Related Party Transactions
|12 Months Ended
Dec. 31, 2020
|Related Party Transactions [Abstract]
|Related Party Transactions
NOTE 17. RELATED PARTY TRANSACTIONS
adopted a written policy for review, approval and monitoring of transactions between Salem and its related parties. The policy applies to any transaction or series of transactions in which Salem is a participant, the amount involved exceeds $120,000 and a Related Party (as defined in Item 404(a) of SEC Regulation
Our Board has
S-K)has a direct or indirect material interest, excluding, among other things, compensation arrangements with respect to employment and
Board membership. Related Parties includes our directors, executive officers, nominees to become a director, any person beneficially owning more than 5% of any class of our stock, immediate family members of any of the foregoing, and any entity in which any of the foregoing persons is employed or is a general partner or principal or in which the person has a 10% or greater beneficial ownership interest.
Under the Policy, related party transactions must be reported to our general counsel and be reviewed and approved or ratified by the
Board in accordance with the terms of the Policy, prior to the effectiveness or consummation of the transaction, whenever practicable. The
Board will review all relevant information available about the potential related party transaction and may, in its sole discretion, impose such conditions as it deems appropriate on Salem or the Related Party in connection with the approval of the related party transaction. We also poll our directors and executive officers on an annual basis with respect to related party transactions and their service as an officer or director of other entities. Any director involved in a related party transaction that is being reviewed or approved must recuse himself or herself from participation in any related deliberation or decision.
Other than compensation arrangements for our directors and executive officers, the following is a summary of transactions for the years ended December 31, 2020 and December 31, 2019, to which we have been a party in which the amount involved exceeds $120,000 annually and in which any of our then directors, executive officers or holders of more than 5% of any class of our stock at the time of such transaction, or any members of their immediate family, or is a general partner or principal or in which the person has a 10% or greater beneficial ownership interest, had or will have a direct or indirect material interest.
Leases with Principal Stockholders
A trust controlled by the Chief Executive Officer of the company, Edward G. Atsinger III, owns real estate on which assets of one radio station are located. Salem has entered into a lease agreement with this trust. Rental expense related to this lease included in operating expense for each of the year’s ending December 31, 2020 and 2019 amounted to $0.2 million. Mr. Ted Atsinger, son of the CEO is the beneficiary and/or successor trustee.
Land and buildings occupied by various Salem radio stations are leased from entities owned by the company’s CEO and its Chairman of the Board. Rental expense under these leases included in operating expense for each of the years ending December 31, 2020 and 2019 was $1.5 million and $1.6 million, respectively.
Truth For Life – Mr. Riddle
Truth For Life is a
non-profitorganization that is a customer of Salem Media Group, Inc. During 2020 and 2019, the company billed Truth For Life approximately $2.4 million and $2.5 million for airtime on its stations. The company had receivable balances of $0 million and $0.2 million, respectively, related to these sales at December 31, 2020 and 2019. Mr. Riddle, a director of the company, joined the Truth for Life board in October 2010. Mr. Riddle notified the company of his resignation from the Truth for Life board in June 2019.
Know the Truth – Mr. Riddle
Know the Truth is a
non-profitorganization that is a customer of Salem Media Group, Inc. During 2020 and 2019 the company billed Know the Truth approximately $0.6 million and $0.8 million for airtime on its stations. The company had receivable balances of $39,000 and $1.2 million at December 31, 2020 and 2019. Mr. Riddle, a director of the company, joined the Know the Truth board in 2010 and remains a member of this board.
Split-Dollar Life Insurance
Salem maintained split-dollar life insurance policies for its Chairman and Chief Executive Officer since 1997. Since 2003, the company has been the owner of the split-dollar life insurance policies and was entitled to recover all of the premiums paid on the policies. The premiums were $0.2 million and $0.5 million for each of the years ended December 31, 2020 and 2019, respectively. The cumulative premiums paid on these policies were $3.7 million and $3.5 million, respectively. The policies were surrendered during 2020 with net proceeds of $2.4 million paid to the
company. The company paid $0.3 million of the proceeds to the Chairman and $0.3 million of the proceeds to the Chief Executive Officer in exchange for surrendering the policies.
Transportation Services Supplied by Sun Air Jets
From time to time, the company rents aircraft from a company owned by Edward G. Atsinger III, Chief Executive Officer and director of Salem. As approved by the independent members of the company’s board of directors, the company rents these aircraft on an hourly basis for general corporate needs. Total rental payments for aircraft for the years ended December 31, 2020 and 2019 was approximately
$298,000 and $135,000,
respectively. At December 31, 2020,
of the $298,000 paid to Sun Air Jets during 2020 was applied as an advance to secure future flights at discounted rates.