DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __)
Filed by the Registrant o
Filed by a Party other than the Registrant o
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
SPANISH BROADCASTING SYSTEM, INC.
(Name of Registrant as Specified In Its Charter)
Not Applicable
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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TABLE OF CONTENTS
2601 South Bayshore Drive, PH 2
Coconut Grove, Florida 33133
May 9, 2011
Dear Stockholders:
On behalf of the Board of Directors, I am pleased to invite you to the Annual Meeting of
Stockholders of Spanish Broadcasting System, Inc. (SBS). The meeting will be held on Wednesday,
June 1, 2011, at 2601 South Bayshore Drive, PH2, Coconut Grove, Florida 33133 at 1:00 p.m. Eastern
Daylight Time (the Annual Meeting).
At the meeting, stockholders of SBS will be asked to vote on the following proposals:
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the election of six members of the Board of Directors to serve until our next annual
meeting of stockholders or until their respective successors are elected and qualify; |
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to authorize the Board of Directors in its sole discretion to approve an amendment to
Spanish Broadcasting System Inc.s certificate of incorporation to effect a reverse stock split of
our Class A common stock and Class B common stock by a ratio of not less than one-for-five
and not more than one-for-ten, with the exact ratio to be set at a whole number within this range
as determined by our Board of Directors in its discretion; and |
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to ratify the appointment by the Board of Directors of KPMG LLP as our independent
registered public accounting firm for our fiscal year ending December 31, 2011. |
The Board of Directors recommends a vote FOR each of proposals 1, 2 and 3. These proposals are described
in detail in the attached Notice of Annual Meeting of Stockholders and Proxy Statement, which you
are encouraged to read fully. We will also consider any additional business that may be properly
brought before the Annual Meeting.
The Board of
Directors has fixed the close of business on April 11, 2011 as the record date for the
determination of stockholders entitled to notice of and to vote at the Annual Meeting and
at any adjournments or postponement thereof.
Your vote is important regardless of the number of shares you own, and we strongly encourage
you to participate by voting your shares whether or not you plan to attend the Annual Meeting.
Included with the attached Proxy Statement is a copy of SBS Annual Report on Form 10-K for
fiscal year ended December 31, 2010. We encourage you to read the Annual Report. It includes
information on SBS operations and markets, as well as SBS audited consolidated financial
statements.
This Proxy Statement
supersedes the Proxy Statement filed by SBS with the Securities and Exchange Commission
on April 21, 2011.
We look forward to seeing you at the Annual Meeting and appreciate your continued support.
Sincerely,
Raúl Alarcón, Jr.
Chairman of the Board of Directors,
President and Chief Executive Officer
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2601 South Bayshore Drive, PH 2
Coconut Grove, Florida 33133
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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TIME AND DATE
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1:00 p.m., Eastern Daylight Time on Wednesday, June 1, 2011 |
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PLACE
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SBS Tower
2601 South Bayshore Drive, PH2
Coconut Grove, Florida 33133 |
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ITEMS OF BUSINESS
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1. To elect six members of the Board of Directors to serve
until our next annual meeting of stockholders or until
their respective successors are elected and qualify. |
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2. To authorize the Board of Directors in its sole discretion to approve an amendment to our
certificate of incorporation to effect a reverse stock split of our Class A common stock and
Class B common stock by a ratio of not less than one-for-five and not more than one-for-ten,
with the exact ratio to be set at a whole number within this range as determined by our Board of
Directors in its discretion. |
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3. To ratify the appointment by the Board of Directors of
KPMG LLP as our independent registered public accounting
firm for our fiscal year ending on December 31, 2011. |
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4. To transact any such other business as may properly
come before the Annual Meeting or any adjournment thereof. |
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ADJOURNMENTS AND
POSTPONEMENTS
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Any action on the items of business described above may be
considered at the Annual Meeting at the time and on the
date specified above or at any time and date to which the
Annual Meeting may be properly adjourned or postponed. |
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ANNUAL REPORT
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Our Annual Report, which is not part of the proxy
soliciting materials, is enclosed. The Annual Report is also accessible on the
Internet by visiting http://ww3.ics.adp.com/streetlink/SBSA. |
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RECORD DATE
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You are entitled to vote if you were a stockholder of
record at the close of business on Friday, April 11, 2011. |
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MEETING ADMISSION
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Either an admission ticket or proof of ownership of our
stock, as well as a form of personal identification, must
be presented in order to be admitted to the Annual
Meeting. If you are a stockholder of record, your
admission ticket is included on the back cover of the
Proxy Statement. If your shares are held in the name of a
bank, broker or other holder of record, you must bring a
brokerage statement or other proof of ownership with you
to the Meeting, or you may request an admission ticket in
advance. Please refer to the section entitled Annual
Meeting Admission in the Proxy Statement for further
details. |
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PREVIOUS PROXY
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This Proxy Statement is being filed
and sent to stockholders on or about May 9, 2011 and supersedes the Proxy Statement filed by SBS with the
Securities and Exchange Commission on April 21, 2011. |
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VOTING
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For instructions on voting, please refer to the
instructions on your proxy card sent on or about May 9, 2011. |
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If your shares are held on your behalf by a broker, bank,
trustee or other nominee in street name, you will
receive a form from your broker seeking instructions as to
how your shares should be voted. We urge you to complete
this form and instruct your broker, bank, trustee or other
nominee to vote on your behalf. |
The enclosed Proxy
Statement is issued in connection with the solicitation of a proxy on the enclosed form by the
Board of Directors of Spanish Broadcasting System, Inc., for use at its 2011 Annual Meeting
of Stockholders. The Proxy Statement not only describes the items that stockholders are being
asked to consider and vote on at the 2011 Annual Meeting, but also provides you with important
information about SBS. Financial and other important information concerning our company is also
contained in our 2010 Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
Pursuant to rules
promulgated by the Securities and Exchange Commission, SBS has elected to provide access to its
proxy materials by sending you this full set of proxy materials, including a proxy card, and
notifying you of the availability of our proxy materials on the Internet. We began distributing
this Proxy Statement, a form of proxy and the 2010 Annual Report on or about
April 28, 2011.
By Order of the Board of Directors,
Joseph A. García
Sr. Executive Vice President, Chief Financial Officer,
Chief Administrative Officer and Secretary
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON JUNE 1, 2011: The Notice of Annual Meeting, Proxy Statement and the
Annual Report are available at http://ww3.ics.adp.com/streetlink/SBSA.
THIS PROXY
STATEMENT AND PROXY CARD WILL BE MADE AVAILABLE ON OR ABOUT MAY 9, 2011.
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PROXY STATEMENT
The Board of Directors (the Board) of Spanish Broadcasting System, Inc., a Delaware
corporation (SBS or the Company) is soliciting proxies for the annual meeting of stockholders
(the Annual Meeting). We are furnishing you with a Proxy Statement because you own shares of our
common stock that entitle you to vote at the Annual Meeting. By use of a proxy, you can vote,
whether or not you attend the Annual Meeting. The Proxy Statement describes the matters we would
like you to vote on and provides information on those matters so you can make an informed decision.
All references in this Proxy Statement to we, our, or us refer to SBS.
Annual Meeting Admission
Only stockholders are invited to attend the meeting. An admission ticket or proof of ownership
of our stock, along with personal identification, must be presented in order to be admitted to the
Annual Meeting. If you are a stockholder of record, your admission ticket is on the back of this
Proxy Statement. If your shares are held in the name of a bank, broker or other holder of record,
you must bring a brokerage statement or other proof of ownership with you to the Annual Meeting, or
obtain an admission ticket in advance. If you do not provide photo identification or comply with
the other procedures outlined above, you will not be admitted to the Annual Meeting.
No cameras (including cell phone cameras), recording equipment, electronic devices, large
bags, briefcases, or packages will be permitted in the Annual Meeting.
Electronic
Delivery of Future Proxy Materials
Stockholders may also sign up to receive future proxy materials, including our annual reports,
E-Proxy Notices, and other stockholder communications electronically instead of by mail. This will
reduce our printing and postage costs, eliminate bulky paper documents from your personal files and
conserve natural resources. In order to receive the communications electronically, you must have an
E-mail account, access to the Internet through an Internet service provider and a Web browser that
supports secure connections. Visit http://investordelivery.com for additional information
regarding electronic delivery enrollment and follow the instructions therein.
This Proxy Statement
is being filed and sent to stockholders on or about May 9, 2011 and
supersedes the Proxy Statement filed by the Company with the SEC on April 21, 2011.
Purpose of the Annual Meeting
The purpose of the Annual Meeting is to vote on the following proposals:
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the election of six members of the Board of Directors to serve until our next annual
meeting of stockholders or until their respective successors are elected and qualify; |
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the authorization of the Board of Directors in its sole discretion to approve an amendment to our
certificate of incorporation to effect a reverse stock split of our Class A common stock and
Class B common stock by a ratio of not less than one-for-five and not more than one-for-ten,
with the exact ratio to be set at a whole number within this range as determined by our Board of
Directors in its discretion; and |
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the ratification of the Board of Directors appointment of KPMG LLP as our independent
registered public accounting firm for our fiscal year ending on December 31, 2011 (Fiscal
Year 2011). |
No matters other than those referred to above are presently scheduled to be considered at the Annual Meeting.
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Recommendations of Our Board of Directors
Our Board of Directors recommends that you vote your shares as follows:
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FOR the election of six members of the Board of Directors to serve until our next
annual meeting of stockholders or until their respective successors are elected and qualify
(PROPOSAL 1); |
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FOR the approval of an amendment to our certificate of incorporation which will
effect a reverse stock split of our Class A common stock and Class B common stock (PROPOSAL 2); and |
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FOR the ratification of the appointment by the Board of Directors of KPMG LLP as our
independent registered public accounting firm for Fiscal Year 2011 (PROPOSAL 3). |
Stockholders Entitled to Vote at the Annual Meeting
Stockholders of Record
All stockholders of record of our Class A common stock, par value $0.0001 per share (the
Class A common stock) and Class B common stock, par value $0.0001 per share (the Class B common
stock), at the close of business on April 11, 2011 (the Record Date), are entitled to receive
notice and to vote at the Annual Meeting on each matter properly brought before the meeting. At the
close of business on the Record Date, there were 41,669,805 shares of Class A common stock
outstanding and entitled to vote and 23,403,500 shares of Class B common stock outstanding and
entitled to vote. The Class A common stock and the Class B
common stock are entitled to 41,669,805 and 234,035,000 votes,
respectively.
Shares Held with a Broker, Bank, Trustee or Other Nominee
Most of our stockholders hold their shares through a stockbroker, bank, trustee, or other
nominee rather than directly in their own name. As summarized below, there are some distinctions
between shares held of record and those owned beneficially:
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STOCKHOLDER OF RECORD If your shares are registered directly in
your name with our Transfer Agent, Broadridge, you are considered the
stockholder of record of those shares and these proxy materials are being sent directly to you by
us. As the stockholder of record, you have the right to grant your
voting proxy directly to us or to vote in person at the meeting. You
may also vote on the Internet or by telephone, as described below under the heading Voting Methods. |
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BENEFICIAL OWNER If your shares are held in a stock brokerage
account, by a broker, bank, trustee, or other nominee, you are
considered the beneficial owner of shares held in street name and
these proxy materials are being forwarded to you by your broker, bank,
trustee, or nominee who is considered the stockholder of record of
those shares. As the beneficial owner, you have the right to direct
your broker, bank, trustee, or nominee on how to vote and are also
invited to attend the meeting. However, since you are not the
stockholder of record, you may not vote these shares in person at the
meeting. Your broker, bank, trustee, or nominee is obligated to
provide you with a voting instruction card for you to use. You will
receive a form from your broker, bank, trustee or other nominee
seeking instructions as to how your shares should be voted. We urge
you to complete the form and instruct your broker, bank, trustee or
other nominee to vote on your behalf. |
Stockholders are entitled to one vote for each share of Class A common stock they hold and ten
votes for each share of Class B common stock they hold, on each matter presented. Shares of Class A
common stock and Class B common stock may not be voted cumulatively.
Quorum
A quorum of stockholders is necessary to hold the Annual Meeting. The presence, in person
or represented by proxy, of the holders of a majority of the aggregate votes entitled to be cast by
the Class A common stock and Class B common stock, voting together as a single class, will
constitute a quorum for the transaction of business at the Annual Meeting. If a quorum is not
present, the stockholders entitled to vote who are present in person or by proxy at the Annual
Meeting have the power to adjourn the Annual Meeting from time to time until a quorum is present or
represented. Unless the adjournment is for more than thirty days or unless a new record date is set
for the adjourned meeting, no notice of the adjourned meeting must be given other than by
announcement at the Annual Meeting. At an adjourned meeting at which a quorum is present, any
business may be transacted that could have been transacted at the original Annual Meeting.
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Votes Required with Respect to Each Proposal
The election of directors requires the affirmative vote of the holders of a majority of shares
present in person or represented by
proxy at the Annual Meeting. All other proposals also require the majority vote of the holders of a
majority of shares present in person or represented by proxy at the Annual Meeting. Holders who
abstain will be considered present at the Annual Meeting for quorum purposes, but their votes will
not be counted as affirmative votes. Abstaining, therefore, will have the practical effect of
voting against the proposals because the affirmative vote of a majority of the shares present at the
Annual Meeting and entitled to vote with respect to these matters is required to approve the
proposals. A broker non-vote occurs when a bank, broker, or other holder of record holding shares
for a beneficial owner does not vote on a particular proposal because that holder does not have
discretionary voting power for that particular item and has not received instructions from the
beneficial owner. Broker non-votes are counted for the purpose of determining whether quorum
exists. There is no cumulative voting for the election of directors.
Election of Directors The nominees for election as directors at the Annual Meeting will be
elected by a majority of the votes cast at the meeting. This means that the director nominee with a
majority of the votes for a particular slot is elected for that slot. Votes withheld from one or
more director nominees will have the practical effect of voting against such director nominee
because the affirmative vote of a majority of the shares present at the Annual Meeting and entitled
to vote for the election of directors is required.
All Other Proposals The affirmative FOR vote of a majority of those shares present in
person or represented by proxy at the meeting and entitled to vote on the matter is required to
approve an amendment to our certificate of incorporation which will effect a reverse stock split
of our Class A common stock and Class B common stock (Proposal 2) and to
ratify the Board of Directors appointment of KPMG LLP as our independent registered public
accounting firm for Fiscal Year 2011 (Proposal 3). In tabulating the voting result for any
particular proposal, abstaining will have the practical effect of voting against the proposal.
Information to Rely Upon When Casting Your Votes
You should rely only on the information contained in this Proxy Statement when casting your
votes. We have not authorized anyone to give any information or to make any representations in
connection with this proxy solicitation other than those contained in this Proxy Statement. You
should not rely on any information or representation not contained in this Proxy Statement as
having been authorized by us. You should not infer that there has not been a change in the facts
set forth in this Proxy Statement or in our affairs since the date of this Proxy Statement. This
Proxy Statement does not constitute a solicitation by anyone in any jurisdiction in which the
solicitation is not authorized or in which the person making the solicitation is not qualified to
do so or to anyone to whom it is unlawful to make a solicitation.
Voting Methods
If you hold shares directly as the stockholder of record, you may vote by granting a proxy or
vote in person at the Annual Meeting by requesting a ballot. If you hold shares beneficially in
street name, you may vote by submitting voting instructions to your broker or nominee pursuant to
the instruction provided by your broker, bank, trustee or other nominee. In most instances, you
will be able to do this over the Internet, by telephone, or by mail. Even if you plan to attend the
Annual Meeting, we recommend that you vote your shares in advance as described below so that your
vote will be counted if you later decide not to attend the Annual Meeting. Please refer to the
summary instructions below and those included on your proxy card or, for shares
held in street name, the voting instruction card included by your broker or nominee.
The Internet and telephone voting procedures are designed to authenticate stockholders by use
of a control number and to allow you to confirm that your instructions have been properly recorded.
If you vote by telephone or on the Internet, you do not need to return your proxy card. Telephone
and Internet voting for stockholders of record will be available 24 hours a day, up until 11:59
p.m. (Eastern Daylight Time) on May 30, 2011.
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VOTE BY INTERNET www.proxyvote.com If you have Internet access,
you may submit your proxy from any location 24 hours a day, 7 days a
week. Have your proxy card when you access the Web
site and follow the instructions to obtain your records and to create
an electronic voting instruction form. |
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VOTE BY TELEPHONE 1-800-690-6903 You may use any touch-tone
telephone to vote your proxy, toll-free, 24 hours a day, 7 days a
week. Have your proxy card in hand when you call and
then follow the instructions. |
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VOTE BY MAIL You may do this by signing your proxy card or, for
shares held in street name, the voting instruction card included by
your broker or nominee and mailing it. If you provide specific voting
instructions, your shares will be voted as you instruct. If you sign,
but do not provide instructions, your shares will be voted as the
Board recommends. Vote, sign, and date your proxy card and return it
in the postage-paid envelope provided, so that it is received by May
30, 2011 to Vote Processing, c/o Broadridge, 51 Mercedes Way,
Edgewood, NY 11717. |
All shares that have been properly voted and not revoked will be voted at the Annual Meeting.
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Voting instructions are included on your proxy card. If you properly submit your proxy by
telephone, the Internet or by mail in time for it to be voted at the Annual Meeting, one of the
individuals named as your proxy, each of whom is one of our officers, will vote your shares as you
have directed. If you submit your proxy by telephone, the Internet or by mail, but do not indicate
how your shares are to be voted with respect to one or more of the proposals to be voted on at the
Annual Meeting, as necessary to vote your shares on each proposal, your shares will be voted in
accordance with the recommendations of our Board of Directors: (1) FOR the election of the
director nominees, (2) FOR the approval of an amendment to our certificate of incorporation which will
effect a reverse stock split of our Class A common stock and Class B common stock,
(3) FOR the ratification of the appointment of KPMG LLP as the Companys
independent registered public accounting firm for Fiscal Year 2011,
and (4) in accordance with the
best judgment of the named proxies on other matters properly brought before the Annual Meeting.
