of national security after the terrorist attacks of September 11, 2001, serving with distinction as a professional Counterintelligence Officer assigned to and supporting the United States Intelligence and Special Operations communities. Prior to his national security career, Mr. Atsinger worked as a Senior Producer in Salem'sSalem’s National News and Public Affairs Department. Mr. Atsinger holds a BA/MA (Oxon) in Philosophy and Theology from Oxford University, England. He has been a member of the Board of Directors of Rockbridge Academy, a classical Christian school in Millersville, Maryland since 2010. Mr. Atsinger is the son of Edward G. Atsinger III. Additionally, he is the nephew of Mr. Epperson and cousin of Director Nominee Stuart W. Epperson Jr.
Mr. Edward G. Atsinger III, the Company’s CEO, recommended Mr. Edward C. Atsinger’s nomination to the Company’s Board of Directors. It is anticipated that
Mr. Atsinger will bringbrings valuable senior executive leadership experience and business development experience to the Company.us.
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Stuart W. Epperson Jr.
Stuart W. Epperson Jr. has been the Founder, President and CEO of Truth Broadcasting Corporation since its inception in 1998. Truth Broadcasting Corporation, which is a current customerone of the Company,our customers, operates 21 signals in seven markets including Raleigh, Greensboro, Charlotte, Richmond, Salt Lake City, Des Moines and Myrtle Beach/Coastal Carolina in the following formats: Christian Talk (primary), Urban Gospel, Southern Gospel and Spanish. From 1995-1998 Mr. Epperson Jr. was a Senior Account Executive at Clear Channel Communications and from 1993-1995 was an Account Executive at Multimedia Radio, Inc. Mr. Epperson Jr. earned his B.A. in Communications from The Master’s College in 1992 and Master of Science, Broadcast Management from Bob Jones University in 1994. Mr. Epperson Jr. is the author of “Last Words of Jesus” published by Worthy Press Publ. in the spring of 2015 and his upcoming “First Words of Jesus” will be published by the same publisher in the fall of 2016. Additionally, Mr. Epperson Jr. currently sits on the Boardboard of Directorsdirectors for the National Religious Broadcasters, Persecution Project Foundation, and Piedmont International University.University, Chesapeake-Portsmouth Broadcasting Corporation and Delmarva Educational Association. Mr. Epperson Jr. is the son of Stuart W. Epperson, the nephew of Mr. Edward G. Atsinger III and cousin of Director Nominee Edward C. Atsinger.
Mr. Stuart W. Epperson, the Company’s Chairman of the Board, recommended Mr. Epperson Jr.’s nomination to the Company’s Board of Directors. It is anticipated that Mr. Epperson Jr. will bringbrings valuable radio and senior executive leadership experience to the Company.us. In addition, Mr. Epperson Jr.’s operation of radio stations in similar formats to those of the Company will enableours enables him to bring relevant experience related to our audiences and programmers.
Director Independence and Executive Sessions
The Company’sOur Board of Directors evaluated the independence of each of the Company’sour Directors pursuant to the listing standards of the NASDAQ Stock Market (“NASDAQ Rules”). During this review, which included a review of the transactions and relationships described in the section of this Proxy Statement entitled “CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS” below, the Board of Directors considered various transactions and relationships among Directors (and their affiliates or family members), members of the Company’sour senior management, affiliates and subsidiaries of the Companyours and certain other parties that occurred during the past three (3) fiscal years. This review was conducted to determine whether, under the NASDAQ Rules, any suchthese relationships or transactions would affect the Board of Directors’ determination as to each director’s independence.
Upon conclusion of this review, the Board of Directors determined that, of the Directors nominated for election at the Annual Meeting, a majority of the Board (comprised(consisting of Messrs. Hinz, Riddle, Venverloh, Lewis and Halvorson) is independent of the Company and its senior management as required byunder the NASDAQ Rules.
The NASDAQ Rules also require that independent members of the Board of Directors meet periodically in executive sessions during which only independent Directors are present. The Company’sOur independent Directors have met separately in such executive sessions and in the future will regularly meet in executive sessions as required by the NASDAQ Rules.
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Committees of the Board of Directors
The Company’sOur Board of Directors has three (3) committees: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. The following table identifies the independent members of the Board of Directors and lists the members and chairman of each of these committees:
| Name | Independent | Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee | ||||
| Stuart W. Epperson | ||||||||
| Edward G. Atsinger III | ||||||||
| Edward C. Atsinger | ||||||||
| Stuart W. Epperson Jr. | ||||||||
| Roland S. Hinz | I | X | C | |||||
| Richard A. Riddle | I | X | C | X | ||||
| Jonathan Venverloh | I | X | ||||||
| James Keet Lewis | I | X | X | X | ||||
| Eric Halvorson | I | C | X |
I = Director is independent
X = Current member of committee
C = Current member and chairman of the committee
The Audit Committee of the Board of Directors (the “Audit Committee”) is a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Audit Committee currently consists of Messrs. Halvorson (Chairman), VenverlohRiddle and Lewis, each of whom is independent under the NASDAQ Rules and applicable SEC rules and regulations. The Board of Directors has determined that Mr. Halvorson, the Audit Committee Chairperson, qualifies as an “audit committee financial expert” as defined by applicable SEC rules and regulations.
The Audit Committee held four (4)three (3) regularly scheduled in-person meetings and two (2) specialthree (3) telephonic meetings in 20152017 and operates under a written charter adopted by the Board of Directors. The Audit Committee and the Company’s Board of Directors annually (or more often as needed) review the charter to ensure it conforms to current laws and practices. This charter is available on the Company’sour Internet website (http://salemmedia.com) and a copy of the charter may be obtained upon written request from the Secretary of the Company.our Secretary.Any information found on the Company’sour website is not a part of, or incorporated by reference into, this or any other report of the Company filed with, or furnished to, the SEC by us.
The Audit Committee’s responsibilities are generally to assist the Board of Directors in fulfilling its legal and fiduciary responsibilities relating to our accounting, audit and reporting policies and practices of the Company and its subsidiaries.practices. The Audit Committee also, among other things, oversees the Company’sour financial reporting process, retains and engages the Company’sour independent registered public accounting firm, approves the fees for the Company’sour independent registered public accounting firm, monitors and reviews the quality, activities and functions of the Company’sour independent registered public accounting firm, and monitors the adequacy of the Company’sour operating and internal controls and procedures as reported by management and the Company’sour independent registered public accounting firm. The Audit Committee Report set forth later in this Proxy Statement provides additional details about the duties and activities of this committee.
As provided under applicable laws and rules, the Company’sour Board of Directors delegates authority for compensation matters to the Compensation Committee of the Board of Directors (the “Compensation Committee”). The Compensation Committee’s membership is determined by the Board of Directors. The Compensation Committee currently consists of Messrs. Riddle (Chairman), Hinz and Lewis, each of whom is independent under the NASDAQ Rules, including recently adopted compensation committee independence requirements. The Compensation Committee is authorized to review and approve compensation, including non-cash benefits and severance arrangements for the Company’s Section 16our officers and employees and to approve salaries, remuneration and other forms of additional compensation and benefits as it deems necessary. The Compensation Committee also administers the Company’s Second Amended and Restatedour 1999 Stock Incentive Plan (the “Stock Plan”).Plan.
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The Compensation Committee held two (2) regularly scheduled meetings in 2015.2017. The Compensation Committee meets at least twice annually and at additional times as are necessary or advisable to fulfill its duties and responsibilities.
The role of the Company’sour Compensation Committee is to oversee the Company’sour compensation and benefit plans and policies, administer theour 1999 Amended and Restated Stock Incentive Plan (including reviewing and approving equity grants to elected officers), and to review and approve all compensation decisions relating to elected officers, including those for the Company’sour Named Executive Officers (who are listed in the Summary Compensation Table below). In 20142017 the actions of the Compensation Committee included reviewing objective benchmarks and metrics by which a Named Executive Officer’s performance can be measured and analyzing peer compensation and performance data for comparison with the Company’sour Named Executive Officers. The Compensation Committee has delegated limited authority to Edward G. Atsinger III, the Company’sour Chief Executive Officer, to grant up to $150,000 of options to purchase the Company’sour Class A common stock annually (measured each calendar year without carry-over of unused grant authority from year to year). The $150,000 is calculated at a price equal to the price of the Company’s Class A common stock at the NASDAQ market close on the date the stock options are granted. This delegated authority is subject to prompt notification to the Compensation Committee of the issuance of any such grants and ratification of any such grants at the next regularly scheduled Compensation Committee meeting following the date of such grants.
The Company’sOur Named Executive Officers do not determine or approve any element or component of their own compensation. The Company’sOur CEO provides a recommendation to the Compensation Committee for base salary and annual incentive compensation for the Named Executive Officers reporting to him.
The Compensation Committee operates pursuant to a charter that was approved by the Board of Directors. The charter sets forth the responsibilities of the Compensation Committee. The Compensation Committee and the Company’sour Board of Directors annually (or more often as needed) review the charter to ensure it conforms to current laws and practices. This charter is available on the Company’sour Internet website (http://salemmedia.com) and a copy of the charter may be obtained from theour Secretary of the Company upon written request.Any information found on the Company’sour website is not a part of, or incorporated by reference into, this or any other report of the Company filed with, or furnished to, the SEC by us.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee of the Board of Directors (the “Nominating and Corporate Governance Committee”) currently consists of Messrs. Hinz (Chairman), Riddle, Venverloh, Lewis and Halvorson, each of whom is independent under the NASDAQ Rules. The Nominating and Corporate Governance Committee held three (3)two (2) regularly scheduled meetings and one (1) special telephonic meeting in 2015.2017.
The Nominating and Corporate Governance Committee is authorized to: (a) develop and recommend a set of corporate governance standards to the Board of Directors for adoption and implementation; (b) identify individuals qualified to become members of the Board of Directors; (c) recommend that director nominees be elected at the Company’sour next annual meeting of stockholders; (d) recommend nominees to serve on each standing committee of the Board of Directors; (e) lead in the annual review of Board performance and evaluation of the Board’s effectiveness; (f) ensure that succession planning takes place for the position of chief executive officer and other key Company senior management positions; and (g) analyze, review and, where appropriate, approve all related party transactions to which the Company or its subsidiaries or affiliateswe are a party, all in accordance with applicable rules and regulations.
To qualify as a nominee for service on the Board of Directors, a candidate must have sufficient time and resources available to successfully carry out the duties required of a Company Board member. The Nominating and Corporate Governance Committee desires to attract and retain highly qualified Directorsdirectors who will diligently execute their responsibilities and enhance their knowledge of the Company’sour core businesses and seeks Directors who possess some or all of the skills, qualifications and experience described under “Board Composition” in this Proxy Statement.
The Nominating and Corporate Governance Committee implements the Company’sour policy regarding stockholder nominations by considering nominees for director positions that are made by the Company’sour stockholders. Any stockholder desiring to make such a nomination must submit in writing the name(s) of the recommended nominee(s) to theour Secretary of the Company at least 90 days prior to, but not earlier than 120 days prior to the first anniversary of the preceding annual meeting of stockholders. The written submission must also contain biographical information about the proposed nominee, a description of the nominee’s qualifications to serve as a member of the Board of Directors, and evidence of the nominee’s valid consent to serve as aour director of the Company if nominated and duly elected.
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The Company’s Directors provideBoard provides oversight of the Company’sour management and playplays a key role in shaping theour strategic direction of the Company.direction. Consistent with the Company’sour Nominating and Corporate Governance Committee Charter, the Nominating and Corporate Governance Committee considers various criteria in Board candidates, including, the skills, qualifications and experience described under “Board Composition” in this Proxy Statement, as well as their appreciation of the Company’sour core purpose, core values, and whether they have time available to devote to Board activities. The Nominating and Corporate Governance Committee also considers whether a potential nominee would satisfy:
| 1. | The criteria for director “independence” established by the NASDAQ Rules; and |
| 2. | The |
Whenever a vacancy exists on the Board due to expansion of the Board’s size or the resignation, retirement or term expiration of an existing director, the Nominating and Corporate Governance Committee identifies and evaluates potential director nominees. The Nominating and Corporate Governance Committee considers recommendations of management, stockholders and others. The Nominating and Corporate Governance Committee has sole authority to retain and terminate any search firm to be used to identify director candidates, including approving its fees and other retention terms.
Director candidates are evaluated using the criteria described above and in light of the then-existing composition of the Board, including its overall size, structure, backgrounds and areas of expertise of existing Directors and the relative mix of independent and employee Directors. The Nominating and Corporate Governance Committee also considers the specific needs of the various Board committees. The Nominating and Corporate Governance Committee recommends potential director nominees to the full Board, and final approval of a candidate for nomination is determined by the full Board. This evaluation process is the same for Director nominees who are recommended by our stockholders.
The Board of Directors has adopted a written charter for the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee and the Company’sour Board of Directors annually (or more often as needed) review the charter to ensure it conforms to current laws and practices. This charter is available on the Company’sour Internet website (http://salemmedia.com) and a copy of the charter may be obtained upon written request from the Secretary of the Company.our Secretary.Any information found on the Company’sour website is not a part of, or incorporated by reference into, this or any other report of the Company filed with, or furnished to, the SEC.SEC by us.
The Nominating and Corporate Governance Committee did not receive any recommendations from stockholders proposing candidate(s) for election at the Annual Meeting. None of the Directors serving on the Audit Committee, the Compensation Committee or the Nominating and Corporate Governance Committee are employees of the Company.our employees.
Although the Board does not have a formal policy on diversity, the Nominating and Corporate Governance Committee and the Board review from time-to-time the membership of the Board in light of the Company’sour operations and strategic objectives and consider whether the current Board members possess the requisite skills, experience and perspectives to oversee the achievement of those goals. As part of an annual effectiveness review, the Nominating and Corporate Governance Committee evaluates the diversity of the Board composition to ensure that it sufficiently represents a diverse set of background, skills and experience.
Historically, the Company’sour Board of Directors has had a general policy that the positions of Chairman of the Board and CEO should be held by separate persons as an aid in the Board’s oversight of management. This policy has been in effect since the Companywe began operations. The Chairman of the Board is a full-time senior executive of the Company.ours. The duties of the Chairman of the Board include:
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The Board of Directors believes that there are advantages to having a separate Chairman for matters such as communications and relations between the Board members, the CEO, and other senior management; in assisting the Board in reaching consensus on particular strategies and policies; and in facilitating robust director, Board and CEO evaluation processes. In addition, having separate Chairman and CEO positions permits the CEO to focus on day-to-day business and allows the Chairman to lead the Board in its oversight responsibilities. The Board currently consists of the Chairman of the Board, the Company’s CEO, and five (5) independent Directors and two (2) non-independent Directors. One of Mr. Epperson’s roles is to oversee and manage the Board of Directors and its functions, including setting meeting agendas and running Board meetings. In this regard, Mr. Epperson and the Board in their advisory and oversight roles are particularly focused on assisting the CEO and senior management in seeking and adopting successful business strategies and risk management policies, and in making successful choices in management succession.
Board’s Role in Risk Oversight
The Company’sOur Board of Directors as a whole has responsibility for risk oversight, with reviews of certain areas being conducted by the relevant Board committees. These committees then provide reports to the full Board. The oversight responsibility of the Board and its committees is enabled by management reporting processes that are designed to provide visibility to the Board about the identification, assessment, and management of critical risks. These areas of focus include strategic, operational, financial and reporting, succession and compensation, legal and compliance, and other risks. The Board and its committees oversee risks associated with their respective areas of responsibility, as summarized above.
Director Attendance at Board and Committee Meetings and 20152017 Annual Meeting of Stockholders
The full Board of Directors held four (4) regularly scheduled meetings and two (2) special telephonic meetings in 2015.2017. During 2015,2017, each of the Company’sour incumbent Directors attended (either in person or telephonically) all of the regularly-scheduledregularly scheduled meetings of the full Board of Directors except that Mr. VenverlohMessrs. Atsinger and Hinz did not attend one (1) special telephonicregularly scheduled meeting. Each of the Company’sour incumbent Directors attended more than seventy-five percent (75%) of the aggregate of the number of meetings of the Board and the total number of meetings held by all committees of the Board on which he served. The Company encourages,We encourage, but doesdo not require, that each Director attend the Company’sour annual meeting of stockholders. In 2015,2017, each of the Company’sour then Directors attended the 20152017 annual meeting of stockholders.stockholders except that Mr. Atsinger did not attend due to business travel in connection with our debt refinance.
