UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 14, 2020
iHeartMedia, Inc.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 001-38987 | 26-0241222 | ||
|
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
20880 Stone Oak Parkway
San Antonio, Texas 78258
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (210) 822-2828
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425). |
| ☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12). |
| ☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)). |
| ☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)). |
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
||
| Class A Common Stock,$0.001 par value per share | IHRT | Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 5.02. |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On August 14, 2020, the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of iHeartMedia, Inc. (the “Company”) approved the grant of performance-based restricted stock units (“Performance RSUs”) covering shares of the Company’s Class A common stock to the following named executive officers: Robert Pittman (Chairman and Chief Executive Officer), Richard Bressler (President, Chief Operating Officer and Chief Financial Officer), Michael McGuinness (Executive Vice President, Finance and Deputy Chief Financial Officer), and Paul McNicol (Executive Vice President and General Counsel) (collectively, the “Executives”). The Performance RSUs were granted under the Company’s 2019 Equity Incentive Plan (the “Plan”).
The Performance RSUs represent the first grant of performance-based long-term incentives made to the Executives since the Company’s emergence from bankruptcy in 2019, and were primarily designed to incentivize the Executives to achieve key strategic priorities in 2020 and 2021. In particular, the Performance RSUs will focus the Executives on realizing critical operational (cost savings) improvements and meeting specific environmental, social and governance (“ESG”) achievements.
In approving the Performance RSUs, the Committee’s key considerations included the following:
| • |
the critical contribution of strategic cost savings, particularly in a softer revenue environment, to driving significant value creation for shareholders both short-term (through increased financial resiliency) and long-term (through structural improvements to profit margins); |
| • |
the importance of creating focused incentives for the Executives to successfully execute against previously-announced substantial cost savings targets near-term (rather than over an elongated period) in order to best position the Company’s overall cost structure both for a future return to normalized revenue generation and for sustained margin expansion in future years; and |
| • |
the benefits to the Company and shareholders of granting the Performance RSUs now (rather than waiting until 2021 to set incentive structures within the Company’s normal annual equity award cycle) in order to drive accelerated progress in achieving the targeted strategic cost savings. |
The number of Performance RSUs granted to each Executive is set forth in the following table.
|
Name |
Number of Performance
RSUs |
|||
|
Robert Pittman |
248,500 | |||
|
Richard Bressler |
248,500 | |||
|
Michael McGuinness |
36,400 | |||
|
Paul McNicol |
22,500 | |||
Performance Goals; Vesting. The Performance RSUs are tied to three categories of performance goals: the Cost-Savings RSUs (80% of total Performance RSUs), the Diversity RSUs (10% of total Performance RSUs), and the ESG RSUs (10% of total Performance RSUs), each of which may be earned and become “Earned Performance RSUs” based on the achievement of the performance goals described below. The Earned Performance RSUs will vest on the 18-month anniversary of the grant date, subject to the Executive’s continued employment through the applicable vesting date.
Cost-Savings RSUs. The Cost-Savings RSUs are eligible to become Earned Performance RSUs based on the Company’s achievement of certain operating expense and modernization savings goals for 2020 and 2021. Specifically, the Cost-Savings RSUs are comprised of three tranches, as shown in the following table:
|
Type of Cost-Savings RSUs |
Eligible Number of Cost-
Savings RSUs |
Performance Period | ||||||
|
Operating Expense Savings |
50 | % | 2020 calendar year | |||||
|
Modernization Savings |
25 | % | 2020 calendar year | |||||
|
Run Rate Modernization Savings |
25 | % | 2021 calendar year | |||||
With respect to each tranche, the Cost-Savings RSUs are eligible to become Earned Performance RSUs on the achievement of the applicable performance goals at the “Threshold”, “Target” and “Maximum” levels (using straight-line linear interpolation between such levels), as follows:
|
Operating
Expense Savings |
Modernization
Savings |
Run Rate
Modernization Savings |
Earning Percentage
of Eligible Number of Cost-Savings RSUs |
|||||
|
“Threshold Level” |
< $180,000,000 | < $45,000,000 | < $90,000,000 | 0% | ||||
|
“Target Level” |
$190,000,000 | $47,500,000 | $95,000,000 | 50% | ||||
|
“Maximum Level” |
³ $200,000,000 | ³ $50,000,000 | ³ $100,000,000 | 100% |
Diversity RSUs. The Diversity RSUs are eligible to become Earned Performance RSUs based on the Company’s achievement of the following three goals: (1) distribution of Black Information Network programming on a 24/7 basis on at least 20 iHeartRadio radio stations, (2) build out of Black Information Network capabilities in at least 10 of the 20 affiliated stations to provide full Black Information Network local news coverage and reporting, and (3) 50% of the new podcast shows launched after July 1, 2020 are produced and/or hosted by women and/or minority creators.