Our Board of Directors has no knowledge of any matters that will be presented for
consideration at the Annual Meeting other than those described herein. The named proxies will also
have discretionary authority to vote upon any adjournment or postponement of the Annual Meeting,
including for the purpose of soliciting additional proxies.
Changing Your Vote
You may change your proxy instructions at any time prior to the vote at the Annual Meeting.
For shares held directly in your name, you may enter a new vote by using the Internet or the
telephone, by mailing a new proxy card bearing a later date (which will automatically revoke your
earlier voting instructions) or by voting in person at the Annual Meeting. For shares held
beneficially by you in street name, you may change your vote by submitting new voting
instructions to your broker or nominee, or by any other method instructed by your broker or
nominee.
Subject to such revocation, all proxies duly executed and received prior to, or during the
Annual Meeting, will be voted in accordance with the specification on the proxy card. If no
specification is made, proxies will be voted in favor of the proposal listed on the proxy card. As
to other matters, if any, to be voted upon at the Annual Meeting, the persons designated as
proxies, who were selected by the Board, will take such actions as they, in their discretion, may
deem advisable.
Counting the Vote
In the election of directors, you may vote FOR all of the nominees, you may WITHHOLD
AUTHORITY FOR ALL the nominees or you may vote FOR any individual nominees. For the other
proposals, you may vote FOR, AGAINST, or ABSTAIN. If you ABSTAIN, it has the same effect as
a vote AGAINST. If you hold your shares directly as the stockholder of record and you sign your
proxy card with no further instructions, your shares will be voted in accordance with the
recommendations of the Board. The inspector of elections will tabulate the votes. If you hold your
shares beneficially in street name and you sign your broker instruction card with no further
instructions, under the rules of various securities exchanges, your nominee generally may vote on
routine matters, but cannot vote on non-routine matters. The election of our directors is
considered a non-routine matter. Therefore, if you hold your shares beneficially in street name,
it is critical that you give instructions on how to cast your vote if you want it to count in the
director election. If you do not instruct your bank, brokerage firm or other nominee how to vote
in the election of directors, no vote will be cast on your behalf.
With regards to Proposal 1 (election of directors), shares represented by proxies that are
marked WITHHELD and shares that are not voted will have the effect of a vote against this
proposal because approval of this proposal requires the affirmative vote of the holders of a
majority of the shares of Class A common stock and Class B common stock present in person or
represented by proxy at the Annual Meeting. With regards to Proposal 2 (amendment to our certificate
of incorporation) and Proposal 3 (ratification of KPMG LLPs
appointment as auditor), shares marked as ABSTAIN and shares which are not voted will be
considered present in person or represented by proxy at the Annual Meeting and will have the effect
of a vote against this proposal because approval of this proposal requires the affirmative vote of
the holders of a majority of the shares of Common Stock present in person or represented by proxy
at the Annual Meeting.
Confidentiality
All stockholder proxies, ballots, and tabulations that identify stockholders are maintained in
confidence. No such document will be available for examination, and the identity and vote of any
stockholder will not be disclosed, except as necessary to meet legal requirements and allow the
inspectors of election to certify the results of the stockholder vote.
Results of the Vote
We will announce the preliminary voting results at the Annual Meeting and publish final
results in Form 8-K within four business days of the Annual Meeting.
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Delivery of Proxy Materials and Annual Report to Households
The SEC rules now allow us to deliver a single copy of an annual report and proxy statement to
any household not participating in electronic proxy material delivery at which two or more
stockholders reside if we believe the stockholders are members of the same
family. This rule benefits both you and SBS. We believe it eliminates irritating duplicate mailings
that stockholders living at the same address receive, and it reduces our printing and mailing costs.
This rule applies to any annual reports, proxy statements, proxy statements combined with a
prospectus, or information statements. Each stockholder will continue to receive a separate proxy
card or voting instruction card.
If your household has multiple stockholders of record and your household receives a single set
of proxy materials this year and you prefer to receive your own copy of the proxy materials now or
in future years, please request a duplicate set by calling 1-800-579-1639, visiting
www.proxyvote.com, sending an E-mail to sendmaterial@proxyvote.com, or writing to Spanish
Broadcasting System, Inc., 2601 South Bayshore Drive, PH 2, Coconut Grove, Florida 33133, ATTN:
Proxy Materials/Investor Relations; Legal Department.
If a broker or other nominee holds your shares, you may continue to receive some duplicate
mailings. Certain brokers will eliminate duplicate account mailings by allowing stockholders to
consent expressly to such elimination or to consent implicitly by not requesting continuation of
duplicate mailings. Since not all brokers and nominees may offer stockholders the opportunity this
year to eliminate duplicate mailings, you may need to contact your broker or nominee directly to
discontinue duplicate mailings to your household.
List of Stockholders
The names of stockholders of record entitled to vote at the Annual Meeting will be available
at the Annual Meeting and for ten days prior to the meeting for any purpose germane to the meeting,
between the hours of 9:30 a.m. and 4:30 p.m. (Eastern Daylight Time), at our principal executive
offices at Spanish Broadcasting System, Inc., 2601 South Bayshore Drive, PH 2, Coconut Grove,
Florida 33133, by contacting the Secretary of the Company.
Cost of Proxy Solicitation
We, on behalf of the Board of Directors, are soliciting proxies in connection with this Annual
Meeting. We will pay for the cost of preparing, assembling, printing, mailing, and distributing
these proxy materials. You will need to obtain your own Internet access if you choose to vote over the Internet. The
solicitation of proxies or votes may be by our directors, officers, and employees, who do not receive any additional compensation for these
solicitation activities. We have retained Morrow & Co., Inc. to assist us in the distribution of
proxy materials and the solicitation of votes. We will pay Morrow & Co., Inc. a fee of
approximately $3,000, plus out-of-pocket expenses. We will also reimburse brokerage houses and
other custodians, nominees, and fiduciaries for their reasonable out-of-pocket expenses for
forwarding proxy and solicitation materials to beneficial owners of stock.
Transfer Agent
Our Transfer Agent is Broadridge Corporate Issuer Solutions, Inc. All communications
concerning stockholders of record accounts, including address changes, name changes, common stock
transfer requirements, and similar issues can be handled by contacting Broadridge Corporate Issuer
Solutions, Inc. at 610-649-7300, or in writing to Broadridge Corporate Issuer Solutions, Inc. Attn:
Angela Lamb, 44 West Lancaster Avenue, Telephone: (610) 649-7300, Fax: (610) 649-7302.
7
CORPORATE GOVERNANCE
The Board of Directors
Our business and affairs are managed under the direction of the Board. The Board meets on a
regularly scheduled basis during our fiscal year to review significant developments affecting us
and to act on matters requiring its approval. The Board also holds special meetings as required
from time to time when important matters arise between scheduled meetings that require action by
the Board. During 2010, the Board consisted of Raúl Alarcón, Jr., Joseph A. García, José A.
Villamil, Mitchell A. Yelen, Manuel E. Machado and Jason L. Shrinsky. Messrs. Villamil, Machado and
Yelen were deemed to be independent as defined under Rule 5605(a)(2) of the National Association of
Securities Dealers (Nasdaq) Listing Rules. Mr. Machado was appointed to the Board, the Audit
Committee and the Compensation Committee on June 3, 2010.
The Board held a total of nine meetings during the fiscal year ended December 31, 2010
(Fiscal Year 2010). Each incumbent director who was a director of SBS during Fiscal Year 2010
attended 75% or more of the aggregate number of meetings of the Board and the meetings of all
committees of the Board on which he served during the period of time in which he served. The
independent members of the Board regularly meet in executive session without any employee directors
or other members of management in attendance.
Our Board has a separately-designated standing Audit Committee established in accordance with
Section 3(a)58(A) of the Securities Exchange Act of 1934 (the Exchange Act) and a Compensation
Committee. The functions and membership of each committee of the Board are set forth below. Our
Board does not have, and as a controlled company, the Nasdaq Listing Rules do not require us to
have, a standing nominating committee.
Controlled Company Exemption
We are a controlled company as defined in Rule 5615(c)(1) of the Nasdaq Listing Rules
because more than 50% of our voting power is held by Raúl Alarcón, Jr., our Chairman of the Board,
President and Chief Executive Officer (CEO). As a controlled company, we are exempt from the
requirements of Rule 5605(b), (d) and (e) of the Nasdaq listing standards that would otherwise
require us to have (i) a majority of independent directors on the Board, (ii) compensation and
nominating committees composed solely of independent directors, (iii) the compensation of executive
officers determined by a majority of the independent directors or a compensation committee composed
solely of independent directors, and (iv) director nominees selected or recommended to the Board
for selection, either by a majority of the independent directors, or a nominating committee
composed solely of independent directors. Consequently, we are exempt from independent director
requirements of Rule 5605(b), (d) and (e) of the Nasdaq Listing Rules, except for the requirements
under subsection (b)(2) thereof pertaining to executive sessions of independent directors and those
under subsection (c) thereof pertaining to the Audit Committee. Currently, we have an Audit
Committee and Compensation Committee composed solely of independent directors.
Board Leadership Structure
Raúl Alarcón, Jr. serves as our Chairman of the Board, President and CEO. Our Board believes
that combining the role of Chairman of the Board and CEO furthers development and execution of the
Companys strategy, facilitates information flow between management and the Board and promotes
efficiency given the size of the Company and its operations. Our Board believes that Mr. Alarcóns
service as both Chairman of the Board and CEO is in our and our stockholders best interests. In
addition, Mr. Alarcón has extensive experience in radio broadcasting and possesses detailed and
in-depth knowledge of the issues, opportunities and challenges that we face. Our Board believes
that he is, therefore, best positioned to develop agendas that ensure that our Boards time and
attention are focused on the most critical matters.
Mr. Alarcón is not an independent director. We do not have a lead independent director. We
believe the governance structure we have is customary for public companies in which the lead
stockholder continues to retain a majority voting interest, and we regard Mr. Alarcóns leadership
role on the Board as positive for the Company in that it fosters stability and encourages
consensus-building between Board initiatives and stockholder support.
Although our Board believes that the combination of the Chairman of the Board and CEO roles is
appropriate in the current circumstances, our Board has not established this approach as policy,
and will routinely review its determination as circumstances dictate and from time to time.
8
Risk Oversight
Our Board as a whole has responsibility for risk oversight. Our Board meets regularly to
discuss the strategic direction and the issues and opportunities facing our company in light of
trends and developments in the broadcasting industry and general business environment. Throughout
the year, our Board provides guidance to management regarding our strategy and helps to refine our
operating plans to implement our strategy. The involvement of the Board in setting our business
strategy is critical to the determination of the types and appropriate levels of risk undertaken by
the Company. Our Board is responsible for risk oversight as part of its fiduciary duties to the
stockholders and the Company, and our Board administers its risk oversight function as a whole and
through its committees. For example, the Audit Committee is charged with the task of overseeing the
Companys risk management process on behalf of the Board. The Audit Committee periodically meets
with the Companys senior management to review the Companys major financial risk exposures and the
steps management has taken to monitor and control such exposures. In addition, the Compensation
Committee considers the risks that may be affected by the Companys executive compensation
programs. While the full Board, and its committees, oversee the Companys risk management, the
Companys management is responsible for the implementation of the Companys risk management
guidelines and policies and the Companys day-to-day risk management process. Finally, the Board
believes that the combined Chairman and CEO leadership structure of the Board allows for quick and
definitive assessment of issues that should be brought to the Boards attention.
Committees of our Board of Directors
Audit Committee
The Audit Committee currently consists of José A. Villamil, Manuel E. Machado and Mitchell A.
Yelen, each of whom has been determined to be independent as defined under Rule 5605(a)(2) of the
Nasdaq Listing Rules and the SECs director independence standards for Audit Committee members. Mr.
Machado was elected to serve on the Audit Committee on June 3, 2010.
The Audit Committee has determined that Mr. Yelen qualifies as an audit committee financial
expert as that term is defined by applicable SEC rules and regulations and serves as the Chairman
of the Audit Committee. All members of the Audit Committee are able to read and understand basic
financial statements, including a balance sheet, income statement, and cash flow statement. The
Audit Committee held four meetings during Fiscal Year 2010.
The primary purpose of the Audit Committee is to assist the Board in its oversight of the
integrity of our financial statements, our compliance with legal and regulatory requirements, and
the qualifications, independence, financial reporting process, and performance of the Companys
independent registered public accounting firm (the Independent Registered Public Accounting
Firm). In fulfilling its oversight responsibilities, the Audit Committee:
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reviews our annual audited and quarterly unaudited consolidated financial statements; |
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reviews and approves related party transactions; |
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reviews our financial reporting process and disclosure and internal controls and procedures,
including major issues regarding accounting principles and financial statement presentation, and
critical accounting policies to be used in the consolidated financial statements; |
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reviews and discusses with management and the Independent Registered Public Accounting Firm the
Companys internal controls and the Independent Registered Public Accounting Firms attestation of
the report; |
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appoints, oversees, and approves the fees paid to the Independent Registered Public Accounting Firm; |
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reviews with the Independent Registered Public Accounting Firm the scope of the annual audit,
including fees and staffing, and approves all audit and permitted non-audit services provided by
the Independent Registered Public Accounting Firm; |
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reviews findings and recommendations of the Independent Registered Public Accounting Firm and
managements response to the recommendations of the Independent Registered Public Accounting Firm; |
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discusses policies with respect to risk assessment and risk management, our major risk exposures,
and the steps management has taken to monitor and mitigate such exposures; and |
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reviews compliance with the Companys Code of Business Conduct and Ethics (Code of Ethics) and
whistleblower policies.
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9
A full description of the Audit Committees primary responsibilities is contained in its
written charter, which is publicly available on our Internet website at
www.spanishbroadcasting.com under the tab entitled Investor Information/Audit Committee
Charter.
Compensation Committee
The Compensation Committee currently consists of Messrs. Villamil, Machado and Yelen, each of
whom has been determined to be independent as defined under Rule 5605(a)(2) of the Nasdaq Listing
Rules. Mr. Villamil serves as the Chairman of the Compensation Committee. Mr. Machado was elected
to serve on the Compensation Committee on June 3, 2010. The Compensation Committee held five
meetings during Fiscal Year 2010.
The Board has determined that all Compensation Committee members are independent under the
Nasdaq Listing Rules listing standards. The Board has also determined that each Compensation
Committee member qualifies as a Non-Employee Director under Rule 16b-3 of the Exchange Act and
that each member, qualifies as an outside director under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the Internal Revenue Code).
The Compensation Committee reviews our compensation practices and policies, annually reviews
performance and approves the compensation for the CEO and other senior executives, and reviews and
discusses with management the compensation disclosures prepared in accordance with the SECs
disclosure rules for executive compensation. In addition, the Compensation Committee:
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reviews and makes recommendations to management with respect to our overall compensation programs and policies; |
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approves the adoption, amendment, and termination of incentive compensation and deferred compensation programs
for our employees; |
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approves employment agreements and severance arrangements for the CEO, as appropriate; |
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approves employment agreements and severance arrangements for our senior executives (other than the CEO), as
appropriate; |
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interprets and supervises the administration of our stock and long-term incentive compensation programs; and |
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exercises all authority of the Board under our equity-based plans. |
A full description of the Compensation Committees primary responsibilities is contained in
its written charter, which is publicly available on our Internet website at
www.spanishbroadcasting.com under the tab entitled Investor Info/Compensation Committee
Charter.
The Role of Executive Officers in Determining Executive Compensation
Our CEO develops recommendations regarding executive compensation, including proposals
relative to compensation for individual executive officers, using internal and external
resources. These resources include such things as compensation surveys, external data and reports
from consultants and data, reports and recommendations from internal staff. Recommendations from
our CEO include and consider all aspects of the compensation program philosophy, design,
compliance and competitive strategy as well as specific actions regarding individual executive
officer compensation. The Compensation Committee reviews these recommendations, and decides
whether to accept, reject, or revise the proposals.
Our CEO and Chief Financial
Officer (CFO) assist the Compensation Committee in
understanding key business drivers included in program designs, especially incentive programs.
This may include defining related measures and explaining the mutual influence on or by other
business drivers and the accounting and tax treatment relating to certain awards. Our CEO and
CFO also provide updates to the Compensation Committee regarding current and anticipated
performance outcomes and their impact on executive compensation.
Our General Counsel, with the assistance of outside counsel for the
Compensation Committee, ensures that appropriate
plan documentation and approvals are received in order to keep executive pay programs in
compliance with applicable laws and stock exchange listing requirements. Our General Counsel and
outside counsel also advise the Audit Committee, the Compensation Committee and our Board
regarding compliance with appropriate governance standards and requirements.
10
Role of the Compensation Committee Advisor
The Compensation Committee has retained an outside consultant, Towers Watson, to assist it
in formulating and evaluating
our executive compensation program for Fiscal Year 2011. Towers Watson will work with the Compensation Committee
to:
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Provide comparative market data for our peer group, developed with the Compensation
Committee and management, with respect to compensation matters; |
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Analyze our compensation and benefit programs relative to our peer group; |
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Advise the Compensation Committee on compensation matters; |
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Summarize the results of the benchmarking and peer group analysis in a report to the
Compensation Committee and members of management, as appropriate; and |
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Participate in meetings with the full Board to present the results of the peer group
analysis. |
In order to encourage an independent view point, the Compensation Committee and its members have
access to Towers Watson at any time without management present and have consulted from time to
time with Towers Watson without management present.
If the Company wishes to engage Tower Watson for services
other than those that Tower Watson provides to the Compensation Committee, such services will be
subject to approval by the Compensation Committee. Tower Watson did
not provide any services to
the Compensation
Committee or the Company during Fiscal Year 2010.
