DEF 14A 1 evc-def14a_20210527.htm EVC-DEF 14A 2021 evc-def14a_20210527.htm
Entravision Communications Corporation
Shareholder Annual Meeting in a DEF 14A on 04/30/2021   Download
SEC Document
SEC Filing

 

 

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

 

 

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Definitive Proxy Statement

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Soliciting Material Pursuant to §240.14a-12

Entravision Communications Corporation

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2425 Olympic Blvd., Suite 6000 West
Santa Monica, California 90404

 

NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON MAY 27, 2021

To Our Class A and Class B Stockholders:

You are cordially invited to attend the 2021 Annual Meeting of Stockholders (the “2021 Annual Meeting”) of Entravision Communications Corporation (the “company”, “we”, “our” or “us”), beginning promptly at 10:00 a.m. Pacific Daylight Time on Thursday, May 27, 2021, for the following purposes:

1. To elect seven directors to our Board of Directors (the “Board”); and

2. To amend the Entravision Communications Corporation 2004 Equity Incentive Plan, as previously amended (the “2004 Plan”) to (i) extend the end of the term of the 2004 Plan to ten years after the date of the 2021 Annual Meeting, until May 27, 2031, and (ii) increase the number of shares of our Class A common stock authorized for issuance under the 2004 Plan by 8,000,000 shares.

Due to the COVID-19 pandemic, the 2021 Annual Meeting will be a virtual meeting only. There is no physical location for the 2021 Annual Meeting and you will not be able to attend the 2021 Annual Meeting in person.

If you plan to participate, vote or submit questions during the 2021 Annual Meeting, please see “Instructions to Attend the 2021 Annual Meeting” on page 50 of the accompanying Proxy Statement or visit https://www.entravision.com/investor/annual-meeting/. You will be able to listen, vote and submit questions from your home or from any remote location that has Internet connectivity.

The matters to be acted upon are described more fully in the proxy statement accompanying this notice.

Our stockholders will also act upon such other business as may properly come before the meeting or any adjournment or postponement thereof. The Board is not aware of any other business to be presented to a vote of the stockholders at the 2021 Annual Meeting.

The Board has fixed the close of business on April 5, 2021 as the record date (the “Record Date”) for determining those stockholders who will be entitled to notice of and to vote at the 2021 Annual Meeting. The stock transfer books will remain open between the Record Date and the date of the 2021 Annual Meeting.

Representation of at least a majority in voting interest of our Class A common stock and our Class B common stock either in person or by proxy is required to constitute a quorum for purposes of voting on each proposal to be voted on at the 2021 Annual Meeting. Accordingly, it is important that your shares be represented at the 2021 Annual Meeting. WHETHER OR NOT YOU PLAN TO ATTEND THE 2021 ANNUAL MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE. Your proxy may be revoked at any time prior to the time it is voted at the 2021 Annual Meeting.

Please read the accompanying proxy material carefully. Your vote is important and we appreciate your cooperation in considering and acting on the matters presented.

 

By Order of the Board of Directors,

 

 

 

 

 

 

Walter F. Ulloa

Chairman and Chief Executive Officer

 

April 30, 2021

Santa Monica, California

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE

STOCKHOLDER MEETING TO BE HELD ON MAY 27, 2021:

THIS PROXY STATEMENT AND THE ANNUAL REPORT ARE AVAILABLE AT

https://investor.entravision.com/sec-filings/annual-reports-proxy-materials/default.aspx

 

 

 

 


 

 

Stockholders Should Read the Entire Proxy Statement

Carefully Prior to Returning Their Proxies

 

PROXY STATEMENT

FOR

2021 ANNUAL MEETING OF STOCKHOLDERS

OF

ENTRAVISION COMMUNICATIONS CORPORATION

To Be Held on May 27, 2021

This proxy statement is furnished in connection with the solicitation by our Board of Directors (the “Board”) of proxies to be voted at the 2021 Annual Meeting of Stockholders (the “2021 Annual Meeting”), beginning promptly at 10:00 a.m. Pacific Daylight Time on Thursday, May 27, 2021, and at any adjournments or postponements thereof, for the purpose set forth in the accompanying Notice of 2021 Annual Meeting of Stockholders (the “Notice”). This proxy statement and the proxy card are first being delivered or mailed to stockholders on or about May 3, 2021. In addition, stockholders may obtain additional copies of our Annual Report to Stockholders for the year ended December 31, 2020 (the “Annual Report”) and this proxy statement, without charge, by writing to us at our principal executive offices at 2425 Olympic Boulevard, Suite 6000 West, Santa Monica, California 90404, Attention: Secretary, or from our website at https://investor.entravision.com. Our Annual Report, which incorporates our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the “10-K”) without exhibits, is being mailed or otherwise provided to stockholders concurrently with this proxy statement. The Annual Report is not to be regarded as proxy soliciting material or as a communication by means of which any solicitation of proxies is to be made.

Due to the COVID-19 pandemic, the 2021 Annual Meeting will be a virtual meeting only, to be held via webcast over the Internet. There is no physical location for the 2021 Annual Meeting and you will not be able to attend the 2021 Annual Meeting in person.

If you plan to participate, vote or submit questions during the 2021 Annual Meeting, please see “Instructions to Attend the 2021 Annual Meeting” on page 50 of the accompanying Proxy Statement or visit https://www.entravision.com/investor/annual-meeting/. You will be able to listen, vote and submit questions from any location that has Internet connectivity.

VOTING RIGHTS AND SOLICITATION

The close of business on April 5, 2021 was the record date (the “Record Date”) for stockholders entitled to notice of and to vote at the 2021 Annual Meeting. As of the Record Date, we had 60,765,450 shares of Class A common stock, par value $0.0001 per share, and 14,927,613 shares of Class B common stock, par value $0.0001 per share, issued and outstanding. All of the shares of our Class A and Class B common stock outstanding on the Record Date, and only those shares, are entitled to vote on each of the proposals to be voted upon at the 2021 Annual Meeting. Holders of the Class A common stock of record entitled to vote at the 2021 Annual Meeting will have one vote for each share of Class A common stock so held with regard to each matter to be voted upon. Holders of the Class B common stock of record entitled to vote at the 2021 Annual Meeting will have 10 votes for each share of Class B common stock so held with regard to each matter to be voted upon.

All votes will be tabulated by the inspector of elections appointed for the 2021 Annual Meeting, who will separately tabulate affirmative and negative votes, abstentions and broker non-votes.

The holders of a majority in voting interest of the Class A common stock and Class B common stock outstanding and entitled to vote at the 2021 Annual Meeting shall constitute a quorum for the transaction of business at the 2021 Annual Meeting. The voting interest of shares of the Class A common stock and Class B common stock represented in person or by proxy will be counted for purposes of determining whether a quorum is present at the 2021 Annual Meeting. Shares which abstain from voting as to a particular matter will be treated as shares that are present and entitled to vote for purposes of determining the voting interest present and entitled to vote with respect to any particular matter, but will not be counted as votes cast on such matter. If a broker or nominee holding stock in “street name” indicates on a proxy that it does not have discretionary authority to vote as to a particular matter, those shares will not be considered as present and entitled to vote with respect to such matter and will not be counted as a vote cast on such matter.

 

 


 

 

In voting with regard to the proposal to elect directors (Proposal 1), stockholders may vote in favor of all the nominees, withhold their votes as to all nominees or withhold their votes as to one or more specific nominees. The vote required by Proposal 1 is governed by Delaware law and is a plurality of the votes cast by the holders of shares entitled to vote, provided that a quorum is present. As a result, in accordance with Delaware law, votes that are withheld and broker non-votes will not be counted and will have no effect on the voting for election of directors. Brokers do not have discretionary authority to vote on this proposal. Pursuant to the terms of a Voting Agreement between Walter F. Ulloa, Paul Anton Zevnik and certain of their affiliates effective as of April 29, 2020 (the “Voting Agreement”), which replaced a prior Voting Agreement dated August 3, 2000, Messrs. Ulloa and Zevnik have agreed to vote all shares held by them (i) in favor of the election of each of them as directors, (ii) in favor of the election of any other nominee for election as director as directed by Mr. Ulloa, and (iii) any time a matter other than election or removal of directors is submitted to the stockholders of the company, as directed by Mr. Ulloa. Messrs. Ulloa and Zevnik, and their affiliates, have in the aggregate the right to cast approximately 75.3% of the votes entitled to be cast in the election of directors.  See “Certain Relationships and Related Transactions—Voting Agreement.”

In voting with regard to the proposal to adopt the amendment to our 2004 Plan to extend the term by ten years and increase the number of shares of our Class A common stock authorized for issuance under the 2004 Plan by 8,000,000 shares (Proposal 2), stockholders may vote in favor of such proposal or against such proposal or may abstain from voting. The vote required to approve Proposal 2 is governed by Delaware law, and the minimum vote required is a majority of the total votes cast on such proposal, provided that a quorum is present. As a result, in accordance with Delaware law, abstentions and broker non-votes will not be counted and will have no effect on the outcome of the vote on this proposal. Pursuant to the Voting Agreement, the terms of which are more fully described above, Messrs. Ulloa and Zevnik have agreed to vote in favor of this proposal and will have in the aggregate the right to cast approximately 75.3% of the votes entitled to be cast on Proposal 2.

Under the rules of The New York Stock Exchange (the “NYSE”) that govern most domestic stock brokerage firms, member brokerage firms that hold shares in “street name” for beneficial owners may, to the extent that such beneficial owners do not furnish voting instructions with respect to any or all proposals submitted for stockholder action, vote in their discretion upon proposals which are considered “discretionary” proposals under the rules of the NYSE. Member brokerage firms that have received no instructions from their clients as to “non-discretionary” proposals do not have discretion to vote on these proposals. Such broker non-votes will not be considered in determining whether a quorum exists at the 2021 Annual Meeting and will not be considered as votes cast in determining the outcome of any proposal.  Under the rules of the NYSE as currently in effect, voting on directors by member broker firms is “non-discretionary”.

Shares of our common stock represented by proxies in the accompanying form which are properly executed and returned to us will be voted at the 2021 Annual Meeting in accordance with the stockholder’s instructions contained therein. In the absence of contrary instructions, shares represented by such proxies will be voted FOR the election of each of the director nominees named in this proxy statement in Proposal 1 and FOR Proposal 2. Management does not know of any matters to be presented at the 2021 Annual Meeting other than those set forth in this proxy statement and in the Notice accompanying this proxy statement. If other matters should properly come before the 2021 Annual Meeting, the proxyholders will vote on such matters in accordance with their best judgment.

Any stockholder has the right to revoke his, her or its proxy at any time before it is voted at the 2021 Annual Meeting by giving written notice to our Secretary, and by executing and delivering to the Secretary a duly executed proxy card bearing a later date, or by appearing at the 2021 Annual Meeting and voting in person; provided, however, that under the rules of the NYSE, any beneficial owner whose shares are held in “street name” by a member brokerage firm may revoke his, her or its proxy and vote his, her or its shares in person at the 2021 Annual Meeting only in accordance with the applicable rules and procedures of the NYSE.

The entire cost of soliciting proxies will be borne by the company. Proxies will be solicited principally through the use of the mails or electronically, but, if deemed desirable, may be solicited personally or by telephone, or special letter by our officers and regular employees for no additional compensation. Arrangements may be made with brokerage houses and other custodians, nominees and fiduciaries to send proxies and proxy material to the beneficial owners of our common stock, and such persons may be reimbursed for their expenses.

 

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PROPOSAL 1

ELECTION OF DIRECTORS

Composition of Board of Directors

As currently in effect, our bylaws provide that the Board shall consist of not less than six and not more than eleven directors. The Board currently consists of seven members elected by the holders of the Class A and Class B common stock, voting together as a class. The Board has nominated seven individuals for election as directors at the 2021 Annual Meeting and has set the number of directors as of the 2021 Annual Meeting at seven.  All our directors are elected by our stockholders at each annual meeting of stockholders and each will serve until such person’s successor is duly elected and qualified, or until such person’s earlier resignation or removal. There are no family relationships among any of our current directors, nominees for directors and executive officers.

The proxyholders named on the proxy card intend to vote all proxies received by them in the accompanying form FOR the election of each of the director nominees listed below, unless instructions to the contrary are marked on the proxy. Each nominee has been nominated by the Board, acting upon the recommendation of the Board’s Nominating/Corporate Governance Committee. All of the nominees are currently members of the Board. If elected, each nominee will serve until the annual meeting of stockholders to be held in 2022 or until such person’s successor has been duly elected and qualified, or until such person’s earlier resignation or removal.

In the event that a nominee is unable or declines to serve as a director at the time of the 2021 Annual Meeting, the proxies will be voted for any nominee who shall be designated by the present Board to fill such a vacancy. In the event that additional persons are nominated for election as directors, the proxyholders intend to vote all proxies received by them for each of the nominees listed below, unless instructions are given to the contrary. As of the date of this proxy statement, the Board is not aware of any nominee who is unable or will decline to serve as a director.

Nominees for Election as Directors

The following is certain information as of April 5, 2021 regarding the nominees for election as directors:

 

Name

 

Position

 

Age

Walter F. Ulloa

 

Chairman and Chief Executive Officer

 

72

Paul Anton Zevnik

 

Director

 

70

Gilbert R. Vasquez

 

Director

 

81

Patricia Diaz Dennis

 

Director

 

74

Juan Saldívar von Wuthenau

 

Director

 

54

Martha Elena Diaz

 

Director

 

59

Fehmi Zeko

 

Director

 

62

 

Biographical Information Regarding Directors

Walter F. Ulloa.    Mr. Ulloa, our Chairman and Chief Executive Officer since the company’s inception in 1996, has more than 40 years of experience in Spanish-language television and radio in the United States. From 1989 to 1996, Mr. Ulloa was involved in the development, management or ownership of our predecessor entities. From 1976 to 1989, he worked at KMEX-TV, Los Angeles, California, as Operations Manager, Production Manager, News Director, Local Sales Manager and an Account Executive. Mr. Ulloa has been a director since February 2000.

Paul Anton Zevnik.    Mr. Zevnik is a partner, resident in the Washington, D.C. and Los Angeles, California offices of the law firm of Morgan, Lewis & Bockius, LLP. Mr. Zevnik was involved in the development, management and ownership of our predecessor entities from 1989 to 1996. Mr. Zevnik is a graduate of Harvard College (A.B. magna cum laude 1972), Harvard University (A.M. 1972) and Harvard Law School (J.D. cum laude 1976). Mr. Zevnik has been a director since August 2000 and currently serves as our presiding or “lead” independent director.

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Gilbert R. Vasquez.  Mr. Vasquez is managing partner of the certified public accounting firm of Vasquez & Company LLP which he founded in 1969. He is past president of the California Board of Accountancy. Mr. Vasquez was an executive board member of the 1984 Olympic Organizing Committee and currently serves as a board member on its successor organization, the LA84 Foundation. Mr. Vasquez continues to serve as a board member of Manufacturers Bank and he is also the Chairman Emeritus of the Los Angeles Latino Chamber of Commerce. He has been a member of various Boards of Directors including Green Dot Public Schools, California State University Los Angeles Foundation, Los Angeles Metropolitan YMCA, Congressional Hispanic Caucus, Los Angeles Area Chamber of Commerce, National Association of Latino Elected and Appointed Officials and the National Council of La Raza. Other past corporate board appointments include Verizon (formerly) GTE of California, Glendale Federal Bank, ProAmerica Bank and Blue Cross of California. Mr. Vasquez has been a director since May 2007.

Patricia Diaz Dennis.  Patricia Diaz Dennis currently serves on the board of directors of Amalgamated Bank, chairing its Compensation and Human Resources Committee and serving on its Nominating and Corporate Governance Committee. Ms. Diaz Dennis is also a trustee emerita of the NHP Foundation, chairs the Sanctions Panel for The Global Fund, and serves on the World Affairs Council of San Antonio.  Ms. Diaz Dennis served in a variety of positions for the company originally known as SBC Communications, Inc. (“SBC”) which later became AT&T. Ms. Diaz Dennis was Senior Vice President and Assistant General Counsel of AT&T from August 2004 until she retired in November 2008. Previously, Ms. Diaz Dennis served as General Counsel and Secretary of SBC West from May 2002 until August 2004, as Senior Vice President of Regulatory and Public Affairs for SBC from November 1998 to May 2002 and as Senior Vice President and Assistant General Counsel of SBC from September 1995 to November 1998. Before joining SBC, Ms. Diaz Dennis was appointed by two Presidents and confirmed by the United States Senate to three federal government positions. Ms. Diaz Dennis was named a member of the National Labor Relations Board by President Ronald Reagan, where she served from 1983 until 1986. President Reagan later appointed Ms. Diaz Dennis as a commissioner of the Federal Communications Commission, where she served from 1986 until 1989. From 1989 to 1991, Ms. Diaz Dennis was at the law firm of Jones, Day, Reavis & Pogue, where she was a partner and communications group practice chair. In 1992, Ms. Diaz Dennis returned to public service when she was appointed by President George H. W. Bush as Assistant Secretary of State for Human Rights and Humanitarian Affairs, serving from 1992 until 1993. Ms. Diaz Dennis served as special counsel for communications matters to the law firm of Sullivan & Cromwell from 1993 until 1995. Ms. Diaz Dennis has served on the Boards and Board committees of a number of for-profit organizations, including Massachusetts Mutual Life Insurance Company from 1995 to 2017 and United States Steel Corporation from 2015 to 2021, and non-profit organizations, including the Girl Scouts of the USA, where she was Chair of the Board from 2005 to 2008. Ms. Diaz Dennis is a member of the California, Texas and District of Columbia bars, and is admitted to practice before the U.S. Supreme Court. Ms. Diaz Dennis previously served as one of our directors from July 2001 until October 2005 and rejoined the Board in May 2014.