If the Committee determines in its sole discretion that (i) all three goals have been achieved during the one-year period following the grant date, then 100% of the Diversity RSUs will become Earned Performance RSUs; (ii) at least two goals have been achieved, then the Committee may certify in its sole discretion that up to 90% of the Diversity RSUs will become Earned Performance RSUs; and (iii) fewer than two goals have been achieved, then no Diversity RSUs will become Earned Performance RSUs.
ESG RSUs. The ESG RSUs are eligible to become Earned Performance RSUs based on the Committee’s determination that the Company has demonstrated significant and tangible progress on the following three goals during the performance period: (1) diversity in radio programming, (2) employee diversity training, and (3) environmental awareness.
If the Committee determines in its sole discretion that (i) all three goals have been achieved during the one-year period following the grant date, then 100% of the ESG RSUs will become Earned Performance RSUs; (ii) at least two goals have been achieved, then the Committee may certify in its sole discretion that up to 90% of the ESG RSUs will become Earned Performance RSUs; and (iii) fewer than two goals have been achieved, then no ESG RSUs will become Earned Performance RSUs.
Termination of Employment. Vesting of the Performance RSUs will cease upon the Executive’s termination of employment, and any Performance RSUs that are unvested as of the termination date will be forfeited. However, upon the Executive’s termination of employment by the Company without cause, by the Executive for good reason or due to the Executive’s death or disability, then (i) if the termination occurs during an ongoing performance period, then 100% of the Performance RSUs with respect to such performance period will vest, and (ii) if the termination occurs after a performance period has ended, then 100% of the Earned Performance RSUs with respect to such performance period will vest.
Change in Control. If a change in control of the Company occurs during an ongoing performance period, then 100% of the Performance RSUs with respect to such performance period will vest immediately prior to the change in control. If a change in control of the Company occurs after a performance period has ended, then 100% of the Earned Performance RSUs with respect to such performance period shall vest immediately prior to the change in control.
The foregoing description of the Performance RSUs is a summary only and does not describe all terms and conditions applicable to these awards. The description is subject to and qualified in its entirety by the terms of the form of Performance RSU award agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.1 and incorporated by reference herein.
| Item 9.01 |
Financial Statements and Exhibits |
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Exhibit No. |
Description |
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| 10.1 | Form of iHeart Media, Inc. Restricted Stock Unit Award Agreement | |
| 104 | Cover Page Interactive File (the cover page tags are embedded within the Inline XBRL document). | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: August 20, 2020 | IHEARTMEDIA, INC. | |||||
| By: |
/s/ Paul McNicol |
|||||
| Name: | Paul McNicol | |||||
| Title: | Executive Vice President, General Counsel and Secretary | |||||
Exhibit 10.1
iHEARTMEDIA, INC.
Restricted Stock Unit Award Agreement
This Restricted Stock Unit Award Agreement (this “Award Agreement”), dated as of , 2020 (the “Effective Date”), evidences the grant of RSUs pursuant to the provisions of the 2019 Incentive Equity Plan (the “Plan”) of iHeartMedia, Inc. (the “Company”) to the individual whose name appears below (“Participant”), covering the specific number of shares of Common Stock (the “Shares”) set forth below and on the following terms and conditions. Capitalized terms that are used but not otherwise defined herein shall have the meanings ascribed to such terms in the Plan.
