DEF 14A 1 emms-def14a_20190711.htm DEF 14A emms-def14a_20190711.htm

Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Filed by the Registrant

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))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Under § 240.14a-12

EMMIS COMMUNICATIONS CORPORATION

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of Filing Fee (Check the appropriate box):

No fee required.

Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.

 

(1)

Title of each class of securities to which transaction applies:   

 

(2)

Aggregate number of securities to which transaction applies: 

 

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):  

 

(4)

Proposed maximum aggregate value of transaction:    

 

(5)

Total fee paid:    

Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

(1)

Amount Previously Paid:     

 

(2)

Form, Schedule or Registration Statement No.:     

 

(3)

Filing Party:     

 

(4)

Date Filed:     

 

 

 

 


Table of Contents

 

May 24, 2019

Dear Shareholder:

The directors and officers of Emmis Communications Corporation join me in inviting you to attend the annual meeting of our shareholders on Thursday, July 11, 2019, at 10:00 a.m. local time, at our headquarters, One Emmis Plaza, 40 Monument Circle, Indianapolis, IN 46204. The formal notice of this annual meeting and the proxy statement appear on the following pages and are accompanied by a copy of our annual report on Form 10-K for the fiscal year ended February 28, 2019. After reading the proxy statement and other materials, please submit your proxy promptly by telephone or via the Internet in accordance with the instructions on the enclosed proxy card, or by marking, signing and returning a physical proxy card by mail, to ensure that your votes on the business matters of the meeting will be recorded.

We hope that you will attend this meeting. Whether or not you attend, we urge you to submit your proxy promptly. Even after submitting the proxy, you may, of course, vote in person on all matters brought before the meeting.

We look forward to seeing you on Thursday, July 11, 2019.

 

 

 

Sincerely,

Jeffrey H. Smulyan

Chief Executive Officer and

Chairman of the Board

The accompanying proxy statement is dated May 24, 2019 and is first being mailed, along with the associated proxy card, to Emmis’ shareholders on or about May 24, 2019.

 


Table of Contents

 

EMMIS COMMUNICATIONS CORPORATION

INDIANAPOLIS, INDIANA

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

The annual meeting of the shareholders of Emmis Communications Corporation will be held on Thursday, July 11, 2019, at 10:00 a.m. local time, at One Emmis Plaza, 40 Monument Circle, Indianapolis, IN 46204.

Holders of common stock will be asked to consider and vote on the following matters:

 

(1)

election of three directors to Emmis’ board of directors for terms of three years;

 

(2)

approval (in an advisory vote) of the compensation of Emmis’ named executive officers as disclosed in this proxy statement;

 

(3)

ratification of the selection of Ernst & Young LLP as Emmis’ independent registered public accountants for the fiscal year ending February 29, 2020; and

 

(4)

transaction of any other business that may properly come before the meeting and any adjournments or postponements of the meeting.

We describe each of these proposals in more detail in the accompanying proxy statement, which you should read in its entirety before voting.

Only shareholders of record at the close of business on May 3, 2019 are entitled to notice of and to vote at this meeting and any adjournments or postponements of this meeting.

 

 

 

By order of the Board of Directors,

J. Scott Enright

Secretary

 

Indianapolis, Indiana

May 24, 2019

 

 

 

Important Notice Regarding the Availability of Proxy Materials for the

Shareholder Meeting to be Held on July 11, 2019

 

The proxy statement and annual report are available at   www.proxyvote.com.

 

Also available on the website are the Emmis proxy card, as well as additional voting information.

 


Table of Contents

 

TABLE OF CONTENTS

 

 

 


Table of Contents

 

EMMIS COMMUNICATIONS CORPORATION

ONE EMMIS PLAZA

40 MONUMENT CIRCLE

INDIANAPOLIS, INDIANA 46204

PROXY STATEMENT

In this proxy statement, Emmis Communications Corporation is referred to as “we,” “us,” “our,” “our company,” “the company” or “Emmis.”

QUESTIONS AND ANSWERS ABOUT THIS ANNUAL MEETING

Q: Why did I receive this proxy statement?

As an Emmis shareholder, you received this proxy statement because our board of directors is soliciting your proxy to vote at the annual meeting of shareholders. The annual meeting will be held on Thursday, July 11, 2019, at 10:00 a.m., local time, at One Emmis Plaza, 40 Monument Circle, Indianapolis, IN 46204.

This proxy statement summarizes the information you need to know to vote on an informed basis at the annual meeting; however, you do not need to attend the annual meeting to vote your shares. See “How do I vote my shares before the Annual Meeting?” We expect to begin sending this proxy statement, the attached notice of annual meeting and the proxy card(s) on May 24, 2019, to all shareholders entitled to vote.

Q: What am I voting on?

You are being asked to consider and vote on the following:

 

election of three directors to our board of directors for terms of three years;

 

approval (in an advisory vote) of the compensation of Emmis’ named executive officers as disclosed in this proxy statement; and

 

ratification of the selection of Ernst & Young LLP as our independent registered public accountants for the fiscal year ending February 29, 2020.

Q: Who is entitled to vote?

Holders of outstanding Class A common stock and holders of outstanding Class B common stock as of the close of business on May 3, 2019, the record date, are entitled to vote at the annual meeting. As of May 3, 2019, 11,856,200 shares of Class A common stock and 1,242,366 shares of Class B common stock were issued and outstanding. As of May 3, 2019, there were no shares of Class C common stock issued or outstanding.

Q: Has the board of directors made any recommendation with respect to each proposal?

The board of directors recommends that holders of common stock vote FOR James M. Dubin, Greg A. Nathanson, and Jeffrey H. Smulyan, the persons nominated by the board’s Corporate Governance and Nominating Committee to be elected by the holders of common stock as directors for terms of three years. The board of directors also recommends that holders of common stock vote FOR approval (in an advisory vote) of the compensation of our named executive officers, and FOR ratification of Ernst & Young LLP as our independent registered public accountants.

Q: What does it mean if I get more than one proxy card?

If you receive more than one proxy card, it means you hold shares registered in more than one account. Sign and return ALL proxy cards to ensure that all your shares are voted.

Q: What are the voting rights of the common stock?

Each share of Class A common stock is entitled to one vote and each share of Class B common stock is entitled to ten votes. Generally, the holders of Class A and Class B common stock vote together as a single group. However, the two classes vote separately in connection with the election of certain directors, certain “going private” transactions and other matters as provided by law.

At this annual meeting, the Class A and Class B common stock will vote together on the election of three directors, the approval (in an advisory vote) of the compensation of our named executive officers, and the ratification of Ernst & Young LLP as our independent registered public accountants.

Q: How do I vote my shares before the Annual Meeting?

If you hold your shares in your own name, you may submit a proxy by telephone, via the Internet or by mail.

 

Submitting a Proxy by Telephone:  You can submit a proxy for your shares by telephone until 11:59 p.m. Eastern Daylight Time on July 10, 2019 by calling the toll-free telephone number on the enclosed proxy card, (800) 690-6903. Telephone proxy submission is available 24 hours a day. Voice prompts allow you to submit a proxy for your shares and confirm that your instructions have

1


Table of Contents

 

 

been properly recorded. Our telephone proxy submission procedures are designed to authenticate shareholders by using individual control numbers.

 

 

Submitting a Proxy via the Internet:  You can submit a proxy via the Internet until 11:59 p.m. Eastern Daylight Time on July 10, 2019 by accessing the web site listed on your proxy card, www.proxyvote.com, and following the instructions you will find on the web site. Internet proxy submission is available 24 hours a day. As with telephone proxy submission, you will be given the opportunity to confirm that your instructions have been properly recorded.

 

 

Submitting a Proxy by Mail:  If you choose to submit a proxy by mail, simply mark the appropriate proxy card, date and sign it, and return it in the postage paid envelope provided or to the address shown on the proxy card. Your proxy must be received by the Secretary before the start of the meeting in order to be counted.

By casting your vote in any of the three ways listed above, you are authorizing the individuals listed on the proxy to vote your shares in accordance with your instructions. You may also attend the Annual Meeting and vote in person.

