Cumulus Media employees nervous about their 2017 incentive bonuses, given the radio broadcasting company’s Chapter 11 bankruptcy organization, need not fret about forgetting about the added bounce to their bank accounts.
Shelley Chapman, Judge for the U.S. Bankruptcy Court for the Southern District of New York, has given the green light to Cumulus’ Incentive Compensation Programs.
Chapman’s order means hundreds of employees will see the pay out of their 2017 incentive bonuses, tied to the Cumulus 2017 and 2018 Incentive Compensation Programs.
However, consideration of two bonus programs — the “QIP” and “SIP” incentive programs Cumulus administers — were adjourned until March 12.
Four bonus programs did get the judge’s approval on Thursday (2/8), and Cumulus is “authorized to take all actions necessary” to implement the bonus payments.
What remains under review is Cumulus’ Quarterly Incentive Plan, the QIP. This was first revealed on May 18, 2017 in an SEC filing. This move saw Cumulus’ Board of Director shift from an annual to a quarterly compensation plan for 2017.
Additionally, the board adopted a supplemental incentive plan for 2017, the so-called SIP.
This was done after being instructed to do so by the board’s Compensation Committee and the committee’s independent compensation consultant.
Awards to named executive officers under the 2017 Quarterly Incentive Plan (QIP) are based on Cumulus achieving budgeted adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) levels. The target cash incentive award opportunity available to each named executive officer under the 2017 QIP is calculated as a percentage of each named executive officer’s base salary, all in accordance with the terms of each officer’s existing employment agreement. This means that performance is measured at the end of each quarter.
If target performance levels for the year-to-date period have been met or exceeded at the end of each quarter, 25% of the total annual target bonus will be awarded following the applicable quarter end date.
Simply put—If target performance levels for the year-to-date period aren’t met, there’s no bonus.
If Cumulus met or exceeded the full-year 2017 maximum EBITDA goal, each named executive officer is entitled under the 2017 QIP to a total payout for the full year equal to 150% of his or her respective 2017 QIP target award opportunity.
Cumulus’ SIP was adopted to, among other things, “further align key senior operating executives’ interests with those of stakeholders in light of the decline in value of outstanding equity awards.”
The 2017 SIP provides participants the opportunity to earn cash payments in rate-able installments over the three remaining fiscal quarters of 2017, based on the company’s year-to-date performance at the end of the respective period.
In order to be eligible to participate in the 2017 SIP, participants must agree to the cancellation of all of their respective outstanding equity incentive awards.
Under the 2017 SIP, target award opportunities are $1.47 million for CEO Mary Berner; $587,500 for EVP/Treasurer and CFO John Abbot; $480,000 for General Counsel Richard Denning; and $120,000 for Suzanne Grimes, Cumulus’ EVP/Corporate Marketing and President of Cumulus’ Westwood One division.