| 1. |
Name of Participant: |
| 2. |
Number of RSUs: |
| 3. |
Date of grant of the RSUs: |
| 4. |
Vesting: |
| a. |
Except as otherwise expressly provided in Sections 4.b-c hereof, subject to Participant’s continued employment or service through the applicable vesting date, 100% of those RSUs that are earned based on the achievement of certain cost-savings, diversity, and ESG performance goals as set forth on Annex B hereto (the “Earned RSUs”) shall vest on the eighteen (18)-month anniversary of the date of grant. |
| b. |
Notwithstanding anything to the contrary contained in Section 4.a hereof, upon a Participant’s Qualifying Termination or termination of employment due to death or Disability (i) that occurs during a performance period that is ongoing, 100% of the RSUs with respect to such performance period (i.e., the Cost-Savings RSUs, the Diversity RSUs and/or the ESG RSUs (as defined on Annex B), as applicable) shall vest, or (ii) that occurs after a performance period has ended, 100% of the Earned RSUs with respect to such performance period shall vest. |
| c. |
Notwithstanding anything to the contrary contained in Section 4.a hereof, upon a Change in Control of the Company, (i) if such Change in Control occurs during a performance period, 100% of the RSUs with respect to such performance period (i.e., the Cost-Savings RSUs, the Diversity RSUs and/or the ESG RSUs, as applicable) shall vest immediately prior to the consummation of the Change in Control, or (ii) if such Change in Control occurs after a performance period has ended, 100% of the Earned RSUs with respect to such performance period shall vest immediately prior to the consummation of the Change in Control. |
| d. |
Subject to Section 4.b hereof, vesting shall cease immediately upon termination of Participant’s employment or service for any reason, and any portion of the RSUs that has not vested on or prior to the date of such termination shall be forfeited on such date. Once vesting has occurred, the vested portion will be settled at the time specified in Section 6 hereof. |
| e. |
For purposes of this Agreement, “Disability” shall has such meaning as is contained in the Plan and, notwithstanding anything to the contrary contained in the Plan, also shall include a “disability” as determined by the Committee in its reasonable discretion. |
| 5. |
Each RSU is granted together with Dividend Equivalents, which Dividend Equivalents will be (a) paid in the same form (cash or stock) in which the corresponding dividends are paid to the stockholders and (b) subject to the same vesting and forfeiture provisions as the RSUs granted pursuant to Section 2. Any payments made pursuant to Dividend Equivalents will be paid in either cash or in shares of Common Stock, or any combination thereof, effective as of the date of settlement under Section 6 below. |
| 6. |
Promptly following, and in any event within sixty (60) days of, the vesting of the RSUs, the Participant shall receive the number of shares of Common Stock that corresponds to the number of RSUs that have become vested on the applicable vesting date, less any shares of Common Stock withheld by the Company pursuant to Section 6.6 of the Plan (if any) to “net settle” the Participant’s RSUs as contemplated therein. To the extent that any FICA tax withholding obligations arise in connection with the RSUs or the dividend equivalents prior to the date on which on which such RSUs or dividend equivalents should otherwise become payable to the Participant, then the Company may accelerate the payment of a number of RSUs sufficient to satisfy (but not in excess of) such tax withholding obligations and any tax withholding obligations associated with such accelerated payment, and the Company or any Affiliate may withhold such amounts in satisfaction of such withholding obligations. If the RSUs and/or the dividend equivalents constitute “nonqualified deferred compensation” (within the meaning of Section 409A of the Code), then (i) Section 9.11 of the Plan shall apply to the RSUs, the dividend equivalents and this Award Agreement and (ii) all payments to be made upon a termination of employment under this Award Agreement may only be made upon the Participant’s “separation from service” (within the meaning of Section 409A of the Code) and (iii) all payments to be made upon a Change in Control under this Award Agreement may only be made upon the occurrence of a “change in control event” (within the meaning of Section 409A of the Code). |
| 7. |
Participant hereby acknowledges receipt of a copy of the Plan attached hereto as Annex A as presently in effect. All of the terms and conditions of the Plan are incorporated herein by reference and the RSUs are subject to such terms and conditions in all respects (except as expressly modified herein). This Award Agreement and the Plan constitute the entire agreement of the parties with respect to the subject matter hereof, and supersede any prior written or oral agreements. |
| 8. |
Nothing in the Plan or this Award Agreement shall confer upon Participant any right to continue to be employed by or provide services to the Company or any of its Subsidiaries or Affiliates, or interfere in any way with any right of the Company or any of its Subsidiaries or Affiliates to terminate such employment or service at any time for any reason whatsoever (whether for Cause or without Cause) without liability to the Company or any of its Subsidiaries or Affiliates. |
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have executed this Restricted Stock Unit Award Agreement as of the date first written above.