If your shares are held in the name of a bank, broker or other nominee, you will receive instructions from the holder of record that you must follow for your shares to be voted. The availability of telephonic or Internet voting will depend on the bank’s or broker’s voting process. Please check with your bank or broker and follow the voting procedures your bank or broker provides to vote your shares. Also, please note that if the holder of record of your shares is a broker, bank or other nominee and you wish to vote in person at the Annual Meeting, you must request a legal proxy from your bank, broker or other nominee that holds your shares and present that proxy and proof of identification at the Annual Meeting.

Q: If I am the beneficial owner of shares held in “street name” by my broker, will my broker automatically vote my shares for me?

Stock exchange rules applicable to brokers grant your broker discretionary authority to vote your shares without receiving your instructions on certain matters. Your broker has discretionary voting authority under these rules to vote your shares on the ratification of Ernst & Young LLP as our independent registered public accountants. However, unless you provide voting instructions to your broker, your broker does not have discretionary authority to vote on the election of directors or the approval (in an advisory vote) of the compensation of our named executive officers. Therefore, it is particularly important that beneficial owners instruct their brokers how they wish to vote their shares.

Q: How will my shares be voted if I give my proxy but do not specify how my shares should be voted?

If you provide specific voting instructions, your shares will be voted at the Annual Meeting in accordance with your instructions. If you return your signed proxy card but do not indicate your voting preferences, we will vote on your behalf FOR each of the nominees for whom you are entitled to vote, FOR the approval (in an advisory vote) of the compensation of our named executive officers, and FOR the ratification of Ernst & Young LLP as our independent registered public accountants.

Q: What is an “abstention” or a broker “non-vote” and how do they affect the vote?

An “abstention” occurs when a shareholder sends in a proxy with explicit instructions to decline to vote regarding a particular matter. Abstentions are counted as present for purposes of determining a quorum. An abstention with respect to the election of directors is neither a vote cast “for” a nominee nor a vote cast “against” the nominee and, therefore, will have no effect on the outcome of the vote. Abstentions with respect to the approval (in an advisory vote) of the compensation of our named executive officers and the ratification of Ernst & Young LLP as our independent registered public accountants will also have no effect on the outcome of the vote.

A broker “non-vote” occurs when a broker or other nominee who holds shares for the beneficial owner is unable to vote those shares for the beneficial owner because the broker or other nominee does not have discretionary voting power for the proposal and has not received voting instructions from the beneficial owner of the shares. Brokers will have discretionary voting power to vote shares for which no voting instructions have been provided by the beneficial owner only with respect to the ratification of Ernst & Young LLP as our independent registered public accountants. Brokers will not have such discretionary voting power to vote shares with respect to the election of directors or the approval (in an advisory vote) of the compensation of our named executive officers. Shares that are the subject of a broker non-vote are included for quorum purposes, but a broker non-vote with respect to a proposal will not be counted as a vote represented at the meeting and entitled to vote and, consequently, as a general matter, will have no effect on the outcome of the vote.

Q: How can I change my vote?

You may revoke your proxy at any time before it is exercised by:

 

Delivering to the Secretary a written notice of revocation, dated later than the proxy, before the vote is taken at the Annual Meeting;

 

Delivering to the Secretary an executed proxy bearing a later date, before the vote is taken at the Annual Meeting;

 

Submitting a proxy on a later date by telephone or via the Internet (only your last telephone or Internet proxy will be counted), before 11:59 p.m. Eastern Time on July 10, 2019; or

 

 

 

Attending the Annual Meeting and voting in person (your attendance at the Annual Meeting, in and of itself, will not revoke the proxy).

Any written notice of revocation, or later dated proxy, should be delivered to:

2


Table of Contents

 

Emmis Communications Corporation

One Emmis Plaza

40 Monument Circle

Indianapolis, Indiana 46204

Attention: J. Scott Enright, Secretary

Alternatively, you may hand deliver a written revocation notice, or a later dated proxy, to the Secretary at the Annual Meeting before we begin voting.

If your shares are held by a bank, broker or other nominee, you must follow the instructions provided by the bank, broker or other nominee if you wish to change your vote.

Q: Who will count the votes?

Representatives of Broadridge Financial Solutions, Inc. will count the votes.

Q: What constitutes a quorum?

A majority of the combined voting power of the outstanding Class A and Class B common stock entitled to vote at the meeting constitutes a quorum for the items to be voted on by the common stock at the Annual Meeting (i.e., counting one vote for each share of outstanding Class A common stock and ten votes for each share of outstanding Class B common stock, present in person or represented by proxy).

Q:  What is the advisory vote on compensation?

The advisory vote on compensation is an advisory vote by the Company’s shareholders whereby the shareholder can either endorse or not endorse the Company’s system of compensating its executive officers.  While the advisory vote on compensation is not binding on the Board, the Board intends to take the vote into consideration in making future compensation awards to the Company’s executive officers.

Q: How many votes are needed for approval of each proposal?

Directors to be elected by the holders of common stock will be elected by a plurality of the votes cast by the holders of outstanding common stock entitled to vote in the election who are present, in person or by proxy, at the meeting. Consequently, the director nominees receiving the most votes of the holders of Class A and Class B common stock, voting together, will be elected to fill three director positions. Only votes cast FOR a nominee will be counted.

The approval (in an advisory vote) of the compensation of our named executive officers, and the ratification of Ernst & Young LLP as our independent registered public accountants for the fiscal year ending February 29, 2020 requires that the number of votes cast in favor of that proposal by holders of our outstanding Class A common stock and Class B common stock, voting together, exceed the number of votes cast against the proposal by such holders of our outstanding Class A common stock and Class B common stock.

Q: What percentage of stock does our largest individual shareholder own and how does he intend to vote? What about executive officers and directors?

Jeffrey H. Smulyan, our Chairman and Chief Executive Officer, is our largest single shareholder, beneficially owning approximately 2.6% of our Class A common stock and 100% of our Class B common stock as of May 3, 2019. Mr. Smulyan has informed us that he intends to vote in favor of the approval (in an advisory vote) of the compensation of our named executive officers, for each of the nominees for director, and in favor of the proposal regarding the ratification of the selection of Ernst & Young LLP as our independent registered public accountants. If he does so, the election of Messrs. Dubin, Nathanson and Smulyan, approval (in an advisory vote) of the compensation of our named executive officers, and ratification of the selection of Ernst & Young LLP as our independent registered public accountants are expected to be approved because Mr. Smulyan controls approximately 51.5% of the combined voting power of our outstanding common stock (not including the potential voting power of unexercised options).

All directors and executive officers together own outstanding Class A common stock and Class B common stock representing approximately 56.3% of the combined voting power of our outstanding common stock (not including the potential voting power of unexercised options).

Q: Does Emmis offer an opportunity to receive future proxy materials electronically?

Yes. If you are a shareholder of record, you may, if you wish, receive future proxy statements and annual reports online. If you elect this feature, you will receive either a proxy card or an e-mail message notifying you when the materials are available, along with a web address for viewing the materials. You may sign up for electronic delivery by marking and signing the appropriate spaces on your proxy card or by contacting our Investor Relations Department by e-mail at ir@emmis.com or toll-free by phone at (866) 366-4703. If you received these materials electronically, you do not need to do anything to continue receiving materials electronically in the future.

If you hold your shares in a brokerage account, you may also have the opportunity to receive proxy materials electronically. Please follow the instructions of your broker.

3


Table of Contents

 

Electronic delivery saves Emmis money by reducing printing and mailing costs. It will also make it convenient for you to receive your proxy materials online. Emmis charges nothing for electronic delivery. You may, of course, incur the usual expenses associated with Internet access, such as telephone charges or charges from your Internet service provider.

You may discontinue electronic delivery at any time. For more information, contact our Investor Relations Department by e-mail at ir@emmis.com or toll-free by phone at (866) 366-4703.

Q: Who can attend the Annual Meeting?

All shareholders as of May 3, 2019 may attend.

Q: Where will the meeting take place?

The annual meeting will take place at our corporate headquarters, located at One Emmis Plaza, 40 Monument Circle, Suite 700, Indianapolis, IN 46204.

Q: How can I obtain directions to attend the annual meeting in person?

If you need directions to the location of the annual meeting, please contact our Investor Relations Department by e-mail at ir@emmis.com or toll-free by phone at (866) 366-4703.

Q: What do I do if I have additional questions?

If you have any questions prior to the annual meeting, please contact our Investor Relations Department by e-mail at ir@emmis.com or toll-free by phone at (866) 366-4703.

