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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
AMENDMENT NO. 1
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( X ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NO. 00-24525
CUMULUS MEDIA INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ILLINOIS 36-4159663
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
111 EAST KILBOURN AVE., SUITE 2700
MILWAUKEE, WISCONSIN 53202
(ADDRESS OF REGISTRANT'S PRINCIPAL OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 414-615-2800
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
13 3/4% SERIES A CUMULATIVE EXCHANGEABLE
REDEEMABLE PREFERRED STOCK DUE 2009
CLASS A COMMON STOCK; PAR VALUE $.01 PER SHARE
(TITLE OF CLASS)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the registrant's outstanding common stock
held by non-affiliates of the registrant as of February 28, 1999 was
approximately $198.5 million. As of February 28, 1998, the registrant had
outstanding 19,737,197 shares of common stock consisting of (i) 8,700,504 shares
of Class A Common Stock; (ii) 8,660,416 shares of Class B Common Stock; and
(iii) 2,376,277 shares of Class C Common Stock.
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This Form 10-K/A is being filed to add the information required by Item
405 of Regulation S-K and Item 11 of Form 10-K, because the Company's definitive
proxy statement for the 1999 Annual Meeting of Stockholders is not yet
available.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Item 10 of Form 10-K is amended to add the following:
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
Under U.S. securities laws, directors, certain executive officers and
persons holding more than 10% of Cumulus Media Inc.'s Common Stock must report
their initial ownership of the Common Stock and any changes in that ownership to
the Securities and Exchange Commission. The Commission has designated specific
due dates for these reports and Cumulus must identify in this proxy statement
those persons for whom these reports were not filed when due. We believe, based
upon a review of copies of such reports and written materials that no other
reports were required, and that during 1998 all Section 16 filing requirements
applicable to Cumulus' directors, executive officers and greater than 10%
beneficial owners were complied with, except for the following: (i) the original
Form 3 filed for Lewis W. Dickey, Jr. did not include certain shares purchased
for his personal account; (ii) the original Form 3 reports for CML Holdings did
not include one transaction and was not filed on a timely basis; and (iii) the
Form 4 report for one transaction of CML Holdings for the month end September
30, 1998 was filed shortly after the due date of October 10, 1998. Each of these
matters was subsequently reported correctly as required.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or accrued for
services rendered to the Company in all capacities, for the year ended December
31, 1998, by the Chief Executive Officer and each of the other executive
officers of the Company employed as of December 31, 1998 (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
------------------------- COMPENSATION
AWARDS
-------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#) COMPENSATION
- ------------------------------- ------------ ------------- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Richard W. Weening 1998 $300,000 $ --- 1,000,690 $ ---
Executive Chairman & Treasurer 1997 (1) $ --- $ --- --- $ ---
Lewis W. Dickey 1998 $300,000 $ 1,000,690 $ ---
Executive Vice Chairman 1997 (1) --- --- --- $ ---
$ ---
William M. Bungeroth 1998 $275,000 $ --- 235,000 $ 2,160
President 1997 $170,000 $50,000 --- $ 205,000
Richard J. Bonick, Jr. 1998 $250,000 $ --- 36,620 $ 2,145
Vice President & CFO 1997 $170,000 $25,000 --- $ 205,000
John Dickey 1998 $250,000 $ --- 152,708 $ ---
Director of Programming 1997 (1) $ --- $ --- --- $ ---
</TABLE>
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(1) During 1997, Messrs. Weening, L. Dickey and J. Dickey dedicated
approximately 85%, 80% and 0% of their time, respectively, to matters
directly related to the Company and its business, since the Company's
inception. Messrs. Weening, L. Dickey and J. Dickey did not receive any
compensation directly from the Company. However, during 1997 the
Company paid $297,000 to Quaestus, an entity controlled by Mr. Weening,
for acquisition and corporate finance services performed on behalf of
the company. In addition, the Company paid $184,000 to Stratford
Research, an entity controlled by L. Dickey and J. Dickey, for
programming research and broadcast strategy consulting services. At
December 31, 1997, the Company owned an additional $240,000 to
Stratford Research for services rendered.
