Nothing in this document should be construed as investment advice. Its purpose is to provide information about who runs America’s radio stations and information about how they could be affected by the global financial problems of 2008/2009.
What do you get when you combine the two most influential hiphop radio stations in the world, a radio station network in Bulgaria, and Indianapolis, Indiana? In addition to a splitting headache, the poster child for Corporate Governance Reform – Emmis Communications.
Its founder holds all three jobs of Chairman, CEO, and President. While being a minority stock holder, he controls 70% of the voting rights through 10:1 non-proportional Class B stock, so he can’t be fired unless he fires himself. If that happens, he gets a $7million change of control bonus.
The company just sold its leased private Gulfstream jet for a loss of $7.3 million. The company has a negative stockholder’s equity, and buries the management compensation information in the company’s proxy statement instead of the 10-K. He paid himself total compensation (salary+bonus+stock options) of $1.9 million in 2007 and $1.2 million in 2008 [Subject to the approval of the compensation committee on the board that he controls, of course]
The company recently renegotiated new terms for its credit facility to avoid technical default.
All of the unpleasant details can be found [here]