Juan Saldívar von Wuthenau.  Mr. Saldívar has been our Chief Digital, Strategy and Accountability Officer since November 2020. He has also been the chief executive officer of JSW Servicios de Estrategia SC since July 2011, and is a partner at the venture fund Rise Capital. Prior to this, Mr. Saldívar held several positions at Televisa Corporación, S.A. de C.V. (“Televisa”), serving as president of Televisa Interactive Media from October 2003 until June 2011 and as Director of Planning and Strategy of Televisa Multimedia from July 2001 until October 2003. Before joining Televisa, Mr. Saldívar was the founder and Country Manager of Submarino.com in Mexico from 1999 until 2001. Mr. Saldívar currently serves on the board of directors of Travesías Editores SA de CV. He holds a degree in economics from the Instituto Tecnológico Autónomo de México and an MBA from the IESE Business School in Spain. Mr. Saldívar has been a director since May 2014.

Martha Elena Diaz. Ms. Diaz has provided strategic advisory services to companies in Latin America, such as National Geographic and Televicentro, since 2015. Previously, Ms. Diaz served as president of the Editorial Televisa subsidiary of Televisa for each of the United States, Mexico and Puerto Rico, and as president of Distribuidora Intermex, S.A. de C.V., a subsidiary of Grupo Televisa, S.A.B., from March 2012 until July 2015. Ms. Diaz also served as president of Sistema Radiópolis, S.A. de C.V., from December 2010 until February 2012. Prior to that, she served as a Director of TV Bids at Prisa Group, the Spanish media conglomerate, and as chief executive officer of Grupo Latino de Publicidad in Colombia. Ms. Diaz also served as president of Sky Colombia, a satellite television company, and chief executive officer of Supercable Colombia, a cable television company. Prior to her media career, Ms. Diaz served as Marketing Vice President of Banco de Colombia, and Commercial Vice President of the north zone of South America at Sofasa. Ms. Diaz currently serves on the board of directors of the Monasterio del Viento

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foundation in Colombia, which helps rural communities and environmental preservation efforts. She holds a degree in chemical engineering from the Universidad Pontificia Bolivariana and a postgraduate certificate as a marketing specialist from the Universidad EAFIT in Colombia. Ms. Diaz has been a director since May 2016.

Fehmi Zeko. Fehmi Zeko currently serves as Senior Advisor at CDX Advisors LLC and a General Partner at Great Point Media. Since March 2018, he has also served on the board of directors of Athene Holding Ltd., a retirement services company. From 2015 to March 2018, Mr. Zeko served as Vice Chairman, Global Technology, Media and Telecommunications Investment Banking Group at Bank of America Merrill Lynch. In this role he helped organize and execute the strategic plan to reposition the entire Technology, Media and Telecom franchise for large cap coverage globally. Prior to Bank of America Merrill Lynch, Mr. Zeko was Senior Managing Director, Group Head North America and Global Chairman, Telecom, Media, Entertainment and Technology (“TMET”) at Macquarie Capital, where he led the firm’s Global TMET Investment Banking and Principal Investing Practice. Prior to joining Macquarie Capital, Mr. Zeko was Vice Chairman and Co-Founder of the Foros Group, where he led the firm’s Media and Communication Advisory Practice. Prior to that, Mr. Zeko held senior investment banking positions at Deutsche Bank and Citigroup. He received his Bachelor of Business Administration and Master of Business Administration in Finance from Texas Christian University’s Neeley School of Business. Mr. Zeko has been a director since May 2019.

CORPORATE GOVERNANCE

We maintain a corporate governance page on our corporate website at www.entravision.com, which includes information regarding the company’s corporate governance practices. Our Corporate Governance Guidelines, Code of Business Conduct and Ethics, Code of Ethics for Chief Executive Officer and Senior Financial Officers, Related Party Transaction Policy, Board committee charters, Audit Committee Pre-Approval Policy and certain other corporate governance documents and policies are available on that page of our website. Any changes to these documents and any waivers granted with respect to our code of ethics will be posted on our website. In addition, we will provide a copy of any of these documents without charge to any stockholder upon written request made to Entravision Communications Corporation, 2425 Olympic Boulevard, Suite 6000 West, Santa Monica, California 90404, Attention:  Secretary. The information on our website is not, and shall not be deemed to be, a part of this proxy statement or incorporated by reference into this or any other filing we make with the Securities and Exchange Commission (the “SEC”).

Board of Directors

Director Independence

Our Board currently consists of seven members, a majority of whom meet the independence requirements of the NYSE as currently in effect. The Board has made independence determinations in accordance with NYSE listing standards, which state that a director will not be independent if:

(i) the director, or an immediate family member of the director, is, or within the last three years was, employed by the company or any of its subsidiaries;

(ii) the director, or an immediate family member of the director, has received, during any twelve-month period within the last three years, more than $120,000 in direct compensation from the company, other than director and committee fees, and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent on continued service);

(iii) the director, or an immediate family member of the director, is a current partner of a firm that is the company’s (or any of its subsidiaries) internal or external auditor; or is a current employee of such a firm; or who was, within the last three years (but is no longer), a partner or employee of such firm and personally worked on the company’s audit within that time;

(iv) the director, or an immediate family member of the director, is, or has been within the last three years, employed as an executive officer of another company where any of the company’s present executive officers at the same time serve or served on that company’s compensation committee; or

(v) the director is a current employee, or an immediate family member of such director is a current executive officer, of a company that has made payments to, or received payments from, the company for property or services in an amount, which, in any of the last three fiscal years, exceeds the greater of $1 million or two percent (2%) of such other company’s consolidated gross revenues.

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With respect to any relationship not covered above, the determination of whether the relationship is material, and therefore whether a director would be independent, will be made by those directors who satisfy the independence criteria set forth above.

In addition to the foregoing, the Board also makes such independence determinations with respect to its audit committee and compensation committee members after taking into account the additional independence and financial literacy standards for members of each such committee, as applicable, in accordance with and pursuant to the rules and regulations of the SEC and NYSE listing rules as currently in effect.

The Board has affirmatively determined that each of Messrs. Zevnik, Vasquez and Zeko and Mses. Diaz Dennis and Diaz are independent.  In addition, the Board has affirmatively determined that none of our independent directors has a material relationship with the company other than as a director, in accordance with the foregoing categorical standards.

In addition, our corporate governance guidelines provide that no member of the Board may serve on more than three public company boards of directors (in addition to ours) without first obtaining the prior approval of the Board. To our knowledge, no member of the Board serves on more than three public company boards of directors (in addition to ours) at this time.

Meetings of the Board

The Board held ten meetings and acted by written consent two times during 2020. Each of our incumbent directors attended 75% or more of the aggregate number of meetings of the Board and the committees on which such director served in 2020.

The company’s non-management directors meet regularly in executive session without management present to discuss certain Board policies, processes and practices, and other matters relating to the company and the functioning of the Board. Mr. Zevnik served as the presiding or “lead” independent director for such meetings during 2020.

Each of our directors is encouraged to attend the company’s annual meeting of stockholders and to be available to answer any questions posed by stockholders to such director. Because the Board holds one of its regular meetings following our annual meeting of stockholders, unless one or more members of the Board is unable to attend, all of the members of the Board are expected to attend the 2021 Annual Meeting. All of our incumbent directors attended our 2020 Annual Meeting of Stockholders.

Board Leadership

Our company is led by Walter Ulloa, who has served as both our Chief Executive Officer and Chairman of the Board since 2000. Since 2004, our Corporate Governance Guidelines provide for an independent lead director. The Board appointed Mr. Zevnik to serve as our lead director during 2020 and 2021.

The lead director is responsible for (i) convening and calling meetings of the independent directors; (ii) chairing executive sessions of the independent directors and communicating with management relating to these sessions; and (iii) if requested by stockholders, being available for direct communication. Our Corporate Governance Guidelines provide that our non-management directors meet regularly, and our independent directors meet annually, in executive session and that our independent lead director presides at these sessions.

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Our Board leadership structure is the traditional one most commonly utilized by other public companies in the United States, and we believe that this leadership structure has been effective for our company. We believe that having a combined Chief Executive Officer/Chairman of the Board, independent chairs for each of our Board committees, only independent directors serving on these committees and an independent lead director provides the right form of leadership and balance for our company. This structure provides us with a single leader for our company to ensure continuity of our operational, executive and Board functions, combined with oversight of the company by experienced independent directors.

Risk Management Oversight Function of the Board

The Board has allocated responsibilities for overseeing risk associated with the company’s business among the Board as a whole and the committees of the Board. In performing its risk oversight function, the Board: (i) oversees management’s development and execution of appropriate business strategies to mitigate the risk that such strategies will fail to generate long-term value for the company and its stockholders or that such strategies will motivate management to take excessive risks; and (ii) oversees the development and implementation of processes and procedures to mitigate the risk of failing to assure the orderly succession of the Chief Executive Officer and the senior executives of the company. 

The Board also regularly reviews information regarding the company’s financial, operational and strategic risks. Each of the Board’s committees also oversees the management of company risks that fall within that committee’s areas of responsibility, including identifying, quantifying and assisting leaders throughout the company in mitigating risks. In performing this function, each committee has full access to management, as well as the ability to engage advisors. As set forth in its charter, the Audit Committee is responsible for discussing with management the company’s major financial risk exposures and the steps management has taken to monitor and control those exposures. The Audit Committee gives updates to the Board at its meetings, including updates on financial and information technology risks. The Audit Committee also meets privately with the company’s independent auditors, our internal auditors and our Chief Financial Officer at least quarterly. The Compensation Committee oversees the company’s risk management related to employee compensation plans and arrangements. The Nominating/Corporate Governance Committee manages risks associated with the independence of the Board and corporate governance matters. While each committee is responsible for overseeing the management of those risk areas, the entire Board is also regularly informed through committee reports.

Communications with the Board

The following procedures have been established by the Board in order to facilitate communications between our stockholders and the Board:

 

Stockholders and any interested parties may send correspondence to the Board or to any individual director, by mail to Corporate Secretary, Entravision Communications Corporation, 2425 Olympic Boulevard, Suite 6000 West, Santa Monica, California 90404, or by email to stockholdercommunications@entravision.com.

 

Our Secretary is responsible for the first review and logging of any such correspondence and forwards the communication to the director or directors to whom it is addressed, unless it is a type of correspondence which the Board has identified as correspondence which may be retained in our files and not sent to directors. The Board has authorized the Secretary to retain and not send to directors communications that: (a) are advertising or promotional in nature (including those offering goods or services), (b) solely relate to complaints by clients with respect to ordinary course of business customer service and satisfaction issues or (c) clearly are unrelated to our business, industry, management or Board or committee matters. These types of communications will be logged and filed but not circulated to directors. Except as set forth in the preceding two sentences, the Secretary does not screen communications sent to directors.

 

The log of stockholder correspondence is available to members of the Board for inspection. The Secretary periodically provides to the Board a summary of the communications received from stockholders, including the communications not sent to directors in accordance with the procedures set forth above.

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Our stockholders may also communicate directly with the lead independent director, or with the non-management directors as a group, by mail addressed to Lead Director, c/o Corporate Secretary, Entravision Communications Corporation, 2425 Olympic Boulevard, Suite 6000 West, Santa Monica, California 90404, or by email to stockholdercommunications@entravision.com.

The Audit Committee has established procedures for the receipt, retention and treatment of complaints regarding questionable accounting, internal controls or auditing matters, or financial impropriety. Any of the company’s employees or non-employees may confidentially communicate concerns about any of these matters by calling our toll-free hotline. All of the reporting mechanisms are also posted on our website. Upon receipt of a complaint or concern, a determination will be made whether it pertains to accounting, internal controls or auditing matters, or financial impropriety and, if it does, it will be handled in accordance with the procedures established by the Audit Committee.

Committees of the Board

The Board has a standing Audit Committee, Compensation Committee and Nominating/Corporate Governance Committee.  The composition, functions and general responsibilities of each committee are summarized below.

Audit Committee

The Audit Committee consists of Messrs. Vasquez (chairman) and Zeko, and Ms. Diaz Dennis.  The Board has determined that Mr. Vasquez is an audit committee financial expert, as that term is defined in Item 401(h) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is independent within the meaning of Item 7(d)(3)(iv) of Schedule 14A adopted under the Exchange Act. The Board has determined that all members of the Audit Committee meet the independence and knowledge requirements of the NYSE as currently in effect. For information about Messrs. Vasquez’s and Zeko’s, and Ms. Diaz Dennis’ experience, please see “Biographical Information Regarding Directors” above. The Audit Committee held eight meetings and acted by written consent two times during 2020.

Consistent with the company’s Corporate Governance Guidelines, no member of the Audit Committee may serve on the audit committees of more than two other public companies (in addition to ours) without first obtaining the prior approval of the Board. Currently, no member of the Audit Committee serves on more than two other public company audit committees (in addition to ours).

The Audit Committee operates under a written charter, a copy of which is available on our website. The Audit Committee’s duties include, among other things, responsibility for reviewing our accounting practices and audit procedures. In addition, the Audit Committee has responsibility for reviewing complaints about, and investigating allegations of, financial impropriety or misconduct. Please see “Report of Audit Committee” below, which provides further details of many of the duties and responsibilities of the Audit Committee.

As part of its responsibility, the Audit Committee is responsible for engaging our independent registered public accounting firm, as well as pre-approving audit and non-audit services performed by our independent registered public accounting firm in order to assure that the provision of such services does not impair its independence. The Audit Committee has adopted, and the Board has ratified, an Audit Committee Pre-Approval Policy, which is also available on our website.

Compensation Committee, Compensation Committee Interlocks and Insider Participation

The Compensation Committee consists of Ms. Diaz (chairwoman) and Mr. Vasquez. The Board has determined that both members of the Compensation Committee qualify as “independent” directors as defined under the NYSE rules as currently in effect, as a “non-employee director” as defined in Rule 16b-3(b)(3) under the Exchange Act and as an “outside director” within the meaning of Section 162(m)(4)(C)(i) of the Internal Revenue Code of 1986, as amended (the “IRS Code”). No member of the Compensation Committee was at any time during 2020 an officer or employee of the company. The Compensation Committee held two meetings and acted by written consent six times during 2020. None of our executive officers served on the compensation committee of another entity or on any other committee of the board of directors of another entity performing similar functions during 2020.

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The Compensation Committee operates under a written charter, a copy of which is available on our website. Among other things, the Compensation Committee establishes the compensation and benefits of our executive officers. The compensation committee also administers our employee benefit plans, including our equity incentive plan.

Please see “Compensation Committee Report” below, which details the Compensation Committee’s report on our executive compensation for 2020.

Nominating/Corporate Governance Committee

The Nominating/Corporate Governance Committee consists of Ms. Diaz Dennis (chairwoman) and Mr. Zevnik. The Board has determined that both members of the Compensation Committee qualify as “independent” directors as defined under the NYSE rules as currently in effect. The Nominating/Corporate Governance Committee held two meetings and acted by written consent two times during 2020.

The Nominating/Corporate Governance Committee operates under a written charter, a copy of which is available on our website. Among other things, the Nominating/Corporate Governance Committee has the primary responsibility for overseeing the company’s corporate governance compliance practices, as well as supervising the affairs of the company as they relate to the nomination of directors. The principal ongoing functions of the Nominating/Corporate Governance Committee include developing criteria for selecting new directors, establishing and monitoring procedures for the receipt and consideration of director nominations by stockholders and others, considering and examining director candidates, recommending director nominations to the Board, developing and recommending corporate governance principles for the company and monitoring the company’s compliance with those principles, overseeing environmental, social and governance matters significant to the company and reporting to the Board from time to time on such matters, and establishing and monitoring procedures for the receipt of stockholder communications directed to the Board.

The Nominating/Corporate Governance Committee is also responsible for conducting an annual evaluation of the Board to determine whether the Board and its committees are functioning effectively, and reports annually to the Board with the results of this evaluation.