Communications between Stockholders and the Board
The Company hasWe have historically handled communications between stockholders and the Board of Directors on anad hoc basis. NoWe have not adopted a formal policy or process for suchthese communications has been adopted by the Company as of the date of this Proxy Statement. The Company has,We have, however, taken actions to ensure that the views of itsour stockholders are communicated to the Board or one or more of itsthe individual Directors, as applicable. The Board considers its responsiveness to such communications as timely and exemplary.
The Company hasWe have adopted a financial code of conduct (“Financial Code of Conduct”) that applies to each Director, of the Company, the Company’s principal executive officer, principal financial officer, principal accounting officer, controller and persons performing similar functions. This Financial Code of Conduct has been adopted by the Board as a “code of ethics” that satisfies applicable NASDAQ Rules. The Financial Code of Conduct is available on the Company’sour Internet website (http://salemmedia.com) and a copy of the Financial Code of Conduct may be obtained free of charge upon written request from the Secretary of the Company.Secretary.Any information found on the Company’sour website is not a part of, or incorporated by reference into, this or any other report of the Company filed with, or furnished to, the SEC.SEC by us.
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Set forth below are theour executive officers, of the Company, together with the positions held by those persons as of December 31, 2015.March 29, 2018. The executive officers are elected annually and serve at the pleasure of the Company’sour Board of Directors; however, the Company haswe have entered into employment agreements with each of the executive officers listed below. Certain payment provisions contained in the Company’s employment agreements with Messrs. Atsinger, Santrella and Evans are described under the section of this Proxy Statement entitled “EXECUTIVE COMPENSATION – Material Terms of NEO Employment Agreements Providing For Payment to NEOs Upon Termination” below.
| Name of Executive Officer | Age | Position(s) Held with the Company | ||
| Stuart W. Epperson | Chairman of the Board | |||
| Edward G. Atsinger III | Chief Executive Officer and Director | |||
| David A.R. Evans | President — New Media | |||
| David P. Santrella | President — Broadcast Media | |||
| Evan D. Masyr | Executive Vice President and Chief Financial Officer | |||
| Christopher J. Henderson | SVP, Legal and Human Resources, General Counsel and Secretary |
Set forth below is certain information concerning the business experience during the past five (5) years and other relevant experience of each of the individuals named above (excluding Messrs. Atsinger and Epperson, whose business experience is described in the section of this Proxy Statement entitled “THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS—Board of Directors” above).
David A. R. Evans
Mr. Evans has been President — New Media of the Company since September 2013. Mr. Evans was President—New Business Development, Interactive and Publishing of the Company from July 2007 to September 2013. Mr. Evans was Executive Vice President—Business Development and Chief Financial Officer of the Company from September 2005 to June 2007. Mr. Evans was Executive Vice President and Chief Financial Officer from September 2003 to September 2005. From 2000 to 2003, Mr. Evans served as the Company’s Senior Vice President and Chief Financial Officer. From 1997 to 2000, Mr. Evans served as Senior Vice President and Managing Director—Europe, Middle East, and Africa of Warner Bros. Consumer Products in London, England. He also served at Warner Bros. Consumer Products in Los Angeles, California, as Senior Vice President—Latin America, International Marketing, Business Development from 1996 to 1997 and Vice President—Worldwide Finance, Operations, and Business Development from 1992 to 1996. From 1990 to 1992, he served as Regional Financial Controller-Europe for Warner Bros. based in London, England. Prior to 1990, Mr. Evans was an audit manager with Ernst & Young LLP in Los Angeles, California and worked as a U.K. Chartered Accountant for Ernst & Young in London, England.
David P. Santrella
Mr. Santrella has been President — Broadcast Media of the Company since January 1, 2015, overseeing all broadcast operations involving the Company’sour local radio stations, radio network and internal rep firm. From January 2010 to December 2014 he served as President — Radio Division of the Company.Division. From October 2008 to December 31, 2009, he served as Operational Vice President over the Company’sour Minneapolis, Denver and Colorado Springs clusters in addition to his existing responsibility over the Chicago cluster. From March 2006 to October 2008, Mr. Santrella was the Operational Vice President of Chicago and Milwaukee. In November of 2003, he was given additional oversight responsibility of Milwaukee. Mr. Santrella started with the Companyus in 2001 as the General Manager of the Company’sour Chicago cluster.
Evan D. Masyr
Mr. Masyr has been Executive Vice President and Chief Financial Officer of the Company since January 2014. Prior to January 2014, Mr. Masyr was Senior Vice President and Chief Financial Officer of the Company since July 2007. Mr. Masyr was Vice President—Accounting and Finance of the Company from September 2005 to June 2007. From March 2004 to September 2005, Mr. Masyr was Vice President of Accounting and Corporate Controller of the Company.Controller. Prior to that time, Mr. Masyr was Vice President and Corporate Controller of the Company from January 2003 to March 2004. From February 2000 to December 2002, he served as the Company’sour Controller. From 1993 to February 2000, Mr. Masyr worked for PricewaterhouseCoopers LLP (formerly, Coopers & Lybrand LLP). Mr. Masyr has been a Certified Public Accountant since 1995.
Mr. Masyr currently serves on the board of directors of Archway Insurance, Ltd., a group insurance captive of which Salem is a member.
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Christopher J. Henderson
Mr. Henderson has been Senior Vice President, Legal and Human Resources, General Counsel and Corporate Secretary of the Company since 2012. Prior to 2012, Mr. Henderson was Vice President, Legal and Human Resources, General Counsel and Corporate Secretary of the Company since March 2008. Mr. Henderson was Vice President, Human Resources of the Company from August 2006 to February 2008. From 2001 to August 2006, Mr. Henderson served as Corporate Counsel for the Company.Counsel. Prior to joining the Company,us, Mr. Henderson worked for thirteen (13) years as an Attorneyattorney for Cooksey, Toolen, Gage, Duffy & Woog, first as a trial attorney and then as a transactional attorney.
COMPENSATION DISCUSSION & ANALYSIS
TheKey Terms for the CD&A and Compensation Tables
| · | Board - the Company’s Board of Directors. |
| · | NEOs - the Company’s “named executive officers,” which includes the Company’s CEO, CFO and three other most highly compensated executive officers during 2017. |
| · | Committee - the Compensation Committee of the Board. |
| · | Stock Plan - the Company’s 1999 Stock Incentive Plan, as amended and restated from time to time. |
Our Executive Compensation Philosophy
The Board of Directors of the Company believesWe believe that a key to the Company’sour current and future success is its ability to attract and retain qualified individuals who are committed to the Company’sour success and are capable of delivering on such commitment. The Company’sOur compensation and benefits programs are designed to enable the attraction, retention and motivation of the best possible employees to operate and manage the Company at all levels. At the same time, the Board of Directors of the Company is committed to a compensation policy for the Company’sour executive management that is appropriately transparent to the Company’sour stockholders and in alignment with stockholders’ best interests.
The Company’sOur executive compensation programs are based uponincorporate a pay-for-performance philosophy that provides incentives to achieve both short-term and long-term objectives and to reward both individual and Company performance. In addition to evaluating performance using financial and operational metrics, the CEO, CFO and the Company’s three other most highly compensated executive officers during 2015 (collectively, the “Named Executive Officers”)NEOs are evaluated in many areas that are not measured directly by financial or operational results. These areas include: (i) how well each Named Executive OfficerNEO helps the Companyus to achieve itsour strategic goals; (ii) each executive’sNEO’s ability to develop his or her subordinates; and (iii) each executive’sNEO’s efforts to enhance the Company’sour relationship with key stakeholders.stockholders. In 2015,2017, the Company’s Named Executive OfficersNEOs were Mr. Atsinger, Chief Executive Officer; Mr. Masyr, Executive Vice President and Chief Financial Officer; Mr. Evans, President – New Media; Mr. Santrella, President – Broadcast Media; and Mr. Henderson, SVP,Senior Vice President, Legal and Human Resources, General Counsel and Secretary.
Benchmarking
It is the intent of the Board of Directors that the Companywe be in a position to compete for highly qualified employees, including its Named Executive Officers.our NEOs. Accordingly, the process for compensation determination involves the Committee’s consideration of peer compensation levels. While the Committee does not have a formal policy regarding benchmarking, when determining recommended salary, target bonus levels and target annual long-term incentive award values for Named Executive Officers,NEOs, the Committee gives consideration to compensation practices at peer radio media companies, based on available data.
Consideration of Say-on-Pay Vote Results
We value the feedback provided by our shareholdersstockholders regarding executive compensation. ShareholdersStockholders are provided with the opportunity to cast an advisory vote on executive compensation once every three (3) years and the Compensation Committee considers the results of such vote when making compensation decisions for the Named Executive Officers.NEOs. At Salem’s 20132016 annual meeting of shareholders, shareholdersstockholders, stockholders indicated their support for the compensation of our Named Executive Officers,NEOs, with approximately 96% of the votes cast on the say-on-pay proposal votedvoting for the proposal. The next shareholderstockholder advisory vote will be held at thisthe 2019 Annual Meeting. The Compensation Committee will continue to consider the results of say-on-pay votes when making future compensation decisions for the Company’s Named Executive Officers.NEOs.
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Named Executive OfficerNEO Compensation
The Company’s Named Executive OfficerOur NEO compensation consists of four elements: (1) base salary; (2) annual cash incentive (bonus) awards; (3) long-term incentive compensation, usually in the form of stock options; and (4) perquisites and benefits. The Committee assesses each of these elements independently from the other elements to ensure that the amount paid to each Named Executive OfficerNEO for each compensation element is reasonable and, as a function of overall compensation paid, ensures that compensation for each Named Executive OfficerNEO is reasonable in its totality.
For 2017, total compensation for our NEOs was distributed as follows:
| NEO | Base Salary | Annual Incentive (Bonus) Awards | Restricted Stock Awards | Long-Term Incentive Compensation | Other Compensation | Total | ||||||||||||||||||
| Mr. Atsinger | 75 | % | — | % | 15 | % | — | % | 10 | % | 100 | % | ||||||||||||
| Mr. Masyr | 98 | % | — | % | — | % | — | % | 2 | % | 100 | % | ||||||||||||
| Mr. Evans | 96 | % | 2 | % | — | % | — | % | 2 | % | 100 | % | ||||||||||||
| Mr. Santrella | 97 | % | — | % | — | % | — | % | 3 | % | 100 | % | ||||||||||||
| Mr. Henderson | 98 | % | — | % | — | % | — | % | 2 | % | 100 | % | ||||||||||||
Employment Agreements
EachAll of the Company’s Named Executive OfficersNEOs except Mr. Atsinger isare employed pursuant to “at will” employment agreements without a fixed term length. Mr. Atsinger is employed pursuant to an employment agreement with a fixed three yearthree-year term. Each of the Named Executive OfficerNEO employment agreements provides for a contractual rate of base salary to be paid during the first three years of the contract length.each year including automatic annual increases. Mr. Atsinger’s current agreement was entered into as of July 1, 2013,2016, and will expire on June 30, 2016.2019. Mr. Masyr’s current agreement was entered into as of January 1, 2014,2017, and the contractual rate of base salary will expire on December 31, 2016.2019. Mr. Evans’ current agreement was entered into as of September 15, 2014,2017, and the contractual rate of base salary will expire on September 14, 2017.2020. Mr. Santrella’s current agreement was entered into as of January 1, 2014,2017, and the contractual rate of base salary will expire on December 31, 2016.2019. Mr. Henderson’s current agreement was entered into as of July 1, 2015, and the contractual rate of base salary will expire on June 30, 2018.
14
Base Salary
When determining recommended base salaries for the Company’s Named Executive Officers,NEOs, the Committee generally evaluates salaries of the peer companies described in the section of this Proxy Statement entitled “COMPENSATION DISCUSSION & ANALYSIS—General Discussion—Benchmarking” above.
Where appropriate, adjustments are made to reflect the Company’s relative position within the peer group. The Committee also considers other factors including: (i) individual contribution and performance; (ii) Company performance; (iii) market conditions; (iv) retention needs; (v) experience; (vi) succession planning; (vii) historic practices; and (viii) internal equity.
Increases in the base salaries of the Company’s Named Executive OfficersNEOs for 20152017 were made pursuant to the terms of the agreements described in the section of this Proxy Statement entitled “COMPENSATION DISCUSSION & ANALYSIS—Named Executive OfficerNEO Compensation—Employment Agreements” above.
Annual Cash Incentive (Bonus) Awards
All of the Company’s Named Executive Officers are eligible to receive discretionary bonuses. The amount to be paid as a bonus, if any, to any Named Executive Officer is determined after a review of the Company’s performance and the performance of each individual Named Executive Officer. Ordinarily, this determination is made in the first quarter of each year, following completion of the Company’s financial statements for the prior year.
Incentive Compensation Pool
Annual cash incentive (bonus) awards arebonuses may be granted to Named Executive OfficersNEOs from a target cash incentive (bonus) pool whichthat is established at the beginning of the prior year.year paid in cash, stock or a combination thereof. Over the course of suchthe year the Committee adjusts the size of the pool to reflect the financial performance of the Company. Although the Companywe may pay an aggregate amount of annual cash incentive (bonus) awardbonuses that is less than the full amount set forth in the pool, it generally does not pay and has not paid an aggregate amount that is greater than that which is in the pool.
Performance MeasuresAll of the NEOs are eligible to receive discretionary annual bonuses. The amount to be paid as a bonus, if any, to any NEO is determined by the Committee after a review of the Company’s performance and Award Paymentsthe performance of each individual NEO. Ordinarily, this determination is made in the first quarter of each year, following completion of the Company’s financial statements for the prior year.
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The Committee considers many factors when assessing the amount of any Named Executive Officer’sNEO’s annual cash incentive (bonus) awards.bonus. The Committee has significant flexibility in awarding cash bonuses. The Company believesWe believe that this flexibility, and the Company’sour history of rewarding performance, provide a strong motivating incentive to the Company’s Named Executive OfficersNEOs to perform in a manner that will help the Companyus continue to achieve itsour goals and objectives.
Given the changing nature and complexities of the media industry, the Committee’s decision to increase or decrease cash bonuses from year to year is generally based upon a variety of factors deemed appropriate by the Committee, including theour financial performance of the Company and the individual areas of responsibility of each Named Executive Officer.NEO. The Committee has broad discretion to make bonus determinations and it is not required to apply formulas or ranges based upon specific performance criteria. Factors generally considered by the Committee include: (i) earnings per share; (ii) return on invested capital; (iii) EBITDA growth; (iv) same station revenue growth; (v) same station operating income growth; (vi) non-broadcast EBITDA; (vii) relative stock price growth; and (viii) audience growth.
Annual Incentive (Bonus) Awards Paid in 2015for 2017 Performance
Based on the overall financial performance of the Company in 2017 as compared to predetermined benchmarks set by management for the Committee’s considerationyear, the Committee did not grant bonuses to any of the factors describedNEOs in the section of this Proxy Statement entitled “COMPENSATION DISCUSSION & ANALYSIS—Named Executive Officer Compensation—Performance Measures and Award Payments” above, and Company management’s recommendations, the actual bonuses paid to each Named Executive Officer in 20152018 for performance in 2014 were $300,000 for Mr. Atsinger, $60,000 for Mr. Masyr, $98,000 for Mr. Evans plus $20,000 for achievement of specific, pre-determined revenue goals, $88,000 for Mr. Santrella and $60,000 for Mr. Henderson.2017.
15
Long-Term Incentive Compensation
The Company believesWe believe that equity-based compensation helps ensure that the interests of the Named Executive OfficersNEOs are aligned with those of the Company’sour stockholders. The CompanyWe also believesbelieve that equity-based compensation is a material element of compensation required to recruit and retain key executives and remain competitive with the Company’sour peers. Lastly, the Company useswe use equity-based compensation, in particular stock options with long-term vesting, to incentivize long-term retention of key executives.
