SCHEDULE 14A
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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
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[ ] Preliminary Proxy Statement
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(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
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SALEM COMMUNICATIONS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
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[SALEM LOGO]
SALEM COMMUNICATIONS CORPORATION
4880 SANTA ROSA ROAD, SUITE 300
CAMARILLO, CA 93012
(805) 987-0400
April 28, 2000
Dear Stockholder:
You are cordially invited to attend the 2000 Annual Meeting of Stockholders
(the "Annual Meeting") of Salem Communications Corporation ("Salem" or the
"company"), scheduled to be held on Wednesday, May 24, 2000 at the Hyatt
Westlake Hotel, 880 South Westlake Boulevard, Westlake Village, California, at
10:00 a.m. local time. As described in the accompanying Notice of Annual Meeting
of Stockholders and Proxy Statement, stockholders will be asked to vote on the
election of directors for Salem. Directors and executive officers of Salem will
be present at the Annual Meeting to respond to any questions that our
stockholders may have regarding the business to be transacted.
WE URGE YOU TO VOTE YOUR PROXY AS SOON AS POSSIBLE. Your vote is very
important, regardless of the number of shares you own. Whether or not you plan
to attend the Annual Meeting in person, we urge you to sign, date and return the
enclosed proxy card promptly in the accompanying postage prepaid envelope. You
may, of course, attend the Annual Meeting and vote in person even if you have
previously returned your proxy card.
On behalf of the board of directors and all of the employees of Salem, we
wish to thank you for your support.
Sincerely yours,
/s/ Stuart W. Epperson
STUART W. EPPERSON
Chairman of the Board
/s/ Edward G. Atsinger III
EDWARD G. ATSINGER III
President and Chief Executive Officer
IF YOU HAVE ANY QUESTIONS CONCERNING THE PROXY STATEMENT OR ACCOMPANYING
PROXY OR IF YOU NEED ANY HELP IN VOTING YOUR STOCK, PLEASE TELEPHONE JONATHAN L.
BLOCK OF SALEM AT (805) 987-0400 TODAY.
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD TODAY.
SALEM COMMUNICATIONS CORPORATION
4880 SANTA ROSA ROAD, SUITE 300
CAMARILLO, CA 93012
(805) 987-0400
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 24, 2000
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Stockholders (the
"Annual Meeting") of Salem Communications Corporation ("Salem" or the "company")
will be held on Wednesday, May 24, 2000, at the Hyatt Westlake Hotel, 880 South
Westlake Boulevard, Westlake Village, California, at 10:00 a.m. local time,
subject to adjournment or postponement by the board of directors, for the
following purposes:
1. To elect seven persons to the board of directors to serve until the
next annual meeting of stockholders or until their respective successors
are duly elected and qualified;
2. To transact such other business as may properly come before the
Annual Meeting or any or all adjournments or postponements thereof.
Only holders of record of Class A common stock, par value $0.01 per share,
and Class B common stock, par value $0.01 per share of Salem on Monday, April 3,
2000, will be entitled to notice of, and to vote at, the Annual Meeting and any
adjournment or postponement thereof.
Prior to the voting thereof, a proxy may be revoked by the person executing
such proxy by (i) filing with the Corporate Secretary of Salem, prior to the
commencement of the Annual Meeting, either a written notice of revocation or a
duly executed proxy bearing a later date or (ii) by voting in person at the
Annual Meeting.
If you plan to attend the Annual Meeting, we would appreciate your response
by indicating so at the appropriate place on the proxy card enclosed.
By order of the board of directors
/s/ JONATHAN L. BLOCK
JONATHAN L. BLOCK
Corporate Secretary
Camarillo, California
April 28, 2000
YOUR VOTE IS IMPORTANT
TO VOTE YOUR SHARES, PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND MAIL IT
PROMPTLY IN THE ENCLOSED RETURN ENVELOPE.
SALEM COMMUNICATIONS CORPORATION
4880 SANTA ROSA ROAD, SUITE 300
CAMARILLO, CA 93012
(805) 987-0400
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 24, 2000
------------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by
the board of directors (the "board" or the "board of directors") of Salem
Communications Corporation, a Delaware corporation ("Salem" or the "company"),
of proxies for use at the 2000 Annual Meeting of Stockholders of the Company
(the "Annual Meeting") scheduled to be held at the time and place and for the
purposes set forth in the accompanying Notice of Annual Meeting of Stockholders.
INFORMATION REGARDING VOTING AT THE ANNUAL MEETING
GENERAL
At the Annual Meeting, the stockholders of the company are being asked to
consider and to vote upon the election of the seven directors nominated by the
company's board of directors to serve until the annual meeting of stockholders
to be held in the year 2001. For information regarding the proposal regarding
the election of directors, see the section of this Proxy Statement entitled
"ELECTION OF DIRECTORS." Shares represented by properly executed proxies
received by the company will be voted at the Annual Meeting in the manner
specified therein or, if no instructions are marked on the enclosed proxy card,
FOR each of the director nominees identified on such card for such directors as
the holder of such shares is entitled to vote. Although management does not know
of any matter other than the election of directors to be acted upon at the
Annual Meeting, unless contrary instructions are given, shares represented by
valid proxies will be voted by the persons named on the accompanying proxy card
in accordance with their respective best judgment with respect to any other
matters that may properly come before the Annual Meeting.
Execution of a proxy will not in any way affect a stockholder's right to
attend the Annual Meeting and vote in person, and any person giving a proxy has
the right to revoke it at any time before it is exercised by (i) filing with the
Corporate Secretary of the company, prior to the commencement of the Annual
Meeting, a duly executed instrument dated subsequent to such proxy revoking the
same or a duly executed proxy bearing a later date or (ii) attending the Annual
Meeting and voting in person.
The mailing address of the principal executive offices of the company is
4880 Santa Rosa Road, Suite 300, Camarillo, California 93012, and its telephone
number is (805) 987-0400. The approximate date on which this Proxy Statement and
the enclosed proxy card are first being sent to stockholders is April 28, 2000.
------------------------
The date of this Proxy Statement is April 28, 2000.
RECORD DATE AND VOTING
Only stockholders of record on Monday, April 3, 2000 (the "Record Date"),
will be entitled to notice of and to vote at the Annual Meeting. There were
outstanding on the Record Date 17,902,392 shares of Class A common stock, par
value $0.01 per share ("Class A common stock"), and 5,553,696 shares of Class B
common stock, par value $0.01 per share ("Class B common stock") (the Class A
common stock and the Class B common stock are collectively referred to as the
"common stock"). Each share of outstanding Class A common stock is entitled to
one vote on each matter to be voted on at the Annual Meeting and each share of
outstanding Class B common stock is entitled to ten votes on each matter to be
voted on at the Annual Meeting, except that, as provided in the company's
Amended and Restated Certificate of Incorporation, the holders of Class A common
stock shall be entitled to vote as a class, exclusive of the Class B
stockholders, to elect two "Independent Directors." The two Independent
Directors shall be elected by a plurality of the votes of the shares of Class A
common stock present in person or represented by proxy and entitled to vote on
the election of the Independent Directors; the remaining five directors will be
elected by a plurality of the votes of the shares of Class A and Class B common
stock present in person or represented by proxy and entitled to vote on the
election of such directors. For information regarding the election of the
Independent Directors, see the section of this Proxy Statement entitled
"ELECTION OF DIRECTORS."
The presence, in person or by proxy, of the holders of at least a majority
of the voting power of the stock issued and outstanding and entitled to vote is
necessary to constitute a quorum at the Annual Meeting. In the event there are
not sufficient votes for a quorum at the time of the Annual Meeting, the Annual
Meeting may be adjourned in order to permit the further solicitation of proxies.