Director Nominations

The Nominating/Corporate Governance Committee has the responsibility to identify appropriate candidates to serve as directors of the company, interviews director candidates and makes recommendations to the Board regarding candidate selection. In considering candidates to serve as directors, the Nominating/Corporate Governance Committee evaluates various minimum individual qualifications, including strength of character, maturity of judgment, relevant technical skills or financial acumen, industry knowledge and diversity, taking into account and complying with all rules of the NYSE and applicable laws with respect to these criteria. The Nominating/Corporate Governance Committee also considers the extent to which the candidate would fill a present need on the Board and additional factors which may provide a range of experiences, skills and perspective to the Board.

In recommending the nominees who are standing for election as directors at the 2021 Annual Meeting, the Nominating/Corporate Governance Committee considered the foregoing factors and, in the case of incumbent directors, each such nominee’s previous service on the Board, which provides continuity in its deliberations.  The Nominating/Corporate Governance Committee also considered specific qualifications, attributes and skills that each nominee possesses and contributes to the work of the Board. As a result of Mr. Ulloa’s extensive experience in the Spanish-language broadcasting industry, including his role as a co-founder and serving currently as an executive officer of the company, he provides a unique perspective on the strategic direction of our company, and additional perspective afforded by his familiarity with day-to-day operations and the executive function. Mr. Zevnik’s background as an attorney, as well as his leadership roles and years of experience with our company and the broadcasting industry, make him an important resource for the Board, as he provides valuable insight into business, strategic and certain technical matters. Mr. Vasquez’s experience as a certified public accountant qualifies him as a financial expert and he serves on the Board’s Audit Committee. He also provides the Board with valuable leadership experience and general business knowledge. Ms. Diaz Dennis’ background as an attorney and her leadership roles and experience in government, our industry and the Latino community provides the Board with valuable expertise in governmental and political affairs, labor and employment matters, knowledge of our industry and leadership

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experience and knowledge of the Latino community. Mr. Saldívar’s extensive business experience in the Spanish-language media industry provides the Board with a valuable perspective on strategic and technical matters and unique insight into our industry. Ms. Diaz’s experience at international Spanish-language media companies and as a marketing executive and operational manager provide the Board with valuable insight into operational, marketing and strategic matters and in-depth knowledge of Latino audiences. Mr. Zekos leadership roles at global financial institutions, as well as his extensive experience in media investment banking, provide the Board with insight into financial, global and strategic matters, as well as knowledge of our industry.

The Nominating/Corporate Governance Committee will also consider stockholder nominations for director. Any nominations for director submitted to this committee by stockholders will be evaluated according to the company’s overall needs, the director qualification standards set forth above, and the nominee’s overall knowledge, experience and background. A nominating stockholder must give appropriate notice to the company of such a nomination not less than 90 days prior to the first anniversary of the preceding year’s annual meeting. In the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary date of the preceding year’s annual meeting, the notice by the stockholder must be delivered not later than the close of business on the later of the 60th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such annual meeting is first made.

Any such stockholder’s notice shall set forth, as to:

 

each person whom the stockholder proposes to nominate for election as a director:

 

the name, age, business address and residence address of such person,

 

the principal occupation or employment of the person,

 

the class and number of shares of the company’s stock which are beneficially owned by such person, if any, and

 

any other information relating to such person which is required to be disclosed in solicitations for proxies for election of directors pursuant to Regulation 14A under the Exchange Act and the rules thereunder; and

 

the stockholder giving the notice:

 

the name and record address of the stockholder and the class and number of shares of the company’s stock which are beneficially owned by the stockholder,

 

a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which nomination(s) are to be made by such stockholder,

 

a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice,

 

any other information relating to such person which is required to be disclosed in solicitations for proxies for election of directors pursuant to Regulation 14A under the Exchange Act and the rules thereunder.

Such a notice must be accompanied by a written consent of the proposed nominee to be named as a director.

Recommendation of the Board

The Board unanimously recommends that stockholders vote FOR the election of each of the director nominees identified above.

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PROPOSAL 2

AMENDMENT OF THE 2004 EQUITY INCENTIVE PLAN

Introduction

In 2004, we adopted the 2004 Equity Incentive Plan (as amended, the “2004 Plan”), which replaced our prior equity-based compensation plans.  The 2004 Plan was approved by stockholders on May 26, 2004.  On May 29, 2014, stockholders approved an extension to the term of the 2004 Plan until May 29, 2024.  The 2004 Plan currently has up to 19,809,138 shares of our Class A common stock authorized for grants under the 2004 Plan.  As of April 5, 2021, we have issued 13,287,167 shares of our Class A common stock under the 2004 Plan, have outstanding grants of restricted stock units and stock options covering 4,238,855 shares of our Class A common stock which have yet to vest and, as a result, have 2,283,116 shares of Class A common stock remaining available for grant under the 2004 Plan.  

On April 29, 2021 the Board of Directors adopted an amendment to the 2004 Plan to increase the number of shares available for issuance by 8,000,000 shares (bringing the remaining total number of shares currently available for issuance under the 2004 Plan to 10,283,116 and the aggregate number of shares under the 2004 Plan to 27,809,138), and to extend the term of the 2004 Plan by an additional 10 years to May 27, 2031, subject, in each case, to stockholder approval of the amendment.  Based on our current plans and growth expectations, we believe that the shares requested in this proposal will be sufficient for the Company’s needs for approximately four to seven years but could last for a shorter period of time if actual practice does not match historic rates or our share price or the number of individuals who receive grants under the 2004 Plan changes materially.

An affirmative vote for Proposal No. 2 is a vote to approve both an increase in the number of shares available for grant under the 2004 Plan and to extend the 2004 Plan term for an additional 10 years from the date of such approval, to May 27, 2031.

Purpose

We believe that our ability to award equity compensation is critical to our continued success in remaining competitive and attracting, motivating and retaining key personnel. The 2004 Plan, as originally adopted, provided 10,000,000 shares to be used for grants under the 2004 Plan. In addition, any shares subject to awards granted under the Entravision Communications Corporation 2000 Omnibus Equity Incentive Plan (the “2000 Plan”) that would have again become available for new grants under the terms of the 2000 Plan became available for awards under the 2004 Plan.  The aggregate number of shares available for issuance under the 2004 Plan as of April 5, 2021 is 19,809,138.

The creativity and entrepreneurial drive of our employees and other personnel who provide services to our company generates much of the growth and success of our business. We believe that our broad-based equity incentive program has been highly successful in motivating and rewarding the efforts of our employees and other valuable personnel. By giving our directors, employees and consultants an opportunity to share in the growth of our stock, we align their interests with those of our stockholders. Our directors, employees and consultants understand that their stake in our company will have value only if, working together, we create value for all our stockholders. Awards under the 2004 Plan generally vest over a period of time, giving the recipient an additional incentive to provide services over a number of years and build on past performance. We believe that our award program has helped us to build a team of high achievers who have demonstrated long-term dedication and productivity and who, in turn, help us to attract like-minded individuals to our company.

At the time of the adoption of the 2004 Plan, we projected that approval of the 2004 Plan would provide us with adequate shares for incentive compensation awards for approximately six years. In fact, under the 2004 Plan we have had adequate shares for incentive compensation awards for the past 17 years. The visibility and sustainability of the equity incentive compensation program are important factors in accomplishing our goals of attracting, motivating and retaining key employees, consultants and directors.

We believe that we have demonstrated a commitment to sound equity compensation practices. We recognize that equity compensation awards dilute stockholder equity, so we have carefully managed our equity incentive

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compensation.  Our equity compensation practices are intended to be competitive and consistent with market practices, and we believe our historical share usage has been responsible and mindful of stockholder interests.  Total potential dilution is equal to the total number of unvested equity awards outstanding plus the pool of shares remaining for future awards, divided by the total number of common shares outstanding, the number of unvested equity awards outstanding, and the pool of shares remaining for future awards.  Our total potential dilution as of April 5, 2021 was:

 

 

 

Stock Options

 

 

 

 

 

 

 

 

Fiscal Year

 

Number

Outstanding

 

Weighted

Average

Exercise

Price ($)

 

Weighted

Average

Remaining

Term (yrs.)

 

Total

Unvested

Stock

Awards

Outstanding

 

Shares

Available

 

Common

Shares

Outstanding

 

Total

Equity

Dilution

2018 (1)

 

1,114,500

 

2.45

 

3.75

 

1,776,166

 

5,255,289

 

89,115,997

 

8.4%

2019 (1)

 

943,500

 

2.20

 

2.66

 

2,256,137

 

4,272,586

 

85,107,301

 

8.1%

2020 (1)

 

883,500

 

2.17

 

1.78

 

3,371,355

 

2,273,161

 

84,231,212

 

7.2%

Current (2)

 

867,500

 

 

 

 

 

3,371,355

 

2,283,116

 

85,045,792

 

7.1%

New Shares

 

 

 

 

 

8,000,000

 

 

 

14.6%

 

(1)

Common shares outstanding consists of our Class A common stock, Class B common stock and Class U common stock, as reported on our Annual Report on Form 10-K for each fiscal year.

(2)

As of April 5, 2021.

 

Burn rate is equal to total awards granted divided by the basic weighted average shares outstanding.  The Company’s three-year average burn rate for fiscal 2018 through fiscal 2020 was:

 

Fiscal Year

 

Total Shares Granted

 

Common Shares Outstanding

 

Burn Rate

2018 (1)

 

1,120,750

 

89,115,997

 

1.3%

2019 (1)

 

1,581,846

 

85,107,301

 

1.9%

2020 (1)

 

2,623,424

 

84,231,212

 

3.1%

3-year average

 

 

 

 

 

2.1%

 

(1)

Common shares outstanding consists of our Class A common stock, Class B common stock and Class U common stock, as reported on our Annual Report on Form 10-K for each fiscal year.

 

2004 Plan Highlights

The 2004 Plan includes provisions which we believe are designed to serve stockholders’ interests and promote effective corporate governance, including the following:

 

No “Evergreen” Provision. The 2004 Plan fixes the number of shares available for future grants and does not provide for any automatic annual increases based on an increase in the number of outstanding shares of our Class A common stock.

 

No Discounted Stock Options. The 2004 Plan prohibits the granting of stock options at an exercise price that is less than the fair market value of our Class A common stock on the date the stock option is granted.

 

No Stock Option Re-pricings. The 2004 Plan explicitly prohibits re-pricing of awards.

 

Limitations on Material Amendments. The 2004 Plan may not be materially amended unless stockholder approval is obtained under the rules of the NYSE.

 

Administered by Independent Directors. The Compensation Committee of the Board of Directors administers the 2004 Plan, although it may delegate certain responsibilities to others, as described below under “Administration”.

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The following is a summary of the material terms of 2004 Plan.  It is qualified by reference to the full text of the 2004 Plan, which is attached as Appendix A to this proxy statement.  A copy of the proposed amendment to the 2004 Plan is attached as Appendix B to this proxy statement. Stockholders are encouraged to review the 2004 Plan and proposed amendment carefully.

 

Number of Shares

As of the Record Date, 2,283,116 shares of our Class A common stock were available for awards under the 2004 Plan. Based on our historical rate of use of shares under the 2004 Plan, we expect that we will run out of shares available for grant under the 2004 Plan by 2022. Accordingly, we wish to amend the 2004 Plan to increase the number of shares of our Class A common stock authorized for issuance under the 2004 Plan by 8,000,000 shares to continue to meet our compensation goals for future years.

Ten million shares of our Class A common stock, plus any shares subject to awards granted under the 2000 Plan that became available for new grants under the terms of the 2000 Plan were initially reserved for issuance under the 2004 Plan. If an award lapses, expires, terminates or is cancelled without the issuance of shares under the award, or if shares are forfeited under an award, then the shares subject to the award may again be used for new awards under 2004 Plan. If shares are issued under any award and we subsequently reacquire them pursuant to rights reserved upon the issuance of the shares, or if previously owned shares are delivered to us in payment of the exercise price of an award or the withholding taxes due as a result of the issuance or receipt of a payment or shares under an award, those shares may also again be used for new awards under the 2004 Plan, but may not be issued under incentive stock options. If we acquire another entity through a merger or similar transaction and issue replacement awards under the 2004 Plan to directors, officers and other employees of the acquired entity, those awards, to the extent permitted under applicable laws and NYSE rules, will not reduce the number of shares reserved for issuance under the 2004 Plan.

In addition to the aggregate number of shares described above, the 2004 Plan imposes the following additional limitation:

 

The maximum number of shares that may be issued in connection with incentive stock options intended to qualify under IRS Code Section 422 is 10,000,000 shares. As part of the amendment to increase the number of shares available under the 2004 Plan by an additional 8,000,000 shares, we are seeking to increase this maximum number of shares that may be issued in connection with incentive stock options to 18,000,000.

For awards intended to qualify as performance-based compensation, the following limitations also apply:

 

The maximum number of shares that may be subject to stock options or stock appreciation rights granted to any one person in any calendar year is 500,000 shares, except that this limit is one million shares if the grant is made in the year of the recipient’s initial employment.

 

The maximum number of shares that may be subject to restricted stock or restricted stock units (“RSUs”) granted to any one person in any calendar year is 500,000 shares.

 

The maximum number of shares that may be subject to performance shares or performance units (if such units are valued in relation to shares) granted to any one person in any calendar year is 500,000 shares.

The number of shares reserved for issuance under the 2004 Plan, and the limits on the number of awards that may be granted to any one person or of a particular type, as described above, are subject to adjustment to reflect certain subsequent changes to our capital structure, such as stock splits, stock dividends and recapitalizations.

Administration

The 2004 Plan is administered by the Compensation Committee. The Compensation Committee has full power to administer the 2004 Plan and the decisions of the Compensation Committee are final and binding upon all the participants.

The Board may delegate the Compensation Committee’s administrative authority to another committee or the Compensation Committee may delegate some of its authority to the Chief Executive Officer of the company. Any

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such delegation may be made only to the extent the law allows. In no event may such delegation be made with respect to awards granted to individuals who are subject to Section 16 of the Exchange Act unless the delegation is made to a committee composed entirely of non-employee directors.

Eligibility

The selection of the participants in the 2004 Plan is generally determined by the Compensation Committee. The Committee may designate any of the following as a participant from time to time: any officers or other employees of our company or any of our affiliates, any individuals that we or our affiliates have engaged to become an officer or other employee, any non-employee director, and consultants and advisors who provide bona fide services to us or our affiliates as independent contractors.

As of April 5, 2021, approximately five named executive officers, five non-employee directors and approximately 1,020 other employees are eligible to be selected by the Compensation Committee to receive grants under the 2004 Plan.  As of April 5, 2021, the fair market value of a share of our Class A common stock, determined by the closing price per share on that date as quoted on the NYSE, was $4.09.

Types of Awards

The 2004 Plan allows for the grant of stock options, stock appreciation rights, performance shares, performance units, restricted stock awards, RSUs and dividend equivalent units in any combination, separately or in tandem. Subject to the terms of the 2004 Plan, the Compensation Committee will determine the terms and conditions of awards, including the times when awards vest or become payable and the effect of certain events such as termination of employment.

Stock Options

The Compensation Committee may grant either incentive stock options qualified with respect to Internal Revenue Code Section 422 or options not qualified under any section of the Code (“non-qualified options”). Only employees may receive incentive stock options. All stock options granted under the 2004 Plan must have an exercise price that is at least equal to the fair market value of our underlying Class A common stock on the grant date. Any incentive stock option granted to an employee who, at the time the option is granted, owns more than 10% of the total combined voting power of all classes of stock of our company or any subsidiary must have an exercise price of at least 110% of the fair market value on the grant date. No stock option granted under the 2004 Plan may have a term longer than ten years, except that under the 2004 Plan the term may be extended for six months beyond the date of death in the event that an option recipient dies prior to the option’s termination date. Any incentive stock option granted to any employee who, at the time the option is granted, owns more than 10% of the total combined voting power of all classes of stock of our company or any subsidiary must terminate no later than the fifth anniversary of the date of grant. The exercise price of stock options may be paid in cash, or, if the Compensation Committee permits, by tendering shares of Class A common stock, or by any other means the Compensation Committee approves.

Stock Appreciation Rights

The Compensation Committee may grant stock appreciation rights which provide the recipient the right to receive a payment (in cash, shares or a combination of both) equal to the difference between the fair market value of a specific number of shares on the grant date and the fair market value of such shares on the date of exercise. Stock appreciation rights must expire no later than ten years after their grant date, except that under the 2004 Plan the term may be extended for six months beyond the date of death in the event that a recipient dies prior to the stock appreciation right’s termination date.