Stock Options
The Company’sOur equity-based compensation program is currently governed by the 1999 Stock Incentive Plan (as amended and restated through March 4, 2015) (“Stock Plan”).Plan. The Stock Plan calls for stock options to be granted with exercise prices equal to the closing market price of the Company’s classour Class A common stock on the date of grant. All stock options granted by the Companyus generally have value only if the market price of the classClass A common stock has increased by the time the options vest and are exercised. The Company’sOur option grants generally vest ratably over four years. Because the stock options do not have value unless the stock price increases above the grant date price, the Committee believes that stock options are a useful motivational tool.
In determining the size of stock option grants to Named Executive Officers,NEOs, the Committee: (i) compares equity-based compensation awards to individuals holding comparable positions in the Company’s peer group; (ii) evaluates the Black-Scholes valuation of potential stock option grants; (iii) reviews Company performance against annual performance goals; and (iv) reviews individual performance against the individual’s annual incentive bonus objectives.
In 2015Based on the overall financial performance of the Company in 2017 as compared to predetermined benchmarks set by management for the year, the Committee decideddid not grant stock options to make any of the NEOs in 2018 for performance in 2017.
In March 2016, the Committee granted nonqualified stock option grants, but anticipatesoptions exercisable for 150,000 shares of Class A common stock to Mr. Atsinger (the “2016 Grant”). At the time of the 2016 Grant, the Stock Plan contained an annual per participant limit of 100,000 shares for plan awards that were intended to qualify as “performance-based compensation” pursuant to Section 162(m) of the Internal Revenue Code (the “Section 162(m) Provision”). Although Mr. Atsinger’s 2016 Grant was not intended to qualify as performance-based compensation for purposes of Section 162(m), it will makecame to our attention that the 2016 Grant could be construed as exceeding the Section 162(m) Provision. The Board of Directors formed a special committee (“Special Committee”) to analyze the issues, and while the Section 162(m) Provision could be interpreted to only apply to stock option grantsoptions expressly intended to qualify as partSection 162(m) performance-based compensation, the Special Committee determined in February 2017 to rescind the portion of executive compensationthe 2016 Grant arguably in excess of the future.Section 162(m) Provision relating to options exercisable for 50,000 shares of Class A common stock and took similar actions with respect to a March 2013 grant to Mr. Atsinger of nonqualified stock options exercisable for 50,000 shares of Class A common stock, of which options exercisable for 50,000 shares of Class A common stock were also rescinded. At our 2017 Annual Stockholders Meeting held on May 10, 2017, a resolution was passed by the stockholders to amend our Stock Plan to increase the annual per participant award limits. On August 9, 2017, the Committee granted Mr. Atsinger 33,066 shares of restricted Class A common stock following the rescissions as permitted under the amended Stock Plan.
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The CompanyWe provides its Named Executive Officersour NEOs with perquisites and employee benefits. Except as specifically noted elsewhere in this Proxy Statement, the employee benefits programs in which the Company’s Named Executive OfficersNEOs participate (which provide benefits such as medical coverage, dental coverage, life insurance, disability insurance and annual contributions to a qualified 401(k) retirement plan) are generally the same programs offered to substantially all of the Company’sour salaried employees.
Perquisites
The Committee does not view perquisites as a significant element of its overall compensation structure, but it does believe that providing perquisites can be a useful tool in attracting, motivating and retaining executive talent. The CompanyWe provided certain perquisites to its Named Executive OfficersNEOs in 20152016 as summarized below:
Use of Vehicles
Mr. Atsinger is provided a vehicle by the Company.us. The Committee made its determination to provide Mr. Atsinger with suchthis perquisite based upon: (i) the fact that this perquisite has been given to this executive for many years, and (ii) a comparison of comparable perquisites for similar positions at peer companies.
Supplemental Medical, Travel and Expense Reimbursement for Mr. Atsinger
In addition to the basic group medical plan offered all employees, Mr. Atsinger receives reimbursement for all travel and medical expenses incurred by him for any medical treatment elected by him. This perquisite includes all medical expenses that are not covered under the Company’sour medical benefits or plans. The CompanyWe may elect to provide this perquisite by obtaining supplemental medical insurance covering Mr. Atsinger at the Company’sour cost or reimbursing Mr. Atsinger for any health, dental or vision expenses incurred by him that are not covered by the Company’sour medical benefits programs. The CompanyWe also providesprovide full reimbursement to Mr. Atsinger for any income or employment taxes applicable to this perquisite.
Payment of Filing and Regulatory Fees
The Company paysWe pay for the preparation of all regulatory and government filings required to be made by the Named Executive OfficersNEOs solely as a result of their position as our officers or directors of the Company or of the Company’s wholly-owned subsidiary, Salem Communications Holding Corporation. The Companydirectors. We also payspay for the preparation and filing of all regulatory filings (including without limitation Hart-Scott-Rodino Act filing fees) that Mr. Atsinger is required to make as a result of the exercise of options granted to him for the purchase of the Company’sour stock. The Committee’s determination to provide this perquisite to Mr. Atsinger was based on the possibility that suchthese filings will need to be made if Mr. Atsinger elects to exercise any of his vested outstanding stock options.
Supplemental Life Insurance Coverage for Messrs. Evans and Santrella
In addition to the basic life insurance provided by the Companywe provide to all employees, the Company reimburseswe reimburse Messrs. Evans and Santrella an amount up to a maximum of $3,500 per year for life insurance on Mr. Evan’s life and Mr. Santrella’s life. SuchWe provide this reimbursement based on the fact that Messrs. Evans and Santrella are our division presidents and oversee all revenue generation efforts. This reimbursement is grossed up to cover all statutory withholdings, and state and federal income taxes.
Split-Dollar Life Insurance
Since 2003, the Company hasWe have maintained separate split-dollar life insurance policies covering Mr.for our Chairman and Mrs. AtsingerChief Executive Officer since 1997 in the amount of $20,000,000 each. PursuantSince 2003, we have been the owner of the split-dollar life insurance policies and pursuant to the terms of these policies, the Companywe will receive an amount equal to the sum of all premiums paid by the Companyus (without interest) through such date and the beneficiaries will receive all remaining insurance benefits under these policies.
Other Benefits
401(k) Plan
We maintain a 401(k) defined contribution plan (the “401(k) Plan”). Participation in this 401(k) Plan by Named Executive Officers is on the same basis as the Company’s other, which covers all eligible employees (as defined in the 401(k) Plan)., including the NEOs. Participation in the 401(k) Plan by the NEOs is on the same basis as our other eligible employees. Participants are allowed to make non-forfeitable contributions up to 60% of their annual salary, but may not exceed the annual maximum contribution limitations established by the Internal Revenue Service. We currently match 50% on the first 5% of the amounts contributed by each participant. During the year ending December 31, 2017, we contributed and expensed $1.9 million to the 401(k) Plan.
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Severance and Change-in-Control Benefits
Change in Control Agreements
The Company hasWe have not entered into change-in-control agreementsa change in control agreement with any of the Company’s corporate Officers, including each of the Named Executive Officers.our NEOs.
Severance and Other Termination Agreements
Upon certain types of terminations of employment, (other than a termination following a change in control of the Company), severance benefits may be paid to the Named Executive Officers.NEOs. The severance benefits payable to each of the Named Executive OfficersNEOs are addressed in their respective employment agreements and each of themNEO would receive the benefits provided to him under theirthe NEO’s specific agreement. The severance and termination payments and benefits that would occur in the event of termination of employment of each of the Named Executive Officers are more fully described in the section of this Proxy Statement entitled “EXECUTIVE COMPENSATION—Potential Payments to the Company’s Named Executive Officers UponNEOs upon Termination or Change in Control”.
Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended, places a limit of one million dollars ($1,000,000)$1,000,000 on the amount of compensation that the Companywe may deduct in any one year with respect to the Company’sour CEO as of the close of the taxable year and the next three most highly compensated executive officers, excluding the CFO.
The Committee believes that tax deductibility is an important factor, but only one factor, to be considered when evaluating its compensation policies and practices. While the Company’sour compensation practices have generally been designed and implemented in a manner which would maintain tax deductibility, the Committee believes that in certain circumstances the interests of the Company may be better served by providing compensation that is not fully tax deductible. Based on the Company’s current compensation plans and policies and proposed regulations interpreting the Internal Revenue Code, however,So, the Committee believesretains the discretion to award compensation that for the near future, any loss in taxexceeds Section 162(m)’s deductibility for executive compensation will not be material in amount.
limit.
Security Ownership Requirements/Guidelines
The Corporate Governance Principles adopted by the Company’s Board of Directors encourage Company executives and board members to purchase shares of the Company’s stock. The Board of Directors recognizes, however, that the number of shares of Company stock owned by any executive or Director is a personal decision. Accordingly, the Company has determined not to adopt a policy requiring ownership by its Named Executive Officers or Directors of a minimum number of shares of Company stock.
17
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This Compensation Committee Report shall not be deemed soliciting material or to be filed with the Securities and Exchange Commission (“SEC”), nor shall any information in this report be incorporated by reference by any general statement into any past or future filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent that Salem Media Group, Inc. and its subsidiaries (the “Company”) specifically incorporates this information by reference into such filing, and shall not otherwise be deemed filed under such Acts.
The Compensation Committee has reviewed and discussed the discussion and analysis of the Company’s executive compensation which appears above with management, and, based on such review and discussion, the Compensation Committee recommended to the Company’s Board of Directors that the above disclosure be included in this Definitive Proxy Statement filed on Schedule 14A under the Securities Exchange Act of 1934, as amended.
The Compensation Committee currently comprisesis composed of Richard A. Riddle, Chairman, Roland S. Hinz and James Keet Lewis.
| COMPENSATION COMMITTEE | |
| Richard A. Riddle, Chairman | |
| Roland S. Hinz, | |
| James Keet Lewis | |
| March |
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The table below summarizes the total compensation paid to or earned byof the Named Executive OfficersNEOs for the Company’s fiscal years ended December 31, 2015,2017, December 31, 2014,2016, and December 31, 2013:2015:
| Name and Principal Position | Year | Salary ($) | Bonus (1) ($) | Option Awards (2) ($) | All Other Compensation (3/4) ($) | Total ($) | Year | Salary ($) | Bonus (1) ($) | Restricted Stock Awards (2) ($) | Option Awards (3) ($) | All Other Compensation (4)(5) ($) | Total (6) ($) | |||||||||||||||||||||||||||||||||||||
| Edward G. Atsinger III Chief Executive Officer | 2015 | 998,846 | 300,000 | — | 123,229 | 1,422,075 | 2017 | 982,404 | — | 193,436 | — | 125,541 | 1,301,381 | |||||||||||||||||||||||||||||||||||||
| 2014 | 936,442 | 315,000 | — | 118,196 | 1,369,638 | |||||||||||||||||||||||||||||||||||||||||||||
| 2013 | 897,308 | 171,000 | 844,477 | 123,705 | 2,036,490 | 2016 | 977,423 | — | 308,517 | 198,750 | 125,117 | 1,609,807 | ||||||||||||||||||||||||||||||||||||||
| 2015 | 998,846 | 325,000 | — | — | 123,229 | 1,447,075 | ||||||||||||||||||||||||||||||||||||||||||||
| Evan D. Masyr Executive Vice President & Chief Financial Officer | 2015 | 404,375 | 60,000 | — | 6,625 | 471,000 | 2017 | 410,395 | — | — | — | 6,750 | 417,145 | |||||||||||||||||||||||||||||||||||||
| 2014 | 376,231 | 72,500 | — | 4,428 | 453,159 | 2016 | 402,308 | — | 61,705 | 33,125 | 6,625 | 503,763 | ||||||||||||||||||||||||||||||||||||||
| 2013 | 341,346 | 39,000 | 197,649 | 24,879 | 602,874 | 2015 | 404,375 | 65,000 | — | — | 6,625 | 476,000 | ||||||||||||||||||||||||||||||||||||||
| David A. R. Evans President—New Media | 2015 | 513,115 | 118,000 | — | 10,763 | 641,878 | 2017 | 522,731 | 10,000 | — | — | 13,334 | 546,065 | |||||||||||||||||||||||||||||||||||||
| 2014 | 478,058 | 185,000 | — | 10,303 | 673,361 | |||||||||||||||||||||||||||||||||||||||||||||
| 2013 | 442,365 | 91,000 | 205,595 | 30,758 | 769,718 | 2016 | 509,154 | — | 89,987 | 33,125 | 13,131 | 645,397 | ||||||||||||||||||||||||||||||||||||||
| 2015 | 513,115 | 100,000 | — | — | 10,763 | 623,878 | ||||||||||||||||||||||||||||||||||||||||||||
| David P. Santrella President—Broadcast Media | 2015 | 458,894 | 88,000 | — | 13,173 | 560,067 | 2017 | 499,135 | — | — | — | 13,298 | 512,433 | |||||||||||||||||||||||||||||||||||||
| 2014 | 428,616 | 94,000 | — | 12,935 | 535,551 | 2016 | 454,808 | — | 92,554 | 33,125 | 13,173 | 593,660 | ||||||||||||||||||||||||||||||||||||||
| 2013 | 390,192 | 54,000 | 207,642 | 26,830 | 678,664 | 2015 | 458,894 | 100,000 | — | — | 13,173 | 572,067 | ||||||||||||||||||||||||||||||||||||||
| Christopher J. Henderson SVP, Legal and Human Resources, General Counsel and Secretary | 2015 | 326,308 | 60,000 | — | 4,212 | 390,520 | 2017 | 344,808 | — | — | — | 6,332 | 351,140 | |||||||||||||||||||||||||||||||||||||
| 2014 | 295,240 | 50,000 | — | 6,375 | 351,615 | 2016 | 334,846 | — | 61,705 | 33,125 | 6,625 | 436,301 | ||||||||||||||||||||||||||||||||||||||
| 2013 | 268,125 | 15,000 | 181,756 | 25,462 | 490,343 | 2015 | 326,308 | 65,000 | — | — | 4,212 | 395,520 | ||||||||||||||||||||||||||||||||||||||
| (1) | Amounts set forth in the “Bonus” column represent bonuses |
| (2) | On February 24, 2017, a restricted stock award of 178,592 total shares was granted to certain members of management that vested immediately in settlement of annual bonuses for performance during the 2016 calendar year. The fair value of each restricted stock award was measured based on the grant date market price of our common shares and expensed as of the vesting date. These restricted stock awards contained transfer restrictions under which they could not be sold, pledged, transferred or assigned until three (3) months from vesting date. Recipients of these restricted stock awards were entitled to all the rights of absolute ownership of therestricted stock from the date of grant, including the right to vote the shares and to receive dividends.Restricted stock awards are independent of option grants and are granted at no cost to the recipient other than applicable taxes owed by the recipient. The awards were considered issued and outstanding from the vest date of grant. |
On August 9, 2017, a restricted stock award of 33,066 shares was granted to Edward G. Atsinger III that vested immediately. The fair value of the restricted stock award was measured based on the grant date market price of our common shares and expensed as of the vesting date. The restricted stock award contained transfer restrictions under which they could not be sold, pledged, transferred or assigned until ninety (90) days from the vesting date. The recipient of this restricted stock award is entitled to all of the rights of absolute ownership of therestricted stock from the date of grant, including the right to vote the shares and to receive dividends.Restricted stock awards are independent of option grants and are granted at no cost to the recipient other than applicable taxes owed by the recipient. The award was considered issued and outstanding from the vest date of grant.
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| (3) | Represents the aggregate grant date fair value of option awards granted within the fiscal year in accordance with FASB ASC Topic 718 for stock-based compensation. These amounts reflect the total grant date fair value for these awards and do not correspond to the actual cash value that will be recognized by the grantee when received. For a detailed discussion of the assumptions made in the valuation of option awards, please see the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. |
| (4) | Amounts set forth in the All Other Compensation column consist of the following: |
Item | Mr. | Mr. Masyr ($) | Mr. | Mr. | Mr. | |||||||||||||||
| Perquisites and Other Personal Benefits (2017) | 106,085 | — | 6,584 | 6,548 | — | |||||||||||||||
| Company Contributions to 401(k) Plan (2017) | — | 6,750 | 6,750 | 6,750 | 6,332 | |||||||||||||||
| Medical, Dental, Life, Vision and Disability Premiums (2017) | 19,456 | — | — | — | — | |||||||||||||||
| TOTAL (2017) | 125,541 | 6,750 | 13,334 | 13,298 | 6,332 | |||||||||||||||
| (1) | Includes the following perquisites and personal benefits which have been valued by us based upon the incremental cost to us of providing these perquisites and personal benefits to the Named Executive Officers: |
| Perquisite or Personal Benefit | Mr. | Mr. | Mr. ($) | Mr. | Mr. | |||||||||||||||
| Personal Use of Company Vehicle (2017) | 4,271 | — | — | — | — | |||||||||||||||
| Split-Dollar Life Insurance Premiums (2017) | 99,027 | — | — | — | — | |||||||||||||||
| Supplemental Medical, Travel and Expense Reimbursement (2017) | 2,787 | — | — | — | — | |||||||||||||||
| Supplemental Life Insurance Premiums (2017) | — | — | 6,584 | 6,548 | — | |||||||||||||||
| Miscellaneous (2017) | — | — | — | — | — | |||||||||||||||
| TOTAL (2017) | 106,085 | — | 6,584 | 6,548 | — | |||||||||||||||
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Grants of Plan-Based Awards in 2017
The Committee granted restricted stock to each Named Executive Officer on February 24, 2017 and to the CEO on August 9, 2017 under the Stock Plan. The Named Executive Officers were awarded the number of restricted stock units shown in the table below.