Disclosure Committee
The Disclosure Committee, as described below, was established by us to ensure compliance
with the reporting requirements established by the SEC and is made up of certain key employees of
the Company. The Disclosure Committee currently consists of Joseph A. García (Senior Executive
Vice President, CFO, Chief Administrative Officer and Secretary), the chairman of the committee,
Melanie M. Montenegro (Executive Vice President and General Counsel), Albert Rodriguez (Chief
Revenue Officer of the Company), Marko Radlovic (Chief Revenue Officer of the radio segment),
José Molina (Vice President of Finance), Frank Soricelli (Corporate Controller), and Nelson
Santos (Vice President of Management Information Systems).
The general purpose of the Disclosure Committee is to design, establish and maintain a
system of controls and procedures to ensure that information required to be disclosed in the
reports and statements filed by us pursuant to the Exchange Act, is reported in conformity with
the rules and forms of the SEC. The Disclosure Committee assists the CEO, CFO and the Audit
Committee in monitoring (i) the integrity of the financial statements, policies, procedures and
the internal financial and disclosure controls and risks of the Company, and (ii) our compliance
with regulatory requirements, to the extent that these policies, procedures and controls may
generate either financial or non-financial disclosures in our filings with the SEC.
Nominating Committee
Our Board does not have a standing nominating committee or a committee serving a similar
function. As a controlled company, the Nasdaq Listing Rules do not require us to have such a
committee. The Board has determined that rather than a nominating committee, it is the most
appropriate body for identifying director candidates and selecting nominees to be presented at
the annual meeting of stockholders.
Director Nominations
As noted above, because Raúl Alarcón, Jr., our CEO, President and Chairman of the Board, holds
more than 50% of our voting power, we are deemed to be a controlled company under the Nasdaq
Listing Rules. Because we are a controlled company, the Board has not elected to establish a
separate nominating committee or formal rules governing director nominations from stockholders. The
functions of evaluating and nominating director candidates are performed by the Board as a whole.
The Board will, from time to time, review biographical information and background material relating
to potential candidates and interview selected candidates. The Board does not currently have a
charter or written policy with regard to the nomination process. We have not engaged a third party
to assist us in identifying and evaluating the individuals nominated for election as directors at
this Annual Meeting.
The Board has not set specific, minimum qualifications that must be met by director
candidates. In deciding whether to nominate any particular candidate for election to the Board, the
Board considers the appropriate skills and personal characteristics needed in light of the makeup
of the current Board, including considerations of each candidates integrity, character, sound
judgment, business acumen, professional skills and experience, knowledge of our business and
industry, differences in viewpoint, education, possible conflicts of interest, the ability to act
in the interests of our stockholders and other individual qualities and attributes. Further, while
the Board does not have a formal diversity policy, it identifies qualified potential candidates
without regard to any candidates race, color,
disability, gender, national origin, sexual orientation, religion or creed. The Board seeks to
ensure the fair representation of all stockholder interests on the Board. The Board believes that
the use of these general criteria, along with a non-discriminatory policy, will best result in a
Board that evidences that diversity in many respects. The Board believes that it currently
maintains that diversity. The Board also considers whether a potential nominee would satisfy the
Nasdaq Listing Rules definition of independent and the SECs definition of audit committee
financial expert. We believe that the backgrounds and qualifications of our directors, considered
as a group, provides a composite mix of experience, knowledge and abilities that allows the Board
to fulfill its responsibilities.
11
Stockholder recommendations relating to director nominees may be submitted in accordance with
the procedures set forth below under the heading Stockholder Proposals for Next Annual Meeting.
Stockholders may also send communications to the Board in accordance with the procedures set forth
below under the heading Stockholder Communications with the Board of Directors.
Stockholder Communications with the Board of Directors
Stockholders of SBS seeking to communicate with the Board, the chairs of the Audit and
Compensation Committees of the Board, or with any of our other directors, should submit any
communications in writing to the following address: Spanish Broadcasting System, Inc., c/o Melanie
M. Montenegro, General Counsel, 2601 South Bayshore Drive, PH 2, Coconut Grove, Florida 33133. The
mailing envelope must contain a clear notation indicating that the enclosed letter is a
Stockholder-Board Communication. Any such communication must identify the author as a
stockholder, must include the stockholders full legal name, address, valid telephone number, the
number of shares beneficially owned by the stockholder and, if applicable, the name of any specific
intended recipient. We will forward any such communication to the full Board or to any individual
director or directors to whom the communication is directed following its clearance through normal
review and appropriate security procedures.
Code of Business Conduct and Ethics
We have a Code of Ethics, which is within the meaning of Item 406(b) of Regulation S-K. All of
our directors, officers and employees, including our CEO and CFO, are required to abide by our
business conduct policies to ensure that our business is conducted in a consistently legal and
ethical manner.
The purpose of the Code of Ethics is to deter wrongdoing and to promote (i) honest and ethical
conduct, including the ethical handling of conflicts of interest; (ii) full, fair, accurate, timely
and understandable disclosures in reports and documents filed by us with, or submitted to, the SEC
or otherwise publicly communicated by us; (iii) compliance with applicable governmental laws, rules
and regulations; (iv) the prompt internal reporting of violations to the Code of Ethics to
appropriate persons identified therein and (v) accountability for adherence to the Code of Ethics.
Employees are required to report any conduct that they believe in good faith to be an actual or
apparent violation of the Code of Ethics.
This Code of Ethics is publicly available on our Internet website at
www.spanishbroadcasting.com under the tab entitled Investor Info/Code of Conduct. If we
make substantive amendments to the Code of Ethics or grant any waiver from its provisions to our
principal executive, financial or accounting officers, or persons performing similar functions,
including any implicit waiver, we will disclose the nature of such amendment or waiver on our
website or in a report on Form 8-K within four business days of such amendment or waiver.
Whistleblower Hotline
We have a whistleblower policy (the Whistleblower Policy), which establishes procedures for
(i) the receipt, retention and treatment of complaints received by our company regarding
accounting, internal accounting controls or auditing matters, and (ii) the confidential and
anonymous submission by our employees of concerns regarding questionable accounting or auditing
matters.
If you wish to contact our Audit Committee to report complaints or concerns relating to the
financial reporting of our company, you may do so by using the various alternatives provided by us,
such as (i) writing directly to the Chairman of the Audit Committee, c/o Director of Internal
Audit, Spanish Broadcasting System, Inc., 2601 South Bayshore Drive, PH 2, Coconut Grove, Florida
33133 or (ii) confidentially and anonymously by calling a toll free telephone hotline operated by
an independent party at (866) 789-1229. A copy of our Whistleblower Policy is available on our
Internet website at www.spanishbroadcasting.com under the tab entitled Investor
Info/Ethics and Compliance Hotline .
Board of Directors Attendance at Annual Meetings of Stockholders
Although we do not have a formal policy requiring director attendance at our Annual Meeting,
all directors and all nominees for election as directors are encouraged to attend the Annual
Meeting. Last year, all of our incumbent directors and director nominees attended our Annual
Meeting.
12
BOARD OF DIRECTORS
The Board of Directors currently consists of six members. Each of the Board members is
standing for reelection to hold office until the next Annual Meeting of Stockholders. Each nominee
elected as a director will continue in office until his or her successor has been elected and
qualified, or until his or her earlier death, resignation, or retirement. The Board has designated
as nominees: Raúl Alarcón, Jr., Joseph A. García, José A. Villamil, Mitchell A. Yelen, Manuel E.
Machado and Jason L. Shrinsky, each of whom currently serves as a member of the Board.
Other than the proposals described in this Proxy Statement, the Board is not aware of any
other matters to be presented for a vote at the Annual Meeting. If you grant a proxy by telephone,
Internet, or by signing and returning your proxy card, either of the persons named as proxy holders
Raúl Alarcón, Jr., our Chairman, President and CEO, and Joseph A. García, our Senior Executive
Vice President, CFO, Chief Administrative Officer (CAO) and Secretary will have the discretion
to vote your shares on any additional matters properly presented for a vote at the meeting. If any
of our nominees are unavailable as a candidate for director, the above-named proxy holders will
vote your proxy for another candidate or candidates as may be nominated by the Board.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
The following table sets forth information concerning the six nominees for director as of the
date of this Proxy Statement. Each of our directors serves until their successor is elected and
qualifies, and all executive officers hold office until their successors are appointed.
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Name |
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Age |
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Position with SBS |
Incumbent Nominees for Director |
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Raúl Alarcón, Jr.
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54 |
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Chairman of the Board of Directors, CEO and President |
Joseph A. García
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67 |
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Senior Executive Vice President,
CFO, CAO, Secretary and Director |
José A. Villamil
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64 |
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Director |
Mitchell A. Yelen
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63 |
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Director |
Manuel E. Machado
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43 |
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Director |
Jason L. Shrinsky
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73 |
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Director |
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Raúl Alarcón, Jr. joined us in 1983 as an account executive and has been our
President and a director since October 1985 and our CEO since June 1994. On
November 2, 1999, Mr. Alarcón, Jr. became our Chairman of the Board and continues
as our CEO and President. Currently, Mr. Alarcón, Jr. is responsible for our
long-range strategic planning and operational matters and is instrumental in the
acquisition and related financing of each of our stations. Mr. Alarcón, Jr. is the
son of the late Pablo Raúl Alarcón, Sr. We nominated Mr. Alarcón, Jr. as a
director because we believe he provides an historical perspective to our long
operating history, having joined us in 1983 and has extensive experience in
Spanish-language media broadcasting. |
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Joseph A. García has been our CFO since 1984, Executive Vice President since 1996
to 2008, and Secretary since November 2, 1999. On June 3, 2008, Mr. García was
elected to the Board and on August 4, 2008, became our Chief Administrative
Officer and Senior Executive Vice President. Mr. García is responsible for our
financial affairs, operational and administrative matters, investor relations, and
has been instrumental in the acquisition and related financing of our stations.
Before joining us in 1984, Mr. García spent thirteen years in international
financial planning positions with Philip Morris Companies, Inc. and with Revlon,
Inc., where he was manager of financial planning for Revlon Latin America. We
nominated Mr. García because we believe he provides a historical perspective to
our long operating history, having joined us in 1984. |
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José A. Villamil
became one of our directors on June 30, 2004. Mr. Villamil
has over 30 years of successful experience as a senior business economist, university educator and as a public official of both the
Federal and State of Florida governments. Mr. Villamil was the Chief Executive Officer of The Washington Economics Group, Inc.
(WEG), an economic consulting firm, serving in such position from 1993 to 1998 and from 2000 to July 2008. Since August 2008,
Mr. Villamil has served as the Dean of the School of Business of St. Thomas University, Miami Florida, while continuing to serve
as Principal Advisor to the clients of WEG. From 1999 to 2000, he directed the Tourism, Trade and Economic Development activities
of the State in the Office of Governor Jeb Bush. Mr. Villamil is the immediate past Chairman of the Governors Council of Economic
Advisors of Florida. Since April 2003, Mr. Villamil has been director of Mercantil CommerceBank, N.A. and CommerceBank Holding Corp.,
and since November 2010, he has been director of Pan-American Life Insurance Group (PALIG). Presently, he is Director of Enterprise
Florida the States principal economic development organization. Mr. Villamil is active in professional and community affairs. He
is currently Chairman of the Economic Roundtable of the Beacon Council Miami-Dade Countys official economic development organization.
He is also a Senior Research Fellow of Florida TaxWatch, an established fiscal and policy research organization of the State of
Florida. From 1989 to 1993, Mr. Villamil served as Chief Economist and later as Undersecretary for Economic Affairs at the United States Department of
Commerce. We nominated Mr. Villamil because of his expertise in the field of economics. |
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Mitchell A. Yelen became one of our directors on September 28, 2007. Mr. Yelen is
currently the Director of tax services at Pinchasik, Strongin, Muskat, Stein &
Company, P.A., a CPA firm, where he has been employed since 1984 specializing in
litigation support, complex tax research and financial planning. Mr. Yelen
previously held positions at CPA firms: Kaufman, Rossin & Co., P.A. and Alexander
Grant & Co., P.A. Among other degrees, he holds an M.B.A. in Finance from
Northwestern University and a J.D. and L.L.M. in taxation from the University of
Miami. We nominated Mr. Yelen because of his knowledge of accounting and finance. |
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Manuel E. Machado became one of our directors on June 3, 2010. Mr. Machado has
been the Chief Executive Officer and Co-Chairman of MGSCOMM, an integrated
marketing communications agency, one of the fastest-growing marketing
communications agencies in the country, since its formation in March 2003. Mr.
Machado was also elected to the board of directors of Worldwide Partners, Inc.
(worldwidepartners.com) on May 26, 2010. MGSCOMM and Worldwide Partners, Inc. are
not affiliates of the Company. Prior to the formation of MGSCOMM in 2003, Mr.
Machado developed successful communications programs for some of the worlds most
renowned brands such as McDonalds Corporation, Coors Brewing, Ford Motor Co.,
Bacardi, Coca Cola, MasterCard International, Ralston Purina, Proctor & Gamble,
Nike, Pisco Chile and the Government of Chile. He is also the founder of The Meka
Group, a marketing communications agency later known as BVK/Meka, and served as
its CEO from 1994 to 2003. Mr. Machado has also held key positions in companies of
worldwide recognition such as Univision Network, Burson-Marsteller and Bacardi.
Mr. Machado is a Past Chairman of the Association of Hispanic Advertising Agencies
(AHAA), www.ahaa.org. He has been involved with the community through several
organizations, including being named Trustee of the Vizcaya Museum and Gardens,
the Latin Grammys Host Committee, the WLRN Board of Trustees, the Voices for
Children Foundation Board of Directors, the Miami-Dade County Sister Cities
Program, the Mercy Foundation Ambassadors Board of Directors, the Hialeah
Foundation Board of Directors, Trustee of the Greater Miami Chamber of Commerce,
and Trustee of the Beacon Council. We nominated Mr. Machado because of his
knowledge of media advertising and marketing communications. |
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Jason L. Shrinsky became one of our directors on November 2,
1999. Mr. Shrinsky is a retired partner from the law firm Kaye
Scholer LLP, which he joined as a partner in 1986. Mr. Shrinsky
has been a lawyer counseling corporations and high net worth
individuals on financings, mergers and acquisitions, other
related financial transactions and regulatory procedures since
1964. Kaye Scholer LLP has served as our legal counsel for more
than 20 years. We nominated Mr. Shrinsky because of his
knowledge of financial transactions and regulatory procedures. |
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EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
In addition to those directors named above who are also our executive officers, the following
table sets forth information concerning non-director employees who serve as our executive officers
as of the date of this Proxy Statement. Our executive officers serve at the discretion of the Board
of Directors.
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Name |
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Age |
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Position with SBS |
Executive Officers |
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Albert Rodriguez
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46 |
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Chief Revenue Officer of the Company and General Manager
of the Miami Television Market |
Marko Radlovic
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47 |
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Chief Revenue Officer of Radio Segment and General Manager
of the Los Angeles Radio Market |
Melanie M. Montenegro
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36 |
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Executive Vice President and General Counsel |
Albert Rodriguez became the Chief Revenue Officer of the Companys consolidated operations on January
3, 2011 and continued in his position as the General Manager of the Miami television market. Mr.
Rodriguez is responsible for overseeing the revenue and profit performance of the Companys
consolidated operations, including radio, television, interactive and entertainment divisions, and
the day-to-day operational matters of the Miami television market. From October 12, 2010 to January
2, 2011, Mr. Rodriguez was the Chief Revenue Officer of the television segment and General Manager of
the Miami television market, and he was General Manager of the Miami television market from January
21, 2010 through October 11, 2010. From November 1999 through January 2010, Mr. Rodriguez was the
General Sales Manager for the Companys radio properties in Miami WCMQ-FM 92.3 Clásica 92,
WRMA-FM 106.7 Romance, and WXDJ-FM 95.7 El Zol 95.7. Under Mr. Rodriguezs management, El Zol
95.7 set the record for being the highest billing station in Floridas history in 2005.
Marko Radlovic became our Chief Revenue Officer of the Companys radio segment and General Manager and
Senior Vice President of the Los Angeles radio market on July 19, 2010. Mr. Radlovic is responsible
for overseeing the revenue and profit performance of the Companys radio segment and the day-to-day
operational matters of the Los Angeles radio market. Previously, Mr. Radlovic was the Companys Chief
Operating Officer from July 21, 2005 through November 6, 2007 and the Chief Revenue Officer from
December 2003 through July 2005. Mr. Radlovic was Vice President/General Manager for our Los Angeles
radio cluster from January 2002 until November 2003 and previously served as Vice President of Sales
for the Los Angeles cluster. Prior to joining us, he was Market Manager for Cumulus Media in Southern
California from January 2001 until August 2001 and was Vice President/General Manager for AM/FM Inc.
in Los Angeles from October 1998 to October 2000.
Melanie M. Montenegro became our Executive Vice President and General Counsel on December 14, 2010. As
executive vice president and general counsel, Ms. Montenegro is responsible for a wide range of
corporate functions, including legal, governance, securities, mergers and acquisitions, litigation,
business development, and compliance. Previously, Ms. Montenegro served as corporate counsel for the
Company managing the day-to-day activities and operations of the legal department. Prior to joining
the Company in 2006, Ms. Montenegro was an attorney with the law firm Kaye Scholer, LLP in New York
City from August 1999 to May 2005. She received her J.D., from Hofstra University School of Law and
also holds a B.A. in Political Science, Spanish Language and Literature.