FORWARD-LOOKING STATEMENTS

This Proxy Statement includes or incorporates “forward-looking statements,” as defined in the Securities and Exchange Act of 1934, as amended. You can identify these forward-looking statements by our use of words such as “intend,” “plan,” “may,” “will,” “project,” “estimate,” “anticipate,” “believe,” “expect,” “continue,” “potential,” “opportunity” and similar expressions, whether in the negative or affirmative. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company to be materially different from any future result, performance or achievement expressed or implied by such forward-looking statement. Such factors include, among others:

 

general economic and business conditions;

 

fluctuations in the demand for advertising and demand for different types of advertising media;

 

our ability to obtain additional capital or to service our outstanding debt;

 

competition from new or different technologies;

 

increased competition in our markets and the broadcasting industry, including our competitors changing the format of a station they operate to more directly compete with a station we operate in the same market;

 

our ability to attract and secure programming, on-air talent, writers and photographers;

 

inability to obtain (or to obtain timely) necessary approvals for purchase or sale transactions or to complete the transactions for other reasons generally beyond our control;

 

increases in the costs of programming, including on-air talent;

 

inability to grow through suitable acquisitions or to consummate dispositions;

 

new or changing technologies, including those that provide additional competition for our businesses;

 

new or changing regulations of the Federal Communications Commission or other governmental agencies;

 

war, terrorist acts or political instability; and

 

other factors mentioned in documents filed by the company with the Securities and Exchange Commission.

In addition, the forward-looking statements do not reflect the potential impact of any future acquisitions, mergers or dispositions. We undertake no obligation to update or revise any forward-looking statements because of new information, future events or otherwise.

4


Table of Contents

 

PROPOSAL 1: ELECTION OF DIRECTORS

Three directors are to be elected by the holders of common stock. James M. Dubin, Greg A. Nathanson and Jeffrey H. Smulyan have each been nominated for a term of three years and until their respective successors have been elected and qualified. All these nominees will be elected by the Class A and Class B common stock voting together as a single class. Messrs. Dubin, Nathanson and Smulyan are members of the present board of directors.

If, at the time of this annual meeting, any nominee is unable or declines to serve, the discretionary authority provided in the proxy may be exercised to vote for a substitute or substitutes. The board of directors has no reason to believe that any substitute nominee or nominees will be required.

Name, Age, Principal Occupation(s) and Business Experience

Nominees for terms expiring in 2022:

James M. Dubin, Age 72

Mr. James Dubin is Executive Chairman of the Board as well as a member of the Audit Committee of Conair Corporation, a manufacturer and marketer of health and beauty products and kitchen and electrical appliances.  He is also a member of the Board of Directors and the Audit Committee of Omega Flex, Inc., a leading manufacturer of flexible metal hose. Mr. Dubin also serves on the Board of Directors for several non-profit organizations.  He was a Partner of the international law firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP for thirty years until his retirement in 2012.

Greg A. Nathanson, Age 72

Mr. Nathanson joined Emmis in 1998 as Television Division President, resigning effective October 1, 2000. He is currently a media consultant. Mr. Nathanson has over 40 years of television broadcasting experience, having served as President of Programming and Development for Twentieth Television from 1996 to 1998; as General Manager of KTLA-TV in Los Angeles, California from 1992 to 1996; and as General Manager of the Fox television station KTTV from 1988 to 1992. In addition, he was President of all television stations owned and operated by Fox Television from 1990 to 1992.

Jeffrey H. Smulyan, Age 72

Mr. Smulyan founded Emmis in 1979 and is the Chairman of the board of directors and Chief Executive Officer. He has held the positions of Chairman of the board of directors and Chief Executive Officer since 1981 and was President until August 2015. Mr. Smulyan began working in radio in 1973, and has owned one or more radio stations since then. Formerly, he was also the owner and chief executive officer of the Seattle Mariners Major League Baseball team. He is former Chairman of the Radio Advertising Bureau; a former director of The Finish Line, a sports apparel manufacturer; and serves as a Trustee of his alma mater, the University of Southern California. Among other awards, Mr. Smulyan has received the National Radio Award, been inducted into the Broadcasting and Cable Hall of Fame, been named a “Giant of Broadcasting” by the Library of American Broadcasting, and been honored as an Indiana Living Legend.

Directors whose terms expire in 2021:

Susan B. Bayh, (1) Age 59

Mrs. Bayh was the Commissioner of the International Joint Commission of the United States and Canada until 2001. She served as a Distinguished Visiting Professor at the College of Business Administration at Butler University from 1994 through 2003. Previously, she was an attorney with Eli Lilly & Company. She is a director of Indiana University School of Public and Environmental Affairs. Mrs. Bayh also serves as an adjunct professor and is on the Board of Visitors at the University of Southern California Gould School of Law where she has taught since September 2015.

Gary L. Kaseff, Age 71

Mr. Kaseff became Executive Vice President and General Counsel of Emmis in 1998, resigning that position effective March, 2009. He remains employed by Emmis. Before becoming general counsel, Mr. Kaseff practiced law in Southern California. Previously, he was President of the Seattle Mariners Major League Baseball team and partner with the law firm of Epport & Kaseff.

Patrick M. Walsh, Age 52

Mr. Walsh became President and Chief Operating Officer in August 2015. Previously, he was Executive Vice President, Chief Financial Officer and Chief Operating Officer of Emmis, having joined Emmis in September 2006. Mr. Walsh came to Emmis from iBiquity Digital Corporation (now Xperi Corporation), the developer and licensor of HD Radio technology, where he served as Chief Financial Officer and Senior Vice President from 2002 to 2006. Prior to joining iBiquity, Mr. Walsh was a management consultant for McKinsey & Company, and served in various management positions at General Motors and Deloitte.

5


Table of Contents

 

Directors whose terms expire in 2020:

Richard A. Leventhal, Age 72

Mr. Leventhal is President and majority owner of LMCS, LLC, an investment, management and consulting company, and is a director of WastePoint, LLC, a concierge trash and recycling company. Previously, Mr. Leventhal founded, co-owned and operated Top Value Fabrics, Inc., a wholesale fabric and textile company in Carmel, Indiana, for 27 years.

Peter A. Lund, (1) Age 78

Mr. Lund is the former President and CEO of CBS.   In a career spanning 20 years at the company, he held numerous positions including:  Managing the CBS TV stations in New York and Chicago, President of the CBS Television Stations Division, President of CBS Sports and President of the CBS Television Network. He is a past director of DIRECTV, The Hallmark Channel, Nielsen Media Research, Lycos and Razorfish.

Lawrence B. Sorrel, Age 60

Mr. Sorrel is Managing Partner of Tailwind Capital, a growth oriented private equity firm with over $3 billion under management. Prior to founding Tailwind, he was a general partner of private equity firm Welsh, Carson, Anderson & Stowe and a Managing Director of Morgan Stanley, where he was a senior executive in the private equity business.

______________

 

(1)

Independent director elected by the holders of the Class A common stock voting as a separate class.

Recommendation of the Board of Directors

Our board of directors unanimously recommends that you vote “FOR” James M. Dubin, Greg A. Nathanson and Jeffrey H. Smulyan, the persons nominated by the Corporate Governance and Nominating Committee to be elected by the holders of common stock as directors.

The Corporate Governance and Nominating Committee believes that well-functioning boards consist of a diverse collection of individuals that bring a variety of complementary skills. Although the board of directors does not have a formal policy with regard to the consideration of diversity in identifying directors, diversity is one of the factors that the Corporate Governance and Nominating Committee may, pursuant to its charter, take into account in identifying director candidates. The Corporate Governance and Nominating Committee generally considers each director eligible for nomination in the broad context of the overall composition of our board of directors with a view toward constituting a board that, as a body, possesses the appropriate mix of skills and experience to oversee our business. Depending on current membership of our board of directors, the Corporate Governance and Nominating Committee also may decide to seek or give preference to a qualified candidate who is female or adds to the ethnic diversity of the board. The experience, qualifications, attributes, or skills that led the Corporate Governance and Nominating Committee to conclude that each of the members of the board of directors nominated by the Corporate Governance and Nominating Committee should serve on the board are generally described below:

Susan B. Bayh

Mrs. Bayh is a lawyer with extensive experience in corporate governance and regulatory matters. She has served as a director of several large and small companies in the highly-regulated pharmaceutical and insurance industries. Her experience as a Commissioner of the International Joint Commission of the United States and Canada also provides international relations perspective relevant to our past, and consideration of future, operations in foreign regulatory environments.