GRANT OF PLAN-BASED AWARDS(1)
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | Option Awards (2) | ||||||||||||||||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | All (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/sh) | Grant Date Fair Value of Stock and Option Awards(3) ($) | |||||||||||||||
| Mr. Atsinger | 2/24/2017 | N/A | N/A | N/A | N/A | N/A | N/A | 42,554 | N/A | N/A | 300,006 | |||||||||||||||
| Mr. Atsinger | 8/09/2017 | N/A | N/A | N/A | N/A | N/A | N/A | 33,066 | N/A | N/A | 224,849 | |||||||||||||||
| Mr. Masyr | 2/24/2017 | N/A | N/A | N/A | N/A | N/A | N/A | 8,511 | N/A | N/A | 60,002 | |||||||||||||||
| Mr. Evans | 2/24/2017 | N/A | N/A | N/A | N/A | N/A | N/A | 12,412 | N/A | N/A | 87,504 | |||||||||||||||
| Mr. Santrella | 2/24/2017 | N/A | N/A | N/A | N/A | N/A | N/A | 12,766 | N/A | N/A | 90,000 | |||||||||||||||
| Mr. Henderson | 2/24/2017 | N/A | N/A | N/A | N/A | N/A | N/A | 8,511 | N/A | N/A | 60,002 | |||||||||||||||
| (1) | Awards granted under our Stock Plan. |
| (2) | All stock options granted hereunder are service-based awards to purchase shares of our Class A common stock pursuant to the terms of the Stock Plan. The options vest ratably in equal 25% installments of the first, second, third and fourth anniversary of the option grant date, with each installment expiring on the fifth anniversary of its vest date. |
| (3) | The value for the stock option awards listed in this column is calculated as the total grant date fair market value determined on an aggregate basis for each award in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 for stock-based compensation. These amounts reflect the total grant date fair value for these awards and do not correspond to the actual cash value that will be recognized by the grantee when received. For a detailed discussion of the assumptions made in the valuation of option awards, please see the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, |
| Item | Mr. Atsinger ($) | Mr. Masyr ($) | Mr. Evans ($) | Mr. Santrella ($) | Mr. Henderson ($) | |||||||||||||||
| Perquisites and Other Personal Benefits (2015) | 106,820 | — | 4,138 | 6,548 | — | |||||||||||||||
| Company Contributions to 401(k) Plan (2015) | — | 6,625 | 6,625 | 6,625 | 4,212 | |||||||||||||||
| Medical, Dental, Life, Vision and Disability Premiums (2015) | 16,409 | — | — | — | — | |||||||||||||||
| TOTAL (2015) | 123,229 | 6,625 | 10,763 | 13,173 | 4,212 | |||||||||||||||
Perquisite or Personal Benefit | Mr. | Mr. | Mr. | Mr. | Mr. | |||||||||||||||
| Personal Use of Company Vehicle (2015) | 5,346 | — | — | — | — | |||||||||||||||
| Split-Dollar Life Insurance Premiums (2015) | 95,304 | — | — | — | — | |||||||||||||||
| Supplemental Medical, Travel and Expense Reimbursement (2015) | 6,170 | — | — | — | — | |||||||||||||||
| Supplemental Life Insurance Premiums (2015) | — | — | 4,138 | 6,548 | — | |||||||||||||||
| TOTAL (2015) | 106,820 | — | 4,138 | 6,545 | — | |||||||||||||||
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Outstanding Equity Awards at Fiscal Year-End
The following table provides information as of December 31, 2015,2017, in respect of all outstanding equity awards made toheld by the Company’s NEOs that are exercisable into the Company’s Class A common stock that may be issued under the Stock Plan, the Company’s only existing equity compensation plan.NEOs.
| Option Awards | Option Awards | |||||||||||||||||||||||||||||
| Number of Securities Underlying Unexercised Options (#) | Number of Options | Number of | Number of | |||||||||||||||||||||||||||
| Name | Exercisable | Unexercisable | Option Exercise Price ($) | Option Expiration Date | Exercisable | Unexercisable | Option | Option | ||||||||||||||||||||||
| Edward G. Atsinger III | 50,000 | $ | 6.92 | 03/11/2019 | 50,000 | $ | 6.92 | 03/11/2020 | ||||||||||||||||||||||
| 50,000 | $ | 6.92 | 03/11/2020 | |||||||||||||||||||||||||||
| 50,000 | (1) | $ | 6.92 | 03/11/2021 | ||||||||||||||||||||||||||
| Evan D. Masyr | 2,964 | $ | 5.20 | 03/08/2016 | ||||||||||||||||||||||||||
| 6,000 | $ | 5.20 | 03/08/2017 | 50,000 | $ | 6.92 | 03/11/2021 | |||||||||||||||||||||||
| 6,000 | $ | 5.20 | 03/08/2018 | 2,239 | $ | 4.85 | 03/08/2022 | |||||||||||||||||||||||
| 6,000 | $ | 5.20 | 03/08/2019 | 37,500 | (2) | $ | 4.85 | 03/08/2023 | ||||||||||||||||||||||
| 7,000 | $ | 2.38 | 09/28/2017 | 25,000 | (4) | $ | 4.85 | 03/08/2024 | ||||||||||||||||||||||
| 7,000 | $ | 2.38 | 09/28/2018 | |||||||||||||||||||||||||||
| 7,000 | $ | 2.38 | 09/28/2019 | |||||||||||||||||||||||||||
| Evan D. Masyr | 8,750 | $ | 6.92 | 03/11/2019 | ||||||||||||||||||||||||||
| 7,000 | $ | 2.38 | 09/28/2020 | 8,750 | $ | 6.92 | 03/11/2020 | |||||||||||||||||||||||
| 16,000 | $ | 2.74 | 03/07/2020 | 8,750 | $ | 6.92 | 03/11/2021 | |||||||||||||||||||||||
| 8,750 | $ | 6.92 | 03/11/2019 | 16,000 | $ | 2.74 | 03/07/2022 | |||||||||||||||||||||||
| 8,750 | $ | 6.92 | 03/11/2020 | 6,250 | $ | 4.85 | 03/08/2022 | |||||||||||||||||||||||
| 16,000 | (2) | $ | 2.74 | 03/07/2021 | 8,750 | $ | 6.92 | 03/11/2022 | ||||||||||||||||||||||
| 16,000 | (3) | $ | 2.74 | 03/07/2022 | 16,000 | (1) | $ | 2.74 | 03/07/2022 | |||||||||||||||||||||
| 16,000 | (4) | $ | 2.74 | 03/07/2022 | 16,000 | (3) | $ | 2.74 | 03/07/2022 | |||||||||||||||||||||
| 16,000 | (5) | $ | 2.74 | 03/07/2022 | 6,250 | (2) | $ | 4.85 | 03/08/2023 | |||||||||||||||||||||
| 8,750 | (1) | $ | 6.92 | 03/11/2021 | 6,250 | (4) | $ | 4.85 | 03/08/2024 | |||||||||||||||||||||
| 8,750 | (6) | $ | 6.92 | 03/11/2022 | 6,250 | (5) | $ | 4.85 | 03/08/2025 | |||||||||||||||||||||
| David A.R. Evans | 6,250 | $ | 11.80 | 03/14/2016 | 8,750 | $ | 6.92 | 03/11/2019 | ||||||||||||||||||||||
| 6,000 | $ | 5.20 | 03/08/2019 | 8,750 | $ | 6.92 | 03/11/2020 | |||||||||||||||||||||||
| 8,750 | $ | 2.38 | 09/28/2019 | 8,750 | $ | 6.92 | 03/11/2021 | |||||||||||||||||||||||
| 8,750 | $ | 2.38 | 09/28/2020 | 8,750 | $ | 6.92 | 03/11/2022 | |||||||||||||||||||||||
| 8,750 | $ | 6.92 | 03/11/2019 | 6,250 | $ | 4.85 | 03/08/2022 | |||||||||||||||||||||||
| 8,750 | $ | 6.92 | 03/11/2020 | 6,250 | (2) | $ | 4.85 | 03/08/2023 | ||||||||||||||||||||||
| 50,000 | (2) | $ | 2.74 | 03/07/2021 | 6,250 | (4) | $ | 4.85 | 03/08/2024 | |||||||||||||||||||||
| 8,750 | (1) | $ | 6.92 | 03/11/2021 | 6,250 | (5) | $ | 4.85 | 03/08/2025 | |||||||||||||||||||||
| 8,750 | (6) | $ | 6.92 | 03/11/2022 | ||||||||||||||||||||||||||
| David P. Santrella | 750 | $ | 11.80 | 03/14/2016 | 8,750 | $ | 6.92 | 03/11/2019 | ||||||||||||||||||||||
| 8,746 | $ | 2.38 | 09/28/2018 | 8,750 | $ | 6.92 | 03/11/2020 | |||||||||||||||||||||||
| 8,750 | $ | 2.38 | 09/28/2020 | 8,750 | $ | 6.92 | 03/11/2021 | |||||||||||||||||||||||
| 20,000 | $ | 2.74 | 03/07/2020 | 20,000 | $ | 2.74 | 03/07/2022 | |||||||||||||||||||||||
| 8,750 | $ | 6.92 | 03/11/2019 | 6,250 | $ | 4.85 | 03/08/2022 | |||||||||||||||||||||||
| 8,750 | $ | 6.92 | 03/11/2020 | 8,750 | $ | 6.92 | 03/11/2022 | |||||||||||||||||||||||
| 20,000 | (2) | $ | 2.74 | 03/07/2021 | 20,000 | (1) | $ | 2.74 | 03/07/2022 | |||||||||||||||||||||
| 20,000 | (3) | $ | 2.74 | 03/07/2022 | 20,000 | (3) | $ | 2.74 | 03/07/2022 | |||||||||||||||||||||
| 20,000 | (4) | $ | 2.74 | 03/07/2022 | 6,250 | (2) | $ | 4.85 | 03/08/2023 | |||||||||||||||||||||
| 20,000 | (5) | $ | 2.74 | 03/07/2022 | 6,250 | (4) | $ | 4.85 | 03/08/2024 | |||||||||||||||||||||
| 8,750 | (1) | $ | 6.92 | 03/11/2021 | 6,250 | (5) | $ | 4.85 | 03/08/2025 | |||||||||||||||||||||
| 8,750 | (6) | $ | 6.92 | 03/11/2022 | ||||||||||||||||||||||||||
| Christopher J. Henderson | 7,000 | $ | 2.38 | 09/28/2020 | ||||||||||||||||||||||||||
| 12,000 | $ | 2.74 | 03/07/2020 | |||||||||||||||||||||||||||
| 8,750 | $ | 6.92 | 03/11/2020 | |||||||||||||||||||||||||||
| 12,000 | (2) | $ | 2.74 | 03/07/2021 | ||||||||||||||||||||||||||
| 12,000 | (3) | $ | 2.74 | 03/07/2022 | ||||||||||||||||||||||||||
| 12,000 | (4) | $ | 2.74 | 03/07/2022 | ||||||||||||||||||||||||||
| 12,000 | (5) | $ | 2.74 | 03/07/2022 | ||||||||||||||||||||||||||
| 8,750 | (1) | $ | 6.92 | 03/11/2021 | ||||||||||||||||||||||||||
| 8,750 | (6) | $ | 6.92 | 03/11/2022 | ||||||||||||||||||||||||||
| 23 |
| Option Awards | ||||||||||||||||
| Number of Securities Underlying Unexercised Options (#) | Number of Securities Underlying Unexercised Options (#) | |||||||||||||||
| Name | Exercisable | Unexercisable | Option Exercise Price ($) | Option Expiration Date | ||||||||||||
| Christopher J. Henderson | 6,892 | $ | 2.38 | 09/28/2020 | ||||||||||||
| 12,000 | $ | 2.74 | 03/07/2020 | |||||||||||||
| 12,000 | $ | 2.74 | 03/07/2021 | |||||||||||||
| 12,000 | $ | 2.74 | 03/07/2022 | |||||||||||||
| 8,750 | $ | 6.92 | 03/11/2020 | |||||||||||||
| 8,750 | $ | 6.92 | 03/11/2021 | |||||||||||||
| 6,250 | $ | 4.85 | 03/08/2022 | |||||||||||||
| 8,750 | $ | 6.92 | 03/11/2022 | |||||||||||||
| 12,000 | (1) | $ | 2.74 | 03/07/2022 | ||||||||||||
| 12,000 | (3) | $ | 2.74 | 03/07/2022 | ||||||||||||
| 6,250 | (2) | $ | 4.85 | 03/08/2023 | ||||||||||||
| 6,250 | (4) | $ | 4.85 | 03/08/2024 | ||||||||||||
| 6,250 | (5) | $ | 4.85 | 03/08/2025 | ||||||||||||
(1) These options vested March 7, 2018.
(2) These options vested March 8, 2018.
(3) Unexercisable options vest March 7, 2019.
(4) Unexercisable options vest March 8, 2019.
(5) Unexercisable options vest March 8, 2020.
21
| 24 |
Option Exercises and Stock Vested
The following table sets forth the stock options exercised by the Named Executive OfficersNEOs in 2015. None of the Named Executive Officers received stock awards in 2015; accordingly, no vesting of stock awarded in 2015 occurred during 2015.2017.
OPTION EXERCISES AND STOCK VESTED
| Option Awards | Option Awards | Stock Awards | ||||||||||||||||||||||
| Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares | Value Realized | Number of Shares | Value Realized | ||||||||||||||||||
| Edward G. Atsinger III | — | — | 35,261 | 82,311 | 75,620 | 501,953 | ||||||||||||||||||
| Evan D. Masyr | 3,036 | $ | 3,036 | — | — | 8,511 | 61,705 | |||||||||||||||||
| David A.R. Evans | 50,000 | $ | 165,500 | — | — | 12,412 | 89,987 | |||||||||||||||||
| David Santrella | — | — | — | — | 12,766 | 92,553 | ||||||||||||||||||
| Christopher J. Henderson | — | — | 108 | 553 | 8,511 | 61,705 | ||||||||||||||||||
We maintain a 401(k) defined contribution plan (the “401(k) Plan”), which covers all eligible employees (as defined in the 401(k) Plan). Participants are allowed to make non-forfeitable contributions up to 60% of their annual salary, but may not exceed the annual maximum contribution limitations established by the Internal Revenue Service. The Company currently matches 50% on the first 5% of the amounts contributed by each participant. During the year ending December 31, 2015, Salem contributed and expensed $1.9 million to the 401(k) Plan.
Potential Payments to the Company’s NEOs upon Termination or Change in Control
Term Employment Agreement with Mr. Atsinger
Under the terms of his employment agreement, if Mr. Atsinger’s employment is terminated by reason of death prior to the expiration of the term, his estate is entitled to receive: (a) the actual earned and accrued portion of his base salary to the extent not already paid, (b) the actual earned and accrued portion of his incentive bonus for any period not already paid, (c) amounts to which he is entitled under the Company’sour benefit plans, (d) immediate, 100% vesting of outstanding unvested stock options and other equity-based awards, and (e) continued coverage of Mr. Atsinger’s dependents (if any) under all applicable Company health benefit plans for a period of twelve (12)12 months.