15
SUMMARY COMPENSATION TABLE
The following table discloses compensation for the fiscal years ended December 31, 2010 and
December 31, 2009 received by our (i) President and CEO, Raúl Alarcón, Jr., (ii) Senior Executive
Vice President, CFO, CAO and Secretary, Joseph A. García, (iii) our former Chief Revenue Officer of
the radio segment and General Manager of the New York market, Frank Flores, who resigned on July
19, 2010, and (iv) Chief Revenue Officer of the radio segment and General Manager of the Los
Angeles market, Marko Radlovic. These individuals are also referred to in this Proxy Statement as
our named executive officers or NEOs.
|
|
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|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Option |
|
|
All Other |
|
|
|
|
|
|
|
|
Salary |
|
|
Bonus |
|
|
Awards |
|
|
Awards |
|
|
Compensation |
|
|
Total |
|
Name and Principal Position |
|
Year |
|
($) |
|
|
($) |
|
|
($)(a) |
|
|
($)(a) |
|
|
($) |
|
|
($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raul Alarcon, Jr. |
|
2010 |
|
|
1,250,000 |
|
|
518,133 |
(b) |
|
|
|
|
|
|
64,360 |
|
|
|
150,390 |
(c) |
|
1,982,883 |
|
Chief Executive Officer, President and Chairman of the Board of the Directors |
|
2009 |
|
|
1,250,000 |
|
|
|
1,002,295 |
|
|
|
|
|
|
|
61,560 |
|
|
|
172,503 |
|
|
|
2,486,358 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph A. Garcia |
|
2010 |
|
|
525,000 |
|
|
50,000 |
(d) |
|
|
|
|
|
|
|
|
|
|
47,513 |
(e) |
|
622,513 |
|
Senior Executive Vice President, Chief Financial Officer, Chief Administrative Officer and Secretary |
|
2009 |
|
|
525,000 |
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
37,027 |
|
|
|
662,027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank Flores(f) |
|
2010 |
|
|
129,427 |
(f) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,716 |
(g) |
|
|
141,143 |
|
Chief Revenue Officer of the radio segment and General Manager of the New York market |
|
2009 |
|
|
292,310 |
|
|
|
317,381 |
|
|
|
|
|
|
|
|
|
|
|
* |
|
|
|
609,691 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marko
Radlovic(h) |
|
2010 |
|
|
275,000 |
(h) |
|
|
72,273 |
(i) |
|
|
|
|
|
|
|
|
|
|
15,552 |
(j) |
|
|
362,825 |
|
Chief Revenue Officer of the radio segment and General Manager of the Los Angeles market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Indicates amounts less than $10,000. |
|
(a) |
|
Represents the aggregate grant date fair value computed in accordance with FASB Topic ASC 718 (ASC 718). See Note 10(c) to the Notes to
Consolidated Financial Statements, included in Part IV, Item 15 of our 2010 Annual Report on Form 10-K, for a discussion of the assumptions
used to value equity-based compensation. |
|
(b) |
|
For Fiscal Year 2010, Mr. Alarcón received a $18,133 contractual performance bonus and a $500,000 discretionary bonus. |
|
(c) |
|
Per Mr. Alarcóns employment agreement, he is entitled to the use of an automobile and driver, personal tax services, telecommunication
services, health insurance benefits and a separate life insurance policy. In Fiscal Year 2010, we incurred expenses related to the usage of an
automobile and driver of $74,361, telecommunication services of
$33,009, health insurance premiums of
$25,684, computer equipment of $621, and life insurance premium of $
16,715, respectively. |
|
(d) |
|
For Fiscal Year 2010, Mr. García received a
$50,000 discretionary bonus. |
|
(e) |
|
Per Mr. Garcías employment agreement, he is entitled to the use of an automobile, related car expenses, health insurance benefits and
telecommunication services. In Fiscal Year 2010, we incurred expenses related to the usage of an automobile of
$20,036, telecommunications services of $1,500, and health insurance
premiums of $25,977, respectively. |
|
(f) |
|
Mr. Flores resigned on July 19, 2010. |
|
(g) |
|
Per Mr. Flores employment agreement, he was
entitled to automobile related allowance and certain health insurance
benefits. For Fiscal Year 2010, we incurred expenses of $2,700
related to the automobile related allowance and health insurance
premiums of $9,016, respectively. |
|
(h) |
|
Mr. Radlovic was appointed Chief Revenue Officer of the radio segment and General Manager of the Los Angeles market effective July 19, 2010.
This table reflects his complete compensation for Fiscal Year 2010, the only year covered by the table in which he served as a named executive
officer. Mr. Radlovic previously was a named executive officer in 2007 and 2008. |
|
(i) |
|
For Fiscal Year 2010, Mr. Radlovic received a $72,273 discretionary performance bonus in his role as General Manager of the Los Angeles market. |
|
(j) |
|
Mr. Radlovic is entitled to a monthly automobile allowance
and certain health insurance benefits. For Fiscal Year 2010, we incurred expenses of $6,000
related to the automobile allowance and health insurance premiums of $9,552, respectively. |
16
Employment Agreements
To further assist our stockholders in understanding the elements of compensation disclosed in
the Summary Compensation Table, the material terms of our agreements with Messrs. Alarcon, Garcia,
Flores and Radlovic are described below.
The Compensation Committee seeks to ensure that our executive compensation aligns with our
corporate strategies, business objectives and the long-term interests of our stockholders and helps
attract, retain and motivate the key personnel it needs to conduct its business. Compensation
levels are intended to fairly compensate the Companys named executive officers. We use base salary
to provide each named executive officer a fixed amount of money during the year with the
expectation that he will perform his job to the best of his ability and in the best interests of
the Company. Executive salaries for Fiscal Year 2010 were not increased. For Fiscal Year 2010,
discretionary performance bonuses were intended to reward the named executive officers for both
Company and individual performance for the year. In evaluating performance for Fiscal Year 2010
for purposes of making a subjective determination of appropriate bonus amounts, the Compensation
Committee considered the Companys Fiscal Year 2010 operating
results. We believe that by providing our executives the opportunity to increase their ownership of stock, the
benefits of stockholders and executives will be more aligned, and we will encourage long-term
performance. We provide executive officers with limited personal benefits and perquisites that are
intended to enhance the attraction and overall retention value of the compensation program. The
Compensation Committee believes that severance benefits help retain qualified executives and are an
important component of a competitive compensation program.
Raúl Alarcón, Jr.
The compensation of Mr. Alarcón, Jr., our Chairman of the Board, CEO and President, in Fiscal
Year 2010 was primarily determined by the amended and restated employment agreement we entered into
with him on October 25, 1999 (the Alarcón Employment Agreement). The Alarcón Employment Agreement
has automatically renewed for successive one-year periods since December 31, 2004, and will
continue to do so unless terminated by either party on 90-days notice prior to December 31 of any
year.
Base Salary. Pursuant to the Alarcón Employment Agreement, Mr. Alarcón, Jr. is entitled to an
annual base salary of not less than $1,000,000. On March 10, 2007, the Compensation Committee
increased Mr. Alarcón Jr.s base salary to $1,250,000, effective April 1, 2007.
Bonus. Under the Alarcón Employment Agreement, Mr. Alarcón, Jr. is entitled to an annual
contractual bonus equal to 7.5% of same station annual broadcast cash flow (now known as station
operating income) growth, including (on a pro rata basis from the date the station was acquired)
acquired stations on a pro forma basis or a greater amount in the discretion of the Board. For
Fiscal Year 2010, Mr. Alarcón, Jr. received a contractual bonus of $18,133 and a
discretionary performance bonus of $500,000. Mr. Alarcóns discretionary bonus was determined by the
Compensation Committee after a thorough review of the Companys financial results for 2010,
Mr. Alarcóns management of the Companys affairs and his efforts to promote the Companys
interests and guide its business and programming. The Compensation Committee commended his
tireless efforts to seek opportunities for the Companys growth. In particular, the Compensation Committee
cited with approval his work with the Puerto Rico operations and his identification of acquisition opportunities.
Securities. During each year of his employment term, Mr. Alarcón, Jr. is entitled to receive
an option to purchase 100,000 shares of Class A common stock, which vests immediately, at an
exercise price equal to the fair market value of the Class A common stock on the applicable grant
date. On October 27, 2010, Mr. Alarcón, Jr. received an option to purchase 100,000 shares of Class
A common stock, at an exercise price of $0.77 per share.
Benefits; Perquisites. Mr. Alarcón, Jr. is entitled to receive executive health insurance
benefits provided to all of our executives, such as life and long-term disability insurance for
himself and health insurance for himself and his family. In addition, Mr. Alarcón, Jr. is entitled
to certain perquisites, such as life insurance, reimbursement for personal tax, accounting
expenses, telecommunications services and the use of a company car and a driver.
Severance. Mr. Alarcón, Jr. is entitled to receive severance benefits upon termination in
certain circumstances. The severance benefits are described in Potential Payments upon Termination
or Change in Control table below.
The Compensation Committee determined that Mr. Alarcón, Jr.s compensation for Fiscal Year
2010 was fair and reasonable based on his individual performance and his unique
contribution to our operational, financial and strategic results for Fiscal Year 2010 and that his
compensation for the year was in line with the Companys overall compensation objectives.
17
Joseph A. García
The compensation of Mr. García, our Senior Executive Vice President, CFO, CAO and Secretary,
in Fiscal Year 2010 was determined by the amended and restated employment agreement we
entered into with him on August 4, 2008, as amended on April 19, 2011
(the Employment Agreement). The term of the Employment Agreement is for
three years and will automatically renew for additional one-year periods, unless either party gives
notice at least 60 days prior to the end of the then-current term.
Base Salary. On August 4, 2008, pursuant to the
Employment Agreement, Mr. Garcías annual base
salary was increased to $525,000. The base salary is subject to an annual review and may be
increased from time to time as recommended by the CEO and approved by the Compensation Committee.
The Compensation Committee did not increase Mr. Garcias base salary in Fiscal Year 2010.
Bonus.
Under the Employment Agreement, if the threshold level of performance is achieved, Mr.
García is eligible to receive an annual cash bonus upon the attainment of individual
pre-established goals and the Companys performance goals, of no less than $100,000 and no more
than $300,000 for each fiscal year completed during the term. No bonus is guaranteed for
performance that fails to meet the threshold level of performance. In the event that the Company is
required to prepare an accounting restatement due to material noncompliance with any financial
reporting requirement under the Federal securities laws, Mr. García is required to reimburse the
Company for the amount of any annual bonus or any other incentives paid to him based on the
financial results that are materially restated downward. In Fiscal Year 2010, Mr. García received a
discretionary bonus of $50,000. Mr. Garcias bonus was determined by the Compensation Committee after a thorough review of the
Companys financial results for 2010, managements recommendations and his handling of the
Companys finances, cash flow and expenses. The Compensation Committee commended his efforts to
manage expenses and begin the process of refinancing the Companys debt in 2012.
Securities. Mr. Garcia received equity grants in 2008, pursuant to the Employment Agreement. The
Employment Agreement did not provide for equity grants in Fiscal Year 2010.
Benefits; Perquisites. Mr. García is entitled to
receive executive health insurance benefits
provided to all of our executives, such as life and long-term disability insurance for himself and
health insurance for himself and his family. In addition, under the
Employment Agreement Mr. García is entitled to certain
perquisites, such as the use of an automobile, related car expenses and telecommunications
services. On April 19, 2011, the Compensation Committee amended this
automobile perquisite, Mr. Garcia is now entitled to an annual
automobile allowance equal to $20,400.
Severance. Mr. García is entitled to receive severance benefits upon termination in certain
circumstances. The severance benefits are described in Potential Payments upon Termination or
Change in Control table below.
The Compensation Committee determined that Mr. Garcias compensation for Fiscal Year 2010 was
fair and reasonable based on his individual performance and his unique contribution
to our operational, financial and strategic results for Fiscal Year 2010 and that his compensation
for the year was in line with the Companys overall compensation objectives.
Frank Flores
The compensation of Mr. Flores, our former Chief Revenue Officer and General Manager of the
New York market, in Fiscal Year 2010 was primarily determined by the amended and restated
employment agreement we entered into with him on April 6, 2009 and effective April 1, 2009, (the
Flores Employment Agreement). Mr. Flores resigned effective June 19, 2010.
Base Salary. Pursuant to the Flores Employment Agreement, Mr. Flores was entitled to receive
an annual base salary of $250,000.
Bonus. Under the Flores Employment Agreement, Mr. Flores was entitled to (i) an annual New
York consolidated station operating income performance bonus and (b) an annual radio consolidated
station operating income performance bonus, based on achieving certain station operating income
targets based upon the CEOs recommendation and subject to the Compensation Committees approval.
In Fiscal Year 2010, Mr. Flores did not receive a consolidated station operating income performance
bonus as a result of his resignation.
Benefits; Perquisites. Mr. Flores was entitled to receive executive medical insurance benefits
provided to all of our executives, such as life and long-term disability insurance for himself and
health insurance for himself and his family.
Severance. Mr. Flores did not receive severance or any other post-termination benefits in
connection with his resignation.
The Compensation Committee determined that Mr. Flores compensation for Fiscal Year 2010 was
fair and reasonable based on his individual performance and contribution to our
operational, financial and strategic results for Fiscal Year 2010 and that his compensation for the
year would have been in line with its overall compensation objectives.
18
Marko Radlovic
The compensation of Mr. Radlovic, our Chief Operating Officer of the radio segment and General
Manager of the Los Angeles radio market, in Fiscal Year 2010 was primarily determined by a letter
agreement we entered into with him on July 19, 2010 (the Letter Agreement).
Base Salary. Pursuant to the Letter Agreement, Mr. Radlovic is entitled to receive an annual
base salary of $275,000.
Bonus. Under the Letter Agreement, Mr. Radlovic is eligible to receive an annual performance
bonus based on achieving certain performance targets for the Los Angeles radio market and the
Companys radio segment. In Fiscal Year 2010, Mr. Radlovic received a $72,273 discretionary
performance bonus in his role as General Manager of the Los Angeles
market for achieving certain targets
of his station operating income performance budget.
Benefits; Perquisites. Mr. Radlovic is entitled to receive executive medical insurance
benefits provided to all of our executives, such as life and long-term disability insurance for
himself and health insurance for himself and his family. In addition, Mr. Radlovic is entitled to
certain perquisites, including a monthly automobile allowance.
Severance. Mr. Radlovic is entitled to receive severance benefits upon termination in certain
circumstances. The severance benefits are described in Potential Payments upon Termination or
Change in Control table below.
The Compensation Committee determined that Mr. Radlovics compensation for Fiscal Year 2010
was fair and reasonable based on his individual performance and contribution to our
operational, financial and strategic results for Fiscal Year 2010 and that his compensation for the
year was in line with the Companys overall compensation objectives.
19
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2010
The following table summarizes equity awards outstanding as of December 31, 2010 for each of our
named executive officers. The closing price of our Class A common stock on December 31, 2010 was
$0.72.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
|
|
Number of |
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Market Value |
|
|
|
Securities |
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
Shares or |
|
|
of Shares or |
|
|
|
Underlying |
|
|
Underlying |
|
|
|
|
|
|
|
|
|
|
Units of |
|
|
Units of |
|
|
|
Unexercised |
|
|
Unexercised |
|
|
Option |
|
|
|
|
|
|
Stock That |
|
|
Stock That |
|
|
|
Options |
|
|
Options |
|
|
Exercise |
|
|
Option |
|
|
Have Not |
|
|
Have Not |
|
|
|
Exercisable |
|
|
Unexercisable |
|
|
Price |
|
|
Expiration |
|
|
Vested |
|
|
Vested |
|
Name |
|
(#) |
|
|
(#) |
|
|
($) |
|
|
Date (a) |
|
|
(#) |
|
|
($) |
|
Raul Alarcon, Jr. |
|
|
100,000 |
|
|
|
|
|
|
$ |
7.77 |
|
|
|
10/27/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
$ |
6.13 |
|
|
|
10/27/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
$ |
8.69 |
|
|
|
10/25/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
$ |
9.98 |
|
|
|
10/27/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
$ |
6.27 |
|
|
|
10/25/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
$ |
4.79 |
|
|
|
10/27/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
$ |
2.62 |
|
|
|
10/27/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
$ |
0.20 |
|
|
|
10/27/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
$ |
0.73 |
|
|
|
10/27/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
$ |
0.77 |
|
|
|
10/27/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000 |
(b) |
|
|
21,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph A. Garcia |
|
|
150,000 |
|
|
|
|
|
|
$ |
9.10 |
|
|
|
1/16/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
|
|
|
$ |
11.78 |
|
|
|
1/21/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
|
|
|
$ |
10.79 |
|
|
|
3/7/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
125,000 |
|
|
|
|
|
|
$ |
0.45 |
|
|
|
9/3/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marko Radlovic |
|
|
20,000 |
|
|
|
|
|
|
$ |
9.20 |
|
|
|
8/30/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
|
|
|
$ |
9.10 |
|
|
|
1/16/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
90,000 |
|
|
|
|
|
|
$ |
9.44 |
|
|
|
11/6/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
62,500 |
|
|
|
|
|
|
$ |
10.10 |
|
|
|
11/3/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
|
|
|
$ |
8.50 |
|
|
|
7/21/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
62,500 |
|
|
|
|
|
|
$ |
5.08 |
|
|
|
11/23/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
The expiration date of each option occurs 10 years after the stock option grant date. If a NEO is terminated, the stock options
will expire based on the plans terms. |
|
(b) |
|
Restricted stock vested on January 1, 2011. |
20
Elements of Post-Termination Compensation
We do not have a practice of providing retirement benefits, including any supplemental
executive retirement plans, to our NEOs. Our NEOs have entered into employment agreements with us
in which these agreements each contain certain post-termination compensation, such as severance
payments or change-in-control provisions. In addition, we retain the discretion to utilize the
offer of severance and/or change-in-control protection as an incentive in hiring our NEOs.
Pension Benefits
We do not provide pension arrangements or post-retirement health coverage for our executives
or employees. Our executive officers are eligible to participate in our 401(k) contributory defined
contribution plan.
Nonqualified Deferred Compensation
We do not provide any nonqualified defined contribution or other deferred compensation plans.
Potential Payments upon Termination or Change in Control
In accordance with the rules of the SEC, the following table presents our estimate of amounts
payable to the NEOs, under our 1999 Stock Option Plan, Omnibus Plan and their employment
agreements, assuming that each of the indicated triggering events discussed in the table below
occurred on December 31, 2010, and the equity awards under the 1999 Stock Option Plan and Omnibus
Plan were neither assumed by a successor corporation nor replaced with a cash retention program.