Performance-Based Awards

The 2004 Plan provides for the grant of performance shares and performance units, the grant or vesting of which is dependent upon the attainment of objective performance targets relative to certain performance measures. Performance targets may include minimum, maximum and target levels of performance, with the size of the award or vesting based on the level attained. Performance measures are criteria established by the Compensation Committee relating to any of the following, as it may apply to an individual, one or more business units, divisions or subsidiaries,

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or on a company-wide basis, and either in absolute terms or relative to the performance of one or more comparable companies or an index covering multiple companies: income from operations; revenue; earnings before interest, taxes, depreciation and amortization, as adjusted (EBITDA as adjusted); income before income taxes and minority interests; operating income; pre- or after-tax income; average accounts receivable; cash flow; cash flow per share; net earnings; earnings per share; return on equity; return on capital; return on assets; growth in assets; economic value added; share price performance; total stockholder return; improvement in or attainment of expense levels; market share or market penetration; business expansion, and/or acquisitions or divestitures. The Compensation Committee can select other goals not listed here for awards that are not intended to meet the requirements of qualified performance-based compensation. The Compensation Committee may specify that the performance-based awards will become payable in whole or in part in the event of the recipients termination of employment as a result of death, disability or retirement.

Performance-based awards may be paid in cash, shares or a combination of both, as determined by the Compensation Committee at the time of making an award.

Unless otherwise provided by the Compensation Committee, a participant will not be entitled to, and will agree to waive or otherwise surrender, any rights to receive dividends or dividend equivalents paid with respect to performance shares or performance units valued in shares until after they have been earned.

Restricted Stock and Restricted Stock Unit Awards

The Compensation Committee may grant shares of restricted Class A common stock with or without payment of consideration by the recipient, or may grant RSUs. The Compensation Committee will determine whether RSUs will be paid in cash, shares of our Class A common stock or a combination thereof. All or part of any restricted stock or RSU award may be subject to conditions and restrictions, which the Compensation Committee will specify, including the vesting terms.  The Compensation Committee may specify that the restriction period will lapse in the event of the recipient’s termination of employment as a result of death, disability or retirement.

Dividend Equivalent Unit Awards

The Compensation Committee may grant awards of dividend equivalent units, either alone or in tandem with other awards, but only if the Board of Directors has declared a dividend on our Class A common stock. A dividend equivalent unit gives the recipient the right to receive a current or deferred payment equal to the dividends paid on one or more shares of our Class A common stock as the Compensation Committee specifies.

Payment of Directors’ Fees in Securities

Subject to any restrictions the Board imposes, a non-employee director may elect to receive stock options in lieu of all or any portion of the director’s annual retainer payment from the company. These options will be issued under and subject to the terms of the 2004 Plan. The number of options to be issued in connection with such an election by a director will be four times the amount of the cash compensation divided by the closing price of our Class A common stock on the date the cash compensation would otherwise have been paid to the director.

Change of Control

The Compensation Committee may determine, in its discretion, whether an award issued under the 2004 Plan will become vested or payable, either in whole or in part, upon a change of control of the company (as defined in the 2004 Plan).

If, in connection with a change of control:

Options and stock appreciation rights issued under the 2004 Plan are not assumed, or if substitute options and stock appreciation rights are not issued, or if the assumed or substituted awards fail to contain similar terms and conditions as the award prior to the change of control or fail to preserve, to the extent applicable, the benefit to be provided to the participant as of the date of a change of control, then each holder of an option or stock appreciation right that is outstanding as of the date of the change of control who is an employee of the company or any subsidiary will have the right, and the Compensation Committee, in its sole discretion, may grant to a holder of an option or stock

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appreciation right that is outstanding as of the date of a change of control who is not an employee of the company or any subsidiary the right, exercisable within 30 days after a change of control (but not beyond the option or stock appreciation rights expiration date), to receive, in exchange for the surrender of the option or stock appreciation right, an amount of cash equal to the excess of the greater of the fair market value of the shares determined on the change of control date or the fair market value of the shares of our Class A common stock on the date of surrender covered by the option or stock appreciation right (to the extent vested and not yet exercised) that is so surrendered over the purchase or grant price of such shares under the award. If the Compensation Committee so determines prior to a change of control, any such option or stock appreciation rights that is not exercised or surrendered prior to the end of the 30-day period will be cancelled.

The 2004 Plan does not provide for a “gross-up” for any excise taxes imposed on golden parachute payments under IRS Code Sections 280G and 4999. Rather, except as otherwise provided in a written agreement between the company and an award holders, in the event that any payment or transfer by the company under the 2004 Plan to or for the benefit of a participant would be nondeductible by the company for federal income tax purposes because of the provisions concerning “excess parachute payments” in IRS Code Section 280G, then the aggregate present value of all such payments will be reduced (but not below zero) to an amount that maximizes the aggregate present value of the payments without causing any payment to be nondeductible by the company because of IRS Code Section 280G.

Adjustments

Under the terms of the 2004 Plan, if the Compensation Committee determines that any dividend or other distribution (whether in the form of cash, shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of securities of the company, issuance of warrants or other rights to purchase securities of the company, or other similar corporate transaction or event affects the shares of our Class A common stock such that the Compensation Committee determines an adjustment to be appropriate to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the 2004 Plan, then, subject to the terms of the 2004 Plan, the Compensation Committee will, in such manner as it may deem equitable, adjust any or all of (1) the number and type of shares subject to the 2004 Plan, (2) the number and type of shares subject to outstanding awards, and (3) the grant, purchase, or exercise price with respect to any award. In any such case, the Compensation Committee may also (or in lieu of the foregoing) provide for a cash payment to the holder of an outstanding award in exchange for the cancellation of all or a portion of the award (without the consent of the holder of an award) in an amount determined by the Compensation Committee effective at such time as the Compensation Committee specifies (which may be the time such transaction or event is effective). If the transaction or event constitutes a change of control, then the payment must be at least as favorable to the holder as the amount the holder could have received in respect of the award under the 2004 Plan’s provision concerning a change of control and the Compensation Committee may make such a provision only if the Committee determines that doing so is necessary to substitute, for each share then subject to an award, the number and kind of shares of stock, other securities, cash or other property to which holders of shares of our Class A common stock are or will be entitled in respect of each share pursuant to the transaction or event.

With respect to incentive stock options, no adjustment may be authorized to the extent that such authority would cause the 2004 Plan to violate IRS Code Section 422(b).

Without limitation, subject to the terms of the 2004 Plan, in the event of any reorganization, merger, consolidation, combination or other similar corporate transaction or event, the Compensation Committee may substitute, on an equitable basis as the Compensation Committee determines, for each share then subject to an award, the number and kind of shares of stock, other securities, cash or other property to which holders of stock are or will be entitled in respect of each share pursuant to the transaction.

Transferability of Awards

Awards granted under the 2004 Plan are not transferable, other than by will or pursuant to state intestate laws, unless the Committee otherwise approves a transfer.

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Backdating Prohibited

The Compensation Committee may not grant a stock option or stock appreciation right with a grant date that is effective prior to the date the Compensation Committee takes action to approve such award.

Foreign Participation

The Compensation Committee may provide for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy or custom regarding awards granted to participants employed in foreign countries. In addition, the Compensation Committee may approve such supplements to, or amendments, restatements or alternative versions of, the 2004 Plan as it determines is necessary or appropriate for such purposes. Any such amendment, restatement or alternative versions that the Compensation Committee approves for purposes of using the 2004 Plan in a foreign country will not affect the terms of the 2004 Plan for use in any other country.

Recoupment of Awards

All awards under the 2004 Plan will be subject to any recoupment or clawback policy that the Board or Compensation Committee may adopt from time to time.

Amendment

The Board or Compensation Committee may alter, amend, suspend or discontinue the 2004 Plan at any time, but no such action may be taken without stockholder approval if such approval is required by law or NYSE listing requirements, or if such action increases the number of shares that may be issued under the 2004 Plan or the annual award limits, or eliminates the prohibition on stock option repricing. The Compensation Committee may alter or amend awards under the 2004 Plan, but no such action may be taken without the consent of the participant if it would materially adversely affect an outstanding award, and no such action may be taken without prior stockholder approval if it would violate the anti-repricing protections under the 2004 Plan as described above under “2004 Plan Highlights”.

Term

The 2004 Plan is to remain in effect until May 29, 2024, unless terminated earlier by the Board of Directors or the Compensation Committee. The proposed amendment will extend the term of the 2004 Plan to 10 years after the date of the 2021 Annual Meeting, until May 27, 2031, if it is approved by the stockholders at the 2021 Annual Meeting.

Federal Income Tax Consequences

The following summary is intended only as a general guide to the United States federal income tax consequences under current law of incentive stock options and non-qualified stock options, which are authorized for grant under the 2004 Plan. It does not attempt to describe all possible federal or other tax consequences of participation in the 2004 Plan or tax consequences based on particular circumstances. The tax consequences may vary if options are granted outside the United States. Participants are advised to consult their personal tax advisors with regard to all consequences arising from the grant or exercise of awards and the disposition of any acquired shares.

Stock Options

The grant of a stock option under the 2004 Plan will create no income tax consequences to us or to the recipient. A participant who is granted a non-qualified stock option will generally recognize ordinary compensation income at the time of exercise in an amount equal to the excess of the fair market value of our Class A common stock at such time over the exercise price. We will generally be entitled to a deduction in the same amount and at the same time as the participant recognizes ordinary income. Upon the participant’s subsequent disposition of the shares of our Class A common stock received with respect to such stock option, the participant will recognize a capital gain or loss (long-term or short-term, depending on the holding period) to the extent the amount realized from the sale differs from the tax basis (i.e., the fair market value of the Class A common stock on the exercise date).

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In general, a participant will recognize no income or gain at the time of the exercise of an incentive stock option, except that the alternative minimum tax may apply. Except as described below, the participant will recognize a long-term capital gain or loss on the disposition of our Class A common stock acquired pursuant to the exercise of an incentive stock option and we will not be allowed a deduction. If the participant fails to hold the shares of our Class A common stock acquired pursuant to the exercise of an incentive stock option for at least two years from the grant date of the incentive stock option and one year from the exercise date, then the participant will recognize ordinary compensation income at the time of the disposition equal to the lesser of the gain realized on the disposition and the excess of the fair market value of the shares of our Class A common stock on the exercise date over the exercise price. We will generally be entitled to a deduction in the same amount and at the same time as the participant recognizes ordinary income. Any additional gain realized by the participant over the fair market value at the time of exercise will be treated as a capital gain.

Stock Appreciation Rights

The grant of a stock appreciation right under the 2004 Plan will create no income tax consequences to us or to the recipient. A participant who is granted a stock appreciation right will generally recognize ordinary compensation income at the time of exercise in an amount equal to the excess of the fair market value of our Class A common stock at such time over the grant price. We will generally be entitled to a deduction in the same amount and at the same time as the participant recognizes ordinary income. If the stock appreciation right is settled in shares of our Class A common stock, upon the participant’s subsequent disposition of such shares, the participant will recognize a capital gain or loss (long-term or short-term, depending on the holding period) to the extent the amount realized from the sale differs from the tax basis (i.e., the fair market value of our Class A common stock on the exercise date).

Restricted Stock

Generally, a participant will not recognize income and we will not be entitled to a deduction at the time an award of restricted stock is made under the 2004 Plan, unless the participant makes the election described below. A participant who has not made such an election will recognize ordinary income at the time the restrictions on the stock lapse in an amount equal to the fair market value of the restricted stock at such time. We will generally be entitled to a corresponding deduction in the same amount and at the same time as the participant recognizes income. Any otherwise taxable disposition of the restricted stock after the time the restrictions lapse will result in a capital gain or loss (long-term or short-term, depending on the holding period) to the extent the amount realized from the sale differs from the tax basis (i.e., the fair market value of our Class A common stock on the date the restrictions lapse). Dividends paid in cash and received by a participant prior to the time the restrictions lapse will constitute ordinary income to the participant in the year paid and we will generally be entitled to a corresponding deduction for such dividends. Any dividends paid in stock will be treated as an award of additional restricted stock subject to the tax treatment described herein.

A participant may, within 30 days after the date of the award of restricted stock, elect to recognize ordinary income as of the date of the award in an amount equal to the fair market value of such restricted stock on the date of the award (less the amount, if any, the participant paid for such restricted stock). If the participant makes such an election, then we will generally be entitled to a corresponding deduction in the same amount and at the same time as the participant recognizes income. If the participant makes the election, then any cash dividends the participant receives with respect to the restricted stock will be treated as dividend income to the participant in the year of payment and will not be deductible by us. Any otherwise taxable disposition of the restricted stock (other than by forfeiture) will result in a capital gain or loss. If the participant who has made an election subsequently forfeits the restricted stock, then the participant will not be entitled to claim a credit for the tax previously paid. In addition, we would then be required to include as ordinary income the amount of any deduction we originally claimed with respect to such shares.

Restricted Stock Units

A participant will not recognize income and we will not be entitled to a deduction at the time an award of a restricted stock unit is made under the 2004 Plan. Upon the participant’s receipt of shares (or cash) at the end of the restriction period, the participant will recognize ordinary income equal to the amount of cash and/or the fair market value of the shares received, and we will be entitled to a corresponding deduction in the same amount and at the same

18


 

time. If the restricted stock units are settled in whole or in part in shares, upon the participants subsequent disposition of the shares the participant will recognize a capital gain or loss (long-term or short-term, depending on the holding period) to the extent the amount realized upon disposition differs from the shares tax basis (i.e., the fair market value of the shares on the date the participant received the shares).

Performance Shares

The grant of performance shares will create no income tax consequences for us or the participant. Upon the participant’s receipt of shares at the end of the applicable performance period, the participant will recognize ordinary income equal to the fair market value of the shares received, except that if the participant receives shares of restricted stock in payment of performance shares, recognition of income may be deferred in accordance with the rules applicable to restricted stock as described above. In addition, the participant will recognize ordinary compensation income equal to the dividend equivalents paid on performance shares prior to or at the end of the performance period. We will generally be entitled to a deduction in the same amount and at the same time as the participant recognizes income. Upon the participant’s subsequent disposition of the shares, the participant will recognize a capital gain or loss (long-term or short-term depending on the holding period) to the extent the amount realized from the disposition differs from the shares’ tax basis (i.e., the fair market value of the shares on the date the participant received the shares).

Performance Units

The grant of a performance unit will create no income tax consequences to us or the participant. Upon the participant’s receipt of cash and/or shares at the end of the applicable performance period, the participant will recognize ordinary income equal to the amount of cash and/or the fair market value of the shares received, and we will be entitled to a corresponding deduction in the same amount and at the same time. If performance units are settled in whole or in part in shares, upon the participant’s subsequent disposition of the shares the participant will recognize a capital gain or loss (long-term or short-term, depending on the holding period) to the extent the amount realized upon disposition differs from the shares’ tax basis (i.e., the fair market value of the shares on the date the participant received the shares).

Dividend Equivalent Units

A participant who is paid a dividend equivalent with respect to an award will recognize ordinary income equal to the value of cash or Class A common stock paid, and we will be entitled to a corresponding deduction in the same amount and at the same time.

IRS Code Sections 409A and 280G

Awards under the 2004 Plan may constitute, or provide for, a deferral of compensation under Section 409A of the IRS Code. If the requirements of IRS Code Section 409A are not complied with, then holders of such awards may be taxed earlier than would otherwise be the case (e.g., at the time of vesting instead of the time of payment) and may be subject to an additional 20% penalty tax and, potentially, interest and penalties. The 2004 Plan is intended to permit compliance with IRS Code Section 409A and the Department of Treasury regulations and other interpretive guidance that may be issued pursuant to IRS Code Section 409A. The 2004 Plan and any applicable awards may be modified to exempt the awards from IRS Code Section 409A or comply with the requirements of IRS Code Section 409A.

Option Grant Table

The following table shows the number of shares subject to option grants made under the 2004 Plan to our executive officers and the other individuals and groups indicated, from the date of the 2004 Plan’s inception through April 5, 2021. A separate column indicates the number of shares underlying options granted as replenishment options, if any.

 

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Cumulative Option Grant Table

2004 Equity Incentive Plan

 

Name and Position

 

Aggregate Number of Shares

Underlying Options Granted

Walter F. Ulloa, Chairman and Chief Executive Officer

 

617,000

Christopher T. Young, Chief Financial Officer and Treasurer

 

439,000

Jeffery A. Liberman, President and Chief Operating Officer

 

474,000

Karl A. Meyer, Chief Revenue Officer

 

474,000

Juan Saldivar von Wuthenau, Chief Digital, Strategy and Accountability Officer

 

180,000

All Current Executive Officers as a Group

 

1,990,000

All Current Directors who are not Executive Officers as a Group

 

690,000

Each Nominee for Election as a Director

 

--

Each Associate of any such Director, Executive Officer or Nominees

 

--

Each other Person who received or is to receive 5% of such awards

 

--

All Current Employees, including Current Officers who are not Executive Officers as a Group

 

5,845,367

 

New Plan Benefits

No awards have been granted, and no shares of any class of our common stock have been issued, on the basis of the proposed share increase under the 2004 Plan.  It is not possible to determine the specific amounts and types of awards that may be awarded in the future under the proposed amendment to the 2004 Plan because the grant and actual pay-out of awards under the 2004 Plan are subject to the discretion of the Compensation Committee.