Abstentions and broker non-votes are counted for the purpose of determining
the presence or absence of a quorum for the transaction of business. With regard
to the election of directors, votes may be cast in favor or withheld; votes that
are withheld will be excluded entirely from the vote and will have no effect.
Abstentions are counted in tabulations of the votes cast on proposals presented
to stockholders other than the election of directors, thus having the effect of
a negative vote, whereas broker non-votes are not counted for purposes of
determining whether a proposal has been approved. Any stockholder proposals that
properly come before the Annual Meeting require, in general, the affirmative
vote of a majority of the voting power of the shares of Class A and Class B
common stock present, in person or represented by proxy, at the Annual Meeting
and entitled to vote on the subject matter.
SOLICITATION
The cost of preparing, assembling and mailing the Notice of Annual Meeting
of Stockholders, this Proxy Statement and the enclosed proxy card will be paid
by the company. Following the mailing of this Proxy Statement, directors,
officers and other employees of the company may solicit proxies by mail,
telephone, facsimile or other electronic means or by personal interview. Such
persons will receive no additional compensation for such services. Brokerage
houses and other nominees, fiduciaries and custodians nominally holding shares
of Class A common stock of record will be requested to forward proxy soliciting
material to the beneficial owners of such shares, and will be reimbursed by the
company for their reasonable charges and expenses in connection therewith. In
addition, the company has retained proxy solicitor Morrow & Co., Inc. to assist
in the distribution of proxies and proxy solicitation materials.
2
DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS
The following table sets forth certain information as of April 17, 2000,
except where otherwise indicated, with respect to the directors of the company.
Each of the directors of the company serves a one-year term and all
directors are subject to re-election at each annual stockholders' meeting.
FIRST BECAME
DIRECTOR OF
NAME OF DIRECTOR AGE COMPANY POSITION HELD WITH THE COMPANY
---------------- --- ------------ ------------------------------
Stuart W. Epperson........ 63 1986 Chairman of the Board
Edward G. Atsinger III.... 60 1986 President, Chief Executive Officer and
Director
Eric H. Halvorson......... 51 1988 Executive Vice President, Chief Operating
Officer, General Counsel and Director
Roland S. Hinz............ 61 1997 Director
Donald P. Hodel........... 64 1999 Director
Richard A. Riddle......... 55 1997 Director
Joseph S. Schuchert....... 71 1999 Director
Set forth below is certain information concerning the principal occupation
and business experience of each of the directors during the past five years.
Mr. Epperson has been Chairman of Salem since its inception. Mr. Epperson
has been engaged in the ownership and operation of radio stations since 1961. In
addition, he is a member of the board of directors of the National Religious
Broadcasters. Mr. Epperson is married to Nancy A. Epperson who is Mr. Atsinger's
sister.
Mr. Atsinger has been President, Chief Executive Officer and a director of
Salem since its inception. He has been engaged in the ownership and operation of
radio stations since 1969 and is a member of the board of directors of the
National Religious Broadcasters.
Mr. Halvorson has been Chief Operating Officer of Salem since 1995,
Executive Vice President of the company since 1991 and a director of the company
since 1988. From 1991 to the present, Mr. Halvorson has also served as the
General Counsel of the company. Mr. Halvorson was the managing partner of the
law firm of Godfrey & Kahn, S.C.-Green Bay from 1988 until 1991. From 1985 to
1988, he was Vice President and General Counsel of the company. From 1976 until
1985, he was an associate and then a partner of Godfrey & Kahn, S.C.-Milwaukee.
Mr. Halvorson was a Certified Public Accountant with Arthur Andersen & Co. from
1971 to 1973.
Mr. Hinz has been a Director of Salem since 1997. Mr. Hinz has been the
owner, President and Editor-in-Chief of Hi-Torque Publishing Company, a
publisher of magazines covering the motorcycling and biking industries, since
1981. He is active in a number of non-profit organizations and serves as
Chairman of the Fund Development Committee of English Language Institute China.
Mr. Hinz also serves on the boards of directors of Gordon Conwell Theological
Seminary, Association for Community Education, Inc., Truth for Life, and Lake
Avenue Congregational Church.
Mr. Hodel has been a Director of Salem since 1999. Mr. Hodel is a founder
and has been the Managing Director of Summit Group International, Ltd., an
energy and natural resources consulting firm, since 1989. He has served as Vice
Chairman of Texon Corporation, an oil and natural gas marketing company, since
1994. Mr. Hodel served as President of the Christian Coalition from June 1997 to
January 1999 and as Executive Vice President of Focus on the Family from January
1996 to August 1996. Mr. Hodel currently serves on the boards of directors of
Integrated Electrical Services, Inc., Eagle Publishing, Inc. and Focus on the
Family. During the Reagan Administration, Mr. Hodel served as Secretary of
Energy and Secretary of the Interior.
3
Mr. Riddle has been a director of Salem since 1997. Mr. Riddle is an
independent businessman specializing in providing financial assistance and
consulting to manufacturing companies. Since 1991 he has been the President of
Richray Industries, a holding company for various manufacturing companies. He
was President and majority stockholder of I. L. Walker Company from 1988 to 1997
when the company was sold. He also was Chief Operating Officer and majority
stockholder of Richter Manufacturing from 1970 to 1987.
Mr. Schuchert has been a Director of Salem since 1999. He was a founder of
the investment firm Kelso & Company, Inc. in 1970 and served as its Chairman and
Chief Executive Officer through December 1997 and Chairman since January 1998.
Mr. Schuchert currently serves on the boards of directors of American Standard
Corporation, Earl M. Jorgensen Company, the United States Chamber of Commerce
and St. Vincent College. He is Director Emeritus of Carnegie Mellon University.
COMMITTEES OF THE BOARD OF DIRECTORS
The company's board of directors has a standing Audit Committee,
Compensation Committee and Stock Option Committee.
Since its inception in April 1999, all decisions that would otherwise have
been considered by the Audit Committee have instead been considered by the full
board of directors. Accordingly, the Audit Committee held no meetings during
1999. In the future, the Audit Committee expects to meet quarterly and
additional times as are necessary or advisable. The Audit Committee currently
consists of Messrs. Riddle (Chairman), Hodel and Hinz. The Audit Committee's
responsibilities are generally to assist the board in fulfilling its legal and
fiduciary responsibilities relating to accounting, audit and reporting policies
and practices of the company and its subsidiaries. The Audit Committee also,
among other things, oversees the company's financial reporting process,
recommends to the board of directors the engagement of the company's independent
auditors, monitors and reviews the quality and activities of the company's
internal audit function and those of its independent auditors, and monitors the
adequacy of the company's operating and internal controls as reported by
management and internal auditors. The board of directors has adopted a written
charter for the Audit Committee. The Audit Committee charter is included as
Appendix A to this Proxy Statement. The members of the Audit Committee are
independent directors as defined under the National Association of Securities
Dealers' listing standards.
Since its inception in April 1999, all decisions that would otherwise have
been considered by the Compensation Committee have instead been considered by
the full board of directors. Accordingly, the Compensation Committee held no
meetings during 1999. In the future, the Compensation Committee expects to meet
annually and additional times as are necessary or advisable. The Compensation
Committee currently consists of Messrs. Hinz (Chairman) and Schuchert. The
Compensation Committee is authorized to review and approve compensation,
including non-cash benefits, and severance arrangements for the company's
officers and senior employees and to recommend to the board salaries,
remuneration and other forms of additional compensation and benefits as it deems
necessary. The Compensation Committee also administers the company's 1999 Stock
Incentive Plan.