James M. Dubin

Mr. Dubin is a lawyer with over 30 years of experience advising businesses on large corporate and securities transactions. During that time, he served for 11 years as chairman of his firm’s finance committee, with responsibility for oversight of the financial affairs of an enterprise with over $500 million in revenues. He has served as a director of Carnival Corporation & PLC and Conair Corporation, and as executive chairman of the board and a member of Conair Corporation’s audit committee. His experience with financial markets and complex financing transactions, corporate governance and executive compensation matters, and mergers and acquisitions is helpful to us.

Gary L. Kaseff

Mr. Kaseff is a lawyer with extensive knowledge of the legal issues arising in the broadcast and publishing industries.

Richard A. Leventhal

Mr. Leventhal is the former owner and operator of a small business, with experience in financial and operational issues affecting organizations, as well as management and development experience. He also brings the perspective to the board of a substantial segment of our local advertisers.

6


Table of Contents

 

Peter A. Lund

Mr. Lund has over 40 years of experience in the broadcasting industry, with particular concentration in the ownership and operation of radio and television stations. He is also familiar with broadcasting network operations.

Greg A. Nathanson

Mr. Nathanson has extensive experience in the broadcasting industry, encompassing both individual station and network operations. He also has an insider’s view of the operation of our company, having served as an executive officer until 2000.

Jeffrey H. Smulyan

Mr. Smulyan is the founder and Chief Executive Officer of Emmis, with extensive broadcasting experience. His experience ranges from running an individual radio station to chairing significant broadcast industry groups. He has developed with the Emmis team a variety of new and highly successful radio formats that contributed to the company’s growth and sustained the company during economic downturns. As our Chief Executive Officer and a recognized industry leader, Mr. Smulyan provides the board with information about the daily operations of the company as well as strategic insights into the broadcast industry and future trends that will likely affect the company’s operations. His experiences with sports management, and as a former director of a retail company, are also valuable to the company’s programming operations and customer relations activities.

Lawrence B. Sorrel

Mr. Sorrel has served as a board member of more than 40 mid-sized businesses and has extensive experience with the purchase, sale and financing of businesses in the communications industry and with credit profiles similar to ours. Mr. Sorrel’s experience in the private equity industry adds a long-term strategic perspective to the board’s deliberations.

Patrick M. Walsh

Mr. Walsh serves as the company’s President and Chief Operating Officer. In addition to his background in finance, accounting and operations, Mr. Walsh has experience as a management consultant and has served in financial and operational capacities in a business that sold technology to the radio industry. He offers the board an inside view of the company’s finances and operations along with a strategic perspective on aspects of the radio broadcasting industry’s future.

7


Table of Contents

 

SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT

As of May 3, 2019, there were 11,856,200 shares of our Class A common stock and 1,242,366 shares of our Class B common stock issued and outstanding. The Class A common stock is entitled to an aggregate of 11,856,200 votes and the Class B common stock is entitled to an aggregate of 12,423,660 votes. The following table shows, as of May 3, 2019, the number of shares and percentage of our Class A common stock and Class B common stock held by each person known to us to own beneficially more than five percent of the issued and outstanding common stock, by the executive officers named in the beneficial ownership table below and our directors, and by our executive officers and directors as a group. Unless otherwise specified, the address of each person listed is: One Emmis Plaza, 40 Monument Circle, Suite 700, Indianapolis, IN 46204.

 

 

 

Class A

Common Stock

 

 

Class B

Common Stock

 

 

 

 

 

Five Percent Shareholders,

Directors, Nominees and

Certain Executive Officers

 

Amount and

Nature of

Beneficial

Ownership

 

 

 

Percent of

Class

 

 

Amount and

Nature of

Beneficial

Ownership

 

 

Percent of

Class

 

 

Percent of

Total

Voting

Power

 

Jeffrey H. Smulyan

 

 

319,096

 

(1)

 

 

2.6

%

 

 

1,242,366

 

(15)

 

100.0

%

 

 

52.0

%

Susan B. Bayh

 

 

194,560

 

(2)

 

 

1.6

%

 

 

 

 

 

 

 

*

 

Paul V. Brenner

 

 

91,273

 

(3)

 

*

 

 

 

 

 

 

 

 

 

 

*

 

James M. Dubin

 

 

142,379

 

(4)

 

 

1.2

%

 

 

 

 

 

 

 

*

 

Gary L. Kaseff

 

 

222,038

 

(5)

 

 

1.8

%

 

 

 

 

 

 

 

*

 

Richard A. Leventhal

 

 

249,391

 

(6)

 

 

2.1

%

 

 

 

 

 

 

 

 

1.0

%

Peter A. Lund

 

 

295,430

 

(7)

 

 

2.5

%

 

 

 

 

 

 

 

 

1.2

%

Greg A. Nathanson

 

 

313,432

 

(8)

 

 

2.6

%

 

 

 

 

 

 

 

 

1.3

%

Lawrence B. Sorrel

 

 

297,368

 

(9)

 

 

2.5

%

 

 

 

 

 

 

 

 

1.2

%

Patrick M. Walsh

 

 

344,413

 

(10)

 

 

2.9

%

 

 

 

 

 

 

 

 

1.4

%

All Executive Officers and

   Directors as a Group (13 persons)

 

 

2,988,101

 

(11)

 

 

22.0

%

 

 

1,242,366

 

 

 

100.0

%

 

 

59.2

%

Other 5% Shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gate City Capital Management, LLC

 

 

1,166,796

 

(12)

 

 

9.8

%

 

 

 

 

 

 

 

 

4.8

%

Nantahala Capital Management, LLC

 

 

821,783

 

(13)

 

 

6.9

%

 

 

 

 

 

 

 

 

3.4

%

Zazove Associates, LLC

 

 

1,069,861

 

(14)

 

 

9.0

%

 

 

 

 

 

 

 

 

4.4

%

*

Less than 1%.

(1)

Consists of 78,448 shares owned individually, 2,719 shares held in the 401(k) Plan, 2,780 shares held by Mr. Smulyan as trustee for his children over which Mr. Smulyan exercises or shares voting control, and 235,149 shares represented by stock options exercisable currently or within 60 days of May 3, 2019.

(2)

Consists of 34,703 shares owned individually and 159,857 shares represented by stock options exercisable currently or within 60 days of May 3, 2019.

(3)

Consists of 23,964 shares owned individually, 1,060 shares held in the 401(k) Plan, and 66,249 shares represented by stock options exercisable currently or within 60 days of May 3, 2019.

(4)

Consists of 25,509 shares owned individually, and 116,870 shares represented by stock options exercisable currently or within 60 days of May 3, 2019. Of the shares owned individually, 548 are restricted stock subject to forfeiture if certain conditions are not satisfied.

(5)

Consists of 62,160 shares owned individually, 852 shares owned by Mr. Kaseff’s spouse, 336 shares held by Mr. Kaseff’s spouse for the benefit of their children, 663 shares held in the 401(k) Plan, and 158,027 shares represented by stock options exercisable currently or within 60 days of May 3, 2019.

(6)

Consists of 89,163 shares owned individually, 371 shares held in an IRA, and 159,857 shares represented by stock options exercisable currently or within 60 days of May 3, 2019.

(7)

Consists of 135,573 shares owned individually, and 159,857 shares represented by stock options exercisable currently or within 60 days of May 3, 2019.

(8)

Consists of 142,575 shares owned individually, 11,000 shares held in trust for the benefit of Mr. Nathanson’s children and 159,857 shares represented by stock options exercisable currently or within 60 days of May 3, 2019. Of the shares owned individually, 548 are restricted stock subject to forfeiture if certain conditions are not satisfied.

(9)

Consists of 137,511 shares owned individually and 159,857 shares represented by stock options exercisable currently or within 60 days of May 3, 2019.

(10)

Consists of 217,959 shares owned individually, 1,455 shares held in the 401(k) Plan, and 124,999 shares represented by stock options exercisable currently or within 60 days of May 3, 2019. Of the shares owned individually, 88,339 are restricted stock subject to forfeiture if certain conditions are not satisfied.

(11)

Includes 1,744,324 shares represented by stock options exercisable currently or within 60 days of May 3, 2019, and 164,435 shares of restricted stock subject to forfeiture if certain conditions are not satisfied.