Effect of a No Vote

If the stockholders do not approve the amendment of the 2004 Plan to both increase the number of available shares of Class A common stock by an additional 8,000,000 shares and extend the end of the term to ten years after the date of the 2021 Annual Meeting, or May 27, 2031, the 2004 Plan will terminate effective May 29, 2024 and thereafter no additional grants can be made under the 2004 Plan.  In such event, the 2004 Plan will continue in effect to administer grants made under the 2004 Plan before its termination. Additionally, because the company does not have any other employee benefit plan that allows for the grant of stock options, restricted stock units or other awards, the company would be unable to make any awards after May 29, 2024 unless and until and unless a new benefit plan is adopted by the Board of Directors and approved by the stockholders.

Board Consideration

In considering the recommendation of our board of directors with respect to the approval of the amendment and the material terms of the 2004 Plan, stockholders should be aware that the members of our board of directors have certain interests, which may present them with conflicts of interest in connection with this proposal. As discussed above, directors are eligible to receive awards under the 2004 Plan.

Registration with the SEC

We intend to file a Registration Statement on Form S-8 with the SEC relating to the issuance of the additional 8,000,000 shares of our Class A common stock under the amendment to the 2004 Plan as soon as practicable assuming and after approval of the 2004 Plan amendment by our stockholders.

 

Required Vote

Approval of amendment of the 2004 Plan requires a majority of the total votes cast on such proposal, provided a quorum is present.

Recommendation of the Board

 

The Board unanimously recommends that stockholders vote FOR approval of the amendment of the 2004 Plan.

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MANAGEMENT

The following sets forth the names, positions and ages of our executive officers as of April 5, 2021:

 

Name

 

Position

 

Age

Walter F. Ulloa

 

Chairman and Chief Executive Officer

 

72

Christopher T. Young

 

Chief Financial Officer and Treasurer

 

52

Jeffery A. Liberman

 

President and Chief Operating Officer

 

62

Karl A. Meyer

 

Chief Revenue Officer

 

57

Juan Saldívar von Wuthenau

 

Chief Digital, Strategy and Accountability Officer

 

54

 

Background

Walter F. Ulloa.    Mr. Ulloa has been our Chairman and Chief Executive Officer since the company’s inception in 1996. See, “Proposal 1—Election of Directors” for additional biographical information on Mr. Ulloa.

Christopher T. Young.    Mr. Young has been our Chief Financial Officer and Treasurer since May 2008.  Mr. Young had previously served as the President of our outdoor advertising division from February 2004 until we sold our outdoor advertising division in May 2008.  From January 2000 to February 2004, Mr. Young served as our outdoor advertising division’s Chief Financial Officer. Before joining our company, Mr. Young had worked with the Bank of Montreal, where he was responsible for all of the bank’s corporate finance activity for the broadcasting and outdoor advertising industries. Mr. Young’s prior experience includes tenures at both the Bank of Tokyo in its corporate finance group and Chase Manhattan Bank. Mr. Young holds a Bachelor of Arts degree in Economics from Columbia University.

Jeffery A. Liberman.    Mr. Liberman, our President and Chief Operating Officer since March 2017, has been involved in the management and operation of Spanish-language and general market television and radio stations since 1974. Mr. Liberman previously served as the Chief Operating Officer from July 2012 until March 2017, and the President of our radio division from May 2001 until July 2012.  From 1992 until our acquisition of Latin Communications Group Inc. in April 2000, Mr. Liberman was responsible for operating Latin Communications Group’s 17 radio stations in California, Colorado, New Mexico and Washington D.C.

Karl A. Meyer.  Mr. Meyer, our Chief Revenue Officer since May 2019, has more than 30 years of experience in broadcast media. Mr. Meyer served as the Vice President, Director of Sales at Univision Communication Inc. (“Univision”) from October 2017 until May 2019, and the Regional Vice President, National Sales at Univision from June 2014 through October 2017.  Previous to that, Mr. Meyer served in a number of positions for us starting in 2004, including Vice President, General Manager of our Los Angeles radio market and later as Executive Vice President, Integrated Marketing Solutions, Western Region.

Juan Saldívar von Wuthenau.    Mr. Saldívar has been our Chief Digital, Strategy and Accountability Officer since November 2020. See, “Proposal 1—Election of Directors” for additional biographical information on Mr. Saldívar.

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SECURITY OWNERSHIP OF CERTAIN

BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information, as of April 5, 2021, concerning, except as indicated by the footnotes below:

 

each person whom we know beneficially owns more than 5% of our Class A common stock or Class B common stock;

 

each of our directors and nominees for the board of directors;

 

our Chief Executive Officer, Chief Financial Officer and each of our other executive officers serving as such as of December 31, 2020 (such individuals are hereafter referred to as our “Named Executive Officers”); and

 

all of our directors and executive officers as a group.

Unless otherwise noted below, the address of each beneficial owner listed in the table is c/o Entravision Communications Corporation, 2425 Olympic Boulevard, Suite 6000 West, Santa Monica, California 90404.

We have determined beneficial ownership in accordance with the rules of the SEC.  Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws.

Applicable percentage ownership is based on 60,765,450 shares of Class A common stock and 14,927,613 shares of Class B common stock outstanding at April 5, 2021. Each share of Class B common stock has 10 votes per share compared to one per share of Class A common stock. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed to be outstanding all shares of common stock subject to options, warrants, restricted stock units or other convertible securities held by that person or entity that are currently exercisable or releasable or that will become exercisable or releasable within sixty days after April 5, 2021. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. In addition, we did not include Univision Communications Inc., which currently holds all 9,352,729 shares of our Class U common stock.  The Class U common stock is non-voting, and therefore Univision does not appear in the table as an owner of voting securities.

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The information provided in the table is based on our records, information filed with the SEC, and information provided to us, except where otherwise noted.

 

 

 

Shares Beneficially Owned

 

 

% Total

 

 

 

Class A Common Stock(1)

 

 

Class B Common Stock

 

 

Voting

 

Name of Beneficial Owner

 

Shares

 

 

%

 

 

Shares

 

 

%

 

 

Power(2)

 

Named Executive Officers and Directors:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Walter F. Ulloa(3)

 

 

1,073,781

 

 

1.48

 

 

 

11,489,365

 

 

 

76.97

 

 

 

57.48

 

Christopher T. Young(4)

 

 

229,001

 

 

*

 

 

 

 

 

 

 

 

*

 

Jeffery A. Liberman(5)

 

 

318,778

 

 

*

 

 

 

 

 

 

 

 

*

 

Karl A. Meyer(6)

 

 

43,108

 

 

*

 

 

 

 

 

 

 

 

*

 

Paul Anton Zevnik(7)

 

 

313,551

 

 

*

 

 

 

3,438,248

 

 

 

23.03

 

 

 

17.84

 

Gilbert R. Vasquez(8)

 

 

713,590

 

 

1.17

 

 

 

 

 

 

 

 

*

 

Patricia Diaz Dennis(9)

 

 

73,382

 

 

*

 

 

 

 

 

 

 

 

*

 

Juan Saldívar von Wuthenau(10)

 

 

445,983

 

 

*

 

 

 

 

 

 

 

 

*

 

Martha Elena Diaz(11)

 

 

115,372

 

 

*

 

 

 

 

 

 

 

 

*

 

Fehmi Zeko(12)

 

 

73,382

 

 

*

 

 

 

 

 

 

 

 

*

 

All executive officers and directors as a group(13)

   (10 persons)

 

 

3,464,097

 

 

 

4.49

 

 

 

14,927,613

 

 

 

100

 

 

 

74.06

 

> 5% Security Holders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

American Century Investment Management Inc.(14)

 

 

10,555,313

 

 

 

17.37

 

 

 

 

 

 

 

 

 

5.03

 

BlackRock, Inc.(15)

 

 

6,000,729

 

 

 

9.88

 

 

 

 

 

 

 

 

 

2.86

 

Dimensional Fund Advisors LP(16)

 

 

3,903,448

 

 

 

6.42

 

 

 

 

 

 

 

 

 

1.86

 

 

Beneficial ownership representing less than one percent is denoted with an asterisk (*).

 

(1)

The number of Class A common stock does not include the shares of Class A common stock issuable upon conversion of the outstanding shares of Class B common stock.

(2)

Percentage of total voting power represents voting power with respect to all shares of our Class A common stock and Class B common stock, as a single class. The holders of our Class B common stock are entitled to 10 votes per share, and holders of our Class A common stock are entitled to one vote per share.

(3)

Consists of (i) 857,356 shares of Class A common stock held of record by Mr. Ulloa; (ii) 216,000 shares of Class A common stock issuable upon exercise of options that are exercisable within sixty days of April 5, 2021; (iii) 425 shares of Class A common stock held by Mr. Ulloa’s spouse; (iv) 889,848 shares of Class B common stock held by The Walter F. Ulloa Irrevocable Trust of 1996; and (v) 10,599,517 shares of Class B common stock held by the Seros Ulloa Family Trust of 1996.  With respect to Mr. Ulloa’s percentage ownership of Class A Common Stock, all shares of Class B Common Stock are assumed to have been converted into Class A common stock since such shares are convertible at the option of the holder thereof within sixty days of April 5, 2021.  In addition, pursuant to the Voting Agreement, Mr. Ulloa and Mr. Zevnik have agreed to vote all shares held by them (i) in favor of the election of each of them as directors, (ii) in favor of the election of any other nominee for election as director as directed by Mr. Ulloa, and (iii) any time a matter other than election or removal of directors is submitted to the stockholders of the company, as directed by Mr. Ulloa.  Mr. Ulloa disclaims beneficial ownership of shares beneficially owned by Mr. Zevnik.

(4)

Consists of 229,001 shares of Class A common stock held by The Young Family Trust.

(5)

Consists of (i) 219,778 shares of Class A common stock held of record by Mr. Liberman; and (ii) 99,000 shares of Class A common stock issuable upon exercise of options that are exercisable within sixty days of April 5, 2021.

(6)

Consists of 43,108 shares of Class A common stock held of record by Mr. Meyer.

(7)

Consists of (i) 45,478 shares of Class A common stock held of record by Mr. Zevnik; (ii) 108,073 shares of Class A common stock issuable upon the settlement of restricted stock units releasable within sixty days of April 5, 2021; (iii) 10,000 shares of Class A common stock held by The Zevnik Charitable Foundation issuable upon the settlement of restricted stock units releasable within sixty days of April 5, 2021; (iv) 150,000 shares of Class A common stock issuable upon exercise of options that are exercisable within sixty days of April 5, 2021; (v) 2,887,582 shares of Class B common stock held by The Paul A. Zevnik Revocable Trust of 2000; and (vi) 550,666 shares of Class B common stock held by The Paul A. Zevnik Irrevocable Trust of 1996.  With respect to Mr. Zevnik’s percentage ownership of Class A Common Stock, all shares of Class B Common Stock are assumed to have been converted into Class A common stock since such shares are convertible at the option of the holder thereof within sixty days of April 5, 2021.  In addition, pursuant to the Voting Agreement, Mr. Ulloa and Mr. Zevnik have agreed to vote all shares held by them (i) in favor of the election of each of them as

23


 

directors, (ii) in favor of the election of any other nominee for election as director as directed by Mr. Ulloa, and (iii) any time a matter other than election or removal of directors is submitted to the stockholders of the company, as directed by Mr. Ulloa.

(8)

Consists of (i) 500,039 shares of Class A common stock held of record by Mr. Vasquez; (ii) 163,551 shares of Class A common stock issuable upon the settlement of restricted stock units releasable within sixty days of April 1, 2021; and (iii) 50,000 shares of Class A common stock issuable upon exercise of options that are exercisable within sixty days of April 5, 2021.

(9)

Consists of 137,551 shares of Class A common stock issuable upon the settlement of restricted stock units releasable within sixty days of April 5, 2021.

(10)

Consists of (i) 128,432 shares of Class A common stock held of record by Mr. Saldívar; (ii) 137,551 shares of Class A common stock issuable upon the settlement of restricted stock units releasable within sixty days of April 5, 2021; and (iii) 180,000 shares of Class A common stock issuable upon exercise of options that are exercisable within sixty days of April 5, 2021.

(11)

Consists of 115,372 shares of Class A common stock issuable upon the settlement of restricted stock units releasable within sixty days of April 5, 2021.

(12)

Consists of 73,382 shares of Class A common stock issuable upon the settlement of restricted stock units releasable within sixty days of April 5, 2021.

(13)

Consists of (i) 60,765,450 shares of Class A common stock; (ii) 14,927,613 shares of Class B common stock; (iii) 745,480 shares of Class A common stock issuable upon the settlement of restricted stock units releasable within sixty days of April 5, 2021; and (iv) 695,000 shares of Class A common stock issuable upon exercise of options exercisable within sixty days of April 5, 2021.

(14)

Based on the most recently available Schedule 13G/A jointly filed by American Century Companies, Inc., American Century Investment Management, Inc., American Century Capital Portfolios, Inc. and Stowers Institute for Medical Research with the SEC dated February 11, 2021. American Century Companies, Inc. beneficially owned 10,555,313 shares of Class A common stock, with sole voting power over 10,162,424 shares and sole dispositive power over 10,555,313 shares; American Century Investment Management, Inc., a wholly-owned subsidiary of American Century Companies, Inc., beneficially owned 10,555,313 shares of Class A common stock, with sole voting power over 10,162,424 shares and sole dispositive power over 10,555,313 shares; American Century Capital Portfolios, Inc. beneficially owned 7,680,000 shares of Class A common stock, with sole voting power and sole dispositive power over all of such shares; and Stowers Institute for Medical Research beneficially owned 10,555,313 shares of Class A common stock, with sole voting power over 10,162,424 shares and sole dispositive power over 10,555,313 shares. The address for the joint filers is 4500 Main Street, 9th Floor, Kansas City, Missouri 64111.

(15)

Based on the most recently available Schedule 13G/A filed with the SEC on January 27, 2021 by BlackRock, Inc. BlackRock, Inc. beneficially owned 6,000,729 shares of Class A common stock, with sole voting power over 5,834,130 shares and sole dispositive power over 6,000,729 shares. The address for BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055.

(16)

Based on the most recently available Schedule 13G/A filed with the SEC on February 12, 2021 by Dimensional Fund Advisors LP. Dimensional Fund Advisors LP beneficially owned 3,903,448 shares of Class A common stock, with sole voting power over 3,710,377 shares and sole dispositive power over 3,903,448 shares. The address for Dimensional Fund Advisors LP is 6300 Bee Cave Road, Building One, Austin, Texas 78746.

 

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors, executive officers and holders of more than 10% of a registered class of our equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of our Class A common stock and our other equity securities. Directors, executive officers and greater than 10% stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) reports they file. Based solely on our review of the copies of such forms received by us, or written representation from certain reporting persons that no Form 5s were required for those persons, we believe that all reporting requirements under Section 16(a) for the 2020 fiscal year were met in a timely manner by our directors, executive officers and greater than 10% beneficial owners.

 

 

COMPENSATION COMMITTEE REPORT

The Compensation Committee has furnished the following Compensation Committee Report for the 2020 fiscal year.  This Report does not constitute soliciting material and should not be deemed filed or incorporated by reference into any of our other filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except to the extent that we specifically incorporate this report by reference therein.

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis provided below (the “CD&A”) with management. In reliance on the reviews and discussions referred to above, the Compensation Committee has recommended to the Board, and the Board has approved, that the CD&A be included in this proxy statement and our Form 10-K for the fiscal year ended December 31, 2020 for filing with the SEC.

By the Compensation Committee of the Board of Directors:

 

 

Martha Elena Diaz, Chair

 

Gilbert R. Vasquez

 

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COMPENSATION DISCUSSION AND ANALYSIS

Administration of Compensation Program

The Compensation Committee of the Board of Directors (the “Committee”) has overall responsibility for evaluating and approving our executive compensation program. The Committee has the authority to review and determine the salaries and bonuses of our executive officers, including the Chief Executive Officer and the other Named Executive Officers, and to establish the general compensation policies for such individuals. The Committee also has the authority to administer and make discretionary equity incentive grants to all of our employees under our 2004 Equity Incentive Plan (as amended, the “2004 Plan”). Typically, our Chief Executive Officer makes compensation recommendations to the Committee with respect to our executive officers, in light of his role in the chief executive function, his unique perspective on the strategic direction of our company and day-to-day operations and his extensive experience in the Spanish-language media industry, and the Committee may accept, adjust or reject such recommendations in its discretion.