The Stock Option Committee was established in February 2000 and currently
consists of Messrs. Atsinger (Chairman) and Hinz. The Stock Option Committee is
authorized to make grants of stock options under the company's 1999 Stock
Incentive Plan to employees of the company other than officers or key employees
and in amounts not to exceed 10,000 shares per calendar year.
All of the directors serving on the Audit Committee and the Compensation
Committee are directors who are not employees of the company. Mr. Atsinger,
Salem's President and Chief Executive Officer, is Chairman of the Stock Option
Committee.
MEETINGS OF THE BOARD OF DIRECTORS
There were two meetings of the board of directors in 1999. During their
respective incumbencies as directors in 1999, each of the directors attended at
least 75% of the meetings of the board of directors.
4
COMPENSATION OF DIRECTORS
Directors' Fees. Officers of Salem who also serve as directors do not
receive compensation for their services as directors other than the compensation
they receive as officers of Salem. Directors of Salem who are not also officers
or employees of Salem receive $2,500 for each regular or special meeting of the
board of directors and $500 for each regular or special meeting of any committee
established by the board of directors (unless such committee meeting is held on
the same day as a regular or special meeting of the board of directors).
Directors of Salem are entitled to reimbursement of their reasonable
out-of-pocket expenses in connection with their travel to and attendance at
board and board committee meetings.
EXECUTIVE OFFICERS
Set forth below are the executive officers of the company, together with
the positions currently held by those persons, as of April 17, 2000. The
executive officers are elected annually and serve at the pleasure of the
company's board of directors; however, the company has entered into employment
agreements with Messrs. Atsinger, Epperson and Halvorson, which agreements are
described under "COMPENSATION AND OTHER INFORMATION -- Employment Agreements,"
below.
NAME OF OFFICER AGE POSITION HELD WITH THE COMPANY
--------------- --- ------------------------------
Stuart W. Epperson........ 63 Chairman of the Board
Edward G. Atsinger III.... 60 President, Chief Executive Officer and Director
Eric H. Halvorson......... 51 Executive Vice President, Chief Operating Officer,
General Counsel and Director
Dirk Gastaldo............. 44 Vice President and Chief Financial Officer
Kenneth L. Gaines......... 61 Vice President -- Operations
Dave Armstrong............ 54 Vice President -- Operations and General Manager/KKLA-FM,
KLTH-AM, KLTX-AM and KIEV-AM
Joe D. Davis.............. 56 Vice President -- Operations and General Manager/WMCA-AM
and WWDJ-AM
Kenneth W. Sasso.......... 53 Vice President -- Operations and General Manager/KGFT-FM,
KPRZ-FM and KBIQ-FM
David Ruleman............. 53 Vice President -- Operations and General Manager/WAVA-FM,
WITH-AM and WABS-AM
Greg R. Anderson.......... 53 President, Salem Radio Network
James R. Cumbee........... 47 President, Non-Broadcast Media
John W. Styll............. 48 President, CCM Communications, Inc.
Set forth below is certain information concerning the business experience
during the past five years of each of the individuals named above (other than
Messrs. Atsinger, Epperson and Halvorson see "--Directors," above).
Mr. Gastaldo has been Chief Financial Officer of Salem since 1993, and a
Vice President of the company since 1992. From 1992 to 1993, Mr. Gastaldo was
Vice President -- Administration of the company, and from 1989 to 1991 he was
Manager -- Internal Audit of the company. He was a Certified Public Accountant
with Ernst & Young from 1978 to 1989.
Mr. Gaines has been Vice President -- Operations of Salem since 1994. Prior
to that time, he served as General Manager of KKLA-FM from 1992 to 1994 and
General Manager of WYLL-FM from 1990 to 1992. Mr. Gaines has been involved in
the management of radio stations since 1964. He served as Executive Vice
President of Commonwealth Communications from 1988 to 1990, Vice President of
Penn Communications from 1985 to 1988, Executive Vice President of Broadstreet
Communications from 1974 to 1985 and Vice President and General Manager of
Metromedia from 1964 to 1974.
Mr. Armstrong has been Vice President -- Operations of Salem since 1996 and
General Manager of KKLA-FM and KLTH-AM since 1994. He has also supervised
operations of KLTX-AM since 1997 and of
5
KIEV-AM since 1998. Mr. Armstrong has 28 years of radio broadcast experience and
has been general manager of stations in Santa Ana and Orange, California.
Mr. Davis has been Vice President -- Operations of Salem since 1996 and
General Manager of WMCA-AM since 1989. He has also been the General Manager of
WWDJ-AM since 1994. He has previously served as Vice President and Executive
Director of Christian Fund for the Disabled as well as President of Practice
Resources, Inc., Davis Eaton Corporation and Vintage Specialty Advertising
company.
Mr. Sasso has been Vice President -- Operations of Salem since 1996 and
General Manager of the company's Colorado Springs stations from 1994 to present.
He also served as General Manager of the company's Denver stations from 1995 to
1996. Mr. Sasso is the former owner of eight radio stations in Florida,
Mississippi and Louisiana which were sold in 1989. From 1969 to 1979 he served
in various radio management capacities for King Broadcasting and The American
Broadcasting Companies.
Mr. Ruleman has been Vice President -- Operations of Salem since 1999 and
General Manager of WAVA-FM since 1992, WITH-AM since 1997 and WABS-AM since
2000. He was General Manager of KPRZ-AM from 1986 to 1992. From 1973 to 1986,
Mr. Ruleman served as Vice President of Palomar Broadcasting Corporation, a
group owner of radio stations in Southern California.
Mr. Anderson has been President of Salem Radio Network(R) since 1994. From
1993 to 1994, Mr. Anderson was the Vice President -- General Manager of the
network. Mr. Anderson was employed by Multimedia, Inc. from 1980 to 1993. After
serving as program director and general manager at Multimedia stations in
Greenville, Shreveport and Milwaukee, he was named Vice President, Operations,
of the Multimedia radio division in 1987 and was subsequently appointed as
Executive Vice President and group head of Multimedia's radio division.
Mr. Cumbee has been the President of Non-Broadcast Media of Salem since
January 2000. He was the President of Reach Satellite Network, Inc. in
Nashville, Tennessee from 1996 through 1999. From 1990 to 1996 he served as Vice
President of Disney Vacation Development Company.
Mr. Styll founded Praise Productions, the predecessor of CCM
Communications, Inc., in 1978 and has served as the President of CCM
Communications, Inc. since its incorporation in 1979. He served as President of
the Gospel Music Association from 1991 to 1994 and as President of the Christian
Music Trade Association from 1996 to 1998. Mr. Styll is a member of the National
Academy of Recording Arts and Sciences.
6
COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation paid by the company for
1999, 1998 and 1997 to the company's Chief Executive Officer and the four
highest paid executive officers of the company serving as of December 31, 1999
(the "Named Executive Officers").