(12)

Information concerning these shares was obtained from a Schedule 13G filed February 13, 2019 by Gate City Capital Management, LLC and Michael Melby, all of whose addresses are 425 S. Financial Place, Suite 910A, Chicago, IL 60605.

(13)

Information concerning these shares was obtained from a Schedule 13G/A filed February 13, 2019 by Nantahala Capital Management, LLC, Wilmont B. Harkey and Daniel Mack, all of whose addresses are 19 Old Kings Highway S., Ste. 200, Darien, Connecticut 06820.

(14)

Information concerning these shares was obtained from a Schedule 13G/A filed January 29, 2019 by Zazove Associates, LLC, Zazove Associates, Inc., and Gene T. Pretti, all of whose addresses are 1001 Tahoe Blvd., Incline Village, NV 89451.

(15)

Includes 100,000 shares of restricted stock that are subject to forfeiture if certain conditions are not satisfied.

8


Table of Contents

 

CORPORATE GOVERNANCE

General

Emmis aspires to the highest ethical standards for our employees, officers and directors, and remains committed to the interests of our shareholders and other constituents. We believe we can achieve these objectives only with a plan for corporate governance that clearly defines responsibilities, sets high standards of conduct and promotes compliance with the law. The board of directors has adopted formal corporate governance guidelines, as well as policies and procedures designed to foster the appropriate level of corporate governance. Some of these guidelines and procedures are discussed below. For further information, including electronic versions of our Code of Business Conduct and Ethics, our Corporate Governance Guidelines, our Audit Committee Charter, our Compensation Committee Charter, our Corporate Governance and Nominating Committee Charter and our Auditor Independence Policy, please visit the Corporate Governance section of our website (www.emmis.com) located under the Investors heading.

Independent Directors

Our board of directors currently consists of nine members. Of these, our board has determined that six (Mrs. Bayh and Messrs. Dubin, Leventhal, Lund, Nathanson and Sorrel) qualify as “independent directors” under the listing standards of The Nasdaq Stock Market, Inc. In addition, Emmis is a “Controlled Company” as defined in the Nasdaq listing standards because more than 50% of the company’s voting power is held by one individual. The company is, therefore, pursuant to Nasdaq Marketplace Rule 5615(c)(2), exempt from certain aspects of Nasdaq’s listing standards relating to independent directors. Nevertheless, the company has voluntarily complied with such rules and a majority of the members of the board of directors are “independent directors” under Nasdaq rules.

Code of Ethics

Emmis has adopted a Code of Business Conduct and Ethics to document the ethical principles and conduct we expect from our employees, officers and directors. A copy of our Code of Business Conduct and Ethics is available in the Corporate Governance section of our website (www.emmis.com) located under the Investors heading.

Leadership Structure, Lead Director and Risk Oversight

The Emmis bylaws provide that the chairman of the board shall be the chief executive officer of the corporation. The board believes that this structure is in the best interest of the company at this time because it makes the best use of the chief executive officer’s extensive knowledge of the company and its businesses, and also facilitates communication between management and the board of directors.

Our independent directors appointed Richard A. Leventhal as the “Lead Director” effective March 1, 2011. In that role, Mr. Leventhal is responsible for coordinating and leading the independent directors, presiding over executive sessions of the independent directors and acting as a liaison between the independent directors and the rest of the board of directors and Emmis management.

The board of directors expects the company’s management to take primary responsibility for identifying material risks the company faces and communicating them to the board, developing and implementing appropriate risk management strategies responsive to those risks with oversight from the board, and integrating risk management into the company’s decision-making processes. The board, through the Audit Committee on a quarterly basis and as a full board at least annually, regularly reviews information regarding the company’s credit, liquidity and operational risks as well as strategies for addressing and managing such risks. In addition, the Compensation Committee monitors the company’s compensation programs so that such programs do not encourage excessive risk-taking by company employees.

Communications with Independent Directors

Any employee, officer, shareholder or other interested party who has an interest in communicating with the Lead Director or any other Emmis independent directors regarding any matter may do so by directing communication to Mr. Leventhal as the Lead Director addressed to Lead Director, c/o Corporate Secretary, Emmis Communications Corporation, One Emmis Plaza, 40 Monument Circle, Suite 700, Indianapolis, Indiana 46204, by facsimile to (317) 684-5583, or by e-mail message to LeadDirector@emmis.com. The communication will be delivered to the independent directors as appropriate. For matters related to nominations or corporate governance, a communication should specify that it is directed to the Corporate Governance and Nominating Committee. For matters related to finance or auditing, a communication should specify that it is directed to the Audit Committee. For matters related to compensation, a communication should specify that it is directed to the Compensation Committee. Messages for any director or the board of directors as a whole may be delivered through the Lead Director as well.

Certain Committees of the Board of Directors

Our board of directors currently has several committees, including an Audit Committee, a Corporate Governance and Nominating Committee, a Compensation Committee and an Executive Committee.

Audit Committee. The Audit Committee’s primary responsibility is to engage our independent auditors and otherwise to monitor and oversee the audit process. The Audit Committee also undertakes other related responsibilities as summarized in the Report of the Audit Committee below and detailed in the Audit Committee Charter, which is available in the Corporate Governance section of our website (www.emmis.com) located under the Investors heading. The board of directors has determined that the members of the Audit Committee, Richard A. Leventhal (chair), James M. Dubin, Peter A. Lund and Lawrence B. Sorrel, are independent directors under the Securities Exchange Act of 1934 and the Nasdaq listing standards. The board of directors has also determined that Lawrence B. Sorrel is an “Audit Committee financial expert” as defined in rules adopted under the Securities Exchange Act of 1934. The Audit Committee held four meetings during the last fiscal year.

9


Table of Contents

 

Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee’s primary responsibility is to assist the board of directors by (1) evaluating and assessing corporate governance issues affecting Emmis and (2) identifying individuals qualified to become members of the board of directors and recommending nominees to the board of directors for the next annual meeting of shareholders. The Corporate Governance and Nominating Committee charter is available in the Corporate Governance section of our website (www.emmis.com) located under the Investors heading. The Corporate Governance and Nominating Committee evaluates current members of the board of directors and potential candidates with respect to their independence, business, strategic and financial skills, as well as overall experience in the context of the needs of the board of directors as a whole. The Corporate Governance and Nominating Committee typically concentrates its focus on candidates with the following characteristics and qualifications, though not necessarily limited thereto:

 

Chief executive officers or senior executives, particularly those with experience in broadcasting, finance, marketing and information technology.

 

Individuals representing diversity in gender and ethnicity.

 

Individuals who meet the current criteria to be considered as independent directors.

The Corporate Governance and Nominating Committee will consider and evaluate potential nominees submitted by holders of our Class A common stock to our corporate secretary on or before the date for shareholder nominations specified in the “Shareholder Proposals” section of this proxy statement. These potential nominees will be considered and evaluated using the same criteria as potential nominees obtained by the Corporate Governance and Nominating Committee from other sources.

In its assessment of each potential candidate, including those recommended by shareholders, the Corporate Governance and Nominating Committee takes into account all factors it considers appropriate, which may include (a) ensuring that the board of directors, as a whole, is diverse and consists of individuals with various and relevant career experience, relevant technical skills, industry knowledge and experience, financial expertise (including expertise that could qualify a director as an “audit committee financial expert,” as that term is defined by the rules of the SEC), local or community ties, and (b) minimum individual qualifications, including strength of character, mature judgment, familiarity with our business and related industries, independence of thought and an ability to work collegially. The Corporate Governance and Nominating Committee also may consider the extent to which the candidate would fill a present need on the board of directors. Typically, after conducting an initial evaluation of a candidate, the Corporate Governance and Nominating Committee will interview that candidate if it believes the candidate might be suitable to be a director and may ask the candidate to meet with other directors and management. If the Corporate Governance and Nominating Committee believes a candidate would be a valuable addition to the board of directors, it will recommend to the full board that candidate’s nomination as a director.  

The members of the Corporate Governance and Nominating Committee are Susan B. Bayh (chair), James M. Dubin, Richard A. Leventhal, and Greg A. Nathanson, all of whom are “independent directors” under Nasdaq standards. The Corporate Governance and Nominating Committee held two meetings during the last fiscal year.