The Committee operates under a written charter. The duties and responsibilities of a member of the Committee are in addition to his or her duties as a member of the Board. The charter reflects these various responsibilities, and the Committee is charged with periodically reviewing the charter, which it does annually. The Committee’s membership is determined by the Board and is composed entirely of independent directors as defined under NYSE listing standards as currently in effect. The Committee has the ability to establish and delegate authority to a subcommittee. In addition, the Committee has the authority to engage the services of outside advisors, experts and others, including independent compensation consultants to assist the Committee. The Committee has engaged Frederic W. Cook & Co., Inc. (“Frederic Cook”) as the Committee’s outside compensation consultant to provide advice directly to the Committee as well as company management in continuing to evaluate and develop compensation policies and practices. The role of Frederic Cook is to provide independent advice and expertise in executive compensation policies and practices. In connection with its engagement of Frederic Cook, the Committee considered various factors regarding Frederic Cook’s independence including, but not limited to, the amount of fees received by Frederic Cook from the company as a percentage of Frederic Cook’s total revenue, its policies and procedures designed to prevent conflicts of interest, and the existence of any business or personal relationship that could impact Frederic Cook’s independence. After reviewing these and other factors, the Committee determined that Frederic Cook was independent and that its engagement did not present any conflicts of interest.

In reviewing executive officer compensation, the Committee does not engage in specific benchmarking of executive officer compensation against competitive market data or our peer group; however, the Committee reviews competitive market data from the media industry as well as other comparably-sized companies, including those companies we have determined to be in our peer group, in combination with an analysis of other factors as described further below. In 2020, the Compensation Committee reviewed competitive market data for companies in our peer group, which the Committee determined consisted of the following companies, each of which is a publicly-traded company for which data is publicly available:

 

•  Sinclair Broadcast Group, Inc.

 

•  TEGNA Inc.

 

•  Urban One, Inc.

 

 

 

 

 

•  Cumulus Media Inc.

 

•  Entercom Communications Corp.

 

•  Gray Television, Inc.

 

 

 

 

 

•  The E. W. Scripps Company

 

•  Nexstar Media Group, Inc.

 

•  Townsquare Media, Inc.

 

 

 

 

 

•  AutoWeb, Inc.

 

•  Fluent, Inc.

 

•  Saga Communications, Inc.

 

 

 

 

 

•  Tribune Media Company

 

•  Emmis Communications Corp.

 

•  Beasley Broadcast Group, Inc.

 

 

 

 

 

•  Trade Desk, Inc.

 

•  Hemisphere Media Group, Inc.

 

•  TrueCar, Inc.

 

 

 

 

 

•  QuinStreet, Inc.

 

•  TiVo Corporation

 

 

 

The Committee held two meetings and acted by written consent six times during 2020. The Board did not modify any action or recommendation made by the Committee with respect to executive compensation for the 2020 fiscal year.

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Objectives and Philosophy

The Committee believes that our executive compensation policies and practices are designed to attract and retain qualified executives, motivate and reward them for their performance as individuals and as a management team, and further align the interests of our executives with the interests of our stockholders. We are engaged in a very competitive industry, and our success depends significantly upon our ability to attract and retain qualified executives through competitive compensation packages offered to such individuals. In addition, the Committee believes in rewarding executives’ performance in obtaining key operating objectives, which, among other things, includes earnings, in light of general economic conditions, as well as specific company, industry and competitive conditions. The Committee also believes that our equity incentive compensation policies and practices should reward executives upon their continued employment with the company and the long-term price of our stock.

Our policy for allocating between long-term and current compensation is to ensure that we provide adequate base salary, bonus and equity incentive compensation to attract, retain and reward qualified executives for their services, while providing long-term incentives to reward retention and to maximize long-term value for the company and our stockholders. Our policy is to provide cash compensation in the form of base salary and bonuses to meet competitive salary requirements and, with respect to bonuses, to reward performance. We provide non-cash equity incentive compensation to meet competitive equity compensation needs, promote retention, reward performance and further align the interest of our executives with the company’s stockholders. The Committee typically evaluates total compensation and makes specific equity incentive compensation grants to Named Executive Officers in connection with services provided to us in their capacity as employees and executive officers. The Committee believes executives should be compensated for the services they perform without regard to existing equity holdings and typically the Committee does not take into account existing equity holdings of any Named Executive Officer in making new grants. The Committee believes its overall policies are competitive within our industry and in general, and are appropriate to fulfill our broad objectives with respect to executive compensation.

The Committee does not rely solely on predetermined formulas or a limited set of criteria when it evaluates the performance of our executive officers. For fiscal year 2020, the Committee considered management’s achievement of our short- and long-term goals in light of general economic conditions as well as specific company, industry and competitive conditions. The principal factors the Committee took into account in evaluating each executive officer’s compensation package for the 2020 fiscal year are described below. However, the Committee has the discretion to apply only some or additional factors, or entirely different factors, for future years. Moreover, all of our Named Executive Officers have entered into employment agreements with the company and many components of each such person’s compensation, including both base salary and bonus, are set by such agreements and not subject to modification during their respective terms.

We generally use substantially the same form of executive employment agreement for each of our executive officers, other than Mr. Ulloa, to ensure that key elements of compensation and terms of employment for each of our executive officers are materially consistent. We generally enter into employment agreements with our executive officers for a term of three years, which provides consistency among our employment agreements with our executive officers, stability in the employment of our executive officers, and a meaningful period of time and flexibility to evaluate the performance of the executive at the end of each such term.

Typically, Mr. Ulloa, as our Chief Executive Officer, makes compensation recommendations to the Committee with respect to our executive officers, and the Committee may accept, adjust or reject such recommendations in its discretion. Mr. Ulloa is a founder, member of the Board and principal stockholder of the company, in addition to serving as our Chairman and Chief Executive Officer.

Our total compensation program for our executive officers consists of the following key elements of compensation:

 

Base salary

 

Bonus

 

Equity incentive compensation

 

Certain additional benefits and perquisites

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Base Salary

It is our goal to provide a base salary for our executive officers that is sufficiently high to attract and retain a strong management team and reflect the individual executive’s responsibilities, value to us, experience and past performance. Base salaries for each of our executive officers are established pursuant to the terms of their respective employment agreements. Our standard executive employment agreement provides that an executive officer’s base annual salary may be increased during the term of the employment agreement, in the discretion of the Committee. Our standard executive employment agreement also does not permit a material reduction to be made to an executive’s then-current base annual salary, unless such reduction is applicable generally to other senior executives of the company. This provision is included to provide each executive with security with respect to their salary for competitive reasons, while providing us with flexibility in the event that the performance of the company, or the performance of our executive officers as a whole or other factors, such as macroeconomic conditions or disruptions caused by the COVID-19 pandemic, warrants the reduction in base salary of all executive officers.

Effective January 2020, we entered into a new three-year employment agreement with Mr. Ulloa (the “2020 Ulloa Agreement”), pursuant to which he continues to serve as our Chairman and Chief Executive Officer, and which agreement replaced a substantially similar employment agreement that expired by its terms on December 31, 2019. As part of the Committee’s review and negotiation of the 2020 Ulloa Agreement, the Committee evaluated various criteria, including our performance, the terms of Mr. Ulloa’s prior employment agreement, the terms of executive employment agreements for chief executive officers at other companies within our industry and in general, and compensation paid to Mr. Ulloa in past years. The Committee consulted with Frederic Cook in evaluating the compensation and terms of the 2020 Ulloa Agreement, and Frederic Cook advised the Committee on various aspects of chief executive officer compensation policies and practices, including such practices at other companies within our industry and in general, without engaging in specific benchmarking. The Committee also consulted with outside legal counsel in drafting the 2020 Ulloa Agreement. The 2020 Ulloa Agreement provides for an initial base salary of $1,378,912 per year commencing in 2020 (compared to an initial base salary of $1,250,000 per year under his prior employment agreement) and further provides that the initial base salary shall be reviewed at least annually prior to the anniversary of its effective date and may be increased, in the discretion of the Committee. In reviewing increases in the base salary, the 2020 Ulloa Agreement provides that the Committee shall consider factors including, but not limited to, the market for executives with skills and experience similar to those of Mr. Ulloa, performance considerations, and the nature and extent of salary increases given to other employees of the company during the prior year.

Effective January 2019, we entered into a new three-year employment agreement with Mr. Young (the “2019 Young Agreement”), pursuant to which he continues to serve as our Chief Financial Officer and Treasurer, and which agreement replaced a substantially similar employment agreement that expired by its terms on December 31, 2018. The 2019 Young Agreement provides for an initial base salary of $551,565 per year commencing in 2019 (compared to an initial base salary of $500,000 per year under his prior employment agreement), which may be increased in connection with any increases in base compensation given to the company’s employees and other senior executive officers, and such other factors as considered by the Committee, in its sole discretion. The Committee relied substantially upon our Chief Executive Officer to negotiate the material terms of the 2019 Young Agreement, and the Committee considered factors including Mr. Young’s performance during the term of his prior employment agreement; his experience in the industry and with the company; the responsibilities to be performed by Mr. Young during the term of the agreement; competitive considerations, including Mr. Young’s retention and incentive to enter into a new three-year employment agreement with us; and a general comparison of the base salaries of chief financial officers of other companies in our industry, without engaging in specific benchmarking.

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Effective March 2020, we entered into a new three-year employment agreement with Mr. Liberman (the “2020 Liberman Agreement”), pursuant to which he continues to serve as our President and Chief Operating Officer, and which agreement replaced a substantially similar employment agreement that expired by its terms on February 29, 2020. The 2020 Liberman Agreement provides for an initial base salary of $717,035 per year commencing in March 2020 (compared to an initial base salary of $650,000 per year under his prior employment agreement), which may be increased in connection with any increases in base compensation given to the company’s employees and other senior executive officers, and such other factors as considered by the Committee, in its sole discretion. The Committee relied substantially upon our Chief Executive Officer to negotiate the material terms of the 2020 Liberman Agreement, and the Committee considered factors including Mr. Liberman’s performance during the term of his prior employment agreement and the responsibilities to be performed by Mr. Liberman during the term of the 2020 Liberman Agreement; competitive considerations, including Mr. Liberman’s retention and incentive to enter into a new three-year employment agreement with us; and a general comparison of the base salaries of chief operating officers of other companies in our industry, without engaging in specific benchmarking.

Effective May 2019, we entered into a three-year employment agreement with Mr. Meyer (the “2019 Meyer Agreement”), pursuant to which he serves as our Chief Revenue Officer. The 2019 Meyer Agreement provides for an initial base salary of $500,000 per year, subject to increases in connection with any increases in base compensation given to the company’s employees and other senior executive officers, and such other factors as considered by the Committee, in its sole discretion. The Committee relied substantially upon our Chief Executive Officer to negotiate the material terms of the 2019 Meyer Agreement, and the Committee considered factors including Mr. Meyer’s experience in the industry, including his prior experience with the company; the responsibilities to be performed by Mr. Meyer during the term of the agreement; competitive considerations, including Mr. Meyer’s retention and incentive to commence employment with the company and enter into a new three-year employment agreement with us; and a general comparison of the base salaries of executive officers of other companies in our industry, without engaging in specific benchmarking.

Effective November 2020, we entered into a three-year employment agreement with Mr. Saldívar (the “2020 Saldívar Agreement”), pursuant to which he serves as our Chief Digital, Strategy and Accountability Officer. The 2020 Saldívar Agreement provides for an initial base salary of $395,000 per year, subject to increases in connection with any increases in base compensation given to the company’s employees and other senior executive officers, and such other factors as considered by the Committee, in its sole discretion. The Committee relied substantially upon our Chief Executive Officer to negotiate the material terms of the 2020 Saldívar Agreement, and the Committee considered factors including Mr. Saldívar’s experience in the industry, including his prior experience with the company; the responsibilities to be performed by Mr. Saldívar during the term of the agreement; competitive considerations, including Mr. Saldívar’s incentive to cease his consulting practice and part-time services to the company in order to provide services full-time for a three-year term; and a general comparison of the base salaries of executive officers of other companies in our industry, without engaging in specific benchmarking.

On April 15, 2020, in light of circumstances relating to the COVID-19 pandemic, we reduced the annual base salaries of all our then Named Executive Officers, effective as of April 16, 2020. The salary reductions and reduced annual base salaries of our Named Executive Officers were as follows: (i) Mr. Ulloa, a reduction from $1,378,912 to $1,068,657; (ii) Mr. Liberman, a reduction from $717,035 to $591,554; (iii) Mr. Young, a reduction from $568,111 to $482,895; and (iv) Mr. Meyer, a reduction from $515,000 to $437,750. On December 3, 2020, we reinstated the annual base salaries of each of those Named Executive Officers to their previous levels, effective as of January 1, 2021. Additionally, on December 15, 2020, each of the Named Executive Officers other than Mr. Saldívar received a one-time payment equaling the difference between (i) his actual salary compensation earned between April 16, 2020 and December 31, 2020 and (ii) the amount he would have earned in salary compensation during that period based on his salary immediately prior to the April 2020 reduction. The one-time payments were as follows: (i) Mr. Ulloa, a payment of $219,764; (ii) Mr. Liberman, a payment of $88,882; (iii) Mr. Young, a payment of $60,362; and (iv) Mr. Meyer, a payment of $54,719.

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Bonus

Similarly as discussed above with respect to base salary, the Committee believes that we should provide cash bonus compensation to our executive officers that is sufficiently high to attract and retain a strong management team and reflects the individual executive’s responsibilities and service to the company, value to the company, experience and past performance. Bonuses granted to our executive officers are also established, in part, pursuant to the terms of their respective employment agreements.

Under the terms of the 2020 Ulloa Agreement, Mr. Ulloa is eligible to receive an annual cash bonus of up to 100% of his then-applicable base salary pursuant to such factors, criteria or annual bonus plan(s) of the company, as determined by the Committee from time to time. The Committee has the discretion to determine, on either a prospective or retrospective basis, the factors, criteria or annual bonus plan(s), including performance goals which must be met, if any, for such annual cash bonus to be paid to Mr. Ulloa for each applicable year of his employment agreement.

With respect to the bonus for 2020 for Mr. Ulloa under the 2020 Ulloa Agreement, the Committee primarily considered: (i) the performance and specific accomplishments of Mr. Ulloa during 2020; (ii) the company’s overall performance during 2020; and (iii) the aggregate bonuses received by Mr. Ulloa in prior years, including the fact that Mr. Ulloa had requested that the Committee refrain from granting the full amount of the bonus which he was eligible to receive in prior years. Following its review, the Committee granted a bonus to Mr. Ulloa in the amount of $275,000 with respect to calendar year 2020.

Bonuses for executive officers are recommended by our Chief Executive Officer and reviewed and approved by the Committee, in its sole discretion. Under the terms of the 2019 Young Agreement, Mr. Young is eligible to receive an annual bonus of up to 100% of his then-applicable base salary in the sole discretion of the Committee. Under the terms of the 2020 Liberman Agreement, Mr. Liberman is eligible to receive an annual bonus of up to 100% of his then-applicable base salary, in the sole discretion of the Committee. Under the terms of the 2019 Meyer Agreement, Mr. Meyer is eligible to receive quarterly bonuses for each of the first three quarters of each year in an amount up to $50,000 per quarter, in the event the company achieves net revenue levels to be determined by the company. Additionally, under the terms of the 2019 Meyer Agreement, Mr. Meyer is eligible to receive an annual bonus of up to $150,000, with each bonus payment subject to the company’s achievement of net revenue levels to be determined by the company, and up to an additional $600,000, in the event the company overachieves those financial targets. Under the terms of the 2020 Saldívar Agreement, Mr. Saldívar is eligible to receive an annual target bonus of $200,000 in the sole discretion of the Committee.

In April 2021, the Committee approved (i) a discretionary bonus in the amount of $161,400 to Mr. Young for calendar year 2020, (ii) a discretionary bonus in the amount of $205,500 to Mr. Liberman for calendar year 2020, (iii) to Mr. Meyer, a discretionary bonus in the amount of $100,000 for calendar year 2020 and a performance bonus in accordance with his employment agreement in the amount of $86,500 based upon the company’s achievement of certain net revenue targets in calendar year 2020, and (iv) a discretionary bonus in the amount of $161,400 to Mr. Saldívar for calendar year 2020. Factors considered by our Chief Executive Officer in recommending, and by the Committee in reviewing and approving, the discretionary bonuses included: (i) the performance and specific accomplishments of each of Messrs. Young, Liberman, Meyer and Saldívar and each of their respective departments during 2020; (ii) the company’s overall performance during 2020; and (iii) general competitive considerations, including retention purposes. The Committee relied substantially upon our Chief Executive Officer’s recommendation with respect to the amount of these bonuses and did not engage in specific benchmarking.

Equity Incentive Compensation

The Committee believes in linking long-term incentives to stock ownership. The Committee believes that the incentive of future stock ownership encourages employees to remain employed by the company and motivates them to use their best efforts at all times. In addition, the Committee believes that equity incentive compensation further enhances the alignment of the interests of our executive officers and other employees with those of our stockholders. In May 2004, our stockholders adopted the 2004 Plan, which replaced the 2000 Plan, and the 2004 Plan is our primary vehicle for offering equity incentive compensation to our directors, executive officers and other employees. In 2014, our stockholders approved an amendment to the 2004 Plan to extend the term of the plan until May 2024. The 2004 Plan is administered by the Committee, which determines the type and amount of grants, vesting requirements and other features and conditions of equity incentive compensation awards. Each of our Named Executive Officers is

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eligible to receive grants of stock options, restricted stock or other equity incentive grants under the 2004 Plan. We typically grant equity incentive awards to our executive officers and other key employees on an annual basis. We do not have specific stock ownership guidelines applicable to our executive officers.