ANNUAL COMPENSATION
----------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITIONS YEAR SALARY BONUS COMPENSATION COMPENSATION
---------------------------- ---- -------- -------- ------------ ------------
Edward G. Atsinger III.............. 1999 $516,667 $ -- $ -- $ --
President, Chief Executive 1998 400,000 250,000 -- --
Officer and Director 1997 400,000 -- 1,281,192(1) --
Stuart W. Epperson.................. 1999 516,667 -- -- --
Chairman of the Board 1998 400,000 288,000 -- --
1997 400,000 -- 1,281,192(1) --
Eric H. Halvorson................... 1999 358,333 100,000 -- 1,739,384(2)
Executive Vice President, Chief 1998 285,000 87,500 -- 570(3)
Operating Officer and Director 1997 270,000 85,000 -- 63,525(4)
Dave Armstrong...................... 1999 207,212 40,000 -- 2,500(3)
Vice President -- Operations 1998 175,658 38,000 -- 876(3)
1997 163,683 -- -- 19(3)
Dirk Gastaldo....................... 1999 193,750 40,000 -- 1,546(3)
Vice President and Chief 1998 150,000 25,000 -- 625(3)
Financial Officer 1997 140,000 32,500 -- --
- ---------------
(1) Represents tax reimbursement payments made to satisfy individual federal and
state income tax liabilities generated by subsidiaries New Inspiration
Broadcasting Company, Inc. and Golden Gate Broadcasting Company, Inc. as a
result of their S corporation status. Of the 1997 amounts, approximately
$390,000 was paid to each executive as distributions from New Inspiration
and Golden Gate. See the company's Consolidated Statements of Stockholders'
Equity included in the Annual Report to Stockholders furnished with this
Proxy Statement.
(2) Includes employer matching contributions to Mr. Halvorson's 401(k) account,
a grant of 75,000 shares of Class A common stock at fair market value of
$900,000 and a cash bonus paid equal to the individual income tax liability
incurred by Mr. Halvorson in connection with the stock grant.
(3) Represents employer matching contributions to individuals' 401(k) accounts.
(4) Includes employer matching contributions to Mr. Halvorson's 401(k) account,
cancellation of $25,000 indebtedness owed to the company by Mr. Halvorson
and accrued interest of $7,420, and a distribution to Mr. Halvorson of
$30,155, an amount equal to the tax liability incurred by Mr. Halvorson as a
result of cancellation of this debt.
1999 STOCK INCENTIVE PLAN AND STOCK OPTION GRANTS
On May 26, 1999, the company adopted the 1999 Stock Incentive Plan,
designed to provide incentives relating to equity ownership to plan participants
including present and future directors, officers, employees, consultants and
advisors of Salem and its subsidiaries as may be selected by the board of
directors or a board committee that the board may appoint to administer the
plan. Awards under the 1999 Stock Incentive Plan may be granted in the form of
stock options, restricted stock, stock appreciation rights, stock payments,
dividend equivalents, stock bonuses, stock sales, phantom stock and/or other
stock-based benefits. An aggregate of 1,000,000 shares of Class A common stock
were reserved for issuance under the plan. Options generally vest over 5 years
and have a maximum term of 10 years. The plan provides that vesting may be
accelerated in certain corporate transactions of the company.
Effective as of the first public offering of the company's Class A common
stock on July 1, 1999 and subsequent thereto through December 31, 1999, the
company granted stock options under the plan for the
7
purchase of an aggregate of up to 304,500 shares of Class A common stock. The
options were granted to selected directors, executive officers and employees of
Salem. No portion of the options granted have thus far vested.
The following table sets forth information regarding grants of stock
options by the company during fiscal 1999 to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
INITIAL GRANTS
------------------------------------------------------
NUMBER OF POTENTIAL REALIZABLE VALUE
SHARES OF PERCENT OF OF ASSUMED ANNUAL RATES
CLASS A TOTAL OF STOCK PRICE
COMMON STOCK OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE OR TERM
OPTIONS EMPLOYEES IN BASE EXPIRATION ---------------------------
NAME GRANTED(#) FISCAL YEAR PRICE($/SH) DATE 5%($) 10%($)
---- ------------ ------------ ----------- ---------- ----------- -------------
Eric H. Halvorson........... 35,000 11.5% $22.50 6/30/09 $495,255 $1,255,072
Dave Armstrong.............. 10,000 3.3% 22.50 6/30/09 141,501 358,592
Dirk Gastaldo............... 20,000 6.6% 22.50 6/30/09 283,003 717,184
EMPLOYMENT AGREEMENTS
Edward G. Atsinger III and Stuart W. Epperson entered into employment
agreements with Salem effective as of August 1, 1997 and as amended effective as
of May 19, 1999, pursuant to which Mr. Atsinger will serve as President and
Chief Executive Officer of Salem and Mr. Epperson will serve as chairman of
Salem for an initial period expiring July 31, 2001. Pursuant to the employment
agreements, each of Messrs. Atsinger and Epperson will be paid an annual base
salary and an annual bonus determined at the discretion of the board of
directors. Effective as of January 1, 2000, the annual base salary payable to
each of Messrs. Atsinger and Epperson is $500,000. Messrs. Atsinger's and
Epperson's employment agreements provide that, in the event of a termination of
employment by Salem without cause (or a constructive termination by Salem)
during the initial term of employment, Salem will pay a severance benefit in the
form of salary continuation payments for the longer of six months or the
remainder of the initial term, plus accrued bonus through the date of
termination. Following the initial term of employment, a termination of
employment by Salem without cause (or a constructive termination by Salem) or a
failure by Salem to renew the initial or any subsequent term of employment for
an additional annual term would entitle Messrs. Atsinger and Epperson to three
months of severance plus accrued bonus through the date of termination.
Additionally, the employment agreements with Messrs. Atsinger and Epperson
provide Salem with a right of first refusal on corporate opportunities, which
includes acquisitions of radio stations in any market in which Salem is
interested, and includes a noncompete provision for a period of two years from
the cessation of employment with Salem and a nondisclosure provision which is
effective for the term of the employment agreement and indefinitely thereafter.
Eric H. Halvorson entered into an employment agreement with Salem pursuant
to which he serves as Executive Vice President of Salem. Effective as of January
1, 2000 his annual salary is $350,000. His employment agreement has a term
through December 2003. If Mr. Halvorson is terminated without cause by Salem, he
is entitled to severance payments equal to his salary for the remaining term of
his agreement. Mr. Halvorson also entered into a deferred compensation agreement
with Salem effective as of November 1991, pursuant to which Mr. Halvorson will
receive (i) 50% of the average of his three highest years of compensation,
payable for a period of ten consecutive years, if he remains employed by Salem
until age 60, or (ii) a discounted amount, based upon the compensation he would
have received if he had remained employed until age 60, if his employment
terminates for any reason after the term of the employment agreement or before
he reaches age 60 by reason of death, disability or termination by Salem without
cause.
8
On May 26, 1999, Salem granted 75,000 shares of Class A common stock to
Eric H. Halvorson and a cash bonus to be paid in an amount equal to the
individual income tax liability incurred by Mr. Halvorson in connection with the
stock grant.
401(k) PLAN
The company adopted a 401(k) savings plan in 1993 for the purpose of
providing, at the option of the employee, retirement benefits to full-time
employees of the company and its subsidiaries. Participants are allowed to make
nonforfeitable contributions to the savings plan of up to 15% of their annual
salary, but may not exceed the annual maximum contribution limitations
established by the Internal Revenue Service. The company currently matches 25%
of the amounts contributed by each participant but does not match participants'
contributions in excess of 6% of their compensation per pay period. The company
made a contribution of $237,000 to the 401(k) savings plan during 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The company's Compensation Committee consists of Messrs. Hinz (Chairman)
and Schuchert. Neither members is, or formerly was, an officer or employee of
the company or any of its subsidiaries and neither had any relationship with the
company requiring disclosure herein under applicable rules. In addition, to the
company's knowledge, no executive officer or director of Salem has served as a
director or a member of the compensation committee of another entity that
requires disclosure herein under applicable rules.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The company's compensation program is administered by the Compensation
Committee of the board of directors, which is composed of two outside,
non-employee directors. Following review and approval by the Compensation
Committee, issues pertaining to compensation benefits and severance arrangements
for the company's key executives are submitted to the full board of directors
for approval.