| iHEARTMEDIA, INC. |
|
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| Name: |
| Title: |
| PARTICIPANT |
|
|
| Name: |
| Attachments: |
Annex A (The Plan) |
|
|
Annex B (RSU Performance Goals) |
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ANNEX A
2019 INCENTIVE EQUITY PLAN
OF
iHEARTMEDIA, INC.
ANNEX B
RSU PERFORMANCE GOALS
The RSUs are comprised of three tranches: (1) the Cost-Savings RSUs, (2) the Diversity RSUs, and (3) the ESG RSUs, each of which may be earned and become Earned RSUs based on the achievement of applicable performance goals, as described below.
Cost-Savings RSUs
The “Cost-Savings RSUs” constitute 80% of the total RSUs. The Cost-Savings RSUs are comprised of three tranches:
(1) the 2020 operating expense savings (excluding modernizations) (“Additional Savings”) tranche (the “Additional Savings RSUs”), which comprises 50% of the Cost-Savings RSUs;
(2) the 2020 savings from modernizations (“Nexus Savings”) tranche (the “Nexus Savings RSUs”), which comprises 25% of the Cost-Savings RSUs; and
(3) the 2021 annual run rate savings from modernizations (“Nexus Run Rate Savings”) tranche (the “Nexus Run Rate RSUs”), which comprises 25% of the Cost-Savings RSUs;
each of which shall be eligible to become Earned RSUs as set forth below based on the Company’s achievement of the Additional Savings, the Nexus Savings and Nexus Run Rate Savings goals. The performance period for each of the Nexus Savings RSUs and the Additional Savings RSUs is the 2020 calendar year; the performance period for the Nexus Run Rate RSUs is the 2021 calendar year.
Additional Savings
The number of Additional Savings RSUs that become Earned RSUs shall be determined following the end of the performance period by multiplying the number of Additional Savings RSUs (i.e., 40% of the total RSUs) by the Additional Savings Earning Percentage, as determined in accordance with the following table.
|
Additional Savings
($) |
Additional Savings
Earning Percentage |
|||||||
|
“Threshold Level” |
< $ 180,000,000 | 0 | % | |||||
|
“Target Level” |
$ 190,000,000 | 50 | % | |||||
|
“Maximum Level” |
³ $ 200,000,000 | 100 | % | |||||
In the event that the Additional Savings falls between the Threshold Level and the Target Level or between the Target Level and the Maximum Level, the Additional Savings Earning Percentage shall be determined using straight line linear interpolation between the applicable levels.
Nexus Savings
The number of Nexus Savings RSUs that become Earned RSUs shall be determined following the end of the performance period by multiplying the number of Nexus Savings RSUs (i.e., 20% of the total RSUs) by the Nexus Savings Earning Percentage, as determined in accordance with the following table.
| Nexus Savings ($) |
Nexus Savings
Earning Percentage |
|||||||
|
“Threshold Level” |
< $ 45,000,000 | 0 | % | |||||
|
“Target Level” |
$ 47,500,000 | 50 | % | |||||
|
“Maximum Level” |
³ $ 50,000,000 | 100 | % | |||||
In the event that the Nexus Savings falls between the Threshold Level and the Target Level or between the Target Level and the Maximum Level, the Nexus Savings Earning Percentage shall be determined using straight line linear interpolation between the applicable levels.
Nexus Run Rate Savings
The number of Nexus Run Rate Savings RSUs that become Earned RSUs shall be determined following the end of the performance period by multiplying the number of Nexus Savings RSUs (i.e., 20% of the total RSUs) by the Nexus Run Rate Savings Earning Percentage, as determined in accordance with the following table.
|
Nexus Run Rate
Savings ($) |
Nexus Run Rate
Savings Earning Percentage |
|||||||
|
“Threshold Level” |
< $ 90,000,000 | 0 | % | |||||
|
“Target Level” |
$ 95,000,000 | 50 | % | |||||
|
“Maximum Level” |
³ $ 100,000,000 | 100 | % | |||||
In the event that the Nexus Run Rate Savings falls between the Threshold Level and the Target Level or between the Target Level and the Maximum Level, the Nexus Run Rate Savings Earning Percentage shall be determined using straight line linear interpolation between the applicable levels.
