| ITEM 5.02 |
DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS;
COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS |
New Employment Agreement with Edward G. Atsinger III
On June 28, 2019, Salem Communications Holding Corporation (“HoldCo”), a wholly-owned subsidiary of Salem Media Group, Inc. (the
“Company”), approved a new employment agreement with Edward G. Atsinger III pursuant to which Mr. Atsinger will continue to serve as the Company’s Chief Executive Officer. The Compensation Committee of the Board of Directors of
the Company has also approved the terms of Mr. Atsinger’s agreement. This new agreement became fully executed by all parties on July 1, 2019.
Mr. Atsinger’s current employment agreement with HoldCo is scheduled to expire on June 30, 2019. The term of
Mr. Atsinger’s new employment agreement will commence on July 1, 2019 and continue until December 31, 2021 unless terminated earlier pursuant to the terms of the agreement. On July 1, 2019, Mr. Atsinger’s new
employment agreement will supersede and replace the employment agreement entered into by HoldCo and Mr. Atsinger as of July 1, 2016.
The employment agreement provides that Mr. Atsinger will receive base salary at an annual rate of One Million Dollars ($1,000,000).
Mr. Atsinger shall have an option, exercisable on three separate occasions (“Exercise Date”) during the Term, to receive up to 40% of his Base Salary in shares of the Company’s Class A Restricted Common Stock (“Stock
Compensation”) during a subsequent six (6) or twelve (12) month period of time. The first Exercise Date shall be no later than July 1, 2019 and shall apply to the period from July 1, 2019 through December 31, 2019. The
second and third Exercise Dates shall be no later than December 31, 2019 and December 31, 2020 and shall cover the following twelve (12) months respectively. Mr. Atsinger will also be eligible for an annual merit bonus in an
amount to be determined at the discretion of the Company’s Board of Directors. Shares issued to Mr. Atsinger as Stock Compensation will be forfeited without compensation if Mr. Atsinger is terminated for “cause” or resigns
without “good reason” within (i) two years of the first Exercise Date or second Exercise Date, respectively, with respect to shares issued as Stock Compensation in connection with the first Exercise Date or second Exercise Date or
(ii) one year of the third Exercise Date with respect to shares issued as Stock Compensation in connection with the third Exercise Date.
Additional benefits under Mr. Atsinger’s employment agreement include: (a) reimbursement for 100% of the costs of all medical
expenses for Mr. Atsinger, including all vision, health and dental expenses incurred by Mr. Atsinger that are not otherwise covered by the Company’s medical benefits program, full reimbursement for all medical-related travel costs and
full reimbursement for any applicable income or employment taxes associated therewith, (b) an automobile allowance, (c) the right to receive the death benefit on a split-dollar life insurance policy pursuant to a separate Split Dollar Life
Insurance Agreement entered into by Mr. Atsinger and the Company, and (d) payment by the Company for all regulatory filing fees associated with any stock or stock-based (including stock options) compensation received by Mr. Atsinger
or as a result of Mr. Atsinger’s beneficial ownership of Company stock (including full reimbursement for any income or employment taxes applicable to the payment of such fees).
Mr. Atsinger’s employment agreement generally provides that if Mr. Atsinger’s employment is terminated as a result of a
“disability” (as defined in the employment agreement), HoldCo will: (a) pay Mr. Atsinger the accrued portion of his salary and bonus through the termination date of the employment agreement, (b) pay a severance equal to 100%
of Mr. Atsinger’s then-current base salary for a period of fifteen (15) months without offset of any disability payments Mr. Atsinger may receive, and (c) as of the termination date, accelerate 100% of the vesting of any
then unvested or time-vested stock options previously granted to Mr. Atsinger by the Company.
