DEF 14A
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ddef14a.txt
DEFINITIVE PROXY STMT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
RADIO ONE, INC.
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(Name of Registrant as Specified In Its Certificate)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-
11.
1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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[_] Fee paid previously with preliminary materials.
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Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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Radio One, Inc.
5900 Princess Garden Parkway, 7th Floor
Lanham, MD 20706
301-306-1111
April 24, 2001
Dear Fellow Stockholder:
You are cordially invited to attend the 2001 annual meeting of Stockholders
of Radio One, Inc. (the "Company"), to be held on Tuesday, June 5, 2001 at 9:30
a.m. local time, at the Hay Adams Hotel, 800 16th Street, NW, Washington, D.C.
At this meeting you will be asked to vote on several proposals, all of which
are described in detail in the attached proxy statement. Also enclosed are the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2000, and a proxy card for each class of voting stock you hold.
Whether or not you plan to attend the annual meeting in person, it is
important that your shares be represented and voted at the meeting. After
reading the attached proxy statement, please sign, date, and promptly return
the proxy or proxies in the enclosed self-addressed envelope. No postage is
required if it is mailed in the United States. Submitting the proxy will not
preclude you from voting in person at the annual meeting should you later
decide to do so.
Your cooperation in promptly returning your completed proxy is greatly
appreciated. We look forward to seeing you at the annual meeting.
Sincerely,
/s/ ALFRED C. LIGGINS, III
--------------------------
Alfred C. Liggins, III
Chief Executive Officer
Radio One, Inc.
5900 Princess Garden Parkway, 7th Floor
Lanham, MD 20706
301-306-1111
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
JUNE 5, 2001
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NOTICE IS HEREBY GIVEN that the annual meeting of Stockholders (the
"Meeting") of RADIO ONE, INC., a Delaware corporation (the "Company") will be
held on June 5, 2001 at 9:30 a.m., local time, at the Hay Adams Hotel, 800 16th
Street, NW, Washington, D.C. to consider and act upon the following matters:
1. The election of Terry L. Jones and Brian W. McNeill as Class A
Directors to serve until the 2002 annual meeting of Stockholders or until
their successors are duly elected and qualified.
2. The election of Catherine L. Hughes, Alfred C. Liggins, III, Larry D.
Marcus, D. Geoffrey Armstrong, and L. Ross Love as Directors to serve until
the 2002 annual meeting of Stockholders or until their successors are duly
elected and qualified.
3. The amendment of the Company's Amended and Restated Bylaws to permit
the filling of vacancies on the Board of Directors by majority vote of the
Stockholders or the Board of Directors.
4. The ratification of the amendment to the 1999 Option and Restricted
Stock Grant Plan increasing the number of shares of class D common stock
reserved for issuance under the Plan from 2,816,198 shares to 3,816,198
shares.
5. The ratification of the appointment of Arthur Andersen LLP as
independent public accountants for the Company for the year ended December
31, 2001.
6. The transaction of such other business as may properly come before
the Meeting or any adjournment thereof.
The Board of Directors is not aware of any other business that will be
presented for consideration at the Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS
VOTE "FOR" EACH OF PROPOSALS 1, 2, 3, 4 AND 5 TO BE PRESENTED AT THE
ANNUAL MEETING.
Only Stockholders of record at the close of business on April 16, 2001 will
be entitled to notice of and to vote at the Meeting or any adjournment thereof.
The Meeting may be adjourned from time to time without notice other than by
announcement at the Meeting. A list of Stockholders entitled to vote at the
Meeting will be available for inspection by any Stockholder, for any reason
germane to the Meeting, during ordinary business hours during the ten days
prior to the Meeting at the Company's offices at 5900 Princess Garden Parkway,
7th Floor, Lanham, Maryland 20706. If you wish to view the list of
Stockholders, please contact the Assistant Secretary's office at (301) 306-
1111.
We hope that you will be able to attend the Meeting in person. However,
whether or not you plan to attend, please complete, date, sign, and return the
enclosed proxy card promptly to ensure that your shares are represented at the
Meeting. If you do attend the Meeting, you may revoke your proxy if you wish to
vote in person. The return of the enclosed proxy card will not affect your
right to revoke your proxy or to vote in person if you do attend the Meeting
(although mere attendance at the meeting will not, in and of itself, constitute
a revocation of a proxy).
By order of the Board of Directors
/s/ Linda J. Eckard Vilardo
-----------------------------------
Linda J. Eckard Vilardo
Vice President, General Counsel and
Assistant Secretary
Dated: April 24, 2001
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Radio One, Inc.
5900 Princess Garden Parkway, 7th Floor
Lanham, MD 20706
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PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 5, 2001
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GENERAL
This proxy statement is furnished in connection with the solicitation on
behalf of the Board of Directors of RADIO ONE, INC. ("Radio One" or the
"Company") of proxies to be used at the annual meeting of Stockholders (the
"Meeting"), to be held on June 5, 2001 at 9:30 a.m., local time, at the Hay
Adams Hotel, 800 16th Street, NW, Washington, D.C., and all adjournments
thereof. The proxy statement and a copy of the Company's Annual Report on Form
10-K for the year ended December 31, 2000 are first being mailed on or about
April 24, 2001 to Stockholders of record at the close of business on April 16,
2001.
A proxy card is enclosed. Whether or not you plan to attend the Meeting in
person, please date, sign and return the enclosed proxy card as promptly as
possible in the postage prepaid envelope provided. This will ensure that your
shares will be voted at the Meeting.
Proxies will be solicited by mail, and the Company will pay all expenses of
preparing and soliciting such proxies. The persons designated as proxy in any
duly executed proxy card received, will vote on all matters presented at the
Meeting in accordance with the specifications given therein by the person
executing such proxy or, in the absence of specified instructions, will vote in
favor of each of the proposals indicated on such proxy. The Board of Directors
does not know of any other matter that may be brought before the Meeting, but,
in the event that any other matter should come before the Meeting, the persons
named as proxy will have authority to vote all proxies not marked to the
contrary in their discretion as they deem advisable.