Diversity RSUs
The “Diversity RSUs” constitute 10% of the total RSUs. The Diversity RSUs shall be eligible to become Earned RSUs based on the Company’s achievement of the following three goals during the performance period: (1) distribution of Black Information Network programming on a 24/7 basis on at least 20 iHeartRadio radio stations, (2) Black Information Network will build out capabilities in at least 10 of the 20 affiliated stations to provide full Black Information Network local news coverage and reporting, and (3) 50% of the new podcast shows launched after July 1, 2020 are produced and/or hosted by women and/or minority creators. The performance period for the Diversity RSUs ends on the one-year anniversary of the date of grant.
The Diversity RSUs may become Earned RSUs as follows:
| • |
If the Committee determines in its sole discretion that all three goals have been achieved, then 100% of the Diversity RSUs will become Earned RSUs. |
| • |
If the Committee determines in its sole discretion that at least two goals have been achieved, then the Committee may certify in its sole discretion that up to 90% of the Diversity RSUs will become Earned RSUs. |
| • |
No Diversity RSUs will become Earned RSUs if fewer than two goals have been achieved, as determined by the Committee in its sole discretion. |
The Committee may determine in its sole discretion that any of the Diversity RSU performance goals have been achieved prior to the conclusion of the performance period; and in such event, the performance period shall be deemed concluded on such determination date.
ESG RSUs
The “ESG RSUs” constitute 10% of the total RSUs. The ESG RSUs shall be eligible to become Earned RSUs based on the Committee’s determination that the Company has demonstrated significant and tangible progress on the following three goals during the performance period: (1) diversity in radio programming, (2) employee diversity training, and (3) environmental awareness. The performance period for the ESG RSUs ends on the one-year anniversary of the date of grant.
The ESG RSUs may become Earned RSUs as follows:
| • |
If the Committee determines in its sole discretion that all three goals have been achieved, then 100% of the ESG RSUs will become Earned RSUs. |
| • |
If the Committee determines in its sole discretion that at least two goals have been achieved, then the Committee may certify in its sole discretion that up to 90% of the ESG RSUs will become Earned RSUs. |
| • |
No ESG RSUs will become Earned RSUs if fewer than two goals have been achieved. |
The Committee may determine in its sole discretion that any of the Diversity RSU performance goals have been achieved prior to the conclusion of the performance period; and in such event, the performance period shall be deemed concluded on such determination date.
Forfeiture
Any RSUs that do not become Earned RSUs in accordance with this Annex B shall be forfeited and terminated without payment of any consideration therefor as of the end of the applicable performance period.
Measurement and Quarterly Review Process
The Additional Savings, Nexus Savings and Nexus Run Rate Savings goals (the “Savings Goals”) are based upon, among other inputs, certain assumptions about the future business of the Company, as well as financial analyses prepared by the Company for the projected business of the Company and its subsidiaries. The Committee shall closely monitor and measure management’s progress toward achieving the Savings Goals through (i) an up-front review of measurement methodology and detailed, quantified action plans (“Action Plans”) designed to achieve each of the Savings Goals (such review to be conducted within 30 days following the Effective Date), and (ii) a series of quarterly meetings with management to be held during the remainder of the 2020 and 2021 performance periods to compare actual savings results achieved in each quarter with the targets incorporated in the relevant Action Plans. Final measurement of actual savings achieved compared to Savings Goals shall be made after the completion of the applicable performance period. In order to properly account for any significant and unusual one-time items – including material M&A transactions, unusual events, or incremental value-creation initiatives that may require added one-time costs to achieve – the Committee shall retain discretion to adjust the calculation of actual results achieved as necessary on a pro forma basis in order to avoid distortion in measuring such results relative to the targeted Savings Goals in the Action Plans. Adjustments for unusual one-time items (if any) shall be made by the Committee in good faith and in such manner as it may deem equitable.