We do not use any pre-determined formula in determining the amount of equity incentive grants that are granted to executive officers. We base the amount of equity incentive grants on such considerations as the level of experience and individual performance of such executive officer, the number of stock options or restricted stock units granted to such executive officer in previous grants, and general competitive considerations, including retention of each executive officer. The Committee relies substantially on our Chief Executive Officer to make specific recommendations regarding which individuals, including our Named Executive Officers, should receive equity incentive grants and the amounts of such grants, in recognition of the fact that our Chief Executive Officer is in the best position to evaluate which individuals are most likely to be motivated by such incentive compensation, and are most valuable to our performance and entitled to be rewarded, by such incentive compensation. The Committee believes that executives should be compensated for the services that they perform without regard to existing equity holdings, and typically does not take into account existing equity holdings of any Named Executive Officer.

As part of the Committee’s ongoing review and evaluation of equity incentive compensation, during 2020 the Committee reviewed our objectives regarding equity incentive compensation and the effectiveness of various forms of equity incentive grants with respect to these objectives. The Committee consulted with Frederic Cook, which prepared a report for the Committee’s review that compared our equity incentive compensation practices to a peer group of comparably-sized media companies and advised the Committee on various aspects of equity compensation policies and practices, including, among other things, types of equity incentive grants, appropriate vesting criteria and the equity incentive compensation policies and practices of other companies in our industry and generally. The Committee also sought the input of our Chief Executive Officer with respect to the appropriate pool of employees who should receive equity incentive grants, appropriate vesting criteria and the regulatory, tax and accounting effects of various forms of equity incentive grants. The Committee considered factors including, among other things: (i) the Committee’s objectives with respect to equity incentive compensation; (ii) general economic and specific industry conditions experienced by the company; (iii) the efforts and performance of the company’s executive officers and employees; (iv) various types of equity incentive awards; (v) various forms of vesting components, including time-based vesting and performance-based vesting; (vi) the appropriate length and frequency of time-based vesting components; (vii) aggregate share usage; and (viii) the regulatory, tax and accounting treatment of various types of equity incentive awards, including the effects of Accounting Standards Codification (“ASC”) 718, “Stock Compensation” issued by the Financial Accounting Standards Board. Following its review, the Committee determined that restricted stock units using time-based vesting criteria were an effective means of meeting our equity incentive compensation objectives for the 2020 fiscal year.

In December 2020, the Committee granted a total of 2,336,000 restricted stock units to our executive officers and other key employees, with 1,010,000, or 43%, of such amount being granted to our Named Executive Officers. These restricted stock units were awarded under the 2004 Plan, and each restricted stock unit entitles the recipient to receive one share of our Class A common stock for each restricted stock unit when the applicable vesting requirements are satisfied. These restricted stock units vest as follows: (i) 25% on December 20, 2020; (ii) 25% on December 20, 2021; (iii) 25% on December 20, 2022; and (iv) 25% on December 20, 2023; in each case, provided that the recipient is employed by us on such date.

Benefits and Perquisites

With limited exceptions, the benefits and perquisites provided to our executive officers, including our Named Executive Officers, are generally available to all of our employees. Exceptions include a monthly automobile allowance provided to certain executives, including our Named Executive Officers, and the cost of life insurance premiums for the benefit of certain of our Named Executive Officers. In addition, we provide, without cost to employees, a travel accident insurance policy that provides a travel accident benefit to all employees, with a greater accident benefit for executives than for non-executives. We also generally pay a portion of the health insurance premiums for our employees, and for certain executive officers, including our Named Executive Officers, we pay a greater amount or all of the health insurance premiums than the amount that we pay for employees in general.

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Change in Control

Pursuant to our standard executive employment agreement, should there be a change in control of the company, including a change of control of the company where the executive officer is not offered continued employment as a senior executive or is required to move his residence outside of the metropolitan area provided in his then-current employment agreement, the executive officer will be entitled to receive all accrued salary and benefits through the date of termination, any discretionary bonus that has been approved by the Committee and a severance payment equal to one year of his then-current base salary.

The current employment agreements for each of our Named Executive Officers provide for this type of severance compensation, except as described as follows:

 

With respect to Mr. Ulloa, if, following a change in control of the company, Mr. Ulloa’s employment is terminated by us without cause, or is terminated by him for good reason (as each such term is defined in the 2020 Ulloa Agreement), he would be entitled to receive: (i) all accrued salary and bonuses through the date of termination; (ii) a lump sum severance payment in an amount equal to the sum of (x) three times his then-current base salary, plus (y) three times his average annual bonus for the three years preceding such termination; and (iii) continuation of all benefit coverage (or reimbursement for expenses incurred in collection with such benefit coverage) for a period of two years after such termination. In addition, upon any termination described above, there would be (i) immediate vesting of, and the lapse of all restrictions applicable to, all unvested stock options and any other equity incentives that vest solely based on the passage of time granted to Mr. Ulloa and outstanding immediately prior to the such termination; and (ii) vesting of any performance based equity incentives awarded to Mr. Ulloa and outstanding immediately prior to the such termination, such vesting to occur in accordance with the terms of the applicable award agreements and plans determined as if Mr. Ulloa’s employment with the company had not terminated.

 

With respect to Mr. Young, if his employment is terminated by us without cause or by Mr. Young for “good reason” (as each such term is defined in the 2019 Young Agreement), including a change of control of the company where Mr. Young is required to move the principal location at which his job duties will be based outside the greater Los Angeles, California area, Mr. Young would be entitled to receive all accrued salary and benefits through the date of termination, as well as a severance payment (the “Severance Payment”) equal to (i) Mr. Young’s then-current base salary, plus (ii) a prorated bonus amount equal to the product of: (x) the average annual bonuses received by Mr. Young for the two years preceding the year of such termination, multiplied by (y) a fraction, the numerator of which is the number of days preceding such termination in the then-current calendar year, and the denominator of which is 365. In addition, after a change is required to move the principal location at which his job duties will be based outside the greater Los Angeles, California area in control of the company, if Mr. Young is not offered continued employment as chief financial officer of the surviving or acquiring entity or the company terminates his employment at any time during the remainder of the term of the agreement for any reason other than for cause, he will be entitled to receive: (i) all accrued salary and benefits through the date of termination; (ii) the Severance Payment; (iii) immediate vesting of, and lapse of all restrictions applicable to, all unvested and outstanding time-based equity incentive grants; and (iv) vesting of all unvested and outstanding performance-based equity incentive grants, at such time and in the event that any applicable performance-based criteria have been met under the terms of applicable award agreements as if Mr. Young had not terminated employment with the company and with the lapse of all restrictions applicable to vesting based on the passage of time.

 

With respect to Mr. Liberman, instead of receiving a severance payment equal to all accrued salary and benefits through the date of termination and one year of his then-current base salary, he would be entitled to receive a severance payment equal to (i) all accrued salary and benefits through the date of termination, (ii) a severance payment equal to (a) one year of his then-current base salary, multiplied by (b) 1.5, (iii) a discretionary annual bonus for the calendar year prior to Mr. Liberman’s termination (if Mr. Liberman has not yet received any discretionary bonus for such calendar year) equal to the average of (a) the annual bonus received by Mr. Liberman for the calendar year preceding such prior calendar year and (b) the annual discretionary bonus received by the company’s Chief Financial Officer and General Counsel for such prior calendar year, and (iv) a prorated bonus amount equal to the product of: (a) the average of the annual bonuses received by Mr. Liberman for the two full calendar years preceding the year of such

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termination (including, if applicable, as calculated under the immediately preceding subsection (iii)), multiplied by (b) a fraction, the numerator of which is the number of days preceding such termination in the then-current calendar year, and the denominator of which is 365. If Mr. Liberman’s employment is terminated by the company for cause, he will only be entitled to receive accrued salary and benefits through the date of termination and shall be ineligible for any bonus or other compensation.

 

With respect to Mr. Meyer, instead of receiving a severance payment equal to all accrued salary and benefits through the date of termination and one year of his then-current base salary, he would be entitled to receive a severance payment equal to (i) all accrued salary and benefits through the date of termination, (ii) a severance payment equal to (a) one year of his then-current base salary, multiplied by (b) 0.5, and (iii) a prorated bonus amount equal to the product of: (a) the quarterly bonus that Mr. Meyer would be entitled to receive had his employment not been terminated during the quarter for such quarterly bonus, multiplied by (b) a fraction, the numerator of which is the number of days preceding such termination in the then-current calendar quarter, and the denominator of which is 90, and (iv) if the termination occurs in the fourth quarter of the year, a prorated bonus amount equal to the product of: (a) the annual bonus that Mr. Meyer would be entitled to receive had his employment not been terminated during the fourth quarter, multiplied by (b) a fraction, the numerator of which is the number of days during the year in which Mr. Meyer was employed by the company and the denominator of which is 365.

 

Mr. Saldívar is not entitled to any additional payments in the event of a change in control of the company.

Director Compensation

For directors who are also employees of the company, we do not provide additional compensation and such individuals are compensated only for their service as an officer or employee of the company, as the Committee believes that employee directors are adequately compensated for all of their responsibilities, including service as a director, through their compensation as employees.

Directors of the company who are not employees of the company are compensated for their services as follows: (i) an annual grant of restricted stock units under the 2004 Plan that has a grant date value of $80,000, with the grant to be made effective as of the date of the annual stockholder meeting; (ii) $65,000 per year, and for committee chairs, an additional cash retainer ($15,000 for the Audit Committee Chair, $10,000 for the Compensation Committee Chair and $10,000 for the Nominating/Governance Committee Chair); (iii) $1,250 for attendance at each Board meeting in person ($500 if telephonically); and (iv) $1,000 for attendance at each committee meeting in person ($500 if telephonically).

As part of the Committee’s ongoing review of director compensation, during 2020 the Committee consulted with Frederic Cook, which advised the Committee on various aspects of director equity compensation policies and practices. The Committee also sought the input of our Chairman and Chief Executive Officer, who, as an officer of the company, was not entitled to receive any compensation for his services as a director, with respect to the implementation of director equity incentive compensation. The Committee also considered the regulatory, tax and accounting effects of various forms of equity incentive grants. The Committee completed its review of director compensation in March 2020, and determined that while the existing director compensation policy was an effective means of meeting our director compensation objectives.

At the Board’s meeting on May 28, 2020, in accordance with the company’s director compensation policy, the Board as a whole granted 47,904 restricted stock units to each non-employee director for calendar year 2020. The restricted stock units vest on the earlier of (a) the first anniversary of the grant date or (b) the business day immediately preceding the date of the 2021 Annual Meeting, provided that the recipient is a member of the Board on such date. The underlying shares of Class A common stock relating to such restricted stock units shall be distributed to each such director at the time of termination of such director’s service with the company, other than with regard to Mr. Zevnik, who elected to receive such underlying shares upon vesting for the purposes of charitable giving. Additionally, in light of the COVID-19 pandemic and its effects on the company’s business, as well as on the advice of Frederic Cook regarding non-employee director compensation policies and practices of the Company and other publicly-traded companies, the Board reduced the annual cash retainer for each non-employee director for the 2020-2021 term by 20 percent (from $65,000 to $52,000) at its meeting on May 28, 2020. At the Board’s meeting on December 10, 2020,

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the Board reinstated the annual cash retainer for each non-employee director for the 2020-2021 director term to $65,000, retroactive to May 28, 2020, in accordance with the company’s director compensation policy. This decision was based on factors including new advice of Frederic Cook regarding non-employee director compensation policies and practices of the company and other publicly-traded companies, as well as our reinstatement of employee salaries to the amounts prior to the 2020 pandemic-related salary reduction and payment of a one-time bonus to employees to make up for salary compensation lost due to that salary reduction.

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Tax Accounting and Treatment

Accounting for Stock-Based Compensation

Beginning January 1, 2006, we began accounting for stock-based payments, including awards granted under the 2004 Plan, in accordance with the requirements of ASC 718. For additional information regarding ASC 718, please refer to Note 2, “Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements included in the 10-K.

Summary Compensation Table for Fiscal Year 2020, 2019 and 2018

 

Name and Principal

Position

 

Year

 

Salary ($)

 

 

Bonus ($) (1)

 

 

Stock

Awards

($) (2)

 

 

 

Option

Awards

($) (2)

 

 

Non-Equity

Incentive Plan

Compensation

($)

 

 

Change in

Pension

Value and

Nonqualified

Deferred

Compensation

Earnings

($)

 

 

All Other

Compensation

($)

 

 

 

Total

($)

 

Walter F. Ulloa,

 

2020

 

$

1,378,912

 

 

$

275,000

 

 

$

1,716,000

 

 

 

$

 

 

$

 

 

$

 

 

$

35,308

 

(3)

 

$

3,405,220

 

Chief Executive Officer

 

2019

 

$

1,313,250

 

 

$

250,000

 

 

$

1,076,000

 

 

 

$

 

 

$

 

 

$

 

 

$

35,308

 

(3)

 

$

2,674,558

 

 

 

2018

 

$

1,275,000

 

 

$

250,000

 

 

$

1,085,000

 

 

 

$

 

 

$

 

 

$

 

 

$

35,308

 

(3)

 

$

2,645,308

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Christopher T. Young,

 

2020

 

$

568,112

 

 

$

161,400

 

 

$

343,200

 

 

 

$

 

 

$

 

 

$

 

 

$

24,158

 

(4)

 

$

1,096,870

 

Chief Financial Officer

 

2019

 

$

551,565

 

 

$

176,000

 

 

$

201,750

 

 

 

$

 

 

$

 

 

$

 

 

$

24,158

 

(4)

 

$

953,473

 

 

 

2018

 

$

525,300

 

 

$

176,000

 

 

$

170,500

 

 

 

$

 

 

$

 

 

$

 

 

$

24,158

 

(4)

 

$

895,958

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jeffrey A. Liberman,

 

2020

 

$

717,035

 

 

$

205,500

 

 

$

405,600

 

 

 

$

 

 

$

 

 

$

 

 

$

24,720

 

(5)

 

$

1,352,855

 

President and Chief Operating Officer

 

2019

 

$

682,890

 

 

$

225,000

 

 

$

242,100

 

 

 

$

 

 

$

 

 

$

 

 

$

24,720

 

(5)

 

$

1,174,710

 

 

 

2018

 

$

663,000

 

 

$

225,000

 

 

$

248,000

 

 

 

$

 

 

$

 

 

$

 

 

$

24,720

 

(5)

 

$

1,160,720

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Karl a. Meyer,

 

2020

 

$

515,000

 

 

$

186,500

 

 

$

343,200

 

 

 

$

 

 

$

 

 

$

 

 

$

20,308

 

(6)

 

$

1,065,008

 

Chief Revenue Officer

 

2019

 

$

318,269

 

 

$

171,000

 

 

$

201,750

 

 

 

$

 

 

$

 

 

$

 

 

$

11,846

 

(6)

 

$

702,865

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Juan Saldívar von Wuthenau

 

2020

 

$

65,833

 

(7)

$

161,400

 

 

$

343,200

 

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

$

570,433

 

Chief Digital, Strategy and Accountability Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Bonus amounts awarded to each Named Executive Officer were based on the satisfaction of factors set forth in their respective employment agreements, as described in the CD&A.

(2)

For a discussion of the assumptions used in the valuation of awards (estimated forfeitures are not considered for purposes of these computations and the full fair value is recognized in the year of grant), see Note 14 "Equity Incentive Plans" in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K, as filed with the SEC on April 12, 2021.

(3)

For each of 2020, 2019 and 2018, includes $24,000 as an automobile allowance and $11,308 for medical insurance premiums.

(4)

For each of 2020, 2019 and 2018, includes $12,000 as an automobile allowance, $11,308 for medical insurance premiums and $850 for life insurance premiums.

(5)

For each of 2020, 2019 and 2018, includes $12,000 as an automobile allowance, $11,308 for medical insurance premiums and $1,412 for life insurance premiums.

(6)

For 2020, includes $9,000 as an automobile allowance and $11,308 for medical insurance premiums. For 2019, includes $5,250 as an automobile allowance and $6,596 for medical insurance premiums.

(7)

In 2020, represents salary compensation since November 5, 2020, which is the effective date of the 2020 Saldívar Agreement. In 2020, there was an additional $549,271 in fees paid to SWS, of which Mr. Saldívar is owner and chief executive officer, in connection with a consulting agreement between the company and SWS.