During 1997, the Company also paid a non-recurring organization fee of
$300,000 (with Quaestus receiving $180,000 of such fee and DBBC, an
entity controlled by Mr. L. Dickey receiving $120,000 of such fee), and
(ii) a management fee of $206,000 (with Quaestus receiving $123,600 of
such fee and DBBC receiving $82,400 of such fee).
(2) During the fiscal year ending December 31, 1998 Mr. Bungeroth and Mr.
Bonick received $2,160 and $2,145 respectively in other compensation
representing the matching Company contributions under the Company's
Defined Contribution Plan (the "401(k) Plan"). No other executives were
eligible to participate in the 401(k) Plan in 1998.
EXECUTIVE STOCK INCENTIVE PLAN
The Company's Board of Directors has adopted the Executive Stock
Incentive Plan (the "Executive Plan") to provide certain key executives of the
Company with additional incentives by increasing their proprietary interest in
the Company. An aggregate of 2,001,380 shares of Class C Common Stock is subject
to the Executive Plan. In addition, no one person will be eligible to receive
options for more than 1,000,690 shares in any one calendar year. Richard W.
Weening and Lewis W. Dickey, Jr. are the sole participants in the Executive
Plan.
The Executive Plan permits the Company to grant awards in the form of
stock options (including both incentive stock options that meet the requirements
of Section 422 of the Internal Revenue Code of 1986, as amended, and
non-qualified stock options) of Class C Common Stock.
Stock options under the Executive Plan were granted on July 1, 1998 and
are divided into three groups. Group 1 consists of time vested options with an
exercise price equal to $14.00 per share and vest quarterly in equal
installments over a four-year period (subject to accelerated vesting in certain
circumstances as described under "Employment Agreements"). Group 2 and Group 3
consist of time vested options which vest in four equal annual installments on
July 1, 1999, July 1, 2000, July 1, 2001 and July 1, 2002 (subject to
accelerated vesting in certain circumstances as described below under
"Employment Agreements"). The first installment of both the Group 2 options and
Group 3 options are exercisable at a price of $14.00 per share on July 1, 1999
and subsequent installments are exercisable at a price 15% (or 20% in the case
of Group 3 options) greater than the prior year's exercise price for each of the
next three years. All options vest upon a change of control of the Company as
described below under "Employment Agreements".
The Executive Plan is administered by the Compensation Committee of the
Board, which will have exclusive authority to grant awards under the Executive
Plan and to make all interpretations and determinations affecting the Executive
Plan. In the event of any changes in the capital structure of the Company, the
Compensation Committee will make equitable adjustments to outstanding awards
granted under the Executive Plan so that the net value of the award is not
changed. As of April 28, 1999 there are outstanding options to purchase a total
of 2,001,380 shares of Class C Common Stock under the Executive Plan.
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1998 STOCK INCENTIVE PLAN
The Company's Board of Directors has also adopted the 1998 Stock
Incentive Plan to provide officers, other key employees and non-employee
directors of the Company (other than participants in the Company's Executive
Plan described above), as well as consultants to the Company, with additional
incentives by increasing their proprietary interest in the Company. An aggregate
of 1,288,834 shares of Class A Common Stock is subject to the 1998 Stock
Incentive Plan, of which a maximum of 1,288,834 shares of Class A Common Stock
is subject to incentive stock options and a maximum of 100,000 shares of Class A
Common Stock is available to be awarded as restricted stock. In addition,
subject to certain equitable adjustments, no one person will be eligible to
receive options for more than 300,000 shares in any one calendar year and the
maximum amount of restricted stock which will be awarded to any one person
during any calendar year is $500,000.
The 1998 Stock Incentive Plan permits us to grant awards in the form of
stock options (including both incentive stock options that meet the requirements
of Section 422 of the Internal Revenue Code of 1986, as amended, and
non-qualified stock options) and restricted shares of the Class A Common Stock.
All stock options awarded under the plan will be granted at an exercise price of
not less than fair market value of the Class A Common Stock on the date of
grant. No award will be granted under the 1998 Stock Incentive Plan after June
22, 2008.