Compensation Committee. The Compensation Committee provides a general review of our compensation and benefit plans for executive officers to ensure that our corporate objectives are met, establishes compensation arrangements and approves compensation payments to our executive officers, and generally administers our stock option and incentive plans for executive officers. The Compensation Committee’s charter is available in the Corporate Governance section of our website (www.emmis.com) located under the Investors heading. The members of the Compensation Committee are Peter A. Lund (chair), Susan B. Bayh, James M. Dubin and Lawrence B. Sorrel, all of whom are independent directors under Nasdaq standards. The Compensation Committee held four meetings during the last fiscal year.

Executive Committee. The Executive Committee has the authority to manage the business of the corporation to the same extent that the board of directors has the authority to manage the business of the corporation except to the extent that the executive committee’s powers may be limited by Ind. Code § 23-1-34-6(e). The members of the Executive Committee are Jeffrey H. Smulyan (chair), Susan B. Bayh, James M. Dubin, Richard A. Leventhal and Lawrence B. Sorrel. The Executive Committee held no meetings during the last fiscal year.

Meeting Attendance

During our last fiscal year, our board of directors held five meetings, either in person or by telephone. Each director attended at least 75% of the aggregate of (1) the total number of meetings of our board of directors held while he or she was a director and (2) the total number of meetings held by all committees on which he or she served during the periods that he or she served on the committee.

We believe that communication between our shareholders and the members of our board of directors is enhanced by the opportunity for personal interaction at our annual meeting of shareholders. Accordingly, we encourage the members of our board of directors to attend our annual meeting of shareholders whenever possible. Six members of our board of directors attended our annual meeting of shareholders held on July 12, 2018.

Compensation of Directors

During the last fiscal year, each director who is not an officer of Emmis received a $30,000 annual retainer. In addition, the chair of our Audit Committee received a $10,000 annual retainer, the chair of our Compensation Committee received a $5,000 annual retainer, the chair of our Corporate Governance and Nominating Committee received a $3,000 annual retainer, the Lead Director received a $3,000 annual retainer, and each director received an annual retainer of $10,000 for each committee on which the director served. Further, each director who is not an officer of Emmis received an option to purchase 25,000 shares of Class A common stock. These options were granted at fair market value on the grant date and vest in thirds on each of the first three anniversaries of the grant date. Our directors are also eligible to participate in our health insurance plan by paying the same rate charged for Continuation Coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986.

10


Table of Contents

 

In the table below, we have set forth information regarding compensation for the fiscal year ended February 28, 2019, received by each of our directors who is not an officer of Emmis. The dollar amounts in the table below for stock and option awards are the grant date fair market values associated with such awards.

2019 DIRECTOR COMPENSATION TABLE

 

 

 

Fees Earned or

 

 

Stock

 

 

Option

 

 

All Other

 

 

 

 

 

Name

 

Paid in Cash

($)

 

 

Awards

($)

 

 

Awards (1)

($)

 

 

Compensation

($)

 

 

Total

($)

 

Susan B. Bayh

 

 

53,000

 

 

 

 

 

 

59,822

 

 

 

 

 

 

112,822

 

James M. Dubin

 

 

60,000

 

 

 

 

 

 

59,822

 

 

 

 

 

 

119,822

 

Gary L. Kaseff

 

 

30,000

 

 

 

 

 

 

59,822

 

 

 

(2

)

 

 

89,822

 

Richard A. Leventhal

 

 

63,000

 

 

 

 

 

 

59,822

 

 

 

 

 

 

122,822

 

Peter A. Lund

 

 

55,000

 

 

 

 

 

 

59,822

 

 

 

 

 

 

114,822

 

Greg A. Nathanson

 

 

40,000

 

 

 

 

 

 

59,822

 

 

 

 

 

 

99,822

 

Lawrence B. Sorrel

 

 

50,000

 

 

 

 

 

 

59,822

 

 

 

 

 

 

109,822

 

 

(1)

In the following table we have set forth information regarding options held by each named director as of February 28, 2019.

Name

 

Number of

Shares

Underlying

Options #

 

 

Option Exercise

Price $

 

 

Option Expiration

Date

 

Option Vesting Date

Mrs. Bayh

 

 

25,000

 

 

 

4.87

 

 

7/12/2028

 

1/3 on each of 7/12/19, ‘20 & ‘21

 

 

 

25,000

 

 

 

2.81

 

 

7/13/2027

 

1/3 on each of 7/13/18, ‘19 & ‘20

 

 

 

75,000

 

 

 

2.77

 

 

2/28/2027

 

Fully Vested

 

 

 

1,829

 

 

 

2.92

 

 

7/7/2026

 

1/3 on each of 7/7/17, ‘18 & ‘19

 

 

 

25,000

 

 

 

2.05

 

 

1/29/2026

 

Fully Vested

 

 

 

1,829

 

 

 

4.80

 

 

7/9/2025

 

Fully Vested

 

 

 

1,829

 

 

 

11.20

 

 

7/10/2024

 

Fully Vested

 

 

 

1,829

 

 

 

10.40

 

 

7/10/2023

 

Fully Vested

 

 

 

1,829

 

 

 

7.84

 

 

11/5/2022

 

Fully Vested

 

 

 

12,500

 

 

 

6.52

 

 

5/2/2022

 

Fully Vested

 

 

 

1,829

 

 

 

4.12

 

 

7/13/2021

 

Fully Vested

 

 

 

25,000

 

 

 

4.60

 

 

3/4/2021

 

Fully Vested

 

 

 

1,829

 

 

 

1.92

 

 

12/17/2020

 

Fully Vested

 

 

 

1,829

 

 

 

1.12

 

 

7/14/2019

 

Fully Vested

 

Mr. Dubin

 

 

25,000

 

 

 

4.87

 

 

7/12/2028

 

1/3 on each of 7/12/19, ‘20 & ‘21

 

 

 

25,000

 

 

 

2.81

 

 

7/13/2027

 

1/3 on each of 7/13/18, ‘19 & ‘20

 

 

 

75,000

 

 

 

2.77

 

 

2/28/2027

 

Fully Vested

 

 

 

1,829

 

 

 

2.92

 

 

7/7/2026

 

1/3 on each of 7/7/17, ‘18 & ‘19

 

 

 

25,000

 

 

 

2.05

 

 

1/29/2026

 

Fully Vested

 

 

 

1,829

 

 

 

4.80

 

 

7/9/2025

 

Fully Vested

 

 

 

1,829

 

 

 

11.20

 

 

7/10/2024

 

Fully Vested

 

 

 

1,829

 

 

 

10.40

 

 

7/10/2023

 

Fully Vested

 

 

 

1,829

 

 

 

7.84

 

 

11/5/2022

 

Fully Vested

 

Mr. Kaseff

 

 

25,000

 

 

 

4.87

 

 

7/12/2028

 

1/3 on each of 7/12/19, ‘20 & ‘21

 

 

 

25,000

 

 

 

2.81

 

 

7/13/2027

 

1/3 on each of 7/13/18, ‘19 & ‘20

 

 

 

75,000

 

 

 

2.77

 

 

2/28/2027

 

Fully Vested

 

 

 

1,829

 

 

 

2.92

 

 

7/7/2026

 

1/3 on each of 7/7/17, ‘18 & ‘19

 

 

 

25,000

 

 

 

2.05

 

 

1/29/2026

 

Fully Vested

 

 

 

1,829

 

 

 

4.80

 

 

7/9/2025

 

Fully Vested

 

 

 

1,829

 

 

 

11.20

 

 

7/10/2024

 

Fully Vested

 

 

 

1,829

 

 

 

10.40

 

 

7/10/2023

 

Fully Vested

 

 

 

1,829

 

 

 

7.84

 

 

11/5/2022

 

Fully Vested

 

 

 

12,500

 

 

 

6.52

 

 

5/2/2022

 

Fully Vested

 

 

 

1,829

 

 

 

4.12

 

 

7/13/2021

 

Fully Vested

 

 

 

25,000

 

 

 

4.60

 

 

3/4/2021

 

Fully Vested

 

 

 

1,829

 

 

 

1.92

 

 

12/17/2020

 

Fully Vested

 

11


Table of Contents

 

Mr. Leventhal

 

 

25,000

 

 

 

4.87

 

 

7/12/2028

 

1/3 on each of 7/12/19, ‘20 & ‘21

 

 

 