If Mr. Atsinger’s employment is terminated upon disability (as defined in his employment agreement), he is entitled to receive: (a) the actual earned and accrued portion of his base salary to the extent not already paid, (b) a severance payment equal to 100% of his then current annual base salary for a period of fifteen (15)15 months, (c) the actual earned and accrued portion of his incentive bonus for any period not already paid, (d) amounts to which he is entitled under the Company’sour benefit plans, and (e) immediate, 100% vesting of outstanding unvested stock options and other equity-based awards.
If Mr. Atsinger’s employment is terminated by the Companyus without cause (as defined in his employment agreement), he is entitled to receive: (a) the actual earned and accrued portion of his base salary to the extent not already paid, (b) the actual earned and accrued portion of his incentive bonus for any period not already paid, and (c) a severance payment equal to his then current annual base salary for a period of six (6) months or the remainder of the term of the employment agreement, whichever is longer.
The employment agreement also contains provisions that: (a) grant the Companyus a right of first refusal on all corporate opportunities presented to Mr. Atsinger (b) restrict Mr. Atsinger’s ability to engage in any business that is competitive with the Company’s business for a period of two (2) years following retirement or termination for cause or without good reason, and (c)(b) restrict Mr. Atsinger’s ability to interfere with the business of the Company or solicit Companyour employees for a period of two (2) years following suchhis retirement or termination. Compliance by Mr. Atsinger with these obligations is a material condition to the Company’sour obligation to provide the above termination benefits.
At-Will Employment Agreement with Mr. Masyr
Under the terms of his employment agreement, if Mr. Masyr’s employment is terminated by reason of death, disability or otherwise for cause (as defined in his employment agreement), he or his estate is entitled to receive: (a) a payment equal to his then base salary accrued through the date of termination to the extent not already paid and (b) his actual earned incentive bonus for any period not already paid.
| 25 |
If Mr. Masyr’s employment is terminated by the Companyus without cause (as defined in his employment agreement), he is also entitled to receive a severance payment in an amount equal to the base salary Mr. Masyr would have otherwise received for a period of six (6) months from the date of termination had he remained employed with the Company.us.
The employment agreement with Mr. Masyr also contains a provision that restricts his ability to interfere with the business of the Company or solicit Companyour employees for a period of six (6) months following termination of employment for any reason. Compliance by Mr. Masyr with this obligation is a material condition to the Company’sour obligation to provide the above termination benefits.
At-Will Employment Agreement with Mr. Evans
Under the terms of his employment agreement, if Mr. Evans’ employment is terminated by reason of death, disability or otherwise for cause (as defined in his employment agreement), he or his estate is entitled to receive: (a) a payment equal to his then base salary through the date of termination to the extent not already paid and (b) his actual earned incentive bonus for any period not already paid. Additionally, if Mr. Evan’s employment is terminated by reason of death, his estate is entitled to receive immediate, 100% vesting of outstanding unvested stock options and other equity-based awards.
If Mr. Evans’ employment is terminated by the Companyus without cause (as defined in his employment agreement), he is also entitled to receive: (a) a severance payment in an amount equal to the base salary Mr. Evans would have otherwise received for a period of six (6) months from the date of termination had he remained employed with the Company,us and (b) professional outplacement assistance for twelve (12)12 consecutive months from the termination date.
The employment agreement with Mr. Evans also contains a provision that restricts his ability to interfere with the business of the Company or solicit Companyour employees for a period of six months following termination of employment for any reason. Compliance by Mr. Evans with these obligations is a material condition to the Company’sour obligation to provide the above termination benefits.
At-Will Employment Agreement with Mr. Santrella
Under the terms of his employment agreement, if Mr. Santrella’s employment is terminated by reason of death, disability or otherwise for cause (as defined in his employment agreement), he or his estate is entitled to receive: (a) a payment equal to his then base salary accrued through the date of termination to the extent not already paid and (b) his actual earned incentive bonus for any period not already paid.
If Mr. Santrella’s employment is terminated by the Companyus without cause (as defined in his employment agreement), he is also entitled to receive a severance payment in an amount equal to the base salary Mr. Santrella would have otherwise received for a period of six (6) months from the date of termination had he remained employed with the Company.us.
The employment agreement with Mr. Santrella also contains a provision that restricts his ability to interfere with the business of the Company or solicit Companyour employees for a period of six (6) months following termination of employment for any reason. Compliance by Mr. Santrella with this obligation is a material condition to the Company’sour obligation to provide the above termination benefits.
At-Will Employment Agreement with Mr. Henderson
Under the terms of his employment agreement, if Mr. Henderson’s employment is terminated by reason of death, disability or otherwise for cause (as defined in his employment agreement), he or his estate is entitled to receive: (a) a payment equal to his then base salary accrued through the date of termination to the extent not already paid and (b) his actual earned incentive bonus for any period not already paid.
If Mr. Henderson’s employment is terminated by the Companyus without cause (as defined in his employment agreement), he is also entitled to receive a severance payment in an amount equal to the base salary Mr. Henderson would have otherwise received for a period of six (6) months from the date of termination had he remained employed with the Company.us.
Payments in the Event of Death
The following table sets forth the estimated value of payments that the estate of the Company’s Named Executive OfficersNEOs would be entitled to receive assuming a death occurring as of December 31, 20152017 and that the price per share of the Company’s classour Class A common stock is $4.98,$4.50, which is an amount equal to the stock’s NASDAQ market closing price on December 31, 2015.2017.
| Name | Value of Salary ($) | Value of Earned ($) | Value of Equity ($) | Value of ($) | TOTAL ($) | |||||||||||||||
| Mr. Atsinger | 15,000 | - | - | 4,745 | 19,745 | |||||||||||||||
| Mr. Masyr | 6,000 | - | - | - | 6,000 | |||||||||||||||
| Mr. Evans | 7,769 | - | 112,000 | - | 119,769 | |||||||||||||||
| Mr. Santrella | 6,808 | - | - | - | 6,808 | |||||||||||||||
| Mr. Henderson | 5,077 | - | - | - | 5,077 | |||||||||||||||
| 26 |
Name | Value of Equity Awards Vesting on Termination ($) | Life Insurance Proceeds ($) | Value of Continued Benefits Coverage ($) | TOTAL ($) | ||||||||||||
| Mr. Atsinger | — | 19,250,552 | 4,968 | 19,255,520 | ||||||||||||
| Mr. Masyr | — | 474,000 | — | 474,000 | ||||||||||||
| Mr. Evans | — | 3,000,000 | — | 3,000,000 | ||||||||||||
| Mr. Santrella | — | 2,500,000 | — | 2,500,000 | ||||||||||||
| Mr. Henderson | — | 409,000 | — | 409,000 | ||||||||||||
Payments in the Event of Disability
The following table sets forth the estimated value of benefits that the Company’s Named Executive OfficersNEOs would be entitled to receive assuming a disability occurring as of December 31, 2015.2017.
Disability as defined in the employment agreement for Mr. Atsinger generally means any mental or physical impairment which prevents the executive at any time during the term from performing the essential functions of his full duties for a period of 180 days within any 270 day period and the executive fails to return to work within 10 days of notice by the Companyus of itsour intention to terminate employment. Disability as defined in the employment agreements for Messrs. Masyr, Evans, Santrella and Henderson generally means any mental or physical impairment which prevents the executive from performing the essential functions of his full duties for a period of 90 days during any 365 day period and the executive fails to return to work within 10 days of notice by the Companyus of itsour intention to terminate employment.
| Name | Value of Salary ($) | Value of ($) | Value of Equity ($) | Value of ($) | TOTAL ($) | |||||||||||||||
| Mr. Atsinger | 1,233,750 | - | - | - | 1,233,750 | |||||||||||||||
| Mr. Masyr | 6,000 | - | - | - | 6,000 | |||||||||||||||
| Mr. Evans | 7,769 | - | - | - | 7,769 | |||||||||||||||
| Mr. Santrella | 6,808 | - | - | - | 6,808 | |||||||||||||||
| Mr. Henderson | 5,077 | - | - | - | 5,077 | |||||||||||||||
| Name | Value of Salary Continuation and Severance ($) | Value of Equity Awards Vesting on Termination ($) | Value of Benefits Coverage ($) | TOTAL ($) | ||||||||||||
| Mr. Atsinger | 1,231,250 | — | — | 1,231,250 | ||||||||||||
| Mr. Masyr | — | — | — | — | ||||||||||||
| Mr. Evans | — | — | — | — | ||||||||||||
| Mr. Santrella | — | — | — | — | ||||||||||||
| Mr. Henderson | — | — | — | — | ||||||||||||
Payments in the Event of Termination Without Cause
The following table sets forth the estimated value of benefits that the Company’s Named Executive OfficersNEOs would be entitled to receive assuming a termination without cause occurring as of December 31, 2015.2017.
Termination for cause generally means: (a) death; (b) disability (as generally defined above); (c) continued gross negligence, malfeasance or gross insubordination in performing duties assigned to the executive; (d) a conviction of a crime involving moral turpitude; (e) an egregious act of dishonesty in connection with employment or a malicious act toward Company or its subsidiaries, (f) a violation of the confidentiality provisions contained in the employment agreement, (g) a willful breach of the employment agreement; (h) disloyalty; or (i) material and repeated failure to carry out reasonably assigned duties or instructions consistent with the executive’s position.
| Name | Value of Salary ($) | Value of ($) | Value of Equity ($) | Value of ($) | Value of ($) | TOTAL ($) | ||||||||||||||||||
| Mr. Atsinger | 502,500 | - | - | - | - | 502,500 | ||||||||||||||||||
| Mr. Masyr | 201,000 | - | - | - | - | 201,000 | ||||||||||||||||||
| Mr. Evans | 260,269 | - | - | - | 28,000 | 288,269 | ||||||||||||||||||
| Mr. Santrella | 228,058 | - | - | - | - | 228,058 | ||||||||||||||||||
| Mr. Henderson | 170,077 | - | - | - | - | 170,077 | ||||||||||||||||||
| 27 |
| Name | Value of Salary Continuation and Severance ($) | Value of Equity Awards Vesting on Termination ($) | Value of Benefits Coverage ($) | Value of Outplacement Services ($) | TOTAL ($) | |||||||||||||||
| Mr. Atsinger | 511,442 | — | — | — | 511,442 | |||||||||||||||
| Mr. Masyr | 213,170 | — | — | — | 213,170 | |||||||||||||||
| Mr. Evans | 275,192 | — | — | 7,625 | (1) | 282,817 | ||||||||||||||
| Mr. Santrella | 259,615 | — | — | — | 259,615 | |||||||||||||||
| Mr. Henderson | 181,731 | — | — | — | 181,731 | |||||||||||||||
| (1) | We are currently seeking a contract with a new vendor for outplacement services. The number reflected in the table above represents the total annual fee for outplacement services as specified in our contract with the previous vendor. |
The ratio of our Principal Executive Officer’s total annual compensation to our median employee’s total annual compensation is a reasonable estimate calculated in a manner consistent with Item 401(u) of Regulation S-K. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio as we report it, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
We selected October 4, 2017 as the measurement date for determining the median employee. Employee compensation was measured by 2017 total earnings as reflected on each employee’s W-2 form. As of that date, the annual total compensation of the median employee, excluding the Principal Executive Officer, was $44,518.90. The annual total compensation of the Principal Executive Officer was $1,301,381. The pay ratio is 29:1. In determining the total employee population of the Company (minus the PEO) all part-time, full-time, active and employees on leave were included. If an employee was not employed by us for the entire year (i.e. was hired during 2017 or terminated after October 4, 2017) his or her pay was annualized. After identifying the median employee, we calculated annual total compensation for that employee using the same methodology we use for our NEOs as set forth in the “Executive Compensation – Summary Compensation Table” above
Securities Authorized for Issuance Under Equity Compensation Plans
The following table provides information as of December 31, 2015,2017, with respect to shares of our Class A common stock that may be issued under the Company’s Stock Plan, our only existing equity compensation plan. The Stock Plan was adopted by our BoardAs of Directors and approved by our stockholders on May 25, 1999. On March 20, 2003, the Board of Directors approved an amendment to the Stock Plan to reserve an additional 600,000 shares of the Company’s Class A common stock for issuance under the Stock Plan. The amendment was approved by a vote of the stockholders at the Company’s annual meeting of stockholders held on June 11, 2003. On November 10, 2004 the Company’s stockholders approved an amendment to the Stock Plan to reserve an additional 1,500,000 shares of the Company’s Class A common stock for issuance under the Stock Plan. The amendment was approved by a vote of the stockholders at the Company’s Annual Meeting of Stockholders held on May 18, 2005. On June 3, 2009, by a vote of the stockholders at the Company’s Annual Meeting of Stockholders, an extension of the term of the Stock Plan through May 25, 2019 was approved. At the Annual Meeting of Stockholders held on June 22, 2012, the company’s stockholders approved a revision to the Stock Plan increasing the number of shares authorized by 1,900,000. As a result,December 31, 2017, a maximum of 5,000,000 shares arewere authorized under the Stock Plan, of which 1,589,123 are1,428,462 were outstanding and 947,573 are exercisable as of December 31, 2015.934,959 were exercisable.
| Equity Compensation Plan Information | ||||||||||||
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||
| (a) | (b) | (c) | ||||||||||
| Equity compensation plans approved by security holders | 1,589,123 | $ | 4.84 | 1,392,135 | ||||||||
| Equity compensation plans not approved by security holders | — | — | — | |||||||||
| Total | 1,589,123 | $ | 4.84 | 1,392,135 | ||||||||
| 28 |
Equity Compensation Plan Information | ||||||||||||
Plan Category | Number of | Weighted-average | Remaining available for | |||||||||
| (a) | (b) | (c) | ||||||||||
| Equity compensation plans approved by security holders | 1,428,462 | $ | 5.20 | 866,479 | ||||||||
| Equity compensation plans not approved by security holders | — | — | — | |||||||||
| Total | ||||||||||||
| 29 |
Non-employee Directors of the Company receive an annual retainer and fees. The following table sets forth the compensation of the Company’sour non-employee Directors in 2015:2017:
| Name | Fees Earned (1) ($) | Stock Awards (2) ($) | Option Awards (3) ($) | TOTAL (4) ($) | Fees Earned | Stock | Option | TOTAL | ||||||||||||||||||||||||
| Roland S. Hinz | 50,500 | 11,660 | 3,960 | 66,120 | 52,000 | — | — | 52,000 | ||||||||||||||||||||||||
| Richard A. Riddle | 60,000 | 11,660 | 3,960 | 75,620 | 64,000 | — | — | 64,000 | ||||||||||||||||||||||||
| Jonathan Venverloh | 50,500 | 11,660 | 3,960 | 66,120 | 45,000 | — | — | 45,000 | ||||||||||||||||||||||||
| James Keet Lewis | 55,000 | 11,660 | 3,960 | 70,620 | 58,000 | — | — | 58,000 | ||||||||||||||||||||||||
| Eric Halvorson | 36,107 | ̶ | ̶ | 36,107 | 65,500 | — | — | 65,500 | ||||||||||||||||||||||||
| Edward C. Atsinger | 40,000 | — | — | 40,000 | ||||||||||||||||||||||||||||
| Stuart W. Epperson Jr. | 40,000 | — | — | 40,000 | ||||||||||||||||||||||||||||
| (1) | Reflects all fees paid to non-employee Directors for participation in regular, special and |
| (2) |
| (3) |
The cash compensation paid as of December 31, 20152017 to the Company’sour non-employee Directors (“Designated Directors”) as approved by the Company’sour Board of Directors at the recommendation of the Compensation Committee is as follows:
| COMPENSATION | AMOUNT | PAYABLE TO | PAYABLE | AMOUNT | PAYABLE TO | PAYABLE | ||||||||||
| Annual Retainer | $ | 27,000 | Designated Directors | Quarterly | $ | 30,000 | Designated Directors | Quarterly | ||||||||
| Attendance Fee (Full Company Board) | $ | 2,500 | Designated Directors | Per Regularly Scheduled Company Board Meeting | $ | 2,500 | Designated Directors | Per Regularly Scheduled Company Board Meeting | ||||||||
| Attendance Fee (Full Company Board) | $ | 1,500 | Designated Directors | Per Special Telephonic Company Board Meeting | $ | 1,500 | Designated Directors | Per Special Telephonic Company Board Meeting | ||||||||
| Attendance Fee (Board Committee) | $ | 1,500 | Designated Director Committee Members | Per Regularly Scheduled or Noticed Committee Meeting | $ | 1,500 | Designated Director Committee Members | Per Regularly Scheduled or Noticed Committee Meeting | ||||||||
| Chairperson Fee (Audit and Compensation Committees) | $ | 2,000 | Chairperson of Audit and Compensation Committees | Per Regularly Scheduled or Noticed Committee Meeting | $ | 2,000 | Chairperson of Audit and Compensation Committees | Per Regularly Scheduled or Noticed Committee Meeting | ||||||||
| Chairperson Fee (Nominating and Corporate Governance Committee) | $ | 1,000 | Chairperson of Nominating and Corporate Governance Committee | Per Regularly Scheduled or Noticed Committee Meeting | $ | 1,000 | Chairperson of Nominating and Corporate Governance Committee | Per Regularly Scheduled or Noticed Committee Meeting | ||||||||
| Attendance Fee (Special Committee) | N/A | Special Committee Members | Per Special Committee Meeting or Task | $ | 1,500 | Special Committee Members | Per Special Committee Meeting or Task | |||||||||
| Chairperson Fee (Special Committee) | $ | 1,000 | Special Committee Members | Per Special Committee Meeting or Task | ||||||||||||
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In addition to the above fees, Directors are compensated on anad hoc basis for special committee or subcommittee meetings held or tasks performed by a committee or subcommittee designated by either the full Board of Directors or by a standing committee of the full Board of Directors, with suchthis compensation determined by the establishing body at the time the special committee or subcommittee is established. Designated Directors who are also chairmen of the Company’sour Board committees shall receive the applicable chairperson fee in addition to a committee attendance fee for each regularly scheduled Company Board committee meeting. Designated Directors shall also receive reimbursement for all reasonable out-of-pocket expenses in connection with travel to and attendance at regularly scheduled Company Board and Board committee meetings.