Any Stockholder may revoke his or her proxy at any time before the Meeting
by written notice to such effect received by the Company at the address set
forth above, attn: Linda J. Eckard Vilardo, Assistant Secretary, by delivery of
a subsequently dated proxy, or by attending the Meeting and voting in person.
THE MEETING
The Meeting will be held on June 5, 2001 at 9:30 a.m., local time, at the
Hay Adams Hotel, 800 16th Street, NW, Washington, D.C.
PROPOSALS
At the Meeting, our Stockholders will be asked to (i) elect Brian W. McNeill
and Terry L. Jones as Class A Directors to serve until the 2002 annual meeting
of Stockholders or until their successors are duly elected and qualified
(Proposal 1); (ii) elect Catherine L. Hughes, Alfred C. Liggins, III, Larry D.
Marcus, D. Geoffrey Armstrong, and L. Ross Love as Directors to serve until the
2002 annual meeting of Stockholders or until their successors are duly elected
and qualified (Proposal 2); (iii) amend the Company's Amended and Restated
Bylaws to permit the filling of vacancies on the Board of Directors by majority
vote of the Stockholders or the Board of Directors (Proposal 3); (iv) ratify
the amendment to the 1999 Option and Restricted Stock Grant Plan increasing the
number of shares of class D common stock reserved for issuance under the Plan
from 2,816,198 shares to 3,816,198 shares (Proposal 4); (v) ratify the
appointment of Arthur Andersen LLP as independent public accountants for the
Company for the year ended December 31, 2001 (Proposal 5); and (vi) transact
such other business as may properly come before the Meeting or any adjournment
thereof.
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The Board of Directors is not aware of any other business that will be
presented for consideration at the Meeting.
HOW YOU CAN VOTE
You may submit your proxies by attending the Meeting and voting your shares
in person. You also may choose to submit your proxies by completing the
enclosed proxy card, dating and signing it, and returning it in the postage-
paid envelope provided. If you sign your proxy card and return it without
marking any voting instructions, your shares will be voted in favor of each of
the proposals presented at the Meeting for which you are eligible to vote. If
your shares are held in the name of a broker, bank or other record holder
(i.e., in "Street Name"), you must either direct the record holder of your
shares how to vote your shares or obtain a proxy from the record holder to vote
at the Meeting.
VOTING AND SOLICITATION OF PROXIES
All shares of class A and class B common stock represented at the Meeting by
properly executed proxies received prior to the vote at the Meeting, unless
previously revoked (as described immediately below), will be voted in
accordance with the instructions indicated thereon. Class C and class D common
stock are not entitled to vote on any proposal presented at the Meeting. Where
a properly signed proxy is returned and no instructions are given, proxies will
be voted as follows:
--Proxies received from the holders of class A common stock will be voted
FOR all of the nominees for Class A Director (for which holders of class B
common stock are not eligible to vote).
--Proxies received from holders of class A common stock and class B common
stock will be voted FOR:
--All of the other nominees for Director;
--The amendment to the Company's Amended and Restated Bylaws to permit
filling of vacancies on the Board of Directors by majority vote of the
Stockholders or the Board of Directors;
--Ratification of the amendment to the 1999 Option and Restricted Stock
Grant Plan increasing the number of shares of class D common stock
reserved for issuance under the Plan from 2,816,198 shares to 3,816,198
shares;
--Ratification of Arthur Andersen LLP as independent public accountants
for the Company for the 2001 fiscal year; and
--At the discretion of the proxies on any other matter that may be
properly brought before the Meeting.
No matters other than those referred to above are presently scheduled to be
considered at the Meeting. A broker who holds a Stockholder's shares in Street
Name will not be entitled to vote on Proposals 3 and 4 without instructions
from the beneficial owner of such shares. Pursuant to the Company's Amended and
Restated Bylaws, any question presented to a meeting of the Stockholders must
be approved (with certain exceptions) by the vote of a majority of the votes
eligible to be cast by the Stockholders at the Meeting, and, as a result,
abstentions will have the same effect as a vote against such proposal, whereas
broker non-votes will have no effect on the voting.
Abstentions may be specified on each proposal. Abstentions will be counted
as present for purposes of the item on which the abstention is noted and, thus,
have the effect of a vote against the proposal. Votes may be cast in favor of
or in opposition to each proposal or, in the case of the election of Directors,
votes may be cast in favor of the election of each nominee or withheld. Except
with respect to proposals requiring the affirmative vote of a majority of votes
entitled to be cast (Proposal 3), as to which broker non-votes have the effect
of a vote against the proposal, shares represented by a proxy as to which there
is a broker non-vote will not be counted toward the calculation of a majority
of votes and thus will have no effect on the outcome of the voting. (A broker
non-vote occurs when a nominee who holds shares for a beneficial owner does not
vote on a proposal because the nominee does not have discretionary voting power
and has not received voting instructions from the beneficial owner.)
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A Stockholder giving a proxy may revoke such proxy at any time before the
proxy is voted. A proxy may be revoked by filing with Linda J. Eckard Vilardo,
Assistant Secretary of the Company at 5900 Princess Garden Parkway, 7th Floor,
Lanham, Maryland 20706 either (i) a written notice of revocation, including by
telegram or facsimile, bearing a date later than the date of such proxy or (ii)
a later-dated proxy relating to the same shares. A Stockholder who gives a
proxy may also revoke such proxy by attending the Meeting and voting in person
(although mere attendance at the Meeting will not, in and of itself, constitute
a revocation of a proxy).
