ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN
OFFICERS
New Employment Agreement with David R. Evans
On January 4, 2021, Salem Communications Holding Corporation ("HoldCo"), a
wholly-owned subsidiary of Salem Media Group, Inc. (the "Company"), and David R.
Evans entered into a new employment agreement pursuant to which Mr. Evans will
serve as the Company's President, New Media. The Compensation Committee (the
"Committee") of the Board of Directors of the Company also approved the terms of
Mr. Evans' new agreement.
Mr. Evans' current employment agreement with HoldCo is an "at-will" agreement,
but the compensation schedule applicable to Mr. Evans expired on December 31,
2020. Mr. Evans' new employment agreement is also an "at-will" agreement that
became effective as of January 3, 2021 and supersedes and replaces the
employment agreement entered into by HoldCo and Mr. Evans as of September 15,
2017.
The employment agreement provides that, for as long as he remains employed by
HoldCo, Mr. Evans will receive a base salary ("Base Salary") as follows: (a) at
an annual rate of $550,000 effective as of January 3, 2021, (b) at an annual
rate of $561,000 effective as of January 1, 2022, and (c) at an annual rate of
$572,220 effective as of January 1, 2023 and continuing through December 31,
2023.
In addition to his annual Base Salary and consideration for a merit bonus in an
amount to be determined at the discretion of the Committee, Mr. Evans will be
eligible to receive the following:
(i) Two (2) quarterly incentive bonuses in the amount of $8,500 each for the
following: (a) achievement of the revenue budget (as set by the Company's
management) by Company's non-broadcast media businesses for which Mr. Evans has
responsibility, excluding Regnery Publishing (the "Non-Broadcast Division"); and
(b) achievement of the EBITDA budget (as set by the Company's management) by
Company's Non-Broadcast Division.
(ii) Two (2) annual incentive bonuses in the amount of $6,800 each for the
following: (a) achievement of the revenue budget (as set by the Company's
management) by Company's Regnery Publishing business unit ("Regnery"); and
(b) achievement of the EBITDA budget (as set by the Company's management) by
Regnery.
(iii) An annual award of twenty-five thousand dollars ($25,000) payable in the
Company's restricted Class A Common Stock vesting twenty-four (24) months after
the grant by the Company only if all of the following occur: (a) the combined
annual revenue of the Non-Broadcast Division and Regnery exceeds the combined
annual revenue budget of the Non-Broadcast Division and Regnery as set by the
Company's management by no less than $500,000; (b) the combined annual revenue
of the Non-Broadcast Division and Regnery exceeds the prior year combined
revenue of the Non-Broadcast Division and Regnery by no less than 5%; (c) the
combined annual EBITDA of the Non-Broadcast Division and Regnery exceeds the
annual EBITDA budget of the Non-Broadcast Division and Regnery as set by the
Company's management by no less than $500,000; and (d) the combined annual
EBITDA of the Non-Broadcast Division and Regnery exceeds the prior year combined
EBITDA of the Non-Broadcast Division and Regnery as set by the Company's
management by no less than 7.5%.
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(iv) For all of the incentives outlined above, revenue and EBITDA budgets will
be prorated and adjusted for acquisitions or dispositions of the Non-Broadcast
Division and Regnery that occur during the applicable time period, before
incentive-based compensation is calculated. For purposes of determining the
amount of any incentive-based compensation, prior year revenue and prior year
EDITDA shall be prorated and adjusted in amounts consistent with the revenue and
EBITDA budget adjustments for acquisitions and dispositions.
(v) If Mr. Evans earns the annual $25,000 incentive, the number of restricted
stock awarded shall be calculated by dividing $25,000 by the closing price of
the restricted stock on the last business day of the applicable year in which
the annual restricted stock award was earned, rounded to the nearest whole
share.
In addition to his Base Salary, Mr. Evans received options to purchase 100,000
shares of Class A common stock that will vest over five years. He will also be
eligible for an annual merit bonus in an amount to be determined at the
discretion of the Company's Board of Directors.
Additional benefits under Mr. Evans' employment agreement include reimbursement
from Holdco for the following: (1) maintenance of Mr. Evans' CPA and Chartered
Accountant License; and (2) life insurance on Mr. Evans' life up to a maximum
amount of $3,500 per year grossed up to cover applicable statutory withholdings
and income taxes.
Mr. Evans' employment agreement generally provides that if his employment is
terminated without "Cause" (as defined in the employment agreement), Mr. Evans
shall receive as severance an amount equal to his then Base Salary for six
(6) months, less standard withholdings for tax and social security purposes.
Additionally, if Mr. Evans dies prior to the expiration of the compensation
schedule of his employment agreement or if there is a Change in Control (as
defined in the employment agreement), any unvested or time-vested stock options
previously granted to Mr. Evans shall become immediately one hundred percent
(100%) vested as of the date of death or Change in Control.
Mr. Evans' employment agreement is filed herewith as Exhibit 99.1 and is
incorporated herein by reference into this Item 5.02.
New Employment Agreement with David Santrella
On January 4, 2021, Salem Communications Holding Corporation ("HoldCo"), a
wholly-owned subsidiary of Salem Media Group, Inc. (the "Company"), and David
Santrella entered into a new employment agreement pursuant to which
Mr. Santrella will serve as the Company's President, Broadcast Media. The
Compensation Committee (the "Committee") of the Board of Directors of the
Company also approved the terms of Mr. Santrella's new agreement.
Mr. Santrella's current employment agreement with HoldCo is an "at-will"
agreement, but the compensation schedule applicable to Mr. Santrella expired on
December 31, 2020. Mr. Santrella's new employment agreement is also an "at-will"
agreement that became effective as of January 3, 2021 and supersedes and
replaces the employment agreement entered into by HoldCo and Mr. Santrella as of
January 1, 2020.
The employment agreement provides that, for as long as he remains employed by
HoldCo, Mr. Santrella will receive a base salary ("Base Salary") as follows:
(a) at an annual rate of $550,000 effective as of January 3, 2021, (b) at an
annual rate of $561,000 effective as of January 1, 2022, and (c) at an annual
rate of $572,220 effective as of January 1, 2023 and continuing through
December 31, 2023.
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In addition to his Base Salary, Mr. Santrella is eligible for an annual merit
bonus in an amount to be determined at the discretion of the Company's Board of
Directors. An additional benefit under Mr.
Santrella's employment agreement includes reimbursement for an amount up to a
maximum of $3,500 per year paid by Mr. Santrella for life insurance on his life
grossed up to cover all statutory withholdings and income taxes.
If Mr. Santrella's employment is terminated without "Cause" (as defined in the
employment agreement), Mr. Santrella shall receive as severance an amount equal
to his then Base Salary for six (6) months, less standard withholdings for tax
and social security purposes. Additionally, if Mr. Santrella dies prior to the
expiration of the compensation schedule of his employment agreement or if there
is a Change in Control (as defined in the employment agreement), any unvested or
time-vested stock options previously granted to Mr. Santrella shall become
immediately one hundred percent (100%) vested as of the date of death or Change
in Control.
Mr. Santrella's employment agreement is filed herewith as Exhibit 99.2 and is
incorporated herein by reference into this Item 5.02.
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ITEM 9.01(c) FINANCIAL STATEMENTS AND EXHIBITS
Item 9.01(c) Exhibits. The following exhibit is furnished with this report on
Form 8-K:
Exhibit No. Description
99.1 Employment Agreement with David R. Evans dated as of January 3,
2021.
99.2 Employment Agreement with David Santrella dated as of
January 3, 2021.
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