21
The following table describes and quantifies the benefits and compensation to which the NEOs
would have been entitled to under their employment agreements and other existing plans and
arrangements if their employment had terminated on December 31, 2010, based on their compensation
and services on that date. The amounts shown on the table do not include payments and benefits
available generally to salaried employees upon termination of employment, such as accrued vacation
pay, distribution from the 401(k) plan, or any death, disability or health benefits available under
broad-based employee plans. Post-termination benefits vary by executive and type of termination.
Potential Payments Upon Termination or Change of Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
Value of |
|
|
|
|
|
|
|
|
|
Severance |
|
|
Severance |
|
|
Stock |
|
|
Option |
|
|
Other |
|
|
|
|
|
|
(Salary) |
|
|
(Bonus) |
|
|
Acceleration |
|
|
Acceleration |
|
|
Benefits |
|
|
Total |
|
Name |
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
Raúl Alarcón, Jr. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without Cause |
|
|
917,808 |
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,866 |
(b) |
|
|
949,674 |
|
With Cause |
|
|
458,904 |
(c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
458,904 |
|
Death |
|
|
917,808 |
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,858 |
(b) |
|
|
936,666 |
|
Disability |
|
|
917,808 |
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,866 |
(b) |
|
|
949,674 |
|
Joseph A. García |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or Disability |
|
|
1,050,000 |
(d) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,050,000 |
|
Prior to a Change of
Control: Without
Cause /With Good
Reason/Non-Renewal
by Company |
|
|
1,050,000 |
(e) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,866 |
(f) |
|
|
1,077,866 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior to the Second
Anniversary of a
Change of Control: Without Cause /With
Good
Reason/Non-Renewal
by Company |
|
|
1,050,000 |
(g) |
|
|
100,000 |
(g) |
|
|
|
|
|
|
|
|
|
|
27,866 |
(f) |
|
|
1,177,866 |
|
Marko Radlovic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without Cause |
|
|
47,596 |
(h) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,596 |
|
|
|
|
(a) |
|
Represents the aggregate base salary payments which the executive would have received during the employment term if such termination had not occurred. |
|
(b) |
|
Represents the aggregate value of the continuation of the executives health and life insurance benefits for up to the employment term. |
|
(c) |
|
Represents 50% of the aggregate base salary payments which the executive would have received
during the employment term if such termination had not occurred. |
|
(d) |
|
Represents two times the aggregate base salary payments which the executive would have
received during a one-year period, provided we receive a release in a form acceptable to us. |
|
(e) |
|
Represents the aggregate base salary payments of the greater of the remainder of the term or
24 months, which the executive would have received if such termination had not occurred,
provided we receive a release in a form acceptable to us. |
|
(f) |
|
Represents the aggregate value of the continuation of executive health insurance benefits for
up to 12 months after such date of termination. |
|
(g) |
|
Represents two times the aggregate base salary and bonus payments which the executive would
have received during a one-year period, provided we receive a release in a form acceptable to
us. |
|
(h) |
|
At December 31, 2010, employment was at-will. In the event that the employment is
terminated without cause, in exchange for a release in a form acceptable to us, Mr. Radlovic
shall receive one week severance of his then annual base salary for every year served. |
While we believe that the amounts shown above and the assumptions upon which they are
based provide reasonable estimates of the amounts that would have been due to the NEOs in the event
that any of the circumstances described above had occurred on December 31, 2010, the actual amounts
due to the NEOs upon a triggering event will depend upon the actual circumstances and the
employment agreements.
Change of Control Triggering Event
A change of control for purposes of Mr. Garcías employment agreement is a change of control
as defined under the Omnibus Plan. Pursuant to the Omnibus Plan, a change of control means a change
in the ownership of the voting power or effective control of the Company, or in the ownership of a
substantial portion of the assets of the Company within the meaning of Section 409A of the Internal
Revenue Code.
22
Non-Competition Provision
Mr. García has agreed that during his employment term and for a period of twelve months
thereafter, he would not engage in certain competitive activities with us, including solicitation
of employees or customers and interference with the relationship between us and any such person. In
addition, he has also agreed to maintain the confidentiality of certain proprietary information
during the term of his employment and thereafter.
Overview of Director Compensation and Procedures
The Compensation Committee may review the level of compensation of our non-employee directors
periodically. Directors who are also our employees do not receive cash or equity compensation for
service on the Board or any committee thereof. To determine how appropriate the current level of
compensation for our non-employee directors is, SBS has historically obtained data from a number of
different sources including:
|
|
|
publicly available data describing director compensation in peer companies; |
|
|
|
|
survey data collected by our human resources department; and |
|
|
|
|
information obtained from other companies. |
Director Compensation
The annual fees paid to non-employee directors are $25,000 for service on the Board; $25,000
for service on the Audit Committee; and $25,000 for service on the Compensation Committee. All
directors are reimbursed for the out-of-pocket expenses they incur in connection with their
service. Our non-employee directors are also eligible to receive stock options under our Omnibus
Plan.
2010 DIRECTOR COMPENSATION
The following table summarizes total compensation earned by each non-employee director
during Fiscal Year 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned |
|
|
|
|
|
|
|
|
|
|
|
|
|
or Paid in |
|
|
|
|
|
|
All Other |
|
|
|
|
|
|
Cash |
|
|
Option Awards |
|
|
Compensation |
|
|
Total |
|
Name (a) |
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
Manuel E. Machado (b) |
|
|
37,500 |
|
|
|
75,015 |
(c) |
|
|
|
|
|
|
112,515 |
|
Jose Antonio Villamil (b) |
|
|
75,000 |
|
|
|
|
|
|
|
|
|
|
|
75,000 |
|
Mitchell Yelen (b) |
|
|
75,000 |
|
|
|
|
|
|
|
|
|
|
|
75,000 |
|
Jason Shrinsky (b) |
|
|
25,000 |
|
|
|
|
|
|
|
50,000 |
(d) |
|
|
75,000 |
|
|
|
|
(a) |
|
Raúl Alarcón, Jr. and Joseph A. García are omitted from this table because they did not
receive any additional compensation for service as a director. |
|
(b) |
|
The following are the aggregate number of option awards outstanding as of December 31, 2010
for each of our non-employee directors. The expiration date of each option occurs 10 years
after the stock option grant date. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Options |
|
|
Number of Options |
|
|
Option Exercise |
|
|
Grant Date Fair |
|
|
Option Expiration |
|
Director |
|
Outstanding |
|
|
Exercisable |
|
|
Price |
|
|
Value per Share |
|
|
Date |
|
Manuel E. Machado |
|
|
50,000 |
|
|
|
10,000 |
|
|
$ |
1.79 |
|
|
$ |
1.50 |
|
|
|
6/03/2020 |
|
Jose Antonio Villamil |
|
|
50,000 |
|
|
|
50,000 |
|
|
$ |
9.33 |
|
|
$ |
6.83 |
|
|
|
6/30/2014 |
|
Mitchell Yelen |
|
|
50,000 |
|
|
|
40,000 |
|
|
$ |
2.58 |
|
|
$ |
1.65 |
|
|
|
9/28/2017 |
|
Jason Shrinsky |
|
|
50,000 |
|
|
|
50,000 |
|
|
$ |
10.79 |
|
|
$ |
6.71 |
|
|
|
3/7/2015 |
|
|
|
|
(c) |
|
Mr. Machado received an option grant in connection with his appointment to the Board of
Directors in June 2010. This amount represents the aggregate grant date fair value computed in accordance
with FASB Topic ASC 718 (ASC 718). See Note 10(c) to the Notes to Consolidated Financial
Statements, included in Part IV, Item 15 of our 2010 Annual Report on Form 10-K, for a
discussion of the assumptions used to value equity-based compensation. |
|
(d) |
|
On March 16, 2009, we entered into a consulting agreement effective April 1, 2009, with Mr.
Shrinsky. The term of the agreement is through December 31, 2011 and may be renewed at our
option on or before December 31st of each succeeding year. Under the terms of the consulting
agreement, he is paid a retainer of $50,000 per year to advise us with respect to various
business matters. |
23
Stock Option Plan for Non-Employee Directors
We adopted a separate option plan for our non-employee directors, but this plan terminated on
September 26, 2009. The terms of this plan provided that the Board had the discretion to grant
stock options to any non-employee director. An aggregate of 300,000 shares of Class A common stock
were reserved for issuance under this option plan. The plan was administered by the Board. Although
the plan has terminated, the expiration of each option granted occurs 10 years after the stock
option grant date.
Under the plan, any non-exercisable options will immediately vest and become exercisable upon
a change in control of the Company. If a non-employee director ceases to be a member of the Board
due to death, retirement or disability, all his unvested options will terminate immediately and all
his exercisable options on such date will remain exercisable based on the plan terms. If a
non-employee directors service as a director is terminated for any reason other than the
preceding, all his unvested options will terminate immediately and all his exercisable options on
such date will remain exercisable for thirty days.
2006 Omnibus Equity Compensation Plan
On July 18, 2006, our stockholders approved the Omnibus Plan. The Board previously approved
the Omnibus Plan at a meeting held on May 3, 2006, which was subject to stockholder approval. An
aggregate of 3,500,000 shares of Class A common stock have been reserved for issuance under this
plan.
Stockholder approval of the Omnibus Plan allows (i) the compensation attributable to grants
under the Omnibus Plan to meet an exception to the $1,000,000 deduction limit under Section 162(m)
of the Code, (ii) incentive stock options issued under the Omnibus Plan to meet the requirements of
the Code, and (iii) the Omnibus Plan to meet the Nasdaq Stock Market listing requirements.
The Omnibus Plan provides that grants may be made to participants of any of the following: (i)
incentive stock options, (ii) nonqualified stock options, (iii) stock appreciation rights (SARs),
(iv) stock units, (v) stock awards, (vi) dividend equivalents, and (vii) other stock-based awards.
All employees, members of the Board, and all non-employee directors are eligible to participate.
The Compensation Committee approves those individuals who will participate in the Omnibus Plan.
Limitations on Directors and Officers Liability
Our third amended and restated certificate of incorporation has a provision which limits the
liability of directors to us to the maximum extent permitted by Delaware law. The third amended and
restated certificate of incorporation specifies that our directors will not be personally liable
for monetary damages for breach of fiduciary duty as a director. This limitation does not apply to
actions by a director or officer that do not meet the standards of conduct which make it
permissible under the Delaware General Corporation Law for SBS to indemnify directors or officers.
Our amended and restated by-laws provide for indemnification of directors and officers (and
others) in the manner, under the circumstances and to the fullest extent permitted by the Delaware
General Corporation Law, which generally authorizes indemnification as to all expenses incurred or
imposed as a result of actions, suits or proceedings if the indemnified parties acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best interests of SBS. Each
director has entered into an indemnification agreement with us that provides for indemnification to
the fullest extent provided by law. We believe that these provisions are necessary or useful to
attract and retain qualified persons as directors and officers. We currently have directors and
officers liability insurance that provides for coverage of up to $20.0 million.
On November 28, 2001, a complaint was filed against us in the United States District Court for
the Southern District of New York (the Southern District of New York) and was amended on April
19, 2002. The amended complaint alleges that the named plaintiff, Mitchell Wolf, purchased shares
of our Class A common stock pursuant to the October 27, 1999 prospectus and registration statement
relating to our initial public offering, which closed on November 2, 1999 (the IPO). The
complaint was brought on behalf of Mr. Wolf and an alleged class of similarly situated purchasers
against us, eight underwriters and/or their successors-in-interest who led or otherwise
participated in our IPO, two members of our senior management team, one of whom is the Chairman of
our Board of Directors, and an additional director (collectively, the Individual Defendants). The
complaint was never served upon the Individual Defendants.
24
This case is one of more than 300 similar cases brought by similar counsel against more than
300 issuers, 40 underwriters and 1,000 individual defendants alleging, in general, violations of
federal securities laws in connection with initial public offerings, in particular, failing to
disclose that the underwriters allegedly solicited and received additional, excessive and
undisclosed commissions from certain investors in exchange for which they allocated to those
investors material portions of the restricted shares issued in connection with each offering. All
of these cases, including the one involving us, have been assigned for consolidated pretrial
purposes to one judge of the Southern District of New York. The issuer defendants in the
consolidated cases (collectively, the Issuer Defendants) filed motions to dismiss the
consolidated cases. These motions to dismiss covered issues common among all Issuer Defendants and
issues common among all underwriter defendants (collectively, the Underwriter Defendants) in the
consolidated cases. As a result of these motions, the Individual Defendants were dismissed from one
of the claims against them, specifically the Section 10b-5 claim. On September 21, 2007, Kaye
Scholer LLP, on behalf of the Individual Defendants, executed a tolling agreement with plaintiffs
providing for the dismissal without prejudice of all claims against the Individual Defendants upon
the provision to plaintiffs of documentation showing that SBS has entity coverage for the period in
question. Documentation of such coverage was subsequently provided to plaintiffs on December 19,
2007.
On October 13, 2004, the Southern District of New York granted plaintiffs motion for class
certification in six focus cases out of the more than 300 consolidated class actions. The Company
was not named in any of the six focus cases. On August 31, 2005, the Southern District of New
York issued an order of preliminary approval of a settlement proposal among the investors in the
plaintiff class, the Issuer Defendants (including us) and the Issuer Defendants insurance carriers
(the Issuers Settlement). The principal components of the Issuers Settlement were: (1) a release
of all claims against the Issuer Defendants and their directors, officers and certain other related
parties arising out of the alleged wrongful conduct in the amended complaint; (2) the assignment to
the plaintiffs of certain of the Issuer Defendants potential claims against the Underwriters; and
(3) a guarantee by the insurers to the plaintiffs of the difference between $1.0 billion and any
lesser amount recovered by the plaintiffs from the Underwriter Defendants. The payments were to be
charged to each Issuer Defendants insurance policy on a pro rata basis. The plaintiffs appealed
the Issuers Settlement to the United States Court of Appeals for the Second Circuit (the Second
Circuit).
On December 5, 2006, the Second Circuit reversed the order, holding that plaintiffs could not
satisfy the predominance requirement for a Federal Rule of Civil Procedure 23(b)(3) class action.
On June 25, 2007, in light of the Second Circuits reversal of the class certification order and
its subsequent denial of plaintiffs petition for a rehearing or rehearing en banc, the Southern
District of New York entered a stipulation between plaintiffs and the Issuer Defendants,
terminating the proposed Issuers Settlement which the Southern District of New York had
preliminarily approved on August 31, 2005.
On August 14, 2007, plaintiffs filed amended complaints in the six focus cases and amended
master allegations in the consolidated actions. On November 13, 2007, the Underwriter Defendants
and Issuer Defendants moved to dismiss the amended complaints in the six focus cases. On March
26, 2008, the Southern District of New York granted in part the motion as to a subset of
plaintiffs Section 11 claims (alleging civil liabilities on account of false registration
statements), but denied the motion as to plaintiffs other claims.
On September 27, 2007, plaintiffs filed a renewed motion for class certification with respect
to the six focus cases, based on newly proposed class definitions. On October 10, 2008, at
plaintiffs request, the Southern District of New York ordered the withdrawal without prejudice of
plaintiffs renewed motion, which had been fully briefed and was sub judice.
On January 7, 2008, the Underwriter Defendants filed a motion (in which the Issuer Defendants
joined) to strike class allegations in 26 of the consolidated cases, including the case against the
Company, on the ground that plaintiffs lacked a putative class representative in those cases at the
time of their May 30, 2007 oral motion. On May 13, 2008, the Southern District of New York issued
an order granting the motion in part and striking certain of the class allegations relating to the
Section 10b-5 claims in 8 of the 26 actions, including the Section 10b-5 claim against SBS. The
order also requires plaintiffs to make certain disclosures with respect to the putative class
representatives in the remaining 18 actions. Once the disclosures are filed, the Underwriter
Defendants and the Issuer Defendants may seek clarification of the Southern District of New Yorks
May 13, 2008 order with respect to the status of the remaining 10b-5-related class allegations in
the other 8 actions, including the SBS action, as well as the status of the Section 11-related
class allegations.
On June 11, 2009, pursuant to a motion filed on April 2, 2009, the Southern District of New
York issued a preliminary order of approval of a settlement of all of the consolidated cases,
including the case against SBS. On September 19, 2009, the Southern District of New York conducted
a hearing regarding the final approval of the settlement of all consolidated cases and, on October
5, 2009, issued an opinion finally approving the settlement. The settlement, which is subject to
appeal, will result in a release of all claims against the Underwriter Defendants and the Issuer
Defendants, and their officers and directors, in exchange for an aggregate sum of approximately
$600 million (the Settlement Amount) to be paid into a settlement fund for the benefit of the
class plaintiffs. The Companys and the Individual Defendants share of the Settlement Amount would
be fully funded by insurance.
25
On October 23, 2009, several objecting members of the class (the Objectors) filed a petition
for leave in the Second Circuit to appeal the Southern District of New Yorks class definition for
purposes of the October 5, 2009 settlement (the Objectors petition). Several Objectors have also
filed notices of appeal in the Second Circuit from the Southern District of New Yorks order
approving the settlement. On October 29, 2009 plaintiffs filed an answer in opposition to the
Objectors petition. On November 2, 2009, the Underwriter Defendants filed a response to the
Objectors petition, taking no position on the petition, but noting that the classes were approved
for settlement purposes only and reserving the right to oppose class certification in the event the
settlement is not finally approved. The Issuer Defendants have not taken a position on the appeals.
On October 7, 2010, all but two of the Objectors entered into a stipulation with plaintiffs
withdrawing their appeals with prejudice. The two remaining Objectors have since submitted briefs
to the Second Circuit in support of their appeals. On December 8, 2010, plaintiffs moved to dismiss
with prejudice one of the remaining Objectors appeals based on alleged violations of the Second
Circuits rules. The motion is fully briefed and is sub judice. The deadline for filing answering
briefs regarding the remaining Objectors appeals is stayed pending determination of the motion to
dismiss.