25,000

 

 

 

2.81

 

 

7/13/2027

 

1/3 on each of 7/13/18, ‘19 & ‘20

 

 

 

75,000

 

 

 

2.77

 

 

2/28/2027

 

Fully Vested

 

 

 

1,829

 

 

 

2.92

 

 

7/7/2026

 

1/3 on each of 7/7/17, ‘18 & ‘19

 

 

 

25,000

 

 

 

2.05

 

 

1/29/2026

 

Fully Vested

 

 

 

1,829

 

 

 

4.80

 

 

7/9/2025

 

Fully Vested

 

 

 

1,829

 

 

 

11.20

 

 

7/10/2024

 

Fully Vested

 

 

 

1,829

 

 

 

10.46

 

 

7/10/2023

 

Fully Vested

 

 

 

1,829

 

 

 

7.84

 

 

11/5/2022

 

Fully Vested

 

 

 

12,500

 

 

 

6.52

 

 

5/2/2022

 

Fully Vested

 

 

 

1,829

 

 

 

4.12

 

 

7/13/2021

 

Fully Vested

 

 

 

25,000

 

 

 

4.60

 

 

3/4/2021

 

Fully Vested

 

 

 

1,829

 

 

 

1.92

 

 

12/17/2020

 

Fully Vested

 

 

 

1,829

 

 

 

1.12

 

 

7/14/2019

 

Fully Vested

 

Mr. Lund

 

 

25,000

 

 

 

4.87

 

 

7/12/2028

 

1/3 on each of 7/12/19, ‘20 & ‘21

 

 

 

25,000

 

 

 

2.81

 

 

7/13/2027

 

1/3 on each of 7/13/18, ‘19 & ‘20

 

 

 

75,000

 

 

 

2.77

 

 

2/28/2027

 

Fully Vested

 

 

 

1,829

 

 

 

2.92

 

 

7/7/2026

 

1/3 on each of 7/7/17, ‘18 & ‘19

 

 

 

25,000

 

 

 

2.05

 

 

1/29/2026

 

Fully Vested

 

 

 

1,829

 

 

 

4.80

 

 

7/9/2025

 

Fully Vested

 

 

 

1,829

 

 

 

11.20

 

 

7/10/2024

 

Fully Vested

 

 

 

1,829

 

 

 

10.40

 

 

7/10/2023

 

Fully Vested

 

 

 

1,829

 

 

 

7.84

 

 

11/5/2022

 

Fully Vested

 

 

 

12,500

 

 

 

6.52

 

 

5/2/2022

 

Fully Vested

 

 

 

1,829

 

 

 

4.12

 

 

7/13/2021

 

Fully Vested

 

 

 

25,000

 

 

 

4.60

 

 

3/4/2021

 

Fully Vested

 

 

 

1,829

 

 

 

1.92

 

 

12/17/2020

 

Fully Vested

 

 

 

1,829

 

 

 

1.12

 

 

7/14/2019

 

Fully Vested

 

Mr. Nathanson

 

 

25,000

 

 

 

4.87

 

 

7/12/2028

 

1/3 on each of 7/12/19, ‘20 & ‘21

 

 

 

25,000

 

 

 

2.81

 

 

7/13/2027

 

1/3 on each of 7/13/18, ‘19 & ‘20

 

 

 

75,000

 

 

 

2.77

 

 

2/28/2027

 

Fully Vested

 

 

 

1,829

 

 

 

2.92

 

 

7/7/2026

 

1/3 on each of 7/7/17, ‘18 & ‘19

 

 

 

25,000

 

 

 

2.05

 

 

1/29/2026

 

Fully Vested

 

 

 

1,829

 

 

 

4.80

 

 

7/9/2025

 

Fully Vested

 

 

 

1,829

 

 

 

11.20

 

 

7/10/2024

 

Fully Vested

 

 

 

1,829

 

 

 

10.46

 

 

7/10/2023

 

Fully Vested

 

 

 

1,829

 

 

 

7.84

 

 

11/5/2022

 

Fully Vested

 

 

 

12,500

 

 

 

6.52

 

 

5/2/2022

 

Fully Vested

 

 

 

1,829

 

 

 

4.12

 

 

7/13/2021

 

Fully Vested

 

 

 

25,000

 

 

 

4.60

 

 

3/4/2021

 

Fully Vested

 

 

 

1,829

 

 

 

1.92

 

 

12/17/2020

 

Fully Vested

 

 

 

1,829

 

 

 

1.12

 

 

7/14/2019

 

Fully Vested

 

Mr. Sorrel

 

 

25,000

 

 

 

4.87

 

 

7/12/2028

 

1/3 on each of 7/12/19, ‘20 & ‘21

 

 

 

25,000

 

 

 

2.81

 

 

7/13/2027

 

1/3 on each of 7/13/18, ‘19 & ‘20

 

 

 

75,000

 

 

 

2.77

 

 

2/28/2027

 

Fully Vested

 

 

 

1,829

 

 

 

2.92

 

 

7/7/2026

 

1/3 on each of 7/7/17, ‘18 & ‘19

 

 

 

25,000

 

 

 

2.05

 

 

1/29/2026

 

Fully Vested

 

 

 

1,829

 

 

 

4.80

 

 

7/9/2025

 

Fully Vested

 

 

 

1,829

 

 

 

11.20

 

 

7/10/2024

 

Fully Vested

 

 

 

1,829

 

 

 

10.40

 

 

7/10/2023

 

Fully Vested

 

 

 

1,829

 

 

 

7.84

 

 

11/5/2022

 

Fully Vested

 

 

 

12,500

 

 

 

6.52

 

 

5/2/2022

 

Fully Vested

 

 

 

1,829

 

 

 

4.12

 

 

7/13/2021

 

Fully Vested

 

 

 

25,000

 

 

 

4.60

 

 

3/4/2021

 

Fully Vested

 

 

 

1,829

 

 

 

1.92

 

 

12/17/2020

 

Fully Vested

 

 

 

1,829

 

 

 

1.12

 

 

7/14/2019

 

Fully Vested

 

(2)

During our last fiscal year, as a non-officer employee of the company, Mr. Kaseff earned $123,400.

Transactions with Related Persons

Prior to 2002, the company had made certain life insurance premium payments for the benefit of Mr. Smulyan. The company discontinued making such payments in 2001; however, pursuant to a Split Dollar Life Insurance Agreement and Limited Collateral Assignment dated November 2, 1997, the company retains the right, upon Mr. Smulyan’s death, resignation or termination of employment, to recover all of the premium payments it had made, which total $1,119,000.

Review and Approval of Related Party Transactions

Our board of directors has adopted a written policy for review, approval and monitoring of transactions between the company and “related parties.” Related parties are directors, executive officers, nominees to become a director, any person beneficially owning more than 5% of any class of our stock, immediate family members of any of the foregoing, and any entity in which any of the forgoing persons is employed

12


Table of Contents

 

or is a general partner or principal or in which the person has a 10% or greater beneficial ownership interest. The policy covers transactions involving amounts exceeding $120,000 in which a related party had, has or will have a direct or indirect interest. The board of directors has independent authority to review and approve related party transactions.

Procedures. The related party is required to notify our legal department of the facts and circumstances of any proposed related party transaction. The legal department makes an initial determination of whether the transaction is subject to the policy. If the legal department determines that the policy is applicable, the transaction is referred to our Audit Committee. Either the Audit Committee, or the chair of the Audit Committee between Audit Committee meetings, considers the facts and circumstances of the proposed transaction and determines whether to approve the transaction. The Audit Committee or the chair, as the case may be, considers, among other things:

 

The benefits of the transaction to the company;

 

The impact of the transaction on a director’s independence;

 

The availability of other sources for comparable products or services;

 

The terms of the transaction; and

 

The terms available to unrelated third parties.

The Audit Committee may seek bids, quotes or independent valuations from third parties in connection with assessing a related party transaction. The Audit Committee or the chair may approve only transactions that they determine are in, or are not inconsistent with, the best interest of the company.

Ratification. If a transaction that was not a related party transaction when it was entered into becomes a related party transaction, or our CEO, CFO or General Counsel become aware that a transaction that was not approved is a related party transaction, they must promptly submit the transaction for review by the Audit Committee, or the chair of the Audit Committee between Audit Committee meetings.