The following is the Compensation Committee report addressing the
compensation of the company's key executive officers for the 1999 fiscal year.
REPORT OF THE COMPENSATION COMMITTEE
The primary function of the Compensation Committee is to oversee Salem's
policies relating to executive compensation. The Compensation Committee's
primary objectives are to attract and retain qualified individuals by providing
competitive compensation and to encourage key management employees to conduct
the affairs of the company in a manner that will directly benefit the company
and its stockholders.
The Compensation Committee's policy is to establish fair and competitive
base salaries for the company's key executives. In fulfilling this role, the
Compensation Committee intends to compare the salaries of Salem's executives
with those with similar responsibilities at companies that are considered to be
comparable in term of assets, net worth, revenue and operating cash flow. The
Compensation Committee intends also to analyze the impact of a key executive's
individual performance with respect to matters important to the interests of
Salem and believes that outstanding performance merits increases in base salary,
bonus consideration and stock-based incentives. The Compensation Committee
believes that a direct relationship between an executive's compensation and that
executive's contribution to the company's interests best serves the company's
stockholders.
Accordingly, the following principals are inherent in all of the
Compensation Committee's considerations regarding compensation for key
executives:
1. In order to attract and retain highly qualified and experienced
personnel necessary to fulfill the objectives of the company, Salem must
offer competitive compensation, including a competitive base salary,
cash bonus incentives and stock-based incentives;
9
2. Cash compensation in excess of the employee's base salary should be tied
to the individual's performance, the performance of the business unit
for which the employee is responsible and the overall performance of the
company; and,
3. The financial interest of the key executives of the company should be
closely aligned with the financial interests of the company's
stockholders.
In 1999, the four primary forms of compensation paid or awarded to Salem's
key management personnel were salary, cash bonuses, stock options and a stock
grant. The base salaries for the Chairman, Chief Executive Officer and Chief
Operating Officer in 1999 were provided for in their respective employment
agreements with Salem. The Chairman's base salary for 1999 was $516,667. The
Chief Executive Officer's base salary for 1999 was $516,667. The Chief Operating
Officer's base salary for 1999 was $358,333. The Chairman, Chief Executive
Officer and Chief Operating Officer each agreed, effective January 1, 2000, to
reduce their salary by $100,000, $100,000 and $50,000, respectively. Salary for
all other key executives is reviewed periodically and adjusted as warranted in
accordance with the company's principles regarding executive compensation
outlined above.
All additional cash compensation paid to key management employees in 1999
was tied to the performance of the individual, the business unit for which they
were responsible and the company. The employment agreements for the Chairman,
Chief Executive Officer and Chief Operating Officer each provide for additional
cash bonuses that may be paid to such executive officers at the sole discretion
of the board of directors. In 1999, neither the Chairman nor Chief Executive
Officer received any cash bonus; the Chief Operating Officer received a cash
bonus of $100,000 based on his performance in the prior year.
The Compensation Committee believes that ownership of the Company's stock
by key management more closely aligns the interest of key management to that of
stockholders. In 1999, the Chief Operating Officer was given a one-time grant of
75,000 shares of Class A common stock in recognition of the contributions he
made in successfully implementing the company's acquisition and operational
strategies and in improving the company's financial results. In connection with
the initial public offering in July, 1999, stock options were granted to the
company's executives and other key employees. The stock options granted to the
executives and other key employees in 1999 generally vest over 5 years and have
an exercise price at an amount equal to or exceeding the fair market price of
Salem's stock at the time of the grant. This approach is designed to increase
stockholder value over a long term, since the full benefit of the compensation
package cannot be realized unless stock price appreciation occurs over a number
of years.
The Internal Revenue Code ("Code") contains a provision that limits the tax
deductibility of certain compensation paid to certain executive officers and
disallows the deductibility of certain compensation in excess of $1,000,000 per
year unless the compensation is considered "performance-based" pursuant to the
rules established in the Code. Salem's policies and practices generally ensure
the maximum deduction possible under the Code; however, the company reserves the
right to forego any and all of the tax deduction if it is believed to be in the
best overall interest of Salem and its stockholders.
COMPENSATION COMMITTEE
Roland S. Hinz (Chairman)
Joseph S. Schuchert
The report of the Compensation Committee shall not be deemed incorporated
by any general statement incorporating by reference this Proxy Statement into
any filing under the Securities Act of 1933, as amended (the "Securities Act")
or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), except
to the extent that the company specifically incorporates this information by
reference and shall not otherwise be deemed filed under such Acts.
10
STOCK PRICE PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return of the
company's Class A common stock with the cumulative total return of the Nasdaq
National Market System equity index and the Paul Kagan Associates, Inc.
Broadcasting Average index since July 1, 1999, when the company's Class A common
stock was first registered under the Exchange Act, through December 31, 1999.
The company's Class B common stock is not publicly traded and is not registered.
The graph assumes that the value of an investment in the Company's Class A
common stock and each index was $100 on July 1, 1999 and that any dividends were
reinvested. No cash dividends have been declared on the company's Class A common
stock since the initial public offering. Stockholder returns over the indicated
period should not be considered indicative of future stockholder returns.
COMPARISON OF CUMULATIVE RETURN(1)
[PERFORMANCE GRAPH]
SALEM NASDAQ PAUL KAGAN
----- ------ ----------
7/1/99 100 100 100
9/30/99 100 101 102
12/31/99 89 150 129
- ---------------
(1) Salem's Class A common stock returns were calculated based on the closing
sales prices per share of the Class A common stock as follows: 7/1/99
(initial trading day), $25.50; 9/30/99, $25.50; 12/31/99, $22.625. The
$22.50 per share initial public offering price of the company's Class A
common stock was not used in calculating the Salem graph points.
The stock price performance graph above shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act or the Exchange Act, except
to the extent that the company specifically incorporates this information by
reference and shall not otherwise be deemed filed under such Acts.
11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the company's Class A and Class B common stock as of April 1, 2000,
by (i) each person believed by the company to be the beneficial owner of more
than 5% of either class of the outstanding Class A or Class B common stock, (ii)
each director, (iii) each of the Chief Executive Officer and the four most
highly compensated executive officers of the company who were serving as
executive officers at December 31, 1999 and (iv) all directors and executive
officers as a group.
PERCENT OF
VOTES OF
CLASS A CLASS B ALL CLASSES
COMMON STOCK COMMON STOCK OF
------------------------ ------------------------ COMMON
NAME AND ADDRESS(1) NUMBER % VOTE(2) NUMBER % VOTE(2) STOCK(2)
------------------- --------- --------- --------- --------- -----------
Stuart W. Epperson............. 4,167,029(3) 23.28% 2,776,848(4) 50.00% 43.49%
Nancy A. Epperson.............. 4,167,029(3) 23.28% 2,776,848(4) 50.00% 43.49%
Edward G. Atsinger III......... 4,244,530 23.70% 2,776,848(5) 50.00% 43.59%
Eric H. Halvorson.............. 75,000(6) * 0 * *
Roland S. Hinz................. 141,971(7) * 0 * *
Donald P. Hodel................ 0 * 0 * *
Richard A. Riddle.............. 53,667(8) * 0 * *
Joseph S. Schuchert............ 5,000 * 0 * *
Dave Armstrong................. 100 * 0 * *
Dirk Gastaldo.................. 500 * 0 * *
All directors and executive
officers as a group (16
persons)..................... 8,687,797 48.53% 5,553,696 100.00% 100.00%
- ---------------
* Less than 1%.
(1) The address for each person is c/o Salem Communications Corporation, 4880
Santa Rosa Road, Suite 300, Camarillo, California 93012.
(2) Percentage voting power is based upon 17,902,392 shares of Class A common
stock and 5,553,696 shares of Class B common stock all of which were
outstanding as of April 1, 2000, and the general voting power of one vote
for each shares of Class A common stock and ten votes for each share of
Class B common stock. For information regarding voting power, see the
section of this Proxy Statement entitled "INFORMATION REGARDING VOTING AT
THE ANNUAL MEETING -- Record Date and Voting."
(3) Includes shares of Class A common stock held by a trust of which Mr.
Epperson is trustee and held directly by Mr. Epperson. As husband and wife,
Mr. and Mrs. Epperson are each deemed to be the beneficial owner of shares
held by the other and, therefore their combined beneficial ownership is
shown in the table.
(4) Includes shares of Class B common stock held directly by Mr. Epperson and
shares held directly by Mrs. Epperson.
(5) These shares of Class A and Class B common stock are held by trusts of which
Mr. Atsinger is trustee.
(6) These shares of Class A common stock are held by trusts for which Mr.
Halvorson and his wife are trustees.
(7) Includes 44,444 shares of Class A common stock held by a trust for which Mr.
Hinz and his wife are trustees, 1,411 shares held by his wife and 444 shares
held by his son. Mr. Hinz disclaims beneficial ownership of shares of Class
A common stock held by his wife and his son.
(8) Includes 44,778 shares of Class A common stock held by a trust for which Mr.
Riddle is trustee.
12
RELATED PARTY TRANSACTIONS
CERTAIN LOAN TRANSACTIONS
In December 1997, the company borrowed $1.8 million from Mr. Atsinger
pursuant to a promissory note with a revolving principal amount of up to $2.5
million. The outstanding balance on the note as of December 31, 1998 was $1.8
million. The note was a demand note which bore interest at a floating rate last
set at 8%. The company repaid this note in full and it was cancelled in April
1999.
In January 1998, the company borrowed $1.5 million from Mr. Epperson
pursuant to a promissory note with a revolving principal amount of up to $2.5
million. In May 1998, the company repaid $1.5 million and there was no
outstanding balance on the note as of December 31, 1998. The note was a demand
note which bore interest at floating rate last set at 8%. The note was cancelled
in April 1999.
In 1997, the company purchased split-dollar life insurance policies for its
then-sole shareholders, Messrs. Atsinger and Epperson. Mr. Epperson selected a
policy in the amount of $20 million while Mr. Atsinger selected a policy in the
amount of $40 million, resulting in a premium difference of $94,000 between the
two policies, which difference was paid to Mr. Epperson in cash in the form of
an interest-free loan. The loan will be called upon payment by Mr. Atsinger of
$94,000 to the company. In 1998, the company purchased one-year split-dollar
life insurance policies in the amount of $20 million for each of Messrs.
Atsinger and Epperson.
13
LEASES WITH PRINCIPAL STOCKHOLDERS
The company leases the studios and tower and antenna sites described in the
table below from Messrs. Atsinger and Epperson or trusts and partnerships
created for the benefit of Messrs. Atsinger and Epperson and their families. All
such leases have cost of living adjustments. Based upon management's assessment
and analysis of local market conditions for comparable properties, the company
believes that such leases do not have terms that vary materially from those that
would have been available from unaffiliated parties.
CURRENT EXPIRATION
MARKET STATION CALL LETTERS FACILITIES LEASED ANNUAL RENTAL DATE(1)
------ -------------------- ----------------- ------------- ----------
LEASES WITH BOTH MESSRS. ATSINGER AND EPPERSON:
Los Angeles, CA KLTX-AM Antenna/Tower $ 146,928 2002
Chicago, IL WYLL-FM Antenna/Tower 120,000 2009
San Francisco, CA KFAX-AM Antenna/Tower 152,700 2003
Philadelphia, PA WFIL-AM/WZZD-AM Antenna/Tower/Studios 117,516 2004
Houston-Galveston, TX KKHT-FM Antenna/Tower 157,500 2008
KKHT-FM Antenna/Tower 20,244 2005
KENR-AM Antenna/Tower 33,744 2005
KTEK-AM Antenna/Tower 17,604 2008
Seattle-Tacoma, WA KGNW-AM Antenna/Tower 38,196 2002
KLFE-AM Antenna/Tower 27,768 2004
Minneapolis-St. Paul, MN KKMS-AM Tower/Antenna/Studios 141,624 2006
Pittsburgh, PA WORD-FM Antenna/Tower 28,464 2003
Denver-Boulder, CO KNUS-AM Antenna/Tower 19,716 2006
KRKS-AM/KBJD-AM Antenna/Tower 60,000 2009
Cleveland, OH WHK-AM Antenna/Tower 35,724 2008
Portland, OR KPDQ-AM/FM Studios 64,644 2002
Antenna/Tower 14,688 2002
Cincinnati, OH WTSJ-AM Antenna/Tower 12,756 2007
Riverside-San Bernardino, CA KLTH-AM Antenna/Tower/Studios 48,492 2002
Sacramento, CA KFIA-AM Antenna/Tower 86,496 2006
San Antonio, TX KSLR-AM Antenna/Tower 34,728 2007
KSLR-AM Antenna/Tower 9,000 2009
Akron, OH WHLO-AM Antenna/Tower 12,756 2007
Canton, OH WHK-FM Antenna/Tower 12,756 2007
----------
$1,414,044
==========
LEASE WITH MR. ATSINGER:
San Diego, CA KPRZ-AM Antenna/Tower 49,572 2002
----------
$1,463,616
==========
- ---------------
(1) The expiration date reported for certain facilities represents the
expiration date assuming exercise of lease term extensions at Salem's
option.
Rental expense paid by the company to Messrs. Atsinger and Epperson or
trusts or partnerships created for the benefit of their families for 1999
amounted to approximately $1,300,000. Rental expense paid by the company to Mr.
Atsinger or trusts created for the benefit of his family for 1999 amounted to
approximately $48,000.
KKOL-AM
In April, 1999, the company purchased KKOL-AM, Seattle, Washington for $1.4
million and the associated real estate and a transmitter site for $400,000 from
Sonsinger, Inc., a corporation owned by Messrs. Atsinger and Epperson. Prior to
the acquisition, pursuant to a local marketing agreement with Sonsinger entered
into on June 13, 1997, the company programmed KKOL-AM and sold all the airtime.
Under that local marketing agreement the company retained all of the revenue,
incurred all of the expenses related to its operation of KKOL-AM, and incurred
local marketing fees under the agreement.
14
RADIO STATIONS OWNED BY THE EPPERSONS
Nancy Epperson, the wife of our Chief Executive Officer, Stuart E.
Epperson, has personally acquired four radio stations in the Norfolk-Virginia
Beach-Newport News, Virginia market. Additionally, Mr. Epperson has personally
acquired certain radio stations in the Greensboro-Winston-Salem, North Carolina
market. These Virginia and North Carolina markets are not currently served by
stations owned and operated by the company. Acquisitions in such markets are not
part of the company's current business and acquisition strategies. Under his
employment agreement, Mr. Epperson is required to offer the company a right of
first refusal of opportunities related to the company's business.