COSTS OF SOLICITATION
Proxies are being solicited by and on behalf of the Company, and the Company
will pay the costs of soliciting proxies. The Company will solicit proxies by
mail, and the directors, officers and employees of the Company may also solicit
proxies by telephone, facsimile, telegram or in person. Those persons will
receive no additional compensation for these services but will be reimbursed
for reasonable out-of-pocket expenses. The Company will bear the costs of
preparing and mailing the proxy materials to such persons as brokerage houses
and other custodians, nominees and fiduciaries, for their forwarding of the
proxy materials to the beneficial owners. Upon request, the Company will also
reimburse such brokerage houses, custodians, nominees and fiduciaries for their
reasonable expenses in sending the proxy materials to the beneficial owners.
SHARES ENTITLED TO VOTE
Only Stockholders of record of Common Stock at the close of business on
April 16, 2001 (the "Record Date") will be entitled to notice of and to vote at
the Meeting. As of the Record Date, there were 22,529,344 shares of class A
common stock and 2,867,463 shares of class B common stock issued, outstanding
and eligible to vote. Each share of class A common stock is entitled to one
non-cumulative vote, and each share of class B common stock is entitled to ten
non-cumulative votes.
QUORUM
A quorum of Stockholders is necessary to take action at the Meeting. Each
share of class A common stock entitles the holder thereof to one vote. Each
share of class B common stock entitles the holder thereof to ten votes.
Accordingly a total of 51,203,974 votes may be cast at the Meeting. The holders
of shares of Common Stock representing a majority of all votes entitled to be
cast at the Meeting (25,601,988 votes), whether present in person or
represented by proxy at the Meeting, shall constitute a quorum. Abstentions and
instructions to withhold voting authority, but not broker non-votes, are
counted as present for purposes of determining whether there is a quorum. In
the event that a quorum is not obtained at the Meeting, we expect that the
Meeting will be adjourned or postponed to solicit additional proxies.
If a quorum is not present, the holders of the shares present in person or
represented by proxy at the Meeting and entitled to vote thereat shall have the
power, by the affirmative vote of the holders of a majority of such shares, to
adjourn the Meeting to another time or place. Unless the adjournment is for
more than thirty days or unless a new record date is set for the adjourned
meeting, no notice of the adjourned meeting need be given to any Stockholder,
provided that the time and place of the adjourned meeting is announced at the
Meeting at which the adjournment was taken. At the adjourned meeting, the
Company may transact any business which might have been transacted at the
original Meeting.
VOTE REQUIRED
A quorum being present at the Meeting, (a) the affirmative vote of a
majority of the votes cast by the holders of class A common stock will be
necessary for the approval and adoption of the proposal to elect Terry L. Jones
and Brian W. McNeill as Class A Directors, (b) the affirmative vote of a
majority of the votes
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represented by all outstanding shares of class A common stock and class B
common stock will be necessary for the approval and adoption of the proposal to
amend the Company's Amended and Restated By-laws to permit filling of vacancies
on the Board of Directors by majority vote of the Stockholders or the Board of
Directors, and (c) the affirmative vote of a majority of the votes cast by all
holders of class A common stock and class B common stock will be necessary for
the approval and adoption of the proposals for (i) the election of the
remaining Director nominees, (ii) the ratification of the amendment to the 1999
Option and Restricted Stock Grant Plan increasing the number of shares of class
D common stock reserved for issuance under the Plan, and (iii) the ratification
of the appointment of the independent public accountants. Abstentions will be
counted as votes against each proposal. Votes cast by proxy or in person at the
Meeting will be tabulated by the inspectors of election appointed for the
Meeting.
VOTING SHARES COMMITTED
The Company has been advised by various members of management and the Board
of Directors who, in the aggregate, hold or otherwise have voting power with
respect to 1,517,123 shares of Class A Common Stock and 2,861,843 shares of
class B common stock (representing approximately 58.9% of the votes possible)
that they intend to vote such shares in favor of each of the proposals to be
presented for consideration and approval at the Meeting.
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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of our Common Stock as of March 31, 2001 by: (1) each person (or
group of affiliated persons) known by us to be the beneficial owner of more
than five percent of any class of common stock; (2) each of our top five most
highly compensated executive officers; (3) each of our directors and nominees;
and (4) all of our directors and officers as a group. The number of shares of
each class of common stock excludes the shares of any other class of common
Stock issuable upon conversion of that class of common Stock. Unless otherwise
indicated in the footnotes below, each Stockholder possesses sole voting and
investment power with respect to the shares listed. Information with respect to
the beneficial ownership of shares has been provided by the Stockholders.
Common Stock
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Class A Class B Class C Class D
----------------- ----------------- ----------------- ------------------ Percent Percent
Number Percent Number Percent Number Percent Number Percent of Total of Total
of of of of of of of of Economic Voting
Shares Class Shares Class Shares Class Shares Class Interest Power
--------- ------- --------- ------- --------- ------- ---------- ------- -------- --------
Catherine L. 1,000 0.004% 851,536 29.7% 3,121,048 99.6% 7,772,168 13.3% 13.5% 16.6%
Hughes(/1/)(/2/)(/3/)..
c/o Radio One
5900 Princess Garden
Parkway, 7th Floor
Lanham, Maryland 20706
Alfred C. Liggins, 38,036 0.2 2,010,307 70.1 3,121,048 99.6 10,163,782 17.4 17.6 39.3
III(/1/)(/2/)(/4/).....
c/o Radio One
5900 Princess Garden
Parkway, 7th Floor
Lanham, Maryland 20706
Scott R. Royster(/5/)... 381,703 1.7 -- -- -- -- 783,403 1.3 1.3 0.7
c/o Radio One
5900 Princess Garden
Parkway, 7th Floor
Lanham, Maryland 20706
Linda J. Eckard 24,308 0.01 -- -- -- -- 298,616 0.5 0.4 0.0
Vilardo(/6/)...........
c/o Radio One
5900 Princess Garden
Parkway, 7th Floor
Lanham, Maryland 20706
Mary Catherine Sneed.... 230,922 1.0 -- -- -- -- 336,844 0.6 0.7 0.5
c/o Radio One
5900 Princess Garden
Parkway, 7th Floor
Lanham, Maryland 20706
Terry L. Jones(/7/)..... 577,318 2.6 -- -- -- -- 1,142,636 2.0 2.0 1.1
c/o Syncom Capital Cor-
poration
8401 Colesville Road,
Suite 300
Silver Spring, MD 20910
Brian W. McNeill(/8/)... 492,258 2.2 -- -- -- -- 984,516 1.7 1.7 1.0
c/o Burr, Egan, Deleage
& Co.