The 1998 Stock Incentive Plan is administered by the Compensation
Committee of the Board, which has exclusive authority to grant awards under the
plan and to make all interpretations and determinations affecting the plan. The
Compensation Committee has discretion to determine the individuals to whom
awards are granted, the amount of such award, any applicable vesting schedule,
whether awards vest upon the occurrence of a Change in Control (as defined in
the 1998 Stock Incentive Plan) and other terms of any award. The Compensation
Committee may delegate to certain senior officers of the Company its duties
under the plan subject to such conditions or limitations as the Compensation
Committee may establish. Any award made to a non-employee director must be
approved by the Company's Board of Directors. In the event of any changes in the
capital structure of the Company, the Compensation Committee will make equitable
adjustments to outstanding awards so that the net value of the award is not
changed.
As of April 28, 1999, there are outstanding options to purchase a total
of 1,120,745 shares of Class A Common Stock exercisable at a price of $14.00 per
share under the 1998 Stock Incentive Plan. These options vest, in general, over
five years starting on July 1, 1998, with the possible acceleration of vesting
for some options if certain performance criteria are met. In addition, all
options vest upon a change of control as more fully described in the 1998 Stock
Incentive Plan.
EMPLOYMENT AGREEMENTS
As discussed more particularly below, the Company has entered into
employment agreements with certain of the Named Executive Officers. Subject to
certain exceptions, such employment agreements prohibit each of the Named
Executive Officers from competing with the Company for a specified period after
termination of employment (18 months for Messrs. Weening and Dickey and 12
months for Messrs. Bungeroth and Bonick).
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Mr. Weening serves as Executive Chairman and Treasurer of the Company
under an employment agreement with the Company. Under the terms of Mr. Weening's
employment agreement, he is entitled to receive an annual base salary of
$300,000. Such base salary will increase by 5.0% during each year of the term of
the employment agreement, subject to merit increases, as the Compensation
Committee deems appropriate. The agreement provides that Mr. Weening may receive
a bonus of up to 50% of his base salary, with bonus targets to be based on
budgeted Broadcast Cash Flow as determined by the Compensation Committee. Mr.
Weening's employment agreement has a three-year term, which automatically
extends each year for one additional year, subject to non-renewal. The terms of
the agreement also provide that upon the death or disability of Mr. Weening, the
Company shall continue to pay Mr. Weening's base salary for the twelve-month
period immediately following such event, all unvested time vested options will
vest and the Company will continue to provide benefits to Mr. Weening and his
dependents for twelve months.
In addition, in the event (i) the death or disability occurs after the
mid-point of a particular vesting year and (ii) the fair market value of the
Class A Common Stock as of the date of such death or disability equals or
exceeds the exercise price per share of the performance options scheduled to
vest at the end of such vesting year, such performance options will vest. The
agreement also provides that in the event Mr. Weening is terminated by the
Company without cause or terminates his employment for good reason, the Company
will pay to Mr. Weening an amount equal to the greater of (i) the base salary
owed to Mr. Weening for the remainder of the term of the agreement and (ii) one
hundred percent of his annual base salary in effect as of the date of
termination plus the last bonus received by Mr. Weening, all unvested time
vested options will vest and the Company will continue to provide benefits to
Mr. Weening and his dependents for twelve months. In addition, if the fair
market value of the Class A Common Stock as of the date of such termination
equals or exceeds the exercise price per share of the unvested performance
options; such performance options will vest.
Further, if the cumulative total return of the Class A Common Stock
from July 1, 1998 to the date of termination exceeds the total return of a peer
group of companies, the performance options will vest. Such performance options
that become vested shall remain exercisable until 90 days following the date
that such performance options would otherwise have become vested and
exercisable. If, within the one-year period following a change of control, the
Company terminates Mr. Weening's employment for any reason other than death or
disability or for cause or Mr. Weening terminates his employment for good
reason, Mr. Weening will be paid the same amount as if he were terminated
without cause if no change of control had occurred and all unvested time vested
options and performance options will vest.
Mr. Dickey serves as Executive Vice Chairman of the Company under an
employment agreement with the Company. Under the terms of Mr. Dickey's
employment agreement he is entitled to receive an annual base salary of
$300,000. Such base salary will increase by 5.0% during each year of the term of
the employment agreement, subject to merit increases, as the Compensation
Committee deems appropriate. The agreement provides that Mr. Dickey may receive
a bonus of up to 50% of his base salary, with bonus targets to be based on
budgeted Broadcast Cash Flow as determined by the Compensation Committee. Mr.
Dickey's employment agreement has a three-year term, which automatically extends
each year for one additional year, subject to non-renewal.
The terms of the agreement also provide that upon the death or
disability of Mr. Dickey, the Company shall continue to pay Mr. Dickey's base
salary for the twelve-month period immediately following such event, all
unvested time vested options will vest and the Company will continue to provide
benefits to Mr. Dickey and his dependents for twelve months. In addition, if (i)
the death or disability occurs after the mid-point of a particular vesting year
and (ii) the fair market value of the Class A Common Stock as of the date of
such death or disability equals or exceeds the exercise price per share of the
performance options scheduled to vest at the end of such vesting year, such
performance options will vest.
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The agreement also provides that in the event Mr. Dickey is terminated
by the Company without cause or terminates his employment for good reason, the
Company will pay to Mr. Dickey an amount equal to the greater of (i) the base
salary owed to Mr. Dickey for the remainder of the term of the agreement and
(ii) one times annual base salary in effect as of the date of termination plus
the last bonus received by Mr. Dickey and all unvested time vested options will
vest. In addition, the fair market value of the Class A Common Stock as of the
date of such termination equals or exceeds the exercise price per share of the
unvested performance options, such performance options will vest. Further, if
the cumulative total return of the Class A Common Stock from July 1, 1998 to the
date of termination exceeds the total return of a peer group of companies, the
performance options will vest. Such performance options that become vested shall
remain exercisable until 90 days following the date that such performance
options would otherwise have become vested and exercisable. If, within the
one-year period following a change of control, the Company terminates Mr.
Dickey's employment for any reason other than death or disability or for cause,
or Mr. Dickey terminates his employment for good reason, Mr. Dickey will be paid
the same amount as if he were terminated without cause if no change of control
had occurred and all unvested time vested options and performance options will
vest.
Mr. Bungeroth serves as President and Chief Executive Officer of the
Company and President and Chief Executive Officer of Cumulus Broadcasting, Inc.
under an employment agreement with the Company. Under the terms of Mr.
Bungeroth's employment agreement, he is entitled to receive an annual base
salary of $275,000 and is eligible to receive a bonus of up to 50% of his annual
base salary based on goals agreed upon by Mr. Bungeroth and the Company's Board
of Directors.
Mr. Bonick is a party to an employment agreement with the Company,
pursuant to which he serves as Vice President and Chief Financial Officer of the
Company and Cumulus Broadcasting, Inc. Under the terms of Mr. Bonick's
employment agreement, he is entitled to receive an annual base salary of
$250,000 and is eligible to receive a bonus of up to 50% of his annual base
salary based on goals agreed upon by Mr. Bonick and the Company's Board of
Directors.
OPTION GRANTS FOR THE TWELVE MONTHS ENDING DECEMBER 31, 1998
The following table sets forth information regarding options to
purchase Common Stock granted by the Company to the Executive Chairman and the
other executive officers named in the Summary Compensation Table during the 1998
calendar year:
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL OPTIONS
SECURITIES GRANTED TO EXERCISE OR
UNDERLYING OPTIONS EMPLOYEES IN FISCAL BASE PRICE EXPIRATION GRANT DATE
NAME GRANTED YEAR PER SHARE DATE PRESENT VALUE
---- ------- ---- --------- ---- -------------
(1)
<S> <C> <C> <C> <C> <C>
Richard W. Weening
Group #1 312,715 9.95% $14.00 June 22, 2008 $2,040,465
Group #2 312,715 9.95% (2) June 22, 2008 $1,823,128
Group #3 375,260 11.94% (2) June 22, 2008 $2,191,518
Lewis W. Dickey, Jr.
Group #1 312,715 9.95% $14.00 June 22, 2008 $2,040,465
Group #2 312,715 9.95% (2) June 22, 2008 $1,823,128
Group #3 375,260 11.94% (2) June 22, 2008 $2,191,518
William M. Bungeroth 235,000 7.48% $14.00 June 22, 2008 $1,688,710
Richard J. Bonick, Jr. 36,620 1.17% $14.00 June 22, 2008 $ 263,151
John Dickey 152,708 4.86% $14.00 June 22, 2008 $1,097,360
</TABLE>
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(1) The present value of each grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted
average assumptions: dividend yield of 0.00% for all years; expected
volatility of 65.59%; risk-free interest rate of 4.73%; and expected
life of four years for the Executive Stock Incentive Plan and five
years for the 1998 Stock Incentive Plan.