Company Directors who are also employees of the Company (Stuart W. Epperson, Chairman of the Board, and Edward G. Atsinger III, CEO) are not additionally compensated for their services as Directors. Compensation for Mr. Atsinger is summarized in the “Summary Compensation Table” appearing in this Proxy Statement under the heading “EXECUTIVE COMPENSATION.”
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This Audit Committee Report shall not be deemed soliciting material or to be filed with the Securities and Exchange Commission (“SEC”), nor shall any information in this report be incorporated by reference by any general statement into any past or future filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent that Salem Media Group, Inc. and its subsidiaries (the “Corporation”) specifically incorporates this information by reference into such filing, and shall not otherwise be deemed filed under such Acts.
The purpose of the Audit Committee (the “Committee”) is to oversee, on behalf of the entire board of directors (the “Board”): (a) the accounting and financial reporting processes of the Corporation, (b) the audits of the Corporation’s financial statements, (c) the qualifications, independence and performance of the public accounting firm engaged as the Corporation’s independent registered public accounting firm to prepare or issue an audit report on the financial statements of the Corporation, and (d) the performance of the Corporation’s internal auditor and independent registered public accounting firm.
The Committee has adopted, and annually reviews, a charter outlining the practices it follows. The charter complies with all current regulatory requirements, including requirements pertaining to the NASDAQ Stock Market listing standards definitions, provisions and applicable exceptions concerning the independence of audit committee members.
In 2015,2017, the Committee held six meetings, three of which were regularly scheduled in-person meetings and three of which were special telephonic meetings.telephonic. The Committee’s meeting agendas are established by the Committee Chairman based upon the Committee’s charter and an annual meeting planner approved by the entire Committee. At each of these meetings, the Committee met with the senior members of the Corporation’s financial management team and General Counsel. Additionally, the Corporation’s internal auditor met with the full Committee at the three regularly scheduled in-person meetings and the independent registered public accounting firm met with the full Committee at six meetings. Prior to each regularly scheduled meeting, the Chairman of the Committee also met privately with the Corporation’s independent registered public accounting firm and, separately, with the Corporation’s internal auditor, at which times candid discussions of financial management, accounting and internal control issues took place.
The Committee appointed SingerLewakCrowe Horwath LLP as the Corporation’s independent registered public accounting firm for the year ended December 31, 2015,2017, and reviewed with the Corporation’s financial managers, the independent registered public accounting firm, and the Corporation’s internal auditor, overall audit scopes and plans, the results of internal and external controls and the quality of the Corporation’s financial reporting.
The Corporation’s management is primarily responsible for the preparation, presentation, and integrity of the Corporation’s financial statements, accounting and financial reporting principles, internal controls, and procedures designed to ensure compliance with accounting standards, applicable laws, and regulations. As the Corporation’s independent registered public accounting firm, SingerLewakCrowe Horwath LLP is responsible for performing an independent audit of the Corporation’s consolidated financial statements in accordance with generally accepted accounting standards and for expressing an opinion on the conformity of the audited financial statements to accounting principles generally accepted in the United States of America.
The Committee has reviewed and discussed with management the Corporation’s audited financial statements as of and for the year ended December 31, 2015.2017. The Committee has also discussed with the independent registered public accounting firm the matters required to be discussed by the Public Company Accounting Oversight Board (“PCAOB”).
The Committee has received and reviewed the written disclosures and the letter from the independent registered public accounting firm required by the rules of the PCAOB and the Committee has discussed with the independent registered public accounting firm that firm’s independence from the Corporation and its management. The Committee has also considered whether the independent registered public accounting firm’s provision of non-audit services to the Corporation is compatible with the auditor’s independence.
Based on the Committee’s reviews and discussions referred to above, the Committee recommended to the Board that the audited consolidated financial statements referred to above be included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 20152017 to be filed with the SEC.
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The Audit Committee currently comprisesis composed of Eric Halvorson, Chairman, Jonathan VenverlohRichard Riddle and James Keet Lewis.
| AUDIT COMMITTEE | |
| Eric Halvorson, Chairman | |
| James Keet Lewis | |
| March |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of the Company’sour Class A and Class B common stock as of March 23, 201614, 2018 (unless otherwise indicated) by: (a) each person believed by the Companyus to be the beneficial owner of more than 5% of either class of the outstanding Class A or Class B common stock; (b) each Director and Director Nominee;Director; (c) each of the NEO’s; and (d) all Directors Director Nominees and NEO’s as a group.
| Class A Common Stock | Class B Common Stock | % Vote of of | Class A Common Stock | Class B Common Stock | % Vote of All Classes of Common | |||||||||||||||||||||||||||||||||||
| Name and Address(1) | Number | % Vote(2) | Number | % Vote(2) | Common Stock(2) | Number | % Vote(2) | Number | % Vote(2) | Stock(2) | ||||||||||||||||||||||||||||||
| Stuart W. Epperson | 3,789,824 | (3) | 18.39 | % | 2,776,848 | (4) | 50.00 | % | 41.44 | % | 3,796,172 | (3) | 17.87 | % | 2,776,848 | (4) | 50.00 | % | 41.11 | % | ||||||||||||||||||||
| Nancy A. Epperson | 3,789,824 | (3) | 18.39 | % | 2,776,848 | (4) | 50.00 | % | 41.44 | % | 3,796,172 | (3) | 17.87 | % | 2,776,848 | (4) | 50.00 | % | 41.11 | % | ||||||||||||||||||||
| Edward G. Atsinger III | 4,476,580 | (5) | 21.72 | % | 2,776,848 | (5) | 50.00 | % | 42.34 | % | 4,541,939 | (5) | 21.38 | % | 2,776,848 | (5) | 50.00 | % | 42.08 | % | ||||||||||||||||||||
| Edward C. Atsinger | 1,093,078 | (6) | 5.30 | % | — | — | 1.44 | % | 1,093,078 | (6) | 5.15 | % | — | — | 1.42 | % | ||||||||||||||||||||||||
| Stuart W. Epperson Jr. | 113,428 | (7) | 0.55 | % | — | — | * | 113,428 | (7) | * | — | — | * | |||||||||||||||||||||||||||
| Roland S. Hinz | 44,150 | (8) | * | — | — | * | 42,150 | (8) | * | — | — | * | ||||||||||||||||||||||||||||
| Richard A. Riddle | 123,391 | (9) | * | — | — | * | 121,391 | (9) | * | — | — | * | ||||||||||||||||||||||||||||
| Jonathan Venverloh | 56,500 | (10) | * | — | — | * | 54,500 | (10) | * | — | — | * | ||||||||||||||||||||||||||||
| James Keet Lewis | 6,000 | (11) | * | — | — | * | 4,000 | (11) | * | — | — | * | ||||||||||||||||||||||||||||
| Eric Halvorson | 6,800 | (12) | * | — | — | * | 9,800 | (12) | * | — | — | * | ||||||||||||||||||||||||||||
| David P. Santrella | 90,466 | (13) | * | — | — | * | 101,946 | (13) | * | — | — | * | ||||||||||||||||||||||||||||
| David A.R. Evans | 150,150 | (14) | * | — | — | * | 80,002 | (14) | * | — | — | * | ||||||||||||||||||||||||||||
| Evan Masyr | 111,268 | (15) | * | — | — | * | 91,724 | (15) | * | — | — | * | ||||||||||||||||||||||||||||
| Christopher J. Henderson | 49,941 | (16) | * | — | — | * | 95,382 | (16) | * | — | — | * | ||||||||||||||||||||||||||||
| All Directors and NEO’s as a group | 10,111,576 | 49.05 | % | 5,553,696 | 100.00 | % | 86.21 | % | 10,145,512 | 47.75 | % | 5,553,696 | 100.00 | % | 85.54 | % | ||||||||||||||||||||||||
| Gabelli Funds, LLC. One Corporate Center Rye, NY 10580 | 1,763,371 | (17) | 8.55 | %(17) | — | — | 2.32 | %(17) | ||||||||||||||||||||||||||||||||
| Neuberger Berman Group, LLC 605 Third Avenue 41st Floor New York, NY 10158 | 1,550,191 | (18) | 7.52 | %(18) | — | — | 2.04 | %(18) | ||||||||||||||||||||||||||||||||
| Epperson Children’s Trusts | 1,012,520 | (19) | 4.91 | % | — | — | 1.33 | % | ||||||||||||||||||||||||||||||||
Gabelli Funds, LLC One Corporate Center | 1,629,700 | (17) | 7.67 | % | — | — | 2.12 | % | ||||||||||||||||||||||||||||||||
Dimensional Fund Advisors, L.P. 6300 Bee Cave Road, Building One Austin, TX 78746 | 1,159,509 | (18) | 5.46 | % | — | — | 1.51 | % | ||||||||||||||||||||||||||||||||
| * | Less than 1%. |
| (1) | Except as otherwise indicated, the address for each person is c/o Salem Media Group, Inc., 4880 Santa Rosa Road, Camarillo, California 93012. Calculated pursuant to Rule 13d-3(d) under the Exchange Act, shares of Class A common stock not outstanding that are subject to options exercisable by the holder thereof within 60 days of March |
| (2) | Percentage voting power is based upon |
| (3) | Includes 1,012,520 shares of Class A common stock held by trusts of which Mr. and Mrs. Epperson are trustees and shares held directly by Mr. and Mrs. Epperson. As husband and wife, Mr. and Mrs. Epperson are each deemed to be the beneficial owner of shares held by the other and share voting and dispositive power; therefore, their combined beneficial ownership is shown in the table. Includes |
| (4) | These shares of Class B common stock are held directly by Mr. Epperson. |
| (5) | These shares of Class A and Class B common stock are held by trusts of which Mr. Atsinger is trustee. Includes |
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| (6) | Includes 1,090,078 shares of Class A common stock held in a trust for the benefit of Edward C. Atsinger, who is Edward G. Atsinger III’s son. Edward G. Atsinger III is the trustee of the trust and these shares are also included in the shares beneficially owned by Edward G. Atsinger III as reflected in this table. Also includes 3,000 shares of Class A common stock held by a trust for the benefit of Edward C. Atsinger. Edward C. Atsinger and his wife are trustees of the trust. These 3,000 shares are not included in shares beneficially owned by Edward G. Atsinger III as reflected in this table. |
| (7) | These shares of Class A common stock are held in custody for Mr. Epperson Jr.’s four (4) minor children. |
| (8) | Includes 1,411 shares held by Mr. Hinz’s wife. Mr. Hinz disclaims beneficial ownership of shares of Class A common stock held by his wife. Also includes 900 shares held by a trust for which Mr. Hinz is trustee and |
| (9) | Includes |
| (10) | 2,000 shares of Class A common stock are held directly by Mr. Venverloh and 33,000 shares of Class A common stock are held by Jonathan and Mehridith Venverloh as trustees of the Ecclesiastes Trust 2004 U/A 11/19/04. Also includes |
| (11) | Includes |
| (12) |
| (13) | Includes |
| (14) | Includes |
| (15) | Includes |
| (16) | Includes |
| (17) | The ownership of common stock |
| (18) |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of December 31, 2015,March 29, 2018, Salem leased the studios and tower and antenna sites described in the table below from Edward G. Atsinger III, Chief Executive Officer and Director of Salem, and Stuart W. Epperson, Chairman of Salem’s Board of Directors. All suchof these leases have cost of living adjustments. Based upon management’s assessment and analysis of local market conditions for comparable properties, Salem believes that suchthese leases do not have terms that do not vary materially from those that would have been available from unaffiliated parties.
| Market | Station Call Letters | 2015 Annual Rental(1) | 2014 Annual Rental(2) | Expiration Date(3) | Station Call Letters | 2017 Annual | 2016 Annual | Expiration Date(3) | ||||||||||||||||||||
| Leases with both Messrs. Atsinger and Epperson: | ||||||||||||||||||||||||||||
| Boston, MA | WBIX-AM (4) | $ | 43,663 | $ | ̶ | 2017 | WBIX-AM (4) | $ | 100,715 | $ | 100,470 | 2022 | ||||||||||||||||
| Minneapolis-St. Paul, MN | KKMS-AM/KYCR-AM(5) | 195,945 | 195,764 | 2016 | KKMS-AM/KYCR-AM(5) | 198,879 | 197,728 | 2036 | ||||||||||||||||||||
| Sacramento, CA | KFIA-AM(4) | 122,383 | 122,344 | 2016 | KFIA-AM(4) | 126,088 | 124,919 | 2036 | ||||||||||||||||||||
| Los Angeles, CA | KTIE-AM(6) | 31,873 | 31,653 | 2016 | KTIE-AM(6) | 32,792 | 32,126 | 2026 | ||||||||||||||||||||
| San Antonio, TX | KSLR-AM(Day site)(4) | 48,840 | 48,840 | 2017 | KSLR-AM (Day site)(4) | 51,550 | 48,840 | 2027 | ||||||||||||||||||||
| Dallas, TX | KLTY-FM (4) | 35,163 | 33,488 | 2020 | KLTY-FM (4) | 38,767 | 36,921 | 2020 | ||||||||||||||||||||
| Houston-Galveston, TX | KNTH-AM(4) | 49,868 | 49,675 | 2023 | KNTH-AM(4) | 50,508 | 50,348 | 2023 | ||||||||||||||||||||
| Houston-Galveston, TX | KTEK-AM(4) | 45,946 | 43,758 | 2037 | KTEK-AM(4) | 50,656 | 48,243 | 2037 | ||||||||||||||||||||
| Philadelphia, PA | WFIL-AM/WNTP-AM(5) | 210,551 | 209,737 | 2023 | WFIL-AM/WNTP-AM(5) | 213,251 | 212,576 | 2023 | ||||||||||||||||||||
| Phoenix, AZ | KPXQ-AM(4) | 69,608 | 69,337 | 2023 | KPXQ-AM(4) | 70,501 | 70,277 | 2023 | ||||||||||||||||||||
| Portland, OR | KPDQ-AM(4) | 29,367 | 29,252 | 2023 | KPDQ-AM(4) | 30,301 | 29,649 | 2023 | ||||||||||||||||||||
| Seattle—Tacoma, WA | KLFE-AM(4) | 38,782 | 38,631 | 2023 | KLFE-AM(4) | 40,016 | 39,155 | 2023 | ||||||||||||||||||||
| Seattle—Tacoma, WA | KNTS-AM(4) | 38,782 | 38,631 | 2023 | KNTS-AM(4) | 40,016 | 39,155 | 2023 | ||||||||||||||||||||
| San Antonio, TX | KSLR-AM (Night site)(4) | 19,947 | 19,870 | 2023 | KSLR-AM (Night site)(4) | 20,203 | 20,139 | 2023 | ||||||||||||||||||||
| San Francisco, CA | KFAX-AM(4) | 238,260 | 237,334 | 2023 | KFAX-AM(4) | 241,316 | 240,552 | 2023 | ||||||||||||||||||||
| Denver-Boulder, CO | KNUS-AM(4) | 27,282 | 27,232 | 2036 | KNUS-AM(4) | 42,945 | 38,993 | 2036 | ||||||||||||||||||||
| Orlando, FL | WTLN-AM(4) | 80,004 | 80,004 | 2045 | WTLN-AM(4) | 80,004 | 80,004 | 2045 | ||||||||||||||||||||
| St. Louis, MO | KXFN-AM (Night site)(4) | 30,450 | 15,000 | 2036 | ||||||||||||||||||||||||
| Subtotal | $ | 1,326,264 | $ | 1,275,550 | $ | 1,458,958 | $ | 1,425,095 | ||||||||||||||||||||
| Lease with Mr. Atsinger: | ||||||||||||||||||||||||||||
| San Diego, CA | KPRZ-AM(4) | 180,094 | 174,848 | 2028 | KPRZ-AM(4) | 191,062 | 185,497 | 2028 | ||||||||||||||||||||
| Total | $ | 1,506,358 | $ | 1,450,398 | $ | 1,650,020 | $ | 1,610,592 | ||||||||||||||||||||
| (1) | Annual rent calculated as of December 31, |
| (2) | Annual rent calculated as of December 31, |
| (3) | The expiration date reported for certain facilities represents the expiration date assuming exercise of all lease term extensions at |
| (4) | Antenna/Tower Site. |
| (5) | Antenna/Tower/Studio Site. |
| (6) | Office/Studio Site. |
Rental expense paid by Salem to Messrs. Atsinger and Epperson or trusts or partnerships created for the benefit of their families for 20152017 amounted to approximately $1.5 million. Rental expense paid by Salem to Mr. Atsinger or trusts created for the benefit of his family for 20152017 amounted to approximately $0.2 million. Rental expense paid by Salem to Messrs. Atsinger and Epperson or trusts or partnerships created for the benefit of their families for 20142016 amounted to approximately $1.5 million. Rental expense paid by Salem to Mr. Atsinger or trusts created for the benefit of his family for 20142016 amounted to approximately $0.2 million.