One Post Office Square
Boston, MA 02109
Larry D. Marcus......... 2,500 0.01 -- -- -- -- 17,000 * * *
248 Gay Avenue
Clayton, MO 63105
L. Ross Love............ 250 * -- -- -- -- 500 * * *
c/o Blue Chip
Broadcasting, Inc.
1821 Summit Road, Suite
401
Cincinnati, OH 45237
D. Geoffrey Armstrong... -- -- -- -- -- -- -- -- -- --
c/o 310 Partners
600 Congress Ave.,
Suite 1400
Austin, TX 78701
Baron Capital Group, 1,590,800 7.1 -- -- -- -- -- -- 1.8 3.1
Inc....................
767 Fifth Avenue
New York, NY 10153
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Common Stock
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Class A Class B Class C Class D
----------------- ----------------- ----------------- ------------------ Percent Percent
Number Percent Number Percent Number Percent Number Percent of Total of Total
of of of of of of of of Economic Voting
Shares Class Shares Class Shares Class Shares Class Interest Power
--------- ------- --------- ------- --------- ------- ---------- ------- -------- --------
Fidelity International 1,522,520 6.8 -- -- -- -- -- -- 1.8 3.0
Limited................
Pembroke Hall, 42
Crowlane
Hamilton, Bermuda
FMR Corp................ 2,069,170 9.2 -- -- -- -- 2,245,740 3.8 5.0 4.0
82 Devonshire Street
Boston, MA 02109
Janus Capital Corpora- 2,196,690 9.8 -- -- -- -- 3,294,630 6.7 7.0 4.3
tion...................
100 Fillmore Street
Denver, Colorado 80206-
4923
Putnam Investments, 3,127,030 13.9 -- -- -- -- 4,850,616 8.3 9.2 6.1
Inc....................
One Post Office Square
Boston, MA 02109
The TCW Group, Inc...... 2,907,150 12.9 -- -- -- -- -- -- 3.3 5.7
865 South Figueroa St.
Los Angeles, CA 90017
All Directors and Named
Executives as a group
(8 persons)............ 1,748,044 7.8 2,861,843 99.8 3,121,048 99.6 15,258,669 26.2 26.5 59.3
-------
* Less than .01%
(1) The shares of class C common stock and 6,242,096 shares of class D
common stock are held by Hughes-Liggins Family Partners, L.P., the
limited partners of which are the Catherine L. Hughes Revocable Trust,
dated March 2, 1999 (of which Ms. Hughes is the trustee and sole
beneficiary), and the Alfred C. Liggins, III Revocable Trust, dated
March 2, 1999 (of which Mr. Liggins is the trustee and sole
beneficiary), and the general partner of which is Hughes-Liggins &
Company, L.L.C., the members of which are the Catherine L. Hughes
Revocable Trust, dated March 2, 1999, and the Alfred C. Liggins, III
Revocable trust, dated March 2, 1999.
(2) The shares of class A common stock and class B common stock are subject
to a voting agreement between Ms. Hughes and Mr. Liggins with respect
to the election of Radio One's directors.
(3) The shares of class B common stock and 1,528,072 shares of class D
common stock are held by the Catherine L. Hughes Revocable Trust, dated
March 2, 1999.
(4) The shares of class B common stock and 3,921,686 shares of class D
common stock are held by the Alfred C. Liggins, III Revocable Trust,
dated March 2, 1999.
(5) Includes 13,985 shares of class A common stock and 27,969 shares of
class D common stock obtainable upon the exercise of stock options
exercisable within 60 days of March 31, 2001.
(6) Includes 23,308 shares of class A common stock and 46,616 shares of
class D common stock obtainable upon the exercise of stock options
exercisable within 60 days of March 31, 2001.
(7) Includes 49,557 shares of class A common stock and 6,714 shares of
class D common stock held by Mr. Jones, 300 shares of class A common
stock and 600 shares of class D common stock held by each of Mr. Jones'
three daughters, and 526,861 shares of class A common stock and
1,134,122 shares of class D common stock held by Syncom Capital
Corporation. Mr. Jones is the President of Syncom Capital Corporation
and may be deemed to share beneficial ownership of shares of class A
common stock held by Syncom Capital Corporation by virtue of his
affiliation with Syncom Capital Corporation. Mr. Jones disclaims
beneficial ownership in such shares.
(8) Includes 14,217 shares of class A common stock and 28,434 shares of
class D common stock held by Mr. McNeill and 478,041 shares of class A
common stock and 956,082 shares of class D common stock held by Alta
Subordinated Debt Partners III, L.P. Mr. McNeill is a general partner
of Alta Subordinated Debt Partners III, L.P. and Mr. McNeill may be
deemed to share beneficial ownership of shares of class A common stock
and class D common stock held by Alta Subordinated Debt Partners III,
L.P. by virtue of his affiliation with Alta Subordinated Debt Partners
III, L.P. Mr. McNeill disclaims any beneficial ownership of such
shares.
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NO APPRAISAL RIGHTS
Under the General Corporation Law of the State of Delaware, Stockholders of
the Company do not have appraisal rights in connection with the proposals upon
which a vote is scheduled to be taken at the Meeting.