TRANSPORTATION SERVICES SUPPLIED BY ATSINGER AVIATION
From time to time, Salem rents an airplane and a helicopter from Atsinger
Aviation LLC, which is owned by Mr. Atsinger. As approved by the independent
members of Salem's board of directors, Salem rents these aircraft on an hourly
basis at below-market rates and uses them for general corporate needs. In 1999,
the company paid $156,000 to Atsinger Aviation for airplane and helicopter
rental.
ELECTION OF DIRECTORS
At the Annual Meeting, stockholders of the company will be asked to vote on
the election of seven directors. Two nominees are nominated as "Independent
Directors" and shall be elected by the holders of Class A common stock as a
class, exclusive of all the Class B stockholders. Donald P. Hodel and Joseph S.
Schuchert have been nominated as the Independent Directors. The nominees
receiving the highest number of votes of shares entitled to vote for such
directors at the Annual Meeting will be elected directors of the company. To
fill these board positions, unless indicated to the contrary, the enclosed proxy
will be voted FOR the nominees listed below, and listed on the enclosed proxy
card, for whom the stockholder is entitled to vote. All directors elected at the
Annual Meeting will be elected to one-year terms and will serve until the annual
meeting of stockholders to be held in the year 2001 and until their successors
have been duly elected and qualified.
Set forth below are the names of persons nominated by the company's board
of directors for election as directors at the Annual Meeting. Your proxy, unless
otherwise indicated, will be voted FOR each of the directors for whom you are
entitled to vote, that is, as a Class A common stock holder FOR Messrs.
Epperson, Atsinger, Halvorson, Hinz, Hodel, Riddle and Schuchert; and as a Class
B common stock holder FOR Messrs. Epperson, Atsinger, Halvorson, Hinz and
Riddle. For a description of the nominees principal occupation and business
experience during the last five years and present directorships, please see
"DIRECTORS AND EXECUTIVE OFFICERS -- Directors," above.
FIRST TERM AS
BECAME COMPANY
DIRECTOR OF DIRECTOR
NAME CURRENT OCCUPATION COMPANY EXPIRES
---- ------------------ ----------- --------
Stuart W. Epperson..... Chairman of the Board of Salem 1986 2000
Edward G. Atsinger President and Chief Executive Officer of Salem 1986 2000
III..................
Eric H. Halvorson...... Executive Vice President, Chief Operating 1988 2000
Officer and General Counsel of Salem
Roland S. Hinz......... Owner, President and Editor-in-Chief of 1997 2000
Hi-Torque Publishing
Donald P. Hodel........ Managing Director of Summit Group International 1999 2000
Ltd.
Richard A. Riddle...... Consultant/Independent Businessman 1997 2000
Joseph S. Schuchert.... Chairman of Kelso & Company, Inc. 1999 2000
The company has been advised by each nominee named in this Proxy Statement
that he is willing to be named as such herein and is willing to serve as a
director if elected. However, if any of the nominees should be unable to serve
as a director, the enclosed proxy will be voted in favor of the remainder of
those nominees not opposed by the stockholder on such proxy and may be voted for
a substitute nominee selected by the board of directors.
15
THE COMPANY'S RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP has been the independent certified public accounting firm
for the company since 1991, and has been selected by the company to continue to
serve as the accountants for the company for 2000. Representatives of Ernst &
Young LLP are expected to attend the Annual Meeting with an opportunity to make
a statement if they desire to do so and will be available to respond to
appropriate questions.
STOCKHOLDERS' PROPOSALS FOR 2001 PROXY STATEMENT
Any stockholder of the company wishing to have a proposal considered for
inclusion in the company's proxy solicitation materials relating to the
company's 2001 annual meeting of stockholders must, in addition to other
applicable requirements, give notice of such proposal in writing to the
Corporate Secretary of the company at its principal executive offices and such
notice must be received on or before February 23, 2001. The proposal may be
included in next year's proxy statement if it complies with certain rules and
regulations promulgated by the Securities and Exchange Commission. The board of
directors will review proposals from eligible stockholders which it receives by
February 23, 2001 and will determine whether any such proposal will be included
in its 2001 proxy solicitation materials.
OTHER MATTERS
At the time of preparation of this Proxy Statement, the board of directors
of the company was not aware of any other matters to be brought before the
Annual Meeting. No eligible stockholder had submitted notice of any proposal as
of 90 days before the date of the Annual Meeting. However, if any other matters
are properly presented for action, in the absence of instructions to the
contrary, it is the intention of the persons named in the enclosed form of proxy
to vote, or refrain from voting, in accordance with their respective best
judgment on such matters.
Pursuant to the Bylaws of Salem, only such business shall be conducted, and
only such proposals shall be acted upon at an annual meeting of stockholders as
are properly brought before the meeting. For business to be properly brought
before an annual meeting by a stockholder, in addition to any other applicable
requirements, timely notice of the matter must first be given to the Corporate
Secretary. To be timely, a stockholder's written notice must be delivered to the
Corporate Secretary at the company's principal executive offices not later than
the 90th day nor earlier than the 120th day prior to the first anniversary of
the preceding annual meeting; provided, however, that in the event the date of
the annual meeting is more than 30 days before or more than 60 days after such
anniversary date, then notice of the stockholder proposal must be delivered to
the Corporate Secretary not earlier than the 120th day nor later than the 90th
day prior to such annual meeting or the 10th day following the day on which
public announcement of the date of such annual meeting is first made. If such
proposal is for a nominee for director, such stockholder's notice must set forth
with respect to such director nominee all of the information relating to such
person that is required to be disclosed in solicitations for elections of
directors under the rules of the Securities and Exchange Commission; for any
stockholder proposal, the notice must comply with Section 2.2 of Article II of
the company's Bylaws (a copy of which is available upon request to the Corporate
Secretary of the company), which section requires that the notice contain a
brief description of such proposal and the reason for conducting such business
at the annual meeting, the name and address, as they appear on the company's
books, of the stockholder making such proposal, the number of shares of Class A
and Class B common stock beneficially owned by such stockholder and any material
interest of such stockholder in such proposal.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Exchange Act and the rules promulgated
thereunder and requirements of the National Association of Securities Dealers,
officers and directors of the company and persons who beneficially own more than
10% of the common stock of the Company are required to file with the Securities
and Exchange Commission and the National Association of Securities Dealers and
furnish to the company reports of ownership and change in ownership with respect
to all equity securities of the company.
16
Based solely on its review of the copies of such reports received by it
during or with respect to the year ended December 31, 1999 and/or written
representations from such reporting persons, the company believes that its
officers, directors and ten-percent stockholders complied with all Section 16(a)
filing requirements applicable to such individuals, except that the individuals
listed in the following table were not timely in reporting one-time purchases of
the company's Class A common stock. All such purchases were made as part of a
reserved share purchase program at the time of the company's initial public
offering in July 1999. These purchases have been reported on Form 4s filed for
each person with the Securities and Exchange Commission in April 2000.
NUMBER OF SHARES OF
NAME CLASS A COMMON STOCK
---- --------------------
Greg R. Anderson........ 500
Dave Armstrong.......... 100
Joe D. Davis............ 1,000
Dirk Gastaldo........... 500
Eileen E. Hill.......... 444
Roland S. Hinz(1)....... 58,638
NUMBER OF SHARES OF
NAME CLASS A COMMON STOCK
---- --------------------
Richard A. Riddle(2).... 26,667
David Ruleman........... 2,000
Kenneth W. Sasso........ 750
Joseph S. Schuchert..... 5,000
John W. Styll........... 1,000
W. Douglas Young........ 6,667
- ---------------
(1) Includes 44,444 shares held by a trust for which Mr. Hinz and his wife are
trustees, 1,411 shares held by his wife and 444 shares held by his son. Mr.