Equity Compensation Plan Information
The following table sets forth, as of December 31, 2010, the number of securities outstanding
under our equity compensation plans, the weighted average exercise price of such securities and the
number of securities available for grant under these plans:
Equity Compensation Plan Information
As of December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares |
|
|
|
|
|
|
|
|
|
to be Issued |
|
|
Weighted-Average |
|
|
Number of Securities |
|
|
|
Upon |
|
|
Exercise |
|
|
Remaining Available |
|
|
|
Exercise of |
|
|
Price of |
|
|
for Future Issuance |
|
|
|
Outstanding |
|
|
Outstanding |
|
|
Under Equity |
|
|
|
Options, |
|
|
Options, |
|
|
Compensation Plans |
|
|
|
Warrants |
|
|
Warrants |
|
|
(excluding |
|
Plan Category |
|
and Rights |
|
|
and Rights |
|
|
Column (a)) |
|
Equity Compensation Plans Approved by
Stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
2006 Omnibus Equity Compensation Plan |
|
|
280,000 |
|
|
$ |
0.86 |
|
|
|
2,958,000 |
|
1999 Stock Option Plan |
|
|
1,517,900 |
|
|
$ |
6.55 |
|
|
|
|
|
Non-Employee Directors Stock Option Plan |
|
|
150,000 |
|
|
$ |
7.57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,947,900 |
|
|
|
|
|
|
|
2,958,000 |
|
|
|
|
|
|
|
|
|
|
|
|
26
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information concerning the beneficial ownership of our Class A
common stock and our Class B common stock as of April 11, 2011, by:
|
|
|
each person known by us to beneficially own more than 5% of any class of our common stock; |
|
|
|
|
each director; |
|
|
|
|
each executive officer named in the Summary Compensation Table (the NEOs); and |
|
|
|
|
all named executive officers and directors as a group. |
Unless indicated below, each stockholder listed had sole voting and sole investment power with
respect to all shares beneficially owned, subject to community property laws, if applicable. As of
the Record Date, there were 41,669,805 shares of Class A common stock and 23,403,500 shares of
Class B common stock outstanding. In addition, as of the Record Date there were 380,000 shares of
Series C convertible preferred stock, par value $.01 per share (Series C preferred stock), which
are convertible into 7,600,000 shares of Class A common stock and vote on an as-converted basis
with the common stock. Accordingly, in the percentage calculations in the table below, we treat the
7,600,000 shares of Class A common stock (into which the Series C preferred stock is convertible)
as outstanding.
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Class A Shares |
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|
Class B Shares |
|
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Percent of |
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|
Percent of |
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Percent of |
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Percent of |
|
|
Total |
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|
Total |
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|
Number of |
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|
Class A |
|
|
Number of |
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|
Class B |
|
|
Economic |
|
|
Voting |
|
Name and Address(1)(2) |
|
Shares |
|
|
Shares |
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|
Shares |
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|
Shares |
|
|
Interest |
|
|
Power |
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|
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|
Raúl Alarcón, Jr.(3) |
|
|
1,162,000 |
|
|
|
2.3 |
% |
|
|
23,400,000 |
|
|
|
100.0 |
% |
|
|
33.3 |
% |
|
|
82.7 |
% |
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph A. García(4) |
|
|
500,000 |
|
|
|
1.0 |
% |
|
|
|
|
|
|
* |
|
|
|
* |
|
|
|
* |
|
Marko Radlovic(6) |
|
|
275,000 |
|
|
|
* |
|
|
|
|
|
|
|
* |
|
|
|
* |
|
|
|
* |
|
Manuel E. Machado(6) |
|
|
10,000 |
|
|
|
* |
|
|
|
|
|
|
|
* |
|
|
|
* |
|
|
|
* |
|
Mitchell A. Yelen(5) |
|
|
45,000 |
|
|
|
* |
|
|
|
|
|
|
|
* |
|
|
|
* |
|
|
|
* |
|
Jose A. Villamil(6) |
|
|
50,000 |
|
|
|
* |
|
|
|
|
|
|
|
* |
|
|
|
* |
|
|
|
* |
|
Jason L. Shrinsky(7) |
|
|
65,000 |
|
|
|
* |
|
|
|
|
|
|
|
* |
|
|
|
* |
|
|
|
* |
|
|
|
|
|
|
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|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
All named executive
officers and
directors as a
group(8) |
|
|
2,107,000 |
|
|
|
4.1 |
% |
|
|
23,400,000 |
|
|
|
100.0 |
% |
|
|
34.3 |
% |
|
|
82.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
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|
CBS Corporation(9) |
|
|
7,600,000 |
|
|
|
15.4 |
% |
|
|
|
|
|
|
* |
|
|
|
10.5 |
% |
|
|
2.7 |
% |
Columbia Wanger Asset
Management, L.P.(10) |
|
|
3,468,600 |
|
|
|
7.0 |
% |
|
|
|
|
|
|
* |
|
|
|
4.8 |
% |
|
|
1.2 |
% |
Attiva Capital
Partners, LTD(11) |
|
|
3,190,246 |
|
|
|
6.5 |
% |
|
|
|
|
|
|
* |
|
|
|
4.4 |
% |
|
|
1.1 |
% |
Beach Point Capital
Management(12) |
|
|
2,632,418 |
|
|
|
5.3 |
% |
|
|
|
|
|
|
* |
|
|
|
3.6 |
% |
|
|
* |
|
|
|
|
* |
|
Indicates less than 1%. |
|
(1) |
|
The address of all directors and executive officers in this table, unless otherwise
specified, is c/o Spanish Broadcasting System, Inc., 2601 South Bayshore Drive, PH 2, Coconut
Grove, Florida 33133. |
27
|
|
|
(2) |
|
As used in this table, beneficial ownership means the sole or shared power to vote or
direct the voting of a security, or the sole or shared power to dispose, or direct the
disposition, of a security. A person is deemed as of any date to have beneficial ownership of
any security that the person has the right to acquire within 60 days after that date,
regardless if the security is in-the-money or not. For purposes of computing the percentage of
outstanding shares held by each person named above, any security that the person has the right
to acquire within 60 days of the date of calculation is deemed to be outstanding, but is not
deemed to be outstanding for purposes of computing the percentage ownership of any other
person. |
|
(3) |
|
Includes 1,000,000 shares of Class A common stock issuable upon the exercise and/or vesting
of securities that the holder has the right to within sixty days of the date of this table.
Also includes 1,070,000 shares of Class B common stock owned by Pablo Raúl Alarcón, Sr.s
estate. Raúl Alarcón, Jr. is the executor of the estate of Pablo Raúl Alarcón, Sr., and has
the power to vote Mr. Alarcón Sr.s shares. |
|
(4) |
|
Includes 350,000 shares of Class A common stock issuable upon the exercise and/or vesting of
securities that the holder has the right to within sixty days of the date of this table. |
|
(5) |
|
Includes 40,000 shares of Class A common stock issuable upon the exercise and/or vesting of
securities that the holder has the right to within sixty days of the date of this table. |
|
(6) |
|
Shares of Class A common stock beneficially owned by Messrs. Radlovic, Machado, and Villamil
are issuable upon the exercise and/or vesting of securities that the holder has the right to
within sixty days of the date of this table. |
|
(7) |
|
Includes 50,000 shares of Class A common stock issuable upon the exercise and/or vesting of
securities that the holder has the right to within sixty days of the date of this table. Mr.
Shrinsky holds these options for the benefit of the law firm, Kaye Scholer LLP. Mr. Shrinsky
shares ownership of, and voting and investment power for, 15,000 shares of Class A common
stock with his spouse. |
|
(8) |
|
Includes 1,775,000 shares of Class A common stock issuable upon the exercise and/or vesting
of securities that the holder has the right to within sixty days of the date of this table. |
|
(9) |
|
Reflects ownership of Mr. Sumner M. Redstone, National Amusements, Inc. (NAI), NAIRI, Inc.
(NAIRI), CBS Corporation (CBS), Westinghouse CBS Holding Company, Inc. (W/CBS HCI), CBS
Broadcasting Inc. (CBSBI), CBS Radio Inc. (CBS Radio) and CBS Radio Media Corporation
(CRMC) (collectively, the Reporting Entities) of 380,000 shares of our Series C Preferred
Stock. Upon conversion, each of the shares of Series C Preferred Stock will convert into
twenty fully paid and non-assessable shares of Class A Common Stock. Mr. Sumner M. Redstone,
by virtue of his stock ownership in NAI, may be deemed to be the beneficial owner, with shared
dispositive and voting power, of the Series C Preferred Stock held or controlled by the
Reporting Entities. The address of the Reporting Entities and Mr. Redstone is c/o CBS
Corporation, 51 West 52nd Street, New York, NY 10019. We obtained this information from a
Schedule 13D/A filed by CBS Corporation on February 14, 2006. Nonetheless, the percentage
which appears in this table may differ from the percentage disclosed in such filing. |
|
(10) |
|
Reflects the ownership of Columbia Wanger Asset Management, L.P. and Columbia Acorn Trust, a
Massachusetts business trust that is advised by Columbia Wanger Asset Management, L.P. The
address of Columbia Wanger Asset Management, L.P. is 227 West Monroe Street, Suite 3000,
Chicago, Illinois 60606. Columbia Wanger Asset Management, L.P. has sole investment discretion
and voting power with respect to all the shares. We obtained this information from a Schedule
13G/A filed by Columbia Wanger Asset Management, L.P. on February 11, 2011. Nonetheless, the
percentage which appears in this table may differ from the percentage disclosed in such
filing. |
|
(11) |
|
Includes 114,000 shares of Class A common stock held by Attiva Capital Partners, LTD
(Attiva), 140,000 shares of Class A common stock held by Complejo Metalurgico de Cumana -
Venezuela, 67,000 shares of Class A common stock held by David Tomasello and 2,869,246 shares
of Class A common stock held by Antonio Tomasello. Antonio Tomasello is the father of David
Tomasello, who is the managing member of Attiva and Chairman of Complejo Metalurgico de Cumana
- Venezuela and, for the purposes of the reporting requirements of the Securities Exchange Act
of 1934, may be deemed to be a beneficial owner of the shares held by that entity which
represent 6.5% of the shares of Class A common stock outstanding. David Tomasello has sole
voting power and shared dispositive power with respect to such securities. We obtained this
information from a Schedule 13D filed August 7, 2009. The address for Attiva is 275 Madison
Avenue, 4th floor, New York, New York 10016. Nonetheless, the percentage which appears in this
table may differ from the percentage disclosed in such filing. |
|
(12) |
|
The address of Beach Point Capital Management LP is 1620 26th Street, Suite 6000N,
Santa Monica, California 90404. Beach Point GP LLC is the general partner of Beach Point
Capital Management LP and, for the purposes of the reporting requirements of the Securities
Exchange Act of 1934, may be deemed to be a beneficial owner of the shares held by that entity
which represent 5.3% of the shares of Class A common stock outstanding. Beach Point Capital
Management LP has sole investment discretion and voting power with respect to all the shares.
The shares are owned by various individual and institutional investors for which Beach Point
Capital Management LP serves as an investment advisor. We obtained this information from a
Schedule 13G/A filed by Beach Point Capital Management LP on January 21, 2011. Nonetheless,
the percentage which appears in this table may differ from the percentage disclosed in such
filing. |
28
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and executive officers and persons
who own more than 10% of a registered class of our equity securities (collectively, Reporting
Persons) to file reports of ownership and changes in ownership of our securities with the SEC.
Reporting Persons are required by the SEC to furnish us with copies of all Section 16(a) forms they
file.
Based on the review of copies of such reports furnished to us and written representations that
no other reports were required, we believe that, during Fiscal Year 2010, the Reporting Persons
timely complied with all Section 16(a) filing requirements applicable to them, except that Mr.
Yelen filed one late report with respect to one transaction that occurred prior to his appointment
to the Board of Directors.
29
The following Audit Committee Report does not constitute soliciting material and should not be
deemed filed or incorporated by reference into any other SBS filing under the Securities Act of
1933, as amended, or Securities Exchange Act of 1934, as amended, except to the extent SBS
specifically incorporates this report by reference therein.
AUDIT COMMITTEE REPORT
The purpose of the Audit Committee is to oversee the Companys accounting and financial
reporting processes and the financial statement audits and to review the effectiveness of internal
controls. The Audit Committees responsibilities are described in a written charter adopted by the
Board. Management is responsible for the Companys internal controls and the financial reporting
process. The Companys independent registered public accounting firm is responsible for performing
an independent audit of the Companys consolidated financial statements in accordance with the
Standards of the Public Company Accounting Oversight Board (United States) and issuing a report
thereon.
The Audit Committee has reviewed and discussed with management and KPMG LLP (KPMG), the
Companys independent registered public accounting firm, our audited consolidated financial
statements for Fiscal Year 2010. The Audit Committee has discussed with KPMG matters required to be
discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as
amended and adopted by the Public Company Accounting Oversight Board in Rule 3200T.
The Audit Committee has received the written disclosures and the letter from KPMG required by
applicable requirements of the Public Company Accounting Oversight Board regarding KPMGs
communications with the Audit Committee concerning independence, and the Audit Committee has
discussed with KPMG the latters independence.
Based on the Audit Committees review and discussions noted above, the Audit Committee
recommended to the Board the inclusion of the Companys audited consolidated financial statements
in SBS 2010 Annual Report on Form 10-K for Fiscal Year 2010 for filing with the SEC.
Respectfully submitted,
Audit Committee:
Mitchell A. Yelen
José A. Villamil
Manuel E. Machado
30
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our consolidated financial statements for Fiscal Year 2010 have been audited by KPMG, our
Independent Registered Public Accounting Firm.
Audit and Audit-Related Fees, Tax Fees and All Other Fees
The following table sets forth the aggregate fees billed to us for professional audit services
rendered by KPMG for the audit of our annual consolidated financial statements for the fiscal years
ended December 31, 2010 and 2009, the review of the consolidated financial statements included in
our quarterly reports on Form 10-Q for such periods and fees billed for other services rendered by
KPMG for such periods. Fees include amounts related to the year indicated, which may differ from
amounts billed.
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended |
|
|
Fiscal Year Ended |
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
|
($ in thousands) |
|
Annual audit fees(1) |
|
$ |
690 |
|
|
$ |
620 |
|
Audit related fees(2) |
|
|
20 |
|
|
|
24 |
|
Tax fees(3) |
|
|
265 |
|
|
|
350 |
|
All other fees(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fees for services |
|
$ |
976 |
|
|
$ |
994 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Annual audit fees for the audit of the consolidated financial statements included in the
Companys Annual Report on Form 10-K and the review of the interim condensed consolidated
financial statements included in the Companys quarterly reports on Form 10-Q. This category
also includes fees for statutory audits required by the Puerto Rico tax authorities, consents,
review of registration statements and other documents filed with the SEC, and accounting
consultations. |
|
(2) |
|
Audit related fees are the fees for the financial statement audit of the Companys employee
benefit plan. |
|
(3) |
|
Tax fees are the fees for professional services rendered for tax compliance, tax advice, and
tax planning for the Companys U.S. and Puerto Rico entities. |
|
(4) |
|
All other fees are the fees for services other than those in the above three categories. |
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of the
Independent Registered Public Accounting Firm
In accordance with the Audit Committee Charter, the Audit Committee is responsible for
appointing and overseeing the work of the Independent Registered Public Accounting Firm. The Audit
Committee has not established or adopted pre-approval policies and procedures for the pre-approval
of all audit and permissible non-audit services provided by the Independent Registered Public
Accounting Firm. The Audit Committee may, however, adopt pre-approval policies and procedures in
the future if it deems pre-approval policies and procedures to be appropriate for us. The Audit
Committee did not rely upon the exception to the pre-approval requirements provided in 17 C.F.R
210.2-01(c)(7)(i)(c). The Audit Committee provided its prior approval for all audit and non-audit
related services reflected in the above table. The Audit Committee reviewed the provision of all
non-audit services by the Independent Registered Public Accounting Firm and concluded that the
provision of these services was compatible with maintaining the Independent Registered Public
Accounting Firms independence.
31
Before engaging the Independent Registered Public Accounting Firm for the Fiscal Year 2011
audit, the Independent Registered Public Accounting Firm submitted to the Audit Committee for
approval a detailed description of services it expected to render to the Company during that year
for each of the following categories of services:
|
|
|
Audit services include audit work performed in the preparation of the
consolidated financial statements, as well as work that generally only
the Independent Registered Public Accounting Firm can reasonably be
expected to provide, including comfort letters, statutory audits, and
attest services and consultation regarding financial accounting and/or
reporting standards. |
|
|
|
|
Audit related services are for assurance and related services that are
traditionally performed by the Independent Registered Public
Accounting Firm, including due diligence related to mergers and
acquisitions, employee benefit plan audits, and special procedures
required to meet certain regulatory requirements. |
|
|
|
|
Tax services include all services performed by the Independent
Registered Public Accounting Firms tax personnel except those
services specifically related to the audit of the financial
statements, and includes fees in the areas of tax compliance, tax
planning, and tax advice. |
|
|
|
|
Other services are those services not captured in the other categories. |
Before engagement, the Audit Committee pre-approved these services by category of service. The
fees are budgeted and the Audit Committee requires the Independent Registered Public Accounting
Firm to report actual fees versus the budget periodically throughout the year by category of
service. During the year, circumstances may arise when it may become necessary to engage the
Independent Registered Public Accounting Firm for additional services not contemplated in the
original pre-approval. In those instances, the Audit Committee requires specific pre-approval
before engaging the Independent Registered Public Accounting Firm.
32
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Approval Policies and Procedures
In accordance with our Audit Committee charter, our Audit Committee is responsible for
reviewing and approving the terms and conditions of all related party transactions in accordance
with the Nasdaq Listing Rules. Our Audit Committee also reviews and approves our proxy statement
and the information contained therein. In determining whether to approve or ratify a related party
transaction, the Audit Committee takes into account, among other factors it deems appropriate,
whether the transaction is on terms no less favorable to us than terms generally available from an
unrelated person under the same or similar circumstances, and the extent of the related persons
interest in the transaction. An Audit Committee member cannot participate in any approval or
ratification of a related party transaction in which such member is a related person, other than to
provide all material information regarding the transaction to the Audit Committee.