(2) Stock options under the Executive Plan were granted on July 1, 1998 and
are divided into three groups. Group 1 consists of time vested options
with an exercise price equal to $14.00 per share and vest quarterly in
equal installments over a four-year period (subject to accelerated
vesting in certain circumstances as described under "Employment
Agreements"). Group 2 and Group 3 also consist of time-vested options
which vest in four equal annual installments on July 1, 1999, July 1,
2000, July 1, 2001 and July 1, 2002 (subject to accelerated vesting in
certain circumstances as described below under "Employment
Agreements"). The first installment of both the Group 2 options and
Group 3 options are exercisable at a price of $14.00 per share on July
1, 1999 and subsequent installments are exercisable at a price 15% (or
20% in the case of Group 3 options) greater than the prior year's
exercise price for each of the next three years. All options vest upon
a change of control of the Company as described above under "Employment
Agreements".
AGGREGATED OPTION EXERCISES FOR THE TWELVE MONTHS ENDING DECEMBER 31, 1998 AND
YEAR-END VALUES
The following table sets forth information concerning option exercises
in the year ended December 31, 1998 by the Company's Executive Chairman and the
other executive officers named in the Summary Compensation Table, and the value
of each such executive officer's unexercised options at December 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT DECEMBER 31, 1998 IN-THE-MONEY OPTIONS AT
(#) DECEMBER 31, 1998 ($) (1)
SHARES VALUE
ACQUIRED REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
ON -------- ----------- ------------- ----------- -------------
EXERCISE
--------
<S> <C> <C> <C> <C> <C> <C>
Richard W. Weening 0 $0 0 1,000,690 $0 $1,272,363 (2)
Lewis W. Dickey, Jr. 0 $0 0 1,000,690 $0 $1,272,363 (2)
William M. Bungeroth 0 $0 0 235,000 $0 $616,875
Richard J. Bonick, Jr. 0 $0 0 36,620 $0 $96,128
John Dickey 0 $0 0 152,708 $0 $400,858
</TABLE>
(1) Based upon a per share price for Common Stock of $16.625. This price
represents the closing price for the Common Stock on the NASDAQ National
Market System on December 31, 1998.
(2) Represents the value of 484,710 in-the-money options for each individual,
respectively, at December 31, 1998.
NON-EMPLOYEE DIRECTOR COMPENSATION
Directors of the Company who are not employees receive a fee of $1,000
for each Board meeting which they attend, plus out-of-pocket expenses incurred
in connection with attendance at each such meeting. In addition, upon the later
of completion of the Company's initial public offering in June 1998 or election
to the Board, each non-employee director received options to purchase a total of
30,000 shares of Class A Common Stock. Such options will be exercisable at the
fair market value of the Class A Common Stock at the date of grant. These
options will vest 20% per year with each option being fully exercisable five
years from the date of grant.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee was established after completion of the
Company's initial public offering in June 1998. The Compensation Committee
consists of Mr. Robert J. Sheridan, III (Chairman) and Mr. Ralph B. Everett,
neither of whom is an officer or employee of the Company or any of the Company's
subsidiaries. The Compensation Committee is responsible for making
recommendations to the Board concerning the compensation levels of the executive
officers of the Company. The Compensation Committee also administers the
Company's 1998 Stock Incentive Plan and Executive Stock Incentive Plan and
determines awards to be made under such plan to the Company's executive officers
and to other eligible individuals. The Compensation Committee reviews
compensation programs for executive officers annually.
With respect to 1998, virtually all of the compensation decisions for executive
officers were made by the Company's Board of Directors prior to the completion
of the initial public offering.
Mr. Everett is a partner with the Washington, D.C. office of the law firm of
Paul, Hastings, Janofsky & Walker LLP, where he heads the Firm's Federal
Legislative Practice Group. The Company also engages the law firm of Paul,
Hastings, Janofsky & Walker LLP on numerous matters dealing with compliance with
federal regulations and corporate finance activities.
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned; thereunto duly authorized this 30th day of April
1999.
Cumulus Media Inc.
By: /s/ Richard J. Bonick, Jr.
-------------------------------------
Richard J. Bonick, Jr.
Vice President and Chief Financial Officer
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