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Terminated Affiliate LinesPurchase of Credit with Related PersonsWSPZ(AM)
On November 17, 2011,22, 2017, Salem entered into linesMedia of creditVirginia, Inc., a subsidiary of the Company, purchased radio station WSPZ(AM) (now WWRC(AM)) from AM570, LLC, an entity in which Edward G. Atsinger III, Chief Executive Officer, and four (4) children of Stuart W. Epperson, Chairman of the Board, are members, The purchase price for the radio station was $620,000. We began programming the station within the Washington DC market as of September 15, 2017 under a related party Local Marketing Agreement (“LMA”) with AM570, LLC. We assumed the lease agreement for the land, tower and broadcasting equipment of WSPZ(AM) (now WWRC-AM) as of the closing date of the purchase. We paid no LMA fees for the station but did reimburse AM570, LLC for operating expenses due under the LMA agreement.
Local Marketing Agreement with East Bay Broadcasting, LLC
In 2016, Edward G. Atsinger III, Chief Executive Officer and Director of Salem, and Stuart W. Epperson, Chairman of Salem’s Board of Directors. PursuantDirectors, formed East Bay Broadcasting, LLC (“East Bay”) to the agreements, Mr. Epperson committed to provide an unsecured revolving line of credit to Salemacquire radio station KTRB(AM) in a principal amount of up to $3 million, and Mr. Atsinger committed to provide an unsecured revolving line of credit in a principal amount of up to $6 million (together, the “Affiliate Lines of Credit”)San Francisco, CA (FCC ID: 66246). The proceeds of the Affiliate Lines of Credit could be used for any purpose. Outstanding amounts under each Affiliate Line of Credit bore interest at a rate equal to the lesser of (1) five percent (5%) per annum, or (2) the maximum rate permitted for subordinated debt under the “Credit Agreement” (as defined below) plus 2% per annum and was required to be repaid within three (3) months from the time that such amounts were borrowed. The Affiliate Lines of Credit did not contain any covenants. In 2012, Salem paid $75,000 in interest to Mr. Atsinger and $121,875 in interest to Mr. Epperson under the Affiliate Lines of Credit. As of March 14, 2013, there was no balance outstanding under the Affiliate Lines of Credit. As of May 3, 2013, the Affiliate Lines of Credit were terminated. For purposes of this paragraph, the term “Credit Agreement” means that certain Credit Agreement, dated as of December 1, 2009, and as amended, by and between Salem Media Group, Inc., as the borrower, and Wells Fargo Bank, N.A.
On May 21, 2012, SalemEast Bay entered into a binding letter of intentLocal Marketing Agreement (“LOI”LMA”) with Roland S. Hinz,New Inspiration Broadcasting Company, Inc. (“New Inspiration”), a subsidiary of Salem, Board member. Pursuant toon December 15, 2016. The LMA has a term of six (6) years and a monthly payment of $25,000 for the LOI, Mr. Hinz committed to provide an unsecured revolving line of credit to Salem infirst year, $26,500 for the principal amount of up to $6 million. On September 12, 2012, Salemsecond year, $28,000 for the third year, $29,500 for the fourth year, $31,000 for the fifth year and Mr. Hinz amended$32,500 for the sixth and restated the original LOI (“Amended and Restated LOI”). The Amended and Restated LOI increased the unsecured revolving line of credit by $6 million, resulting in a total line of credit of up to $12,000,000 (the “Amended and Restated Hinz Line of Credit”). The proceedsfinal year of the AmendedLMA. Under the LMA, New Inspiration will also reimburse East Bay for all reasonable out of pocket costs associated with or arising out of the operation of the station.
Payments to Delmarva Educational Association Corporation
During the year ended December 31, 2017, we paid approximately $21,000 to Delmarva Educational Association Corporation, a related party entity for which Nancy A. Epperson, the wife of the Chairman of the Board, and Restated Hinz LineStuart W. Epperson Jr., the son of Credit could be used for any purpose. Any outstanding amountthe Chairman of the Board, serve as directors. The payments represented commissions due to Delmarva under the Amended and Restated Hinz Line of Credit bore interest at a rate equal to the lesser of (1) five percent (5%) per annum, or (2) the then-current, applicable indexed rate under the Credit Agreement plus two percent (2%) per annum and was required to be repaid within six (6) months from the time that such amounts were borrowed. The Amended and Restated Hinz Line of Credit did not contain any covenants. In 2012, Salem paid $125,000 in interest to Mr. Hinz under the Amended and Restated Hinz Line of Credit. As of March 14, 2013, there was no balance outstanding under the Amended and Restated Hinz Line of Credit. As of May 3, 2013, the Amended and Restated Hinz Line of Credit was terminated.revenue sharing promotion.
Radio Stations Owned by the Eppersons
During 2013, 20142015, 2016 and 2015,2017, Nancy A. Epperson, the wife of the Chairman of the Board, Stuart W. Epperson and mother of Board member Stuart W. Epperson Jr., served as an officer, director and stockholder of several radio broadcasting entities as follows:
During 2013, 20142015, 2016 and 2015,2017, Director nominee Stuart W. Epperson Jr., the son of the Chairman of the Board, Stuart W. Epperson, served as the following:
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The markets in which these radio stations are located are not currently served by stations ownedwe own and operated by the Company.operate. Under his employment agreement, Chairman of the Board, Mr. Epperson, is required to offer the Companyus a right of first refusal of opportunities related to our business.
Radio Stations Owned by Mr. Hinz
During 2013, 2014,2015, 2016, and 2015,2017, Mr. Hinz, a Salem Director, through Hi-Favor Broadcasting, LLC, has and continues to operate the following radio stations in Southern California: (a) KLTX-AM, Long Beach, California, and KEZY-AM, San Bernardino, California (which were acquired from the Companyus in August 2000 and December 2001, respectively); and (b) KSDO-AM, San Diego, California. Additionally, through the Association for Community Education, Inc., Mr. Hinz has and continues to operate KDRH-AM, King City, California; KEYQ-AM, Fresno, California; KGZO-AM, Shafter, California; and KMRO-AM, Camarillo, California. These radio stations are formatted in Christian Teaching and Talk programming in the Spanish language.
Know the Truth – Mr. Riddle and Mr. Lewis
Know the Truth is a non-profit organization that is a customer of Salem. During 2017, 2016 and 2015, Know the Truth paid us approximately $1.2 million, $0.4 million, and $0.4 million, respectively, for airtime on its stations. Salem had receivable balances of $0.7 million and $0.2 million related to these sales at December 31, 2017 and 2016, respectively. Mr. Riddle joined the Know the Truth board in 2010 and Mr. Lewis joined the Know the Truth board in 2016 and each remains a member of this board.
Truth for Life is a non-profit organization that is a customer of Salem. During 2017, 2016 and 2015, Truth for Life paid us approximately $2.1 million, $2.2 million and $2.2 million, respectively, for airtime on its stations. Salem had receivable balances of approximately $3,000 and $4,000 related to these sales at December 31, 2017 and 2016, respectively. Mr. Riddle joined the Truth for Life board in 2010 and remains a member of this board.
The Company purchasedWe have maintained split-dollar life insurance policies for its Chairman and Chief Executive Officer insince 1997. During 2011, the then-existing policies were cancelled and new policies were entered into. The Company isSince 2003, we have been the owner of the split-dollar life insurance policies and isare entitled to recover all of the premiums paid on these policies. The Company recordsWe record an asset based on the lower of the aggregate premiums paid or the insurance cash surrender value. The premiums were $386,000 for each of the years ended December 31, 2015, 20142017, 2016 and 2013.2015. As of December 31, 2017, 2016, and 2015, 2014, and 2013, Salemwe recorded the net cash surrender value of these policies as assets of $2.5$1.4 million, $1.9$1.0 million and $1.65$0.6 million, respectively. The cumulative premiums paid on these policies as of December 31, 2017, 2016, and 2015 were $2.8 million, $2.6 million and $2.5 million, respectively. Benefits above and beyond the cumulative premiums paid will go to the beneficiary trusts established by each of the Chairman and Chief Executive Officer.
Transportation Services Supplied by Atsinger Aviation
From time to time, the Company rentswe rent aircraft from a company owned by Edward G. Atsinger III, Chief Executive Officer and Director of Salem. As approved by the independent members of the company’s Board of Directors, the Company rentswe rent these aircraft on an hourly basis at what the Company believeswe believe are market rates and usesuse them for general corporate needs. Total rental expense for these aircraft for 2015, 20142017, 2016 and 20132015 amounted to approximately $217,000, $301,000 and $133,000, $274,000 and $239,000, respectively.
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THE COMPANY’S RELATIONSHIP WITH ITS
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMFIRMS
Principal Accountant Fees and Services
The following table summarizes the fees billed by the Company’s current registered public accounting firm, SingerLewakCrowe Horwath LLP (“SL”Crowe”), for professional services rendered during fiscal year 2015years 2017 and 2016:
| December 31, 2017 | December 31, 2016 | ||||||||||
| Annual Audit Fees (1) | $ | 588,525 | $ | 268,750 | |||||||
| Audit-Related Fees (2) | $ | 23,000 | $ | 22,000 | |||||||
| Tax Fees(3) | $ | $ | 72,768 | ||||||||
| All Other Fees | $ | 144,938 | $ | 16,636 | |||||||
| Total Fees For Services(3) | $ | 756,463 | $ | 380,154 | |||||||
| (1) | Annual audit fees for the audit of the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 and the review of the interim condensed consolidated financial statements included in the Company’s quarterly reports on Form 10-Q. |
| (2) | Audit-related fees are the fees for the financial statement audit of the Company’s 401(k) Plan. |
| (3) | Tax fees are fees related to accounting, reporting and internal control evaluation of the third quarter tax valuation allowance adjustment. |
| (4) | None of the fees listed in the table above were approved by the Audit Committee in reliance on a waiver from pre-approval under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. |
The following table summarizes the fees billed by SingerLewak LLP (“Singer”), the Company’s previous independent registered public accounting firm, for professional services rendered during fiscal year 2014:2016:
| Fees Paid During Year Ended | ||||||||||||
December 31, 2015 | December 31, 2014 | December 31, 2016 | ||||||||||
| Audit Fees | $ | 441,473 | $ | 486,891 | $ | 270,002 | ||||||
| Audit-Related Fees | $ | 50,361 | $ | 34,663 | $ | — | ||||||
| Tax Fees | $ | — | $ | — | $ | — | ||||||
| All Other Fees | $ | — | $ | — | $ | 27,901 | ||||||
| Total Fees For Services(1) | $ | 491,834 | $ | 521,554 | $ | 297,903 | ||||||
| (1) | None of the fees listed in the table above were approved by the Audit Committee in reliance on a waiver from pre-approval under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. |
Audit Committee’s Pre-Approval Policies and Procedures
In accordance with the Audit Committee’s pre-approval policies and procedures and the requirements of applicable law, all services to be provided by SLCrowe are pre-approved by the Audit Committee. Pre-approval includes audit services, audit-related services and other permissible non-audit services. Pre-approval is generally provided by the full Audit Committee for up to a year and is detailed as to the particular defined tasks or scope of work and is subject to a specific budget. In some cases, the Audit Committee has delegated authority to the Chairman of the Audit Committee to pre-approve additional services, and any such pre-approvals granted by the Chairman must then be communicated to the full Audit Committee at or prior to the next scheduled Audit Committee meeting. When assessing whether it is appropriate to engage the independent registered public accounting firm to perform a service, the Audit Committee considers, among other things, whether suchthese services are consistent with the independent registered public accounting firm’s independence and whether suchthese services constitute prohibited non-audit functions under Section 201 of the Sarbanes-Oxley Act of 2002. The Audit Committee considered the provision of the services listed in the table above by SLCrowe and determined that the provision of such services was compatible with maintaining the independence of SL.Crowe.
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ELECTION OF DIRECTORS
At the Annual Meeting, our stockholders of the Company will be asked to vote on the election of nine (9) Directors. Two (2) nominees are nominated as “Independent Directors” and shall be elected bywhom the holders of Class A common stock are entitled to elect, as a class, exclusive of all of the holders of Class B common stock.stock, pursuant to the Amended and Restated Certificate of Incorporation. Roland S. Hinz and Richard A. Riddle have been nominated as the Independent Directors. The nominees for the Independent Director seats receiving a majority of the highest number of votes of the shares of Class A common stock presented in person or represented by proxy and entitled to vote on the election of the Independent Directors will be elected the Independent Directors. The nominees for such Directorsthe remaining Board seats receiving a majority of the votes of the shares of Class A common stock and Class B common stock present in person or represented by proxy and entitled to vote at the Annual Meeting will be elected Directors of the Company. All Directors elected at the Annual Meeting will be elected to a one (1) year term and will serve until the annual meeting of stockholders to be held in the year 20172018 or until their respective successors have been duly elected and qualified.
Set forth below are the names of persons nominated by the Company’sour Board of Directors for election as Directors at the Annual Meeting:
Stuart W. Epperson
Edward G. Atsinger III
Roland S. Hinz
Richard A. Riddle
Jonathan Venverloh
James Keet Lewis
Eric H. Halvorson
Edward C. Atsinger
Stuart W. Epperson Jr.
| Stuart | W. Epperson |
| Edward | G. Atsinger III |
| Roland | S. Hinz |
| Richard | A. Riddle |
| Jonathan | Venverloh |
| James | Keet Lewis |
| Eric | H. Halvorson |
| Edward | C. Atsinger |
| Stuart | W. Epperson Jr. |
For a description of the nominees’ principal occupation and business experience during the last five (5) years and present Directorships,directorships, please see the section of this Proxy Statement entitled “THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS—Board of Directors” above.
The Company hasWe have been advised by each nominee named in this Proxy Statement that he is willing to be named as such herein and is willing to serve as a Director if elected. However, if any of the nominees should be unable to serve as a Director, the enclosed proxy, if executed and returned, will be voted in favor of the remainder of those nominees not opposed by the stockholder on suchthe proxy and may be voted for a substitute nominee selected by the Board of Directors.