Related Party Transactions
During fiscal years 2010 and 2009, we paid CBS Radio, Inc. various payments totaling
approximately $0.3 million per year, respectively, pursuant to a lease for tower and antenna space.
In June 1992, Spanish Broadcasting System of Florida, Inc., one of our subsidiaries, entered
into a 20-year lease with Mr. Alarcón, Sr., our late Chairman Emeritus and Mr. Alarcón, Jr., our
Chairman of the Board, CEO and President, for a building which provides for a base monthly rent of
$9,000. The lease is cancellable by the lessors upon sixty days notice to us, except during the
months of November through May. Effective June 1, 1998, the lease for this building was assigned to
SBS Realty Corp., a realty management company owned by Messrs. Alarcón, Sr. and Alarcón, Jr. This
building is currently vacant. During fiscal years 2010 and 2009, we paid SBS Realty Corp. aggregate
amounts of approximately $0.1 million per year, respectively.
Our corporate headquarters are located in office space previously owned by Irradio Holdings
Ltd., a Florida limited partnership, for which the general partner is Irradio Investments, Inc., a
Florida subchapter S corporation, wholly owned by our CEO. In January 2011, Irradio Holdings sold
the leased space to Agave Acquisitions, LLC and transferred all of its rights and obligations;
therefore, eliminating the related party transaction. The lease term of the office space is through
April 30, 2015, with the option to renew all or some of the existing office space for an additional
five years. During fiscal years 2010 and 2009, we paid Irradio Holdings Ltd. an aggregate amount of
approximately $2.5 million, in rent and related expenses. Additionally, during fiscal years 2010
and 2009, the Company subleased certain of its existing office space to subtenants to reduce
expenses. In Fiscal Year 2011, we estimate paying an annual rent of approximately $2.0 million for all the
space leased under the lease, which will be offset by rent income of approximately $1.0 million.
On January 1, 2008, we entered into a local marketing agreement with South Broadcasting
System, Inc., a company owned by the estate of Mr. Alarcón, Sr., our late Chairman Emeritus. Mr.
Alarcón, Jr., our Chairman of the Board, CEO and President, is the executor and one of the
beneficiaries of the estate. Pursuant to the local marketing agreement, we are permitted to
broadcast our Mexican Regional programming on radio station 106.3 FM (the LMA Station). We are
required to pay the operating costs of the LMA Station and in exchange we retain all revenues from
the sale of the advertising within the programming we provide. Under the terms of the local
marketing agreement, we have the right of first negotiation and the right of first refusal to match
a competing offer. However, after the first anniversary of the effective date, if we do not agree
to match the terms of the competing offer within the ten (10) business day period or fail to notify
South Broadcasting of our intent to match the competing offer, then South Broadcasting has the
right to accept such offer, provided South Broadcasting pays us the early termination fee equal to
the lesser of 5% of the aggregate purchase price of the LMA Station or $1.0 million. The local
marketing agreement terminated on its terms on December 31, 2008, after which we continued to
operate the LMA Station on the same financial terms on a month to month basis. On May 8, 2009, the
local marketing agreement was renewed for three years and will terminate on its terms on December
31, 2011.
On March 16, 2009, we entered into a consulting agreement effective April 1, 2009, with Mr.
Shrinsky, one of our Board members. The term of the agreement is through December 31, 2011 and may
be renewed at our option on or before December 31st of each succeeding year. Under the terms of the
consulting agreement, he is paid a retainer of $50,000 per year to advise us with respect to
various business matters. We paid a retainer of $50,000 during fiscal year 2010 and 2009.
Certain Relationships
Eric García, the son of Mr. García, our CFO, is employed by us as a sales executive for our
New York radio stations. Based on commissions earned during the fiscal years 2010 and 2009, he was
paid $183,845 and $211,032, respectively.
See Security Ownership of Certain Beneficial Owners and Management.
33
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, stockholders will be asked to elect Raúl Alarcón, Jr., Joseph A.
García, José A. Villamil, Mitchell A. Yelen, Manuel E. Machado and Jason L. Shrinsky, each of whom
currently serves as a member of the Board, to the Board of Directors until his or her successor has
been elected and qualified, or until his or her earlier death, resignation, or retirement.
If you submit your proxy via the Internet, by telephone or by mail, your shares will be voted
for the election of the six nominees recommended by the Board of Directors, unless you mark the
proxy in such a manner as to withhold authority to vote. The named proxies will vote all shares
represented by proxy for the nominees for these vacancies, except to the extent authority to do so
is withheld. Stockholders may withhold authority from the named proxies to vote for the entire
slate of directors as nominated or may withhold the authority to vote for any individual nominee by
marking the box under the WITHHOLD column adjacent to the name(s) of the appropriate director(s)
via the Internet or on the attached proxy card, or by indicating by telephone that authority is
withheld. Withholding authority to vote for one or more of the nominees will result in those
nominees receiving fewer votes. If any nominee for any reason is or becomes unable or unwilling to
serve, all shares represented by proxy will be voted at the Annual Meeting by the named proxies for
the person, if any, as shall be designated by the Board of Directors to replace the nominee. Please
see Shares Held with a Broker, Bank, Trustee or Other Nominee for information on how your shares
will be voted in the absence of your instructions if you hold shares through a bank, broker or
other nominee. Each nominee has agreed to serve as a director if elected, and the Board of
Directors has no reason to believe that any nominee will be unavailable to serve as a director.
Vote Required
To be elected as a director at the Annual Meeting, each candidate for election must receive a
majority of the votes cast by the stockholders present in person or represented by proxy at the
Annual Meeting.
Recommendation of the Board of Directors:
THE BOARD UNANIMOUSLY RECOMMENDS THAT EACH HOLDER OF CLASS A COMMON STOCK AND EACH HOLDER OF CLASS
B COMMON STOCK VOTE FOR THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR LISTED BELOW.
34
PROPOSAL 2
APPROVAL
OF AMENDMENT TO CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT
General
Our Board of Directors has approved, and is hereby soliciting stockholder approval of an
amendment to our certificate of incorporation to effect a reverse stock split of our Class A common
stock and Class B common stock at a specific ratio to be
determined by the Board of Directors in its sole discretion of
not less than one-for-five and not more than one-for-ten (the Reverse Split Ratio) substantially in the
form set forth in Appendix A to this proxy statement (the Reverse Stock Split Amendment). A vote
in favor of this Proposal 2 will constitute approval of the Reverse Stock Split Amendment providing
for the combination of any whole number of shares of common stock between and including five and
ten into one share of common stock and will grant our Board of Directors the authority to select
any exchange ratio within that range to be implemented. If stockholders approve this proposal, our
Board of Directors will have the authority, but not the obligation, in its sole discretion and
without further action on the part of the stockholders, to select one of the approved reverse stock
split ratios and effect the approved reverse stock split by filing the Reverse Stock Split
Amendment with the Secretary of State of the State of Delaware at any time after the approval of
the Reverse Stock Split Amendment. If the Reverse Stock Split Amendment has not been filed with the
Secretary of State of the State of Delaware by June 9, 2011, the Board of Directors will abandon the Reverse Stock Split Amendment. If the
reverse stock split is implemented, the Reverse Stock Split Amendment would not change the par
value of a share of our common stock. Except for any changes as a result of the treatment of
fractional shares, each stockholder will hold the same percentage of common stock outstanding
immediately prior to the reverse stock split as such stockholder held immediately prior to the
reverse stock split. Our Board of Directors believes that stockholder approval of an exchange ratio
range (rather than an exact exchange ratio) provides the Board of Directors with maximum
flexibility to achieve the purposes of the reverse stock split. If the stockholders approve
Proposal 2, the reverse stock split will be effected, if at all, only upon a determination by the
Board of Directors that the reverse stock split is in the Companys and the stockholders best
interests at that time. In connection with any determination to effect the reverse stock split, the
Board of Directors will set the time for such a split and select a specific ratio within the range.
These determinations will be made by the Board of Directors with the intention to create the
greatest marketability for our common stock based upon prevailing market conditions at that time.
The Board of Directors reserves its right to elect to abandon the reverse stock split if it
determines, in its sole discretion, that this proposal is no longer in the best interests of the
Company and its stockholders.
Reasons For The Reverse Stock Split
Nasdaq Compliance
Our Class A common stock is currently listed on the Nasdaq Global Market under the symbol
SBSA. Our Board of Directors authorized the reverse stock split of our Class A common stock and
Class B common stock with the primary intent of increasing the per share trading price of our Class
A common stock so that we may regain compliance with the $1.00 minimum bid price requirement set
forth in Nasdaq Listing Rule 5450(a)(1). The Company has no plans, commitments, arrangements,
understandings or agreements to issue any shares of Class A common stock or Class B common stock
made available because of the reverse stock split.
As we initially announced on October 18, 2010, we received a notice from Nasdaq on October 12,
2010 indicating that we failed to comply with the minimum bid price requirement set forth in Nasdaq
Listing Rule 5450(a)(1) for continued listing of our common stock on the Nasdaq Global Market
because the bid price of our common stock closed under $1.00 per share for 30 consecutive business
days. The notice also stated that, in accordance with Nasdaq Listing Rule 5810(c)(3)(A), we would
be provided 180 calendar days, or until April 11, 2011, to regain compliance with the minimum bid
price requirement. To regain compliance, the closing bid price of our common stock had to remain at
or above $1.00 per share for a minimum of 10 consecutive trading days prior to the market close on
April 11, 2011.
We did not regain compliance with the $1.00 minimum bid price requirement by April 11, 2011.
Accordingly, on April 12, 2011, we received written notification from Nasdaq (the Staff
Determination) that unless we requested a hearing before the Nasdaq Listing Qualifications Panel
(the Panel) on or before 4:00 p.m. Eastern Time on April 19, 2011, our Class A common stock would
be delisted from The Nasdaq Global Market at the opening of business on April 21, 2011.
On April 15, 2011, we requested a hearing before the Panel to appeal the Staff Determination
in order to present our plan to address the minimum bid price deficiency (the Appeal). A hearing
is scheduled on May 12, 2011. At the hearing, we will provide Nasdaq with a specific plan of how we
intended to regain compliance with the minimum bid price deficiency, including a time frame for
completion of such plan. We will include in that plan a proposed reverse stock split to increase
the per share trading price of our Class A common stock if our stock price did not meet the minimum
bid requirements.
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Investor Interest
We also believe that the reverse stock split should make our Class A common stock more
attractive to institutional and other investors, as the current market price of
our Class A common stock may affect its acceptability to certain institutional investors,
professional investors and other members of the investing public. In addition, many institutional
investors may be prohibited from purchasing stocks below certain minimum price levels. For the same
reason, brokers may be reluctant to recommend lower-price stocks to their clients, or may
discourage their clients from purchasing such stocks. Other investors may be dissuaded from
purchasing lower-price stocks because the commission, as a percentage of the total transaction,
tends to be higher for such stocks. To the extent that the price per share of our Class A common
stock remains at a higher per share price as a result of the reverse stock split, some of these
concerns may be ameliorated.
Fees
The reverse stock split would also reduce certain of our costs, such as the Nasdaq listing
fees.
Accordingly, for the foregoing reasons, the Company believes that effecting the reverse stock split
would be in the Companys and our stockholders best interests.
Certain Risks Associated with the Reverse Stock Split
In theory, an up to 1-for-10 reverse stock split should cause the trading price of Class A
common stock after the reverse stock split to be up to ten times what it would have been if the
reverse stock split had not taken place, depending on the ratio selected by the Board, however,
this may not necessarily be the case. Other factors, such as financial results, market conditions,
and the market perception of our business may adversely affect the market price of our Class A
common stock. In addition, the Company also considered other various negative factors associated
with reverse stock splits including the negative perception of
reverse stock splits held by some
investors, analysts and other stock market participants, the fact that the stock price of some
companies that have implemented reverse stock splits has subsequently declined back to pre-reverse
stock split levels, the adverse effect on liquidity that may be caused by a reduced number of
shares outstanding, the potential concomitant downward pressure decreased liquidity could have on
trading price, and the costs associated with implementing a reverse stock split. As a result, there
can be no assurance that the reverse stock split, if completed, will result in the intended
benefits described above.
If the reverse stock split is effectuated, stockholders will own a fewer number of shares than
they currently own (a number equal to the number of shares owned immediately prior to the reserve
stock split divided by a number up to ten). While we expect that the reverse stock split will
result in an increase in the per share price of our Class A common stock, the reverse stock split
may not increase the per share price of our Class A common stock in proportion to the reduction in
the number of shares of our Class A common stock outstanding. It also may not result in the
permanent increase of the per share price, which depends on many factors. The history of similar reverse stock splits for
companies in similar circumstances is varied.
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The Proposed Reverse Stock Split Amendment
Pursuant to the Reverse Stock Split Amendment, a specified number of outstanding shares of
Class A common stock and Class B common stock, not less
than five and not to exceed ten, would be combined and
would become one share of Class A common stock or one share of Class B common stock,
respectively. The Board of Directors has the authority, but not the obligation, in its sole
discretion, to select the exact ratio for the reverse stock split and
implement the Reverse Split Ratio
without further action on the part of stockholders. This was done in order to give the Board of
Directors flexibility and allow it to consider various factors at the time of implementation of the
Reverse Split Ratio, including prevailing market and economic conditions, the historical and projected
performance of the Class A common stock and trading volumes, and the projected impact of the Reverse Split
Ratio on trading liquidity, among other factors.
As of the Record Date, the Company had 41,669,805 shares of Class A common stock outstanding
and 23,403,500 shares of Class B common stock outstanding. Based on the number of shares currently
issued and outstanding, immediately following the reverse stock split
and assuming a 1-for-10 split,
the Company would have approximately 4,166,981 shares of Class A common stock outstanding and
2,340,350 shares of Class B common stock outstanding (although this estimate does not give effect
to rounding for fractional shares). The total authorized shares of Class A common stock is
100,000,000 and the total authorized shares of Class B common stock is 50,000,000. The number of
authorized shares and the par value of the Class A common stock and Class B common stock will not be changed in
connection with the Reverse Stock Split Amendment. In addition, the split will not affect any Class A or Class B
holders proportionate voting power (subject to the treatment of fractional shares), and all shares
of Class A common stock and Class B common stock will remain fully paid and non-assessable.
The number of authorized shares of the Companys Series C
convertible preferred stock will not be
affected in any way by the reverse stock split. If the reverse stock
split is effected, the conversion ratio of the Series C convertible
preferred stock into Class A common stock will be adjusted, using the same Reverse Split Ratio.
Fractional Shares
In
lieu of issuing fractional shares as a result of the reverse stock
split, the Company will round up to the nearest whole share in the event the stockholder
would be entitled to receive less than one share of Class A common stock or Class B common stock.
Effective Date
The effective date of the reverse stock split (the Effective Date), if implemented by our
Board of Directors, will be the date and time on which the Reverse Stock Split Amendment is
accepted and recorded by the Delaware Secretary of State (subject to any specific future time and
date of effectiveness stated therein) in accordance with Section 103 of the DGCL, which is
anticipated to be on or about June 9, 2011.
If, at any time prior to the filing of the Reverse Stock Split Amendment, our Board of
Directors, in its discretion, determines that the reverse stock split is no longer in our best
interests or in the best interests of our stockholders, the reverse stock split may be abandoned,
without any further action by our stockholders. If the trading price of our Class A common stock
was to increase so that we were to regain compliance with the $1.00 minimum bid price requirement
set forth in Nasdaq Listing Rule 5450(a)(1) prior to implementing the reverse stock split, it is
unlikely that the Board of Directors would implement the reverse stock split.
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Effects Of The Reverse Stock Split
General
If we determine to implement the reverse stock split, the principal result will be to
proportionately decrease the number of outstanding shares of our Class A common stock and Class B
common stock based on the Reverse Split Ratio. Our Class A common stock is currently registered
under Section 12(b) of the Exchange Act, and we are subject to the periodic reporting and other
requirements of the Exchange Act. The reverse stock split will not affect the registration of our
Class A common stock under the Exchange Act or the listing of our Class A common stock on the
Nasdaq Global Market. However, the CUSIP number of our Class A common stock will change as a result
of the reverse stock split.
Proportionate voting rights and other rights of the holders of our Class A common stock and
Class B common stock will not be affected by the reverse stock split, other than as a result of the
rounding up for fractional shares as described above. For example, a holder of 2.0% of the voting
power of the outstanding shares of our Class A common stock and Class B common stock immediately
prior to the Effective Date will generally continue to hold 2.0% of the voting power of the
outstanding shares of our Class A common stock and Class B common stock immediately after the
reverse stock split. The number of stockholders of record will not be affected by the reverse stock
split. If implemented, the reverse stock split may result in some stockholders owning odd lots of
less than 100 shares of our Class A common stock. Odd lot shares may be more difficult to sell, and
brokerage commissions and other costs of transactions in odd lots are generally somewhat higher
than the costs of transactions in round lots of even multiples of 100 shares. We believe,
however, that these potential negative effects are outweighed by the benefits of the reverse stock
split.
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Effect on Class B common stock
Raúl
Alarcón, Jr. beneficially owns all 23,400,000 of the issued and outstanding shares of our
Class B common stock, which are neither publicly traded nor listed on any exchange. Our third
amended and restated certificate of incorporation provides that, in the case of any split of our
Class A common stock, the shares of our Class B common stock will also be split so that the number
of shares of our Class A common stock and Class B common stock outstanding immediately following
such split will bear the same relationship to each other as that which existed immediately prior to
such split. Accordingly, our Board of Directors authorized the reverse stock split of our Class B
common stock on the same basis and at the same Reverse Split Ratio as the Class A common
stock.