Annual Review. From time to time, the Audit Committee will review previously approved related party transactions that have a remaining term of six months or more or remaining amounts involved in excess of $120,000. Based on the factors described above, the Audit Committee determines whether to continue, modify or terminate the transaction.

REPORT OF THE AUDIT COMMITTEE

The following Report of the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such Acts.

The Audit Committee is a separately-designated, standing committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended. It is composed of four directors the board of directors has determined are “independent directors” as defined by Nasdaq listing standards. The Audit Committee’s responsibilities are set forth in its written charter approved by the board of directors. The charter is reviewed annually by the Audit Committee. A copy of the Audit Committee charter may be found in the Corporate Governance section of our website (www.emmis.com) located under the Investors heading. As required by Nasdaq listing standards, the Audit Committee has determined that its charter is adequate. The Audit Committee has also determined that its members meet the financial literacy requirements of Nasdaq listing standards.

Management is responsible for the company’s internal controls and the financial reporting process. The independent registered public accountants are responsible for performing an independent audit of the company’s consolidated financial statements in accordance with auditing standards generally accepted in the United States of America and for issuing a report on the financial statements. The Audit Committee is responsible for the appointment, compensation, and oversight of the independent auditor. For the fiscal year ended February 28, 2019, the Audit Committee engaged Ernst & Young LLP to serve as the company’s independent auditor.

The Audit Committee has met and held discussions with management and Ernst & Young LLP. As part of these meetings and discussions, the Audit Committee (i) discussed with the company’s internal auditor and Ernst & Young, LLP the overall scope and plans for their respective audits, (ii) met with the company’s internal auditor and Ernst & Young, LLP, with and without management present, to discuss the results of their procedures and evaluations, and (iii) discussed with management the company’s major financial risk exposures and the steps management has taken to monitor and control such exposures, including the company’s risk assessment and risk management processes. Management represented to the Audit Committee that the company’s consolidated financial statements as of and for the fiscal year ended February 28, 2019 were prepared in accordance with accounting principles generally accepted in the United States of America, and the Audit Committee has reviewed and discussed these consolidated financial statements with management. The Audit Committee also discussed with Ernst & Young LLP matters required to be discussed by their professional standards, including, among other things, matters related to the conduct of the audit of the company's consolidated financial statements and the matters required to be discussed by the applicable requirements of the Public Company Accounting and Oversight Board (“PCAOB”) and the Securities and Exchange Commission.

The board of directors, upon the recommendation of the Audit Committee, has adopted an Auditor Independence Policy that, among other things, prohibits the company’s independent auditor from performing certain non-audit services for the company, requires prior approval of the Audit Committee for any services provided by the company’s independent auditor, limits the hiring by the company of former employees of the company’s independent auditor who have worked on the Emmis account and requires enhanced disclosure both to the Audit Committee and to shareholders of matters related to auditor independence.

13


Table of Contents

 

The Audit Committee has received the written disclosures and the letter from Ernst & Young LLP required by applicable requirements of the PCAOB regarding Ernst & Young’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with the independent registered public accountants that firm’s independence. In addition, the Audit Committee (or the chairman of the Audit Committee with respect to engagements of less than $100,000) approves in advance all engagements of the company’s independent auditor. The Audit Committee determined that Ernst & Young’s provision of non-audit services to the company as described in “Matters Relating to Independent Registered Public Accountants” is compatible with maintaining that firm’s independence.

Based on these discussions and reviews, the Audit Committee determined that the audited financial statements for the company’s last fiscal year should be included in our company’s annual report on Form 10-K, and made a formal recommendation to the board of directors to that effect.

 

Richard A. Leventhal, Chair

Peter A. Lund

James M. Dubin

Lawrence B. Sorrel

 

EXECUTIVE COMPENSATION

The following table sets forth the compensation awarded to, earned by, or paid to the principal executive officer and the two most highly compensated executive officers during the last fiscal year other than the principal executive officer (collectively, the “Named Executive Officers”) during the fiscal years ended February 28, 2019 and February 28, 2018.

2019 SUMMARY COMPENSATION TABLE

 

Name and Principal Position

 

Year

 

 

Salary (1)

($)

 

 

Bonus (2)

($)

 

 

Stock

Awards (3)

($)

 

 

Option

Awards (3)

($)

 

 

All Other

Compensation

(4)

($)

 

 

Total

($)

 

Jeffrey H. Smulyan,

 

 

2019

 

 

 

1,027,149

 

 

 

1,000,000

 

 

 

422,000

 

 

 

76,009

 

 

 

34,002

 

 

 

2,559,160

 

Chairman and Chief Executive

   Officer

 

 

2018

 

 

 

1,001,648

 

 

 

 

 

 

 

 

 

44,348

 

 

 

34,043

 

 

 

1,080,039

 

Patrick M. Walsh,

 

 

2019

 

 

 

636,153

 

 

 

 

 

 

 

 

 

 

 

 

17,207

 

 

 

653,360

 

President and Chief Operating

   Officer

 

 

2018

 

 

 

619,464

 

 

 

 

 

 

500,000

 

 

 

79,131

 

 

 

18,881

 

 

 

1,217,476

 

Paul V. Brenner

 

 

2019

 

 

 

396,361

 

 

 

19,993

 

 

 

 

 

 

 

 

 

431,122

 

 

 

847,476

 

President — TagStation/Next Radio

 

 

2018

 

 

 

400,174

 

 

 

8,817

 

 

 

 

 

 

 

 

 

12,097

 

 

 

421,088

 

 

(1)

In the fiscal year ended February 28, 2019, ten percent (10%) of each executive officer’s salary was paid in shares of our Class A common stock, valued at the $5.35, $4.97, $4.37, and $3.95 per-share closing price on May 10, 2018, July 30, 2018, October 29, 2018, and January 28, 2019, respectively.  In the fiscal year ended February 28, 2018, ten percent (10%) of each executive officer’s salary was paid in shares of our Class A common stock, valued at the $3.29, $2.96, $3.45, and $3.11 per-share closing price on May 12, 2017, July 31, 2017, October 30, 2017, and January 29, 2018, respectively.

(2)

Amounts paid to Mr. Smulyan in fiscal 2019 represent a signing bonus paid in connection with Mr. Smulyan’s new employment agreement on June 29, 2018.  Amounts paid to Mr. Brenner are a percentage of cash flow received by Emmis from The Broadcasters Traffic Consortium, LLC, an entity in which Emmis holds an investment and of which Mr. Brenner is president.

(3)

A discussion of the assumptions used in calculating these values may be found in Note 4 to our audited financial statements beginning on page 45 of our annual report on Form 10-K for the fiscal year ended February 28, 2019 and in Note 4 to our audited financial statements beginning on page 59 of our annual report on Form 10-K for the fiscal year ended February 28, 2018.

(4)

The following table sets forth the items comprising “All Other Compensation” for each named executive officer.

 

Name

 

Year

 

 

Perquisites

and Other

Personal

Benefits (A)

($)

 

 

Tax

Reimbursements

($)

 

 

Insurance

Premiums (B)

($)

 

 

Company

Contributions

to Retirement

and

401(k) Plans

($)

 

 

Other

Payments

(C)

($)

 

 

Total

($)

 

Jeffrey H. Smulyan

 

 

2019

 

 

 

24,000

 

 

 

 

 

 

10,002

 

 

 

 

 

 

 

 

 

34,002

 

 

 

 

2018

 

 

 

24,000

 

 

 

 

 

 

10,043

 

 

 

 

 

 

 

 

 

34,043

 

Patrick M. Walsh

 

 

2019

 

 

 

12,000

 

 

 

74

 

 

 

5,133

 

 

 

 

 

 

 

 

 

17,207

 

 

 

 

2018

 

 

 

12,000

 

 

 

603

 

 

 

5,138

 

 

 

 

 

 

1,140

 

 

 

18,881

 

Paul V. Brenner

 

 

2019

 

 

 

12,000

 

 

 

3,253

 

 

 

133

 

 

 

 

 

 

415,736

 

 

 

431,122

 

 

 

 

2018

 

 

 

12,000

 

 

 

 

 

 

97

 

 

 

 

 

 

 

 

 

12,097

 

(A) Represents amounts paid as an automobile allowance.

(B)

These amounts relate to reimbursements for premiums for life, disability or long-term care insurance, as well as the value of certain insurance provided to all our full-time employees.

14


Table of Contents