Vote Required and Board of Directors’ Recommendation
The affirmative vote of a majority of the Class A shares present in person or represented by proxy and entitled to vote aton the meeting,election of the Independent Directors, at which a quorum representing a majority of the voting power of all outstanding shares of Class A common stock and Class B common stock is present and entitled to vote, is required to approve Proposal 1.the election of the nominees for the Independent Director seats. The affirmative vote of a majority of the Class A and Class B shares present in person or represented by proxy and entitled to vote at the Annual Meeting, at which a quorum representing a majority of the voting power of all outstanding shares of Class A common stock and Class B common stock is present and entitled to vote, is required to approve the election of the nominees for the remaining Board seats.THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSAL 1.
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ADVISORY (NON-BINDING) VOTE ON A RESOLUTION APPROVING EXECUTIVE COMPENSATIONPROPOSAL TO RATIFY THE APPOINTMENT OF
CROWE HORWATH LLP AS DISCLOSED PURSUANT TO ITEM 402 OF REGULATION S-KTHE
In accordance with Section 14A of the Exchange Act, at the Annual Meeting, stockholders of the Company will be asked to vote to approve an advisory (non-binding) resolution approving the executive compensation of the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K in the “Executive Compensation” section of this proxy statement. Stockholders are encouraged to read the “Executive Compensation” section in this proxy statement, including the tables and narrative provided therein, for the details on the Company’s executive compensation.COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The CompanyAudit Committee1 has selected Crowe Horwath LLP to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2017. Crowe Horwath LLP has served as our independent auditor since May 2016. A representative of Crowe Horwath LLP is asking stockholdersexpected to approve the following advisory resolution atattend the Annual Meeting:Meeting, and the representative will have an opportunity to make a statement if he or she so desires. The representative will also be available to respond to appropriate questions from stockholders.
RESOLVED, thatReasons for the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, including the compensation tables and the narrative discussion, is hereby APPROVED.Proposal
This advisory resolution, commonly referredSelection of our independent registered public accounting firm is not required to as a “say-on-pay” resolution, is non-binding onbe submitted for stockholder approval. Nonetheless, the Board of Directors. Although non-binding,Directors is seeking ratification of the Board and the Compensation Committee value the opinionsselection of Crowe Horwath LLP as a matter of further involving our stockholders in its corporate affairs. If the stockholders do not ratify this selection, the Audit Committee will reconsider its selection of Crowe Horwath LLP and will revieweither continue to retain this firm or appoint new independent registered public accounting firm. Even if the selection is ratified, the Audit Committee, in its discretion, may direct the appointment of different independent registered public accounting firm at any time during the year if it determines that this change would be in the best interests of the Company and consider the voting results when evaluating our executive compensation program.its stockholders.
Vote Required and Board of Directors’ Recommendation
The affirmative vote of a majority of the shares present or represented by proxy and entitled to vote at the meeting,Annual Meeting, at which a quorum representing a majority of the voting power of all outstanding shares of Class A common stock and Class B common stock is present and entitled to vote, is required to approve Proposal 2.THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSAL 2.
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1 Under Exchange Act Rule 10A-3, which is also reflected in the Audit Committee charter, the Audit Committee must select and retain the independent registered public accounting firm.
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STOCKHOLDERS’ PROPOSALS FOR 20172019 PROXY STATEMENT
Any stockholder of the Companyour stockholders wishing to have a proposal considered for inclusion in the Company’sour proxy solicitation materials relating to the Company’s 2017our 2019 Annual Meeting of Stockholders must, in addition to other applicable requirements, give notice of suchthe proposal in writing to the Secretary of the Company at its principal executive offices and suchthe notice must be received on or before December 10, 2016.November 29, 2018. The proposal may be included in next year’s proxy statement if it complies with certain rules and regulations promulgated by the SEC. Proposals must be submitted in accordance with the Company’sour Bylaws and comply with SEC regulations promulgated pursuant to Rule 14a-8 of the Exchange Act.
Stockholder proposals which are not to be included in the Company’s proxy solicitation materials relating to the Company’s 2016 Annual Meeting of Stockholders must be submitted in accordance with our bylaws, which set forth that notice of such proposal must be sent in writing to the Secretary of the Company at its principal executive offices and such notice must be received on or before February 18, 2017.
At the time of preparation of this Proxy Statement, the Board of Directors of the Company was not aware of any other matters to be brought before the Annual Meeting. No eligible stockholder had submitted notice of any proposal ninety (90) days before the date of the Annual Meeting.anniversary of last year’s annual meeting. However, if any other matters are properly presented for action, in the absence of instructions to the contrary, it is the intention of the persons named in the enclosed form of proxy to vote, or refrain from voting, in accordance with their respective best judgment on such matters.
If a stockholder desires to have a proposal presented at the Company’sour annual meeting of stockholders in 20172019 and the proposal is not intended to be included in the Company’sour related 20172019 proxy solicitation materials, the stockholder must give us advance notice to the Company in accordance with the Company’sour Bylaws. Pursuant to the Company’sour Bylaws, only such business shall be conducted, and only such proposals shall be acted upon at an annual meeting of stockholders as are properly brought before the annual meeting. For business to be properly brought before an annual meeting by a stockholder, in addition to any other applicable requirements, timely notice of the matter must first be given to the Secretary. To be timely, a stockholder’s written notice must be delivered to the Secretary at the Company’s principal executive offices not later than the 90th day nor earlier than the 120th day prior to the first anniversary of the preceding annual meeting; provided, however, that in the eventif the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, then notice of the stockholder proposal must be delivered to the Secretary not earlier than the 120th day nor later than the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such annual meeting is first made. If suchthe proposal is for a nominee for Director, suchthe stockholder’s notice must set forth with respect to such Director nominee all of the information relating to suchthat person that is required to be disclosed in solicitations for elections of Directors under the rules of the SEC; for any stockholder proposal, the notice must comply with Section 2.2 of Article II of the Company’sour Bylaws (a copy of which is available upon request to the Secretary of the Company)Secretary), which section requires that the notice contain a brief description of suchthe proposal and the reasons for conducting suchthe business at the annual meeting, the name and address, as they appear on the Company’sour books, of the stockholder making suchthe proposal, the number of shares of Class A common stock and Class B common stock beneficially owned by suchthe stockholder and any material interest of suchthe stockholder in such proposal.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Exchange Act and the rules promulgated thereunder and applicable requirements of NASDAQ, officers and Directors of the Company and persons who beneficially own more than 10%ten percent (10%) of theour common stock of the Company are required to: (a) report their initial ownership and change in ownership with respect to all equity securities of the Company; and (b) furnish suchthose reports to the Company.
Based solely on its review of the copies of such reports received by it during or with respect to the year ended December 31, 2015, the Company believes2017, we believe that its Officers,our officers, Directors and more than ten (10) percent stockholders complied with all Section 16(a) filing requirements applicable to such individuals, except that Messrs. Hinz, Riddle, Venverloh and Lewis inadvertently failed to timely report grants of stock and stock options on Form 4 which occurred on March 27, 2015 (subsequently accounted for on the Form 4s filed by such individuals on June 9, 2016); and the Form 4 filed by Mr. Atsinger on June 25, 2016 incorrectly reported the number of shares of Class A Common Stock transferred to a trust of Mr. Atsinger (subsequently corrected by the amended Form 4 filed by Mr. Atsinger on September 25, 2016).those individuals.
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The Company’sOur Annual Report on Form 10-K to Stockholders for the year ended December 31, 2015,2017 including audited financial statements, is being made available to stockholders along with these proxy materials, but suchthis Annual Report is not incorporated herein and is not deemed to be a part of this Proxy Statement. The Company’sOur Annual Report on Form 10-K for the year ended December 31, 2015,2017 as filed with the SEC (without exhibits) is available to stockholders via the Company’sour website (http://salemmedia.com) or in printed form (without exhibits) without charge on written request to the Company.us. Exhibits to the Annual Report on Form 10-K may be obtained in printed form from the Companyus upon payment of the Company’sour reasonable expenses to furnish such exhibits.To obtain any of these materials, contact Christopher J. Henderson, Secretary, Salem Media Group, Inc., 4880 Santa Rosa Road, Camarillo, California 93012.
| By order of the Board of Directors, | |
| |
| CHRISTOPHER J. HENDERSON | |
| Secretary |
Camarillo, California
April 8, 2016March 29, 2018
PLEASE VOTE YOUR SHARES ONLINE, BY TELEPHONE OR BY SIGNING, DATING AND
RETURNING THE ENCLOSED PROXY CARD TODAY.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
If you have any questions, or have any difficulty voting your shares, please telephone Christopher J. Henderson of Salem at (805) 987-0400.
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Form 10-K are available at www.proxyvote.com. E40561-P01519 SALEM MEDIA GROUP, INC. PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 9, 2018 Solicited on Behalf of the Board of Directors The undersigned hereby authorizes Edward G. Atsinger III and Christopher J. Henderson, and each of them individually, with power of substitution, to vote and otherwise represent all of the shares of Class A common stock of Salem Media Group, Inc. ("Salem"), held of record by the undersigned, at the Annual Meeting of Stockholders of Salem to be held at Salem's corporate office, 4880 Santa Rosa Road, Camarillo, California 93012, on Wednesday, May 9, 2018, at 9:30 a.m. PDT, and any postponement(s) or adjournment(s) thereof, as indicated on the reverse side hereof. The undersigned acknowledges receipt of the Notice of Annual Meeting and Proxy Statement dated, in each case, March 29, 2018. All other proxies heretofore given by the undersigned to vote shares of Salem's Class A common stock are expressly revoked. The shares represented by this proxy will be voted as described on the reverse hereof by the stockholder. If no instructions are provided for Proposal 1 or Proposal 2, the shares will not be voted for the proposal. Address Changes/Comments: (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) (Continued, and to be signed and dated on the reverse side.)
SALEM MEDIA GROUP, INC. ATTN: MALLORIE KLEMENS 4880 SANTA ROSA ROAD CAMARILLO, CA 93012 VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E40562-P01519 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY SALEM MEDIA GROUP, INC. The BOARD OF DIRECTORS recommends a vote "FOR" Proposal 1. 1. To elect seven (7) members to the Board of Directors of Salem: Nominees: For Against Abstain 1a. Stuart W. Epperson 1b. Edward G. Atsinger III 1c. Jonathan Venverloh 1d. J. Keet Lewis 1e. Eric H. Halvorson 1f. Edward C. Atsinger 1g. Stuart W. Epperson Jr. For address changes and/or comments, please check this box and write them on the back where indicated. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date The BOARD OF DIRECTORS recommends a vote "FOR" For Against Abstain Proposal 2. 2. Proposal to ratify the appointment of Crowe Horwath LLP as Salem's independent registered public accounting firm. At their discretion, the proxies are authorized to consider and vote upon such other business as may properly come before the meeting or any adjournment thereof. Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Form 10-K are available at www.proxyvote.com. E40563-P01519 SALEM MEDIA GROUP, INC. PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 9, 2018 Solicited on Behalf of the Board of Directors The undersigned hereby authorizes Edward G. Atsinger III and Christopher J. Henderson, and each of them individually, with power of substitution, to vote and otherwise represent all of the shares of Class B common stock of Salem Media Group, Inc. ("Salem"), held of record by the undersigned, at the Annual Meeting of Stockholders of Salem to be held at Salem's corporate office, 4880 Santa Rosa Road, Camarillo, California 93012, on Wednesday, May 9, 2018, at 9:30 a.m. PDT, and any postponement(s) or adjournment(s) thereof, as indicated on the reverse side hereof. The undersigned acknowledges receipt of the Notice of Annual Meeting and Proxy Statement dated, in each case, March 29, 2018. All other proxies heretofore given by the undersigned to vote shares of Salem's Class B common stock are expressly revoked. The shares represented by this proxy will be voted as described on the reverse hereof by the stockholder. If no instructions are provided for Proposal 1 or Proposal 2, the shares will not be voted for the proposal. Address Changes/Comments: (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) (Continued, and to be signed and dated on the reverse side.)
*** Exercise Your Right to Vote *** Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 9, 2018. SALEM MEDIA GROUP, INC. SALEM MEDIA GROUP, INC. ATTN: MALLORIE KLEMENS 4880 SANTA ROSA ROAD CAMARILLO, CA 93012 E40564-P01519 Meeting Information Meeting Type: Annual Meeting For holders as of: March 14, 2018 Date: May 9, 2018 Time: 9:30 a.m. PDT Location: Salem Media Group, Inc. 4880 Santa Rosa Road Camarillo, CA 93012 You are receiving this communication because you hold shares in the company named above. This is not a ballot. You cannot use this notice to vote these shares. This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. You may view the proxy materials online at www.proxyvote.com or easily request a paper copy (see reverse side). We encourage you to access and review all of the important information contained in the proxy materials before voting. See the reverse side of this notice to obtain proxy materials and voting instructions.
Before You Vote How to Access the Proxy Materials Proxy Materials Available to VIEW or RECEIVE: NOTICE AND PROXY STATEMENT FORM 10-K How to View Online: Have the information that is printed in the box marked by the arrow XXXX XXXX XXXX XXXX (located on the following page) and visit: www.proxyvote.com. How to Request and Receive a PAPER or E-MAIL Copy: If you want to receive a paper or e-mail copy of these documents, you must request one. There is NO charge for requesting a copy. Please choose one of the following methods to make your request: 1) BY INTERNET: www.proxyvote.com 2) BY TELEPHONE: 1-800-579-1639 3) BY E-MAIL*: sendmaterial@proxyvote.com * If requesting materials by e-mail, please send a blank e-mail with the information that is printed in the box marked by the arrowXXXX XXXX XXXX XXXX (located on the following page) in the subject line. Requests, instructions and other inquiries sent to this e-mail address will NOT be forwarded to your investment advisor. Please make the request as instructed above on or before April 25, 2018 to facilitate timely delivery. How To Vote Please Choose One of the Following Voting Methods Vote In Person: Many stockholder meetings have attendance requirements including, but not limited to, the possession of an attendance ticket issued by the entity holding the meeting. Please check the meeting materials for any special requirements for meeting attendance. At the meeting, you will need to request a ballot to vote these shares. Vote By Internet: To vote now by Internet, go to www.proxyvote.com. Have the information that is printed in the box marked by the arrow XXXX XXXX XXXX XXXX (located on the following page) available and follow the instructions. Vote By Mail: You can vote by mail by requesting a paper copy of the materials, which will include a proxy card. E40565-P01519
Voting Items The BOARD OF DIRECTORS recommends a vote "FOR" Proposal 1. 1. To elect nine (9) members to the Board of Directors of Salem: †The holders of Salem's Class A common stock are entitled to vote on the election of the two additional nominees as independent directors, Messrs. Hinz and Riddle. Nominees: 1a. Stuart W. Epperson 1b. Edward G. Atsinger III 1c. Roland Hinz† 1d. Richard Riddle† 1e. Jonathan Venverloh 1f. J. Keet Lewis 1g. Eric H. Halvorson 1h. Edward C. Atsinger 1i. Stuart W. Epperson Jr. E40566-P01519 The BOARD OF DIRECTORS recommends a vote "FOR" Proposal 2. 2. Proposal to ratify the appointment of Crowe Horwath LLP as Salem's independent registered public accounting firm. At their discretion, the proxies are authorized to consider and vote upon such other business as may properly come before the meeting or any adjournment thereof.
Voting Items The BOARD OF DIRECTORS recommends a vote "FOR" Proposal 1. 1. To elect seven (7) members to the Board of Directors of Salem: Nominees: 1a. Stuart W. Epperson 1b. Edward G. Atsinger III 1c. Jonathan Venverloh 1d. J. Keet Lewis 1e. Eric H. Halvorson 1f. Edward C. Atsinger 1g. Stuart W. Epperson Jr. E40567-P01519 The BOARD OF DIRECTORS recommends a vote "FOR" Proposal 2. 2. Proposal to ratify the appointment of Crowe Horwath LLP as Salem's independent registered public accounting firm. At their discretion, the proxies are authorized to consider and vote upon such other business as may properly come before the meeting or any adjournment thereof.
E40568-P01519