Effect on Series C convertible preferred stock
As
of May 9, 2011, there were 380,000 shares of Series C convertible preferred stock, par
value $.01 per share, issued and outstanding, which are convertible into 7,600,000 shares of Class
A common stock. Every share of our Series C convertible preferred stock is convertible into 20
shares of Class A common stock. If the reverse stock split is effected, the conversion ratio of the
Series C convertible preferred stock will be automatically proportionally adjusted, using the same
Reverse Split Ratio, pursuant to the Certificate of Designation of the Series C
convertible preferred stock. If a 1-for-10 reverse stock split ratio is used, the Series C convertible
preferred stock will then be convertible into 760,000 shares of Class A common stock.
Effect On Our Stock Plan
As
of May 9, 2011, there were approximately
1,911,700 outstanding stock options
under our Stock Option Plan For Non-Employee Directors,
Employee Incentive Stock Option Plan and Omnibus Equity Compensation Plan (the Stock
Plan). If the reverse stock split is effected, the Company expects that the number of all
outstanding equity awards will be proportionately adjusted by our Compensation Committee, using the
Reverse Split Ratio, pursuant to its existing authority under the Stock Plan to do so.
It is anticipated that the number of authorized shares under our Stock Plan will be adjusted and
the exercise price for each stock option will be increased such that upon an exercise, the
aggregate exercise price payable by the optionee to the Company would remain the same.
Accounting Matters
Pursuant to the reverse stock split, the par value of our Class A common stock and Class B
common stock each will remain $0.0001 per share. As a result of the reverse stock split, on the
Effective Date, the stated capital on our balance sheet attributable to our Class A common stock
and Class B common stock, respectively, will be reduced
proportionately based on the Reverse Split Ratio, and the additional paid-in capital account shall be credited with the amount by which
the stated capital is reduced. Our stockholders equity, in the aggregate, will remain unchanged.
No
Going Private Transaction
The Company currently has no
intention to go private, and the reverse stock split is not intended to be the first step in a going
private transaction and will not have the effect of a going private transaction under Rule 13e-3
of the Exchange Act.
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Exchange of Stock Certificates
Broadridge
Corporate Issuer Solutions, Inc., the Companys transfer agent (the Transfer Agent),
will act as exchange agent for purposes of implementing the exchange of stock certificates, and is
sometimes referred to as the exchange agent. As soon as practicable after the Effective Time, a
letter of transmittal will be sent to stockholders of record as of the Effective Time for purposes
of surrendering to the exchange agent certificates representing pre-reverse stock split shares in
exchange for certificates representing post-reverse stock split shares in accordance with the
procedures set forth in the letter of transmittal. No new certificates will be issued to a
stockholder until such stockholder has surrendered such stockholders outstanding certificate(s),
together with the properly completed and executed letter of transmittal, to the exchange agent.
From and after the Effective Time, any certificates formerly representing pre-reverse stock split
shares which are submitted for transfer whether pursuant to a sale, other disposition or otherwise,
will be exchanged for certificates representing post-reverse stock split shares. A stockholder will
not be entitled to receive any dividends or distributions payable after the Effective Time until
that stockholder surrenders and exchanges his or her certificates. STOCKHOLDERS SHOULD NOT DESTROY
ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
Street Name and Book-Entry Holders
Upon the reverse stock split, the Company intends to treat shares held by stockholders in
street name through a bank, broker or other nominee, in the same manner as stockholders whose
shares are registered in their own names. Banks, brokers and other nominees will be instructed to
effect the reverse stock split for their beneficial holders. These brokers, banks and other
nominees may have other procedures for processing the transaction, however, and stockholders
holding in street name are encouraged to ask their brokers, banks or other nominees any questions
they may have regarding such procedures.
Stockholders who hold some or all of their shares in electronic book-entry form with the
Transfer Agent do not have certificates evidencing their ownership and need not take any action to
receive their post-reverse stock split shares. Rather, a statement will be sent automatically to
any such stockholders address of record indicating the effects of the transaction, including the
number of shares of Class A common stock held following the reverse stock split.
No Appraisal Rights
Stockholders have no rights under Delaware law, our third amended and restated certificate of
incorporation or our amended and restated bylaws to exercise dissenters rights of appraisal with
respect to the reverse stock split.
Dilution
and Anti-Takeover Effect
Because the Company
will not reduce the number of shares of common stock
the Company is authorized to issue in the Reverse Stock Split Amendment, the overall effect will
be an increase in authorized but unissued shares of common stock as a result of the reverse stock
split. These shares may be issued at the Board of Directors discretion. Any future issuances will
have the effect of diluting the percentage of stock ownership and voting rights of the present
holders of common stock. This will increase the ability of the Board
of Directors to issue authorized and
unissued shares without further stockholder action. The issuance in the future of such additional
authorized shares may have the effect of diluting the earnings per share and book value per share,
as well as the stock ownership and voting rights, of the currently outstanding shares of our
common stock. The Company does not presently have any contractual obligations or any plans,
arrangements or understandings to issue additional shares of its common stock. The effective
increase in the number of authorized but unissued shares of our common stock may be construed as
having an anti-takeover effect by permitting the issuance of shares to purchasers who might
oppose a hostile takeover bid or oppose any efforts to amend or repeal certain provisions of the
Company's articles of incorporation or bylaws.
Certain Federal Income Tax Consequences of the Reverse Stock Split
The following discussion is a summary of certain federal income tax consequences of the
reverse stock split to us and to holders of our common stock that hold such stock as a capital
asset for federal income tax purposes. This discussion is based on laws, regulations, rulings and
decisions in effect on the date hereof, all of which are subject to change (possibly with
retroactive effect) and to differing interpretations. This discussion applies only to holders that
are U.S. persons and does not address all aspects of federal income taxation that may be relevant
to holders in light of their particular circumstances or to holders who may be subject to special
tax treatment under the Internal Revenue Code of 1986, as amended, including, without limitation,
holders who are dealers in securities or foreign currency, foreign persons, insurance companies,
tax-exempt organizations, banks, financial institutions, broker-dealers, holders who hold our
common stock as part of a hedge, straddle, conversion or other risk reduction transaction, or who
acquired our common stock pursuant to the exercise of compensatory stock options, the vesting of
previously restricted shares of stock or otherwise as compensation.
We have not sought, and will not seek, an opinion of counsel or a ruling from the Internal
Revenue Service regarding the federal income tax consequences of the reverse stock split. The
following summary does not address the tax consequences of the reverse stock split under foreign,
state, or local tax laws. ACCORDINGLY, EACH HOLDER OF COMMON STOCK SHOULD CONSULT HIS, HER OR ITS
TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT TO SUCH
HOLDER.
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The federal income tax consequences for a holder of our common stock pursuant to the reverse
stock split will be as follows:
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the holder should not recognize any gain or loss for federal income tax purposes; |
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the holders aggregate tax basis of the common stock received pursuant to the reverse
stock split (including that with respect to any post-reverse stock split fractional shares
received as a result of the Companys rounding up of pre-reverse stock split fractional
shares in connection with the Transaction) should be equal to the aggregate tax basis of
such holders common stock surrendered in exchange therefor; |
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the holders holding period for the common stock received pursuant to the reverse stock
split (including that with respect to any post-reverse stock split fractional shares
received as a result of the Companys rounding up of pre-reverse stock split fractional
shares in connection with the Transaction) should include such holders holding period for
the common stock surrendered in exchange therefor; and |
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we should not recognize gain or loss as a result of the reverse stock split. |
Vote Required
The affirmative vote of the holders of a majority of the outstanding shares of Class A common stock
and Class B common stock entitled to vote at the Annual Meeting will be required to approve the
Reverse Stock Split Amendment.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT EACH HOLDER OF CLASS A COMMON STOCK AND EACH
HOLDER OF CLASS B COMMON STOCK VOTE FOR THE PROPOSAL TO AUTHORIZE THE BOARD OF DIRECTORS IN ITS
SOLE DISCRETION TO APPROVE AN AMENDMENT TO OUR CERTIFICATE OF
INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF OUR
CLASS A COMMON STOCK AND CLASS B COMMON STOCK BY A RATIO OF NOT LESS THAN ONE-FOR-FIVE AND NOT MORE
THAN ONE-FOR-TEN, WITH THE EXACT RATIO TO BE SET AT A WHOLE NUMBER WITHIN THIS RANGE AS DETERMINED
BY OUR BOARD OF DIRECTORS IN ITS SOLE DISCRETION.
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PROPOSAL
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RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2011
General
Upon recommendation of the Audit Committee, our Board of Directors has appointed KPMG LLP as
our independent registered public accounting firm for Fiscal Year 2011. The stockholders are asked
to ratify this action of the Board of Directors. Stockholder ratification of the selection of KPMG
LLP as our independent registered public accounting firm for Fiscal Year 2011 is not required by
our By-Laws, or otherwise, but is being pursued as a matter of good corporate practice. If
stockholders do not ratify the selection of KPMG LLP as our independent registered public
accounting firm for Fiscal Year 2011, our Board of Directors will reconsider the selection our
independent registered public accounting firm for Fiscal Year 2011. Even if the appointment is
ratified, our Board of Directors, upon the recommendation of our Audit Committee, may select a
different independent registered public accounting firm at any time during Fiscal Year 2011 if
it determines such a change would be in our best interests and the best interests of our
stockholders.
It is anticipated that one or more representatives of KPMG LLP will be present at the Annual
Meeting with an opportunity to make a statement, if desired, and will be available to answer
appropriate questions from stockholders who are present.
Vote Required
The affirmative vote of the holders of a majority of the votes represented at the Annual
Meeting in person or by proxy is required to ratify the Board of Directors appointment of KPMG LLP
as our independent registered public accounting firm for Fiscal Year 2011.
Recommendation of the Board of Directors:
THE BOARD UNANIMOUSLY RECOMMENDS THAT EACH HOLDER OF CLASS A COMMON STOCK AND EACH HOLDER OF CLASS
B COMMON STOCK VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2011.
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STOCKHOLDER PROPOSALS FOR 2012 ANNUAL MEETING
Under the rules and regulations of the SEC, stockholder proposals intended to be presented in
our proxy statement for the annual meeting of stockholders to be held in 2012 must be received by us at
our principal executive offices at 2601 South Bayshore Drive, PH 2,
Coconut Grove, Florida 33133, in writing by certified mail, return receipt requested, Attention: Melanie M. Montenegro, General Counsel, no later than the close of business on December 31, 2011. However,
if the 2012 annual meeting does not occur between May 2, 2012 and July 1, 2012, the notice must be
received no earlier than 120 days before the 2012 annual meeting and not later than the close of
business on the later of 90 days before the 2012 annual meeting or 10 days following the day on
which public announcement of the 2012 annual meeting is first made.
The notice must set forth the security holders name and address as they appear on our books
and the class and number of shares of common stock beneficially owned by such security holder.
Additionally, the notice must set forth, as to each person whom the security holder proposes to
nominate for election as a director, all information relating to such person required to be
disclosed pursuant to Regulation 14A under the Securities Exchange Act of 1934 (including such
persons written consent to being named as a nominee and to serving as a director if elected).
ANNUAL REPORT
Our 2010 Annual Report on Form 10-K, containing our consolidated financial statements, is
available on the Internet at www.proxyvote.com . The 2010 Annual Report on Form 10-K is not
incorporated in this Proxy Statement and is not deemed to be a part of the proxy solicitation
material.
Any beneficial or record owner of our securities on the Record Date of April 11, 2011 may
request and receive without charge a copy of our 2010 Annual Report on Form 10-K, including the
consolidated financial statements and financial statement schedules thereto. Such request should be
in writing and addressed to: Spanish Broadcasting System, Inc., 2601 South Bayshore Drive, PH 2,
Coconut Grove, Florida 33133, Attention: Melanie M. Montenegro, General Counsel.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not know of any other
matter which will be brought before the Annual Meeting. However, if any other matter properly comes
before the Annual Meeting, or any adjournment thereof, the person or persons voting the proxies
will vote on such matters in accordance with their best judgment and discretion.
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By Order of the Board of Directors |
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![-s- Raúl Alarcón, Jr.](c16883c1688302.gif) |
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Raúl Alarcón, Jr. |
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Chairman of the Board of Directors, President and Chief Executive Officer |
Coconut Grove, Florida
May 9, 2011
43
Appendix A
CERTIFICATE OF AMENDMENT
TO THE
THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
SPANISH BROADCASTING SYSTEM, INC.
Pursuant to Section 242 of
the General Corporation Law
of the State of Delaware
SPANISH BROADCASTING SYSTEM, INC. (the Corporation) organized and existing under and by
virtue of the provisions of the General Corporation Law of the State of Delaware, does hereby
certify as follows:
FIRST: Upon the filing and effectiveness (the Effective Time) pursuant to the General
Corporation Law of the State of Delaware of this Certificate of Amendment to the Corporations
Third Amended and Restated Certificate of Incorporation, Article Five of the Third Amended
and Restated Certificate of Incorporation is amended by adding
Section 5.8 as follows:
5.8
Reverse Stock Split. Each [ ( )] shares of the Corporations Class
A common stock, par value $.0001 per share (the Class A common stock), and Class B common
stock, par value $.0001 per share (the Class B common stock), issued and outstanding
immediately prior to the Effective Time shall automatically be combined into one (1) validly
issued, fully paid and non-assessable share of Class A common stock and Class B common stock,
respectively, without any further action by the Corporation or the holders thereof. No
fractional shares shall be issued and instead, a fraction of a share will be rounded up to one
whole share. Each certificate that immediately prior to the Effective Time represented shares
of Class A common stock or Class B common stock, as the case may be (the Old Certificates),
shall thereafter represent that number of shares of Class A common stock or Class B common
stock, as the case may be, into which the shares of Class A common stock or Class B common
stock, as the case may be, represented by the Old Certificate shall have been combined,
subject to the rounding up of fractional share interests as described above.
SECOND: This Certificate of Amendment shall become effective as of June [ ], 2011
at 11:59 p.m., Eastern Standard Time.
THIRD: This Certificate of Amendment was duly authorized by the Corporations Board of
Directors and adopted by the Corporations stockholders at the
Annual Meeting of the Stockholders in accordance with the
provisions of Section 242 of the General Corporation Law of the State of Delaware.
A-1
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be duly
executed in its corporate name as of the [ ] day of June, 2011.
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SPANISH BROADCASTING SYSTEM, INC.
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By: |
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Name: |
Raúl Alarcón, Jr. |
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Title: |
President and Chief Executive Officer |
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A-2
SPANISH BROADCASTING SYSTEM, INC.
2601 SOUTH BAYSHORE DRIVE, PH2
COCONUT GROVE, FL 33133
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m.
Eastern Time on May 30, 2011. Have your proxy card in hand when you access the web site and follow the instructions to
obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future
proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery,
please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access
proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on May 30, 2011.
Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and
return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW
IN BLUE OR BLACK INK AS FOLLOWS: |
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M35643-P13144 |
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KEEP THIS PORTION FOR YOUR RECORDS |
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
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DETACH AND RETURN THIS PORTION ONLY |
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SPANISH BROADCASTING SYSTEM, INC. |
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To withhold authority to vote for any individual
nominee(s), mark For All Except and write the number(s) of the
nominee(s) on the line below. |
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The Board of Directors recommends that you vote FOR
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1. |
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Election of Directors |
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Nominees: |
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01) Raúl Alarcón, Jr.
02) Joseph A. García
03) José A. Villamil
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04) Mitchell A. Yelen
05) Manuel E. Machado
06) Jason L. Shrinsky
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The Board of Directors recommends you vote FOR proposals 2 and 3.
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Abstain |
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To authorize the Board of Directors in its sole discretion to approve an
amendment to Spanish Broadcasting System Inc.s certificate of incorporation to effect a reverse stock split for our Class A
common stock and Class B common stock by a ratio of not less than one-for-five and not more than one-for-ten, with the exact ratio
to be set at a whole number within this range as determined by our Board of Directors in its sole discretion.
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To ratify the appointment of KPMG LLP as our Independent Registered Public
Accounting Firm for the fiscal year ending December 31, 2011.
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IF A CHOICE IS NOT SPECIFIED WITH RESPECT TO ANY PROPOSAL, THIS PROXY WILL BE VOTED FOR SUCH PROPOSAL.
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Yes |
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No |
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Please indicate if you plan to attend this
meeting. |
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Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor,
administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All
holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX] |
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Signature (Joint Owners) |
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Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to
be Held on June 1, 2011:
The Notice & Proxy Statement and Annual Report are available at www.proxyvote.com.
M35644-P13144
SPANISH BROADCASTING SYSTEM, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 1, 2011
The undersigned, acknowledging receipt of (1) the notice
of the annual meeting of stockholders to be held on June 1, 2011 at 1:00 p.m., Eastern Daylight Time, at the corporate offices of
Spanish Broadcasting System, Inc., SBS Tower, 2601 South Bayshore Drive, PH2, Coconut Grove, Florida 33133, (2) the Proxy Statement
relating to the meeting, and (3) the 2010 Annual Report on Form 10-K, hereby revokes all prior proxies and appoints Raúl Alarcón, Jr.
and Joseph A. García, and each of them acting singly, with full power of substitution, as proxies to represent and vote on behalf of the
undersigned, as designated herein, all shares of Class A common stock, par value $0.0001 per share, and all shares of Class B common
stock, par value $0.0001 per share, of Spanish Broadcasting System, Inc., a Delaware corporation, that the undersigned would be entitled
to vote if present in person at the annual meeting of stockholders and any adjournment or adjournments thereof. These proxies are
authorized to vote in their discretion upon such other matters as may properly come before the annual meeting or any adjournment(s)
thereof. IF A CHOICE IS NOT SPECIFIED WITH RESPECT TO ANY PROPOSAL, THIS PROXY WILL BE VOTED FOR SUCH PROPOSAL.
Attendance of the undersigned at the annual meeting will not
be deemed to revoke this proxy unless the undersigned shall revoke this proxy in writing or shall vote in person at the annual meeting.
EACH STOCKHOLDER SHOULD SIGN THIS PROXY PROMPTLY AND RETURN IT IN THE ENCLOSED ENVELOPE. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF SPANISH BROADCASTING SYSTEM, INC.
Continued and to be signed on reverse side