Hinz disclaims beneficial ownership of shares held by his wife and his son.
(2) Includes 17,778 shares held by a trust for which Mr. Riddle is trustee.
ANNUAL REPORT ON FORM 10-K
The company's Annual Report to Stockholders for the year ended December 31,
1999, including audited financial statements, is being mailed to stockholders
along with these proxy materials. The company's Annual Report on Form 10-K for
the year ended December 31, 1999 as filed with the Securities and Exchange
Commission (without exhibits) is available to stockholders without charge upon
written request to the company. Exhibits to the Annual Report on Form 10-K may
be obtained from the company upon payment of the company's reasonable expenses
to furnish such exhibits. To obtain any such exhibits, contact Jonathan L.
Block, Salem Communications Corporation, 4880 Santa Rosa Road, Suite 300,
Camarillo, California 93012.
By order of the board of directors
/s/ JONATHAN L. BLOCK
JONATHAN L. BLOCK
Corporate Secretary
Camarillo, California
April 28, 2000
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
If you have any questions, or have any difficulty voting your shares,
please contact Jonathan L. Block of Salem at (805) 987-0400.
17
APPENDIX A
SALEM COMMUNICATIONS CORPORATION
AUDIT COMMITTEE CHARTER
1. ORGANIZATION
This charter governs the operations of the audit committee. The committee
shall review and reassess the charter at least annually and obtain the approval
of the board of directors. The committee shall be appointed by the board of
directors and shall comprise at least three directors, each of whom are
independent of management and the Company. For purposes hereof, "independent"
shall mean a director who meets the National Association of Securities Dealers,
Inc. ("NASD") definition of independence. Members of the committee shall be
considered independent if they have no relationship that may interfere with the
exercise of their independence from management and the Company. All committee
members shall be financially literate, and at least one member shall have
accounting or related financial management expertise, both as provided in the
NASD Rules.
2. STATEMENT OF POLICY
The audit committee shall provide assistance to the board of directors in
fulfilling their oversight responsibility to the shareholders, potential
shareholders, the investment community, and others relating to the Company's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the internal audit function, the
annual independent audit of the Company's financial statements, and the legal
compliance and ethics programs as established by management and the board. In so
doing, it is the responsibility of the committee to maintain free and open
communication between the committee, independent auditors, the internal auditors
and management of the Company. In discharging its oversight role, the committee
is empowered to investigate any matter brought to its attention with full access
to all books, records, facilities, and personnel of the Company and the power to
retain outside counsel, or other experts for this purpose.
3. RESPONSIBILITIES AND PROCESSES
The primary responsibility of the audit committee is to oversee the
Company's financial reporting process on behalf of the board and report the
results of their activities to the board. Management is responsible for
preparing the Company's financial statements, and the independent auditors are
responsible for auditing those financial statements. The committee in carrying
out its responsibilities believes its policies and procedures should remain
flexible, in order to best react to changing conditions and circumstances. The
committee should take the appropriate actions to set the overall corporate
"tone" for quality financial reporting, sound business risk practices, and
ethical behavior.
The following shall be the principal recurring processes of the audit
committee in carrying out its oversight responsibilities. The processes are set
forth as a guide with the understanding that the committee may supplement them
as appropriate.
- The committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately
accountable to the board and the audit committee, as representatives of
the Company's shareholders. The committee shall have the ultimate
authority and responsibility to evaluate and, where appropriate, replace
the independent auditors. The committee shall review the written
statement from the outside auditor of the Company concerning any
relationships between the auditor and the Company or any other
relationships that may adversely affect the independence of the auditor
and assess the independence of the outside auditor as required under
Independence Standards Board Standard 1. Annually, the committee shall
review and recommend to the board the selection of the Company's
independent auditors, subject to shareholders' approval.
- The committee shall discuss with the internal auditors and the
independent auditors the overall scope and plans for their respective
audits including the adequacy of staffing and compensation. Also, the
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committee shall discuss with management, the internal auditors, the
adequacy and effectiveness of the accounting and financial controls,
including the Company's system to monitor and manage business risk, and
legal internal auditors and the independent auditors, with and without
management present, to discuss the results of their examinations.
- The committee shall review the interim financial statements with
management and the independent auditors prior to the filing of the
Company's Quarterly Report on Form 10-Q. Also, the committee shall
discuss the results of the quarterly review and any other matters
required to be communicated to the committee by the independent auditors
under generally accepted auditing standards. The chair of the committee
may represent the entire committee for the purposes of this review.
- The committee shall review with management and the independent auditors
the financial statements to be included in the Company's Annual Report on
Form 10-K (or the annual report to shareholders if distributed prior to
the filing of Form 10-K), including their judgment about the quality, not
just acceptability, of accounting principles, the reasonableness of
significant judgments, and the clarity of the annual audit and any other
matters required to be communicated to the committee by the independent
auditors under generally accepted auditing standards.
4. MEETINGS
The audit committee shall meet as often as may be deemed necessary or
appropriate in its judgment, generally four times each year, either in person or
telephonically. The audit committee shall meet in executive session with the
independent auditors at least annually. The audit committee shall report to the
full board of directors with respect to its meetings. The majority of the
members of the audit committee shall constitute a quorum.
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SALEM COMMUNICATIONS CORPORATION
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 24, 2000
Solicited on Behalf of the Board of Directors
The undersigned authorizes Eric H. Halvorson and Jonathan L.
Block, and each of them individually, with power of substitution, to vote and
otherwise represent all of the shares of Class A and Class B Common Stock of
Salem Communications Corporation, (the "Company"), held of record by the
undersigned, at the Annual Meeting of Stockholders of the Company to be held at
the Hyatt Westlake Hotel, 880 South Westlake Boulevard, Westlake Village,
California, on Wednesday, May 24, 2000 at 10:00 a.m. local time, and any
adjournment(s) thereof, as indicated on the reverse side hereof.
The undersigned acknowledges receipt of the Notice of Annual Meeting
and Proxy Statement dated in each case, April 28, 2000. All other proxies
heretofore given by the undersigned to vote shares of the Company's Class A or
Class B Common stock are expressly revoked.
The shares represented by this proxy will be voted as described on the
reverse hereof by the stockholder. If not otherwise directed, this proxy will be
voted FOR the election as directors of all nominees nominated in Item 1 for
which the stockholder is entitled to vote.
(Continued, and to be signed and dated on the reverse side.)
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
1. To elect seven (7) FOR all [X] WITHHOLD [X] EXCEPTIONS [X]
members to the Board nominees AUTHORITY to vote
of Directors of Salem: listed below for for all nominees
whom stockholder is listed below for whom
entitled to vote+ stockholder is
entitled to vote+
Nominees: Edward G. Atsinger III Eric H. Halvorson Joseph S. Schuchert+
Stuart W. Epperson Richard A. Riddle Donald P. Hodel+
Roland S. Hinz
+ Messrs. Schuchert and Hodel are nominated as independent directors; only
holders of Class A Common Stock are entitled to vote on the election of the
two independent directors.
(INSTRUCTIONS. To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions ____________________________________________________________________
2. At their discretion, the proxies are authorized to consider and vote upon
such other business as may properly come before the meeting or any
adjournment thereof.
I plan to attend the [X]
Annual Meeting
ADDRESS AREA
Change of Address and/or [X]
Comments Mark Here
Please sign exactly as your name
appears hereon. When signing in a
representative capacity, please
give full title.
Date: ______________, 2000
__________________________________
__________________________________
Signature
Votes MUST be indicated (x) [X]
in Black or Blue ink.
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
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