 

35


 

 

Pay Ratio Disclosure

In August 2015, pursuant to a mandate under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the chief executive officer.  Registrants were obligated to comply with the pay ratio rule for the first fiscal year beginning on or after January 1, 2017.

In order to determine the median employee, we prepared a list of all employees as of December 31, 2020. As permitted by SEC rules, for purposes of preparing this list for fiscal year 2020 we excluded:

 

all 177 of the employees of several entities collectively doing business as Cisneros Interactive (“Cisneros Interactive”), which we acquired during 2020; and

 

30 employees located in Brazil, Chile, Colombia, Costa Rica, Israel, the United Kingdom and Uruguay, comprising 3.5% of our total employees.

As a result of these permitted exclusions, we had a total of 832 employees on this list as of December 31, 2020.

We identified the median employee by examining the 2020 total cash compensation for all such individuals on this list, excluding our chief executive officer, who were employed by us on December 31, 2020 (whether employed on a full-time, part-time or seasonal basis). For such employees, we did not make any assumptions, adjustments or estimates with respect to total cash compensation, and we did not annualize the compensation for any full-time employees that were not employed by us for all of 2020. We applied a U.S. dollar exchange rate to the compensation elements paid to our employees in currencies other than the U.S. dollar.

Using reasonable estimates in accordance with SEC rules, we determined the compensation of our median employee by: (i) calculating the annual total compensation described above for each of our non-excluded employees; (ii) ranking the annual total compensation of all non-excluded employees, except for the chief executive officer, from highest to lowest; and (iii) identifying the employee who was the 416th person on that ranking (the “Median Employee”).

After identifying the Median Employee, we calculated annual total compensation for both employees using the same methodology we use for our named executive officers as set forth in “Summary Compensation Table for Fiscal Year 2020, 2019 and 2018” above, and then we calculated the average annual total compensation of those two employees.

As a result of the foregoing, the annual total compensation for fiscal year 2020 for our chief executive officer was $3,405,220 and for the Median Employee it was $42,883, resulting in a ratio of 79.4 to 1. Given the different methodologies that various public companies are using to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies.

 

 

 

36


 

 

Grants of Plan-Based Awards During 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All Other

 

 

All Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock Awards:

 

 

Option Awards:

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of

 

 

 

 

 

 

 

 

Number of

 

 

Number of

 

 

Exercise or

 

 

 

 

 

 

 

 

 

Non-Equity

 

 

Estimated Future Payouts Under Non-

 

 

Estimated Future Payouts Under

 

 

Shares of

 

 

Securities

 

 

Base Price

 

 

Grant Date

 

 

 

 

 

Incentive Plan

 

 

Equity Incentive Plan Awards

 

 

Equity Incentive Plan Awards (1)

 

 

Stock or

 

 

Underlying

 

 

of Option

 

 

Fair Value

 

Name

 

Grant

Date

 

Units Granted

(#)

 

 

Threshold

($)

 

 

Target

($)

 

 

Maximum

($)

 

 

Threshold

(#)

 

 

Target

(#)

 

 

Maximum

(#)

 

 

Units

(#)

 

 

Options

(#)

 

 

Awards

($ / Sh)

 

 

of Stock and

Option Awards

 

Walter F. Ulloa

 

12/14/20

 

 

 

 

$

 

 

$

 

 

$

 

 

 

550,000

 

 

 

550,000

 

 

 

550,000

 

 

 

 

 

 

 

 

$

3.12

 

 

$

3.12

 

Christopher T. Young

 

12/14/20

 

 

 

 

$

 

 

$

 

 

$

 

 

 

110,000

 

 

 

110,000

 

 

 

110,000

 

 

 

 

 

 

 

 

$

3.12

 

 

$

3.12

 

Jeffrey A. Liberman

 

12/14/20

 

 

 

 

$

 

 

$

 

 

$

 

 

 

130,000

 

 

 

130,000

 

 

 

130,000

 

 

 

 

 

 

 

 

$

3.12

 

 

$

3.12

 

Karl A. Meyer

 

12/14/20

 

 

 

 

$

 

 

$

 

 

$

 

 

 

110,000

 

 

 

110,000

 

 

 

110,000

 

 

 

 

 

 

 

 

$

3.12

 

 

$

3.12

 

Juan Saldívar von Wuthenau

 

12/14/20

 

 

 

 

$

 

 

$

 

 

$

 

 

 

110,000

 

 

 

110,000

 

 

 

110,000

 

 

 

 

 

 

 

 

$

3.12

 

 

$

3.12

 

 

(1)

Represents restricted stock unit awards which vest as follows: (i) 25.0% on December 20, 2020, provided the recipient is employed by the company on such date; (ii) 25.0% on December 20, 2021, provided the recipient is employed by the company on such date; (iii) 25.0% on December 20, 2022, provided the recipient is employed by the company on such date; and (iv) 25.0% on December 20, 2023, provided the recipient is employed by the company on such date.

Employment Agreements

Agreement with Walter F. Ulloa. Effective January 1, 2020, we entered into the 2020 Ulloa Agreement, pursuant to which he continues to serve as our Chairman and Chief Executive Officer. The 2020 Ulloa Agreement replaces a substantially similar agreement which was effective as of January 1, 2017 through December 31, 2019. The 2020 Ulloa Agreement is for a term that commenced on January 1, 2020 and terminates on December 31, 2022, and provides for an initial base salary of $1,378,912 per year.  Mr. Ulloa’s salary shall be reviewed at least annually by the Compensation Committee and, in that committee’s discretion, the base salary may be increased in subsequent years of the term of the agreement. Mr. Ulloa’s annual base salary is currently $1,378,913.

Mr. Ulloa is eligible to receive an annual bonus of up to 100% of his then-applicable base salary pursuant to such factors, criteria or annual bonus plan(s) of the company as determined by the Compensation Committee from time to time. Mr. Ulloa is also eligible to receive grants of stock options, restricted stock and other grants under the 2004 Plan, or any successor plan thereto, on the same terms as the company’s other executive officers.

If Mr. Ulloa’s employment is terminated by us without cause or is a constructive termination without cause, Mr. Ulloa will be entitled to receive: (i) all accrued salary and bonuses through the date of termination; (ii) a lump sum severance payment in an amount equal to the greater of (x) two times his then-current base salary or (y) the amount of his then-current base salary multiplied by a fraction, the numerator of which is the number of months remaining in the term of the agreement and the denominator of which is 12; (iii) an additional lump sum severance payment in an amount equal to two times his average annual bonus for the three years preceding such termination; (iv) continuation of all benefit coverage (or reimbursement for expenses incurred in collection with such benefit coverage) for a period of two years after such termination; (iv) immediate vesting of, and the lapse of all restrictions applicable to, all unvested stock options and any other equity incentives that vest solely based on the passage of time granted to such him and outstanding immediately prior to the such termination; and (v) vesting of any performance based equity incentives awarded to him and outstanding immediately prior to the such termination, such vesting to occur in accordance with the terms of their applicable award agreements and plans determined as if such Mr. Ulloa’s employment with the company had not terminated. If a termination without cause follows a change of control of the company or is initiated by Mr. Ulloa for good reason, as specified in the agreement, Mr. Ulloa shall be entitled to receive the amounts specified in the first sentence of this paragraph; provided, however, that in lieu of the amount specified in clause (ii) of such sentence, Mr. Ulloa shall be entitled to receive a lump sum severance payment in an amount equal to three times the sum of his then-current base salary, and in lieu of the amount specified in clause (iii) of such sentence, Mr. Ulloa shall be entitled to receive a lump sum severance payment in an amount equal to three times his average annual bonus for the three years preceding such termination. If Mr. Ulloa’s employment is terminated by the company for cause, all payments under Mr. Ulloa’s agreement shall cease, except for all accrued salary and bonuses through the date of termination.

 

37


 

 

The employment agreements that we have entered into with our other Named Executive Officers are substantially similar to each other and are summarized below.

Agreement with Christopher T. Young. Effective January 1, 2019, we entered into the 2019 Young Agreement, pursuant to which he continues to serve as our Chief Financial Officer and Treasurer. The agreement replaces a substantially similar agreement which was effective as of January 1, 2016 through December 31, 2018. The 2019 Young Agreement provides for an initial base salary of $551,565 per year, which may be increased in the discretion of the Compensation Committee. The agreement with Mr. Young expires on December 31, 2021. Mr. Young’s annual base salary is currently $568,112.

Mr. Young is eligible to receive an annual bonus, in the discretion of the Compensation Committee, of up to 100% of his then-applicable base salary. Mr. Young is also eligible to receive equity incentive grants under the 2004 Plan, or any successor plan thereto, in the discretion of the Compensation Committee.

If Mr. Young’s employment is terminated by us without cause or by Mr. Young for good reason (as each such term is defined in the 2019 Young Agreement), including a change of control of the company where Mr. Young is required to move the principal location at which his job duties will be based outside the greater Los Angeles, California area, Mr. Young would be entitled to receive all accrued salary and benefits through the date of termination, as well as a severance payment (the “Severance Payment”) equal to (i) Mr. Young’s then-current base salary, plus (ii) a prorated bonus amount equal to the product of: (x) the average annual bonuses received by Mr. Young for the two years preceding the year of such termination, multiplied by (y) a fraction, the numerator of which is the number of days preceding such termination in the then-current calendar year, and the denominator of which is 365. In addition, after a change in control of the company, if Mr. Young is not offered continued employment as chief financial officer of the surviving or acquiring entity or the company terminates his employment at any time during the remainder of the term of the agreement for any reason other than for cause, he will be entitled to receive: (i) all accrued salary and benefits through the date of termination; (ii) the Severance Payment; (iii) immediate vesting of, and lapse of all restrictions applicable to, all unvested and outstanding time-based equity incentive grants; and (iv) vesting of all unvested and outstanding performance-based equity incentive grants, at such time and in the event that any applicable performance-based criteria have been met under the terms of applicable award agreements as if Mr. Young had not terminated employment with the company and with the lapse of all restrictions applicable to vesting based on the passage of time. If Mr. Young’s employment is terminated by us for cause (as such term is defined in the 2019 Young Agreement), Mr. Young will be entitled to receive only any accrued salary and benefits through the date of termination, and shall be ineligible for any bonus.

Agreement with Jeffery A. Liberman. Effective March 1, 2020, we entered into the 2020 Liberman Agreement, pursuant to which he continues to serve as our President and Chief Operating Officer. The 2020 Liberman Agreement replaces a substantially similar agreement, which was effective as of March 1, 2017 through February 29, 2020. The 2020 Liberman Agreement provides for an initial base salary of $717,035 per year, which may be increased in the discretion of the Compensation Committee. The agreement with Mr. Liberman expires on February 28, 2023. Mr. Liberman’s annual base salary is currently $717,035.

Mr. Liberman is eligible to receive an annual bonus, in the discretion of the Compensation Committee, of up to 100% of his then-applicable base salary. Mr. Liberman is also eligible to receive equity incentive grants under the 2004 Plan, or any successor plan thereto, in the discretion of the Compensation Committee.

If Mr. Liberman’s employment is terminated by us without cause or by Mr. Liberman for good reason, including a change of control of the company where Mr. Liberman is not offered continued employment as a senior executive or is required to move his residence outside the greater Los Angeles, California area, he will be entitled to receive: (i) all accrued salary and benefits through the date of termination, (ii) a severance payment equal to one year of his then-current base salary multiplied by 1.5, payable in 12 equal monthly payments, (iii) a discretionary annual bonus for the calendar year prior to Mr. Liberman’s termination (if Mr. Liberman has not yet received any discretionary bonus for such calendar year) equal to the average of (a) the annual bonus received by Mr. Liberman for the calendar year preceding such prior calendar year and (b) the annual discretionary bonus received by the Company’s Chief Financial Officer and General Counsel for such prior calendar year, and (iv) a prorated bonus amount equal to the product of: (a) the average of the annual bonuses received by Mr. Liberman for the two full calendar years preceding the year of

38


 

such termination (including, if applicable, as calculated under the immediately preceding subsection (iii)), multiplied by (b) a fraction, the numerator of which is the number of days preceding such termination in the then-current calendar year, and the denominator of which is 365.

Mr. Liberman’s receipt of this severance payment is conditioned upon his execution of a customary form of release whereby he waives all claims arising out of his employment and termination of employment. If Mr. Liberman’s employment is terminated by us for cause, he will only be entitled to receive accrued salary and benefits through the date of termination and shall be ineligible for any bonus.

Agreement with Karl A. Meyer. Effective May 13, 2019, we entered into the 2020 Meyer Agreement, pursuant to which he serves as our Chief Revenue Officer. The 2020 Meyer Agreement provides for an initial base salary of $500,000 per year, which may be increased in the discretion of the Compensation Committee. The agreement with Mr. Meyer expires on April 30, 2022. Mr. Meyer’s annual base salary is currently $515,000.

Mr. Meyer is eligible to receive up to $50,000 quarterly bonuses for each of the first three quarters of each year and an annual bonus of up to $150,000, with each bonus payment subject to the company’s achievement of certain financial targets, and up to an additional $600,000, in the event the company overachieves those financial targets. Mr. Meyer is also eligible to receive equity incentive grants under the 2004 Plan, or any successor plan thereto, in the discretion of the Compensation Committee.

If Mr. Meyer’s employment is terminated by us without cause or by Mr. Meyer for good reason, including a change of control of the company where Mr. Meyer is not offered continued employment as a senior executive or a requirement to move the principal location at which his job duties will be based outside the greater Los Angeles, California area, he will be entitled to receive: (i) all accrued salary and benefits through the date of termination, (ii) a severance payment equal to (a) one year of his then-current base salary, multiplied by (b) 0.5, (iii) a prorated bonus amount equal to the product of: (a) the quarterly bonus that Mr. Meyer would be entitled to receive had his employment not been terminated during the quarter for such quarterly bonus, multiplied by (b) a fraction, the numerator of which is the number of days preceding such termination in the then-current calendar quarter, and the denominator of which is 90, and (iv) if the termination occurs in the fourth quarter of the year, a prorated bonus amount equal to the product of: (a) the annual bonus that Mr. Meyer would be entitled to receive had his employment not been terminated during the fourth quarter, multiplied by (b) a fraction, the numerator of which is the number of days during the year in which Mr. Meyer was employed by the company and the denominator of which is 365.

Mr. Meyer’s receipt of this severance payment is conditioned upon his execution of a customary form of release whereby he waives all claims arising out of his employment and termination of employment. If Mr. Meyer’s employment is terminated by us for cause, he will only be entitled to receive accrued salary and benefits through the date of termination and shall be ineligible for any bonus.

Agreement with Juan Saldívar. Effective November 5, 2020, we entered into the 2020 Saldívar Agreement, pursuant to which he serves as our Chief Digital, Strategy and Accountability Officer. The 2020 Saldívar Agreement provides for an initial base salary of $395,000 per year, which may be increased in the discretion of the Compensation Committee. The agreement with Mr. Saldívar expires on December 31, 2023. Mr. Saldívar’s annual base salary is currently $395,000.

Mr. Saldívar is eligible to receive an annual target bonus, in the discretion of the Compensation Committee, of $200,000. Mr. Saldívar is also eligible to receive equity incentive grants under the 2004 Plan, or any successor plan thereto, in the discretion of the Compensation Committee.

If Mr. Saldívar’s employment is terminated by us without cause, he will be entitled to receive: (i) all accrued salary and benefits through the date of termination, and (ii) a severance payment equal to his then-current base salary.

Mr. Saldívar’s receipt of this severance payment is conditioned upon his execution of a customary form of release whereby he waives all claims arising out of his employment and termination of employment. If Mr. Saldívar’s employment is terminated by us for cause, he will only be entitled to receive accrued salary and benefits through the date of termination and shall be ineligible for any bonus.

39


 

Equity Awards

On December 14, 2020, we granted restricted stock units to each of our Named Executive Officers.  The restricted stock units were awarded under the 2004 Plan, and each unit entitles the recipient to receive one share of the company’s Class A common stock for each restricted stock unit when the applicable vesting requirements are satisfied. The restricted stock units vest as follows: (i) twenty-five percent (25%) on December 20, 2020, provided the recipient is employed by the company on such date; (ii) twenty-five percent (25%) on December 20, 2021, provided the recipient is employed by the company on such date; (iii) twenty-five percent (25%) on December 20, 2022, provided the recipient is employed by the company on such date; and (iv) twenty-five percent (25%) on December 20, 2023, provided the recipient is employed by the company on such date.

The specific grants to Named Executive Officers were as follows:

 

Name

 

Restricted Awards

for Fiscal Year 2020

 

Walter F. Ulloa

 

 

550,000

 

Christopher T. Young

 

 

110,000

 

Jeffery A. Liberman

 

 

130,000

 

Karl A. Meyer

 

 

110,000

 

Juan Saldivar

 

 

110,000

 

 

40


 

 

Outstanding Equity Awards at Fiscal Year-End 2020

 

 

 

Option Awards

 

Stock Awards