PROPOSAL 1--ELECTION OF CLASS A DIRECTORS
Pursuant to the Amended and Restated Bylaws of the Company (the "Bylaws"),
the Board by resolution at its meeting of April 2, 2001 has deemed it advisable
and in the best interest of the Company to increase the number of directors to
seven (7). At the Meeting, the holders of class A common stock, voting
separately as a class, will elect two Class A Directors to serve until the 2002
annual meeting or until their successors are duly elected and qualified. The
two nominees are Brian W. McNeill and Terry L. Jones. Each of them is an
incumbent Director. These nominees have consented to serve if elected, but
should any nominee be unavailable to serve, your proxy will vote for the
substitute nominee recommended by the Board of Directors. To be elected, the
two nominees must receive the affirmative vote of a majority of the votes cast
by the holders of the class A common stock. There is no cumulative voting for
the Board of Directors.
The tables below contain certain biographical information about the nominees
for Class A Director as well as our other Directors and executive officers.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT EACH HOLDER OF CLASS A
COMMON STOCK VOTE "FOR" THE ELECTION OF EACH OF THE PERSONS NOMINATED FOR CLASS
A DIRECTOR IN PROPOSAL 1.
Nominees For Class A Director
Terry L. Jones
Director since 1995
Age: 54.................... Mr. Jones has been a Director of Radio One since
1995. Since 1990, Mr. Jones has been President of
Syndicated Communications, Inc., a communications
venture capital investment company, and its
wholly owned subsidiary, Syncom Capital
Corporation. He joined Syndicated Communications,
Inc. in 1978 as a Vice President. Mr. Jones
serves in various capacities, including director,
president, general partner and vice president,
for various other entities affiliated with
Syndicated Communications, Inc. He also serves on
the board of directors of Delta Capital
Corporation, Sun Delta Capital Access Center,
Cyber Digital Inc. and the Southern African
Enterprise Development Fund. Mr. Jones earned his
B.S. degree from Trinity College, his M.S. from
George Washington University and his M.B.A. from
Harvard Business School.
Brian R. McNeill
Director since 1995
Age: 45.................... Mr. McNeill has been a Director of Radio One
since 1995. Mr. McNeill is the Managing General
Partner of Alta Communications, which was founded
in 1996 as the successor firm to Burr, Egan,
Deleage & Co., a major private equity firm
specializing in the telecommunications industry.
Mr. McNeill began at Burr, Egan in 1986. He has
served as a director of many private radio and
television broadcasting companies such as
NextMedia, Marathon Media, Telemundo Holdings and
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Shockley Communications. From 1979 to 1986, he
worked at the Bank of Boston where he started and
managed that institution's broadcast lending
group. Mr. McNeill is a graduate of Holy Cross
College and earned an M.B.A. from the Amos Tuck
School at Dartmouth College. He currently serves
as a director of Acme Communications, Inc., a
public company with ownership interests in nine
television stations.
PROPOSAL 2--ELECTION OF OTHER DIRECTORS
The remaining five Directors will be elected by the holders of the class A
common stock and class B common stock voting together at the Meeting, to serve
until the 2002 annual meeting and until their successors are duly elected and
qualified. The five nominees are Catherine L. Hughes, Alfred C. Liggins, III,
Larry D. Marcus, D. Geoffrey Armstrong, and L. Ross Love. Ms. Hughes, Mr.
Liggins and Mr. Marcus are incumbent Directors. These nominees have consented
to serve if elected, but should any nominee be unavailable to serve, your proxy
will vote for the substitute nominee recommended by the Board of Directors. To
be elected, the five persons nominated for Director must receive the
affirmative vote of a majority of the votes cast by all Stockholders entitled
to vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT EACH HOLDER OF CLASS A
COMMON STOCK AND CLASS B COMMON STOCK VOTE "FOR"
THE ELECTION OF EACH OF THE PERSONS NOMINATED FOR DIRECTOR
IN PROPOSAL 2.
Nominees For Other Directors
Catherine L. Hughes
Chairperson of the Board
and Secretary
Director since 1980
Age: 53.................... Ms. Hughes has been Chairperson of the Board of
Directors and Secretary of Radio One since 1980,
and was Chief Executive Officer of Radio One from
1980 to 1997. She was one of the founders of
Radio One's predecessor company in 1980. Since
1980, Ms. Hughes has worked in various capacities
for Radio One including President, General
Manager, General Sales Manager and talk show
host. She began her career in radio as General
Sales Manager of WHUR-FM, the Howard University-
owned, urban-contemporary radio station.
Ms. Hughes is also the mother of Mr. Liggins,
Radio One's Chief Executive Officer, President,
Treasurer and Director.
Alfred C. Liggins, III
Chief Executive Officer,
President and Treasurer
Director since 1989
Age: 36.................... Mr. Liggins has been Chief Executive Officer
since 1997, and President, Treasurer and a
Director of Radio One since 1989. Mr. Liggins
joined Radio One in 1985 as an Account Manager at
WOL-AM. In 1987, he was promoted to General Sales
Manager and promoted again in 1988 to General
Manager overseeing Radio One's Washington, D.C.
operations. After becoming President, Mr. Liggins
engineered Radio One's expansion into other
markets. Mr. Liggins is a graduate of the Wharton
School of Business/Executive M.B.A. Program. Mr.
Liggins is the son of Ms. Hughes, Radio One's
Chairperson and Secretary.
8
Larry D. Marcus
Director since 1999
Age: 52.................... Mr. Marcus became a Director of Radio One in
April 1999. Mr. Marcus is currently President of
Peak Media L.L.C., which is the sole management
member of Peak Media Holdings L.L.C., the owner
of a television station in Johnstown,
Pennsylvania, and the operator under a time
brokerage agreement of a television station in
Altoona, Pennsylvania. In 1989, Mr. Marcus became
the Chief Financial Officer of River City
Broadcasting, L.P., licensee of ten television
stations and thirty-four radio stations located
in medium to large markets. River City
Broadcasting was sold to Sinclair Broadcasting in
1996. Mr. Marcus is a graduate of City College of
New York.
D. Geoffrey Armstrong
Director Nominee
Age: 43.................... Mr. Armstrong is a nominee for the Board of
Directors. Mr. Armstrong is currently Chief
Executive Officer of 310 Partners, a private
investment firm. From March of 1999 through
September, 2000, Mr. Armstrong was the Chief
Financial Officer of AMFM, Inc., which was
publicly traded on the New York Stock exchange
until it was purchased by Clear Channel
Communications in September 2000. Between June
1998 and March 1999, Mr. Armstrong was Chief
Operating Officer and a director of Capstar
Broadcasting Corporation, which merged with AMFM,
Inc. in July of 1999. Mr. Armstrong was a founder
of SFX Broadcasting, which was taken public in
1993, and subsequently served as Chief Financial
Officer, Chief Operating Officer, and a director
until the company was sold in 1998.
L. Ross Love
Director Nominee
Age: 54.................... Mr. Love is a nominee for the Board of Directors.
Mr. Love is currently President and CEO of Blue
Chip Broadcasting, which is being acquired by
Radio One in a transaction expected to close this
summer. Mr. Love founded Blue Chip in 1995,
growing the company to nineteen stations in six
markets. He is Blue Chip's largest shareholder.
Prior to starting Blue Chip, Mr. Love had a 28-
year career at Procter & Gamble, serving the last
10 years as Vice- President, Advertising for P&G
worldwide.
Executive Officers
In the table below we set forth certain information on those persons
currently serving as our executive officers. Biographical information on
Catherine L. Hughes, Chairperson of the Board and Secretary, and Alfred C.
Liggins, III, Chief Executive Officer, President and Treasurer, is included
above in the section "Nominees for Other Director."
Scott R. Royster
Executive Vice President
and Chief Financial
Officer
Age: 36.................... Mr. Royster has been Executive Vice President of
Radio One since 1997 and Chief Financial Officer
of Radio One since 1996. Prior to joining Radio
One, he served as an independent consultant to
Radio One. From 1995 to 1996, Mr. Royster was a
principal at TSG Capital
9
Group, LLC, a private equity investment firm
located in Stamford, Connecticut, which has been
an investor in Radio One since 1987. Mr. Royster
has also served as an associate and later a
principal at Capital Resource Partners from 1992
to 1995, a private capital investment firm in
Boston, Massachusetts. Mr. Royster is a graduate
of Duke University and Harvard Business School.
Mary Catherine Sneed
Chief Operating Officer
Age: 49.................... Ms. Sneed has been Radio One's Chief Operating
Officer since January 1998. Prior to joining
Radio One, she held various positions with Summit
Broadcasting including Executive Vice President
of the Radio Division, and Vice President of
Operations from 1992 to 1995. Ms. Sneed is a
graduate of Auburn University.
Linda J. Eckard Vilardo
Vice President,
Assistant Secretary and
General Counsel
Age: 43.................... Ms. Eckard Vilardo has been General Counsel of
Radio One since January 1998, Assistant Secretary
of Radio One since April 1999, and Vice President
of Radio One since February 2001. Prior to
joining Radio One as General Counsel, Ms. Eckard
Vilardo represented Radio One as outside counsel
from July 1995 until assuming her current
position. Ms. Eckard Vilardo was a partner in the
Washington, D.C. office of Davis Wright Tremaine
LLP, from August 1997 to December 1997. Her
practice focused on transactions and FCC
regulatory matters. Prior to joining Davis Wright
Tremaine LLP, Ms. Eckard Vilardo was a
shareholder of Roberts & Eckard, P.C., a firm
that she co-founded in April 1992. Ms. Eckard
Vilardo is a graduate of Gettysburg College, the
National Law Center at George Washington
University and the University of Glasgow. Ms.
Eckard Vilardo is admitted to the District of
Columbia Bar and the Bar of the United States
Supreme Court.
Leslie J. Hartmann
Vice President of Finance
and Corporate Controller
Age: 39.................... Ms. Hartmann has been Controller of Radio One
since 1997 and Vice President of Finance since
September 2000. Prior to joining Radio One, she
served as Vice President and Market Controller
for Bonneville International Corporation in
Phoenix, Arizona from 1991 to 1997. Ms. Hartmann
is a graduate of the University of California and
has an M.B.A. degree from the University of
Phoenix.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Radio One's
Directors and executive officers and persons who beneficially own more than ten
percent of our common stock to file with the Securities and Exchange Commission
reports showing ownership of and changes in ownership of our Common Stock and
other equity securities. On the basis of reports and representations submitted
by Radio One's Directors, executive officers, and greater than ten percent
owners, we believe that all required Section 16(a) filings for fiscal 2000 were
timely made.
10
IMPORTANT INFORMATION CONCERNING THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES
THEREOF
The Board of Directors has an Audit Committee and a Compensation Committee.
The Audit Committee is governed by a charter which was adopted by the Board on
June 12, 2000 (the "Charter"). A copy of the Charter is attached to this proxy
statement as Appendix 1. The functions of the Audit Committee include
(i) selecting independent auditors for the Company, (ii) reviewing and
arranging the scope of audits of the Company's financial statements and
reviewing with the independent auditors and management of the Company the
results thereof, including evaluation of the internal accounting controls, and
(iii) reviewing and approving the Company's accounting principles and methods
of their application. The members of the Audit Committee are Messrs. Jones and
McNeill. The Audit Committee held one meeting during the last fiscal year.
The members of the Compensation Committee are Messrs. Jones and McNeill. The
functions of the Compensation Committee are to (i) approve policies, plans and
performance criteria concerning the salaries, bonuses and other compensation of
the executive officers of the Company, (ii) review and approve the salaries,
bonuses and other compensation of the executive officers of the Company, (iii)
review the compensation programs for other key employees, including salary and
cash bonus amounts, (iv) establish and review policies regarding executive
officer perquisites, (v) engage experts on compensation matters, if and when
the members of the Compensation Committee deem it proper or advisable to do so,
and (vi) perform such other duties as shall from time to time be delegated by
the Board. The Compensation Committee held one meeting during the last fiscal
year.
The Board of Directors held a total of nine meetings during the last fiscal
year. Each incumbent Director who was a Director of the Company during the
fiscal year ended December 31, 2000 attended more than 75% of the aggregate
number of meetings of the Board, and the committees of which they were members,
that were held during the period such Director was a member of the Board of
Directors.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Committee has reviewed and discussed with management of the Company and
Arthur Andersen LLP, the independent auditing firm of the Company, the audited
financial statements of the Company as of December 31, 2000 (the "Audited
Financial Statements"). In addition, we have discussed with Arthur Andersen LLP
the matters required by Codification of Statements on Auditing Standards No.
61.
The Committee also has received and reviewed the written disclosures and the
letter from Arthur Andersen LLP required by Independence Standards Board
Standard No. 1, and we have discussed with that firm its independence from the
Company. We also have discussed with management of the Company and the auditing
firm such other matters and received such assurances from them as we deemed
appropriate.
Management is responsible for the Company's internal controls and the
financial reporting process. Arthur Andersen LLP is responsible for performing
an independent audit of the Company's financial statements in accordance with
generally accepted auditing standards and issuing a report thereon.
Based on the foregoing review and discussions and a review of the report of
Arthur Andersen LLP with respect to the Audited Financial Statements, and
relying thereon, we have recommended to the Company's Board of Directors the
inclusion of the Audited Financial Statements in the Company's Annual Report on
Form 10-K of the year ended December 31, 2000.
Respectfully submitted,
Audit Committee
Terry L. Jones
Brian W. McNeill
11
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation of Directors
Our non-officer Directors are reimbursed for all out-of-pocket expenses
related to meetings attended. In addition, Mr. Marcus receives an annual
stipend of $24,000. Our other non-officer Directors receive no additional
compensation for their services as Directors. Our officers who serve as
directors do not receive compensation for their services as Directors other
than the compensation they receive as officers of Radio One.
Compensation of Executive Officers
The following information relates to compensation of our Chief Executive
Officer and each of our most highly compensated executive officers (the "Named
Executives") for the fiscal years ended December 31, 2000, 1999, and 1998 (as
applicable):
Summary Compensation Table
Long Term
Compensation Awards
-------------------------
Restricted Securities
Name and Principal Stock Underlying All Other
Positions Year Salary Bonus Awards Options Compensation(/3/)
------------------ ---- -------- -------- ---------- ---------- -----------------
Catherine L. Hughes..... 2000 $250,000 $200,000 -- -- $3,404
Chairperson of the
Board of 1999 250,000 150,000 -- -- 6,167
Directors and Secretary 1998 225,000 100,000 -- -- 3,232
Alfred C. Liggins, III.. 2000 300,000 300,000 -- -- 3,328
Chief Executive
Officer, President, 1999 300,000 250,000 -- -- 6,230
Treasurer and Director 1998 225,000 100,000 -- -- 3,567
Scott R. Royster........ 2000 300,000 125,000 37,292(/1/) 5,135
Executive Vice
President and 1999 200,000 175,000 $225,000(/2/) 18,646 7,739
Chief Financial Officer 1998 165,000 50,000 -- -- --
Mary Catherine Sneed.... 2000 220,000 175,000 -- -- --
Chief Operating Officer 1999 220,000 50,000 -- -- --
1998 200,000 50,000 -- -- --
Linda J. Eckard
Vilardo................ 2000 200,000 95,000 -- 62,154(/1/) --
General Counsel 1999 175,000 90,000 -- 31,077 --
1998 150,000 25,000 -- -- --
--------
(/1/On)June 6, 2000, we issued a stock dividend, payable to all holders of
Radio One's class A, class B and class C common stock , of two shares of
Radio One's class D common stock for each share of class A, class B and
class C common stock held by such Holders as of May 30, 2000. Pursuant to
the provisions of the 1999 Stock Option and Restricted Stock Grant Plan,
the shares underlying the options previously granted were adjusted
accordingly to reflect the class D dividend. The options set forth in the
table below for 2000 represent those shares.
(/2/Represents)51,194 shares of class A common stock. As of December 29, 2000,
Mr. Royster held 34,384 shares of such stock with a value (based on the
last reported sale price for class A common stock on the Nasdaq National
Market on such date of $10.6875) of $367,479.00, and 102,388 shares of
class D common stock with a value as of December 29, 2000 (based on the
last reported sale price for class D common stock on the Nasdaq National
Market on such date of $11.00) of $1,126,268.00. Twenty-five percent of the
stock vested on the date of grant; the remaining stock will vest in equal
increments every month beginning February 28, 1999 and ending December 31,
2001.
(/3/Represents)personal use of vehicle and other taxable fringe benefits. In
addition, Ms. Hughes, Mr. Royster and Ms. Eckard Vilardo received loans
from us in 2000. See "Certain Relationships and Related Transactions--
Executive Officers' Loans," below.
12
Option Grants in Last Fiscal Year
Potential Realizable
% of Total Value at Assumed Annual
Number of Options Rates of Stock Price
Securities Granted to Appreciation for
Underlying Employees in Option Term
Options Fiscal Exercise Expiration -----------------------
Name Granted Year(/1/) Price Date 5% 10%
---- ---------- ------------ -------- ----------- ----------- -----------
Scott R. Royster........ 37,292 3.2% $8.11 May 5, 2009 $190,201.70 $482,008.47
Linda J. Eckard
Vilardo................ 62,154 5.4% $8.11 May 5, 2009 $317,006.24 $803,356.07
--------
(/1/On)June 6, 2000, we issued a stock dividend, payable to all holders of
Radio One's class A, class B and class C common stock, of two shares of
Radio One's class D common stock for each share of class A, class B and
class C common stock held by such Holders as of May 30, 2000. Pursuant to
the provisions of the 1999 Stock Option and Restricted Stock Grant Plan,
the shares underlying the options previously granted were adjusted
accordingly to reflect the class D dividend. The options set forth in this
table for 2000 represent those shares.
Fiscal Year-End Option Values
Number of Securities Underlying Value of Unexercised In-the-Money
Unexercised Options at Fiscal Year-End Options at Fiscal Year-End
----------------------------------------- --------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
-------------------- ------------------- ---------------------- ---------------------
Name Class A Class D Class A Class D Class A Class D Class A Class D
---- --------- --------- --------- --------- ---------- ----------- ---------- ----------
Scott R. Royster........ 13,985 27,969 4,661 9,323 $40,661.39 $ 80,830.41 $13,551.86 $26,943.47
Linda J. Eckard
Vilardo................ 23,308 46,616 7,769 15,538 $67,768.01 $134,720.24 $22,588.37 $44,904.82
Employment Agreements
Mr. Scott R. Royster Employment Agreement. Effective as of October 18, 2000,
we entered into an amended and restated employment agreement with Mr. Royster
pursuant to which his employment term was extended through October 17, 2005,
with an optional five year extension upon mutual agreement of the parties.
Pursuant to the terms of the employment agreement, Mr. Royster serves as our
Chief Financial Officer and Executive Vice President and receives an annual
base salary of $300,000, subject, under the terms of the employment agreement,
to an annual increase of not less than 5% and an annual cash bonus at the
discretion of the Board of Directors. Mr. Royster will earn a retention bonus
of $750,000 ratably over the period from January 1, 2000 through December 31,
2004, and will earn an additional retention bonus in the amount of $7.0 million
ratably over the period from October 19, 2005 through October 18, 2010. In
connection with the employment agreement, Mr. Royster agreed to purchase from
us and we agreed to sell to him 333,334 unregistered shares of class A common
stock and 666,666 unregistered shares of class D common stock, each for a
purchase price of $7.00 per share. The purchase price for such shares was
funded by a loan from us evidenced by a full recourse promissory note from Mr.
Royster. Under the terms of the employment agreement, Mr. Royster also received
from us an interest free loan in the amount of $750,000 due on the earlier of
January 1, 2005 or the sixtieth day following the termination of Mr. Royster's
employment. We could incur severance obligations under the terms of the
employment agreement in the event that Mr. Royster's employment is terminated.
Ms. Linda J. Eckard Vilardo Employment Agreement. Effective as of October
31, 2000, we entered into an amended and restated employment agreement with Ms.
Eckard Vilardo pursuant to which her employment term was extended through
October 31, 2004, with an optional four year extension upon mutual agreement of
the parties. Pursuant to the terms of the employment agreement, Ms. Eckard
Vilardo serves as our General Counsel, Assistant Secretary and Vice President
and receives an annual base salary of $220,000, subject, under the terms of the
employment agreement, to an annual increase of not less than 5% and an annual
cash bonus at the discretion of the Board of Directors. Ms. Eckard Vilardo will
earn a retention bonus of approximately $2.0 million ratably over the period
from November 1, 2004 through October 31, 2008. In connection with the
13
employment agreement, Ms. Eckard Vilardo agreed to purchase from us and we
agreed to sell to her 250,000 unregistered shares of class D common stock for a
purchase price of $8.02 per share. The purchase price for such shares was
funded by a loan from us evidenced by a full recourse promissory note from
Ms. Eckard Vilardo. We could incur severance obligations under the terms of the
employment agreement in the event that Ms. Eckard Vilardo's employment is
terminated.
401(k) Plan
We adopted a defined contribution 401(k) savings and retirement plan
effective August 1, 1994. Employees are eligible to participate after
completing 90 days of service and attaining age 21. Participants may contribute
up to 15% of their gross compensation subject to certain limitations.
Stock Option Plan
On March 10, 1999 we adopted a stock plan which was also ratified by the
Stockholders of the Company on March 10, 1999. The plan is designed to provide
incentives relating to equity ownership to present and future executive,
managerial and other key employees, directors and individuals who perform
substantial work for Radio One and our subsidiaries as may be selected in the
sole discretion of the committee that administers the plan. The plan was
amended by the Board of Directors as of March 10, 1999, June 14, 2000,
September 27, 2000 and April 2, 2001. The plan, as amended, provides for the
granting to participants of stock options and restricted stock grants as the
Compensation Committee of the Board of Directors, or such other committee of
the Board of Directors as the Board of Directors may designate (the
"Committee") deems to be consistent with the purpose of the plan. An aggregate
of 1,408,099 shares of class A common stock (voting) and 3,816,198 shares of
class D common stock (non-voting) have been reserved for issuance under the
plan, as amended. The plan affords Radio One latitude in tailoring incentive
compensation for the retention of key personnel, to support corporate and
business objectives, and to anticipate and respond to a changing business
environment and competitive compensation practices. As of December 31, 2000, we
have granted options to purchase 278,484 shares of class A common stock having
a weighted average exercise price of $11.7699 per share and 1,149,672 shares of
class D common stock, having a weighted average exercise price of $10.1219 per
share.
For a complete discussion of the provisions of the Plan, see "Proposal 4--
Ratification of the Amendment to the 1999 Option and Restricted Stock Grant
Plan Increasing the Number of Shares of Class D Common Stock Reserved for
Issuance Under the Plan."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Radio One has formed a Compensation Committee of the Board of Directors, and
all of the Directors serving on such Compensation Committee are Directors who
are not employees of Radio One. The Compensation Committee is comprised of
Messrs. Terry L. Jones and Brian W. McNeill. No member of our Compensation
Committee has a relationship that would constitute an interlocking relationship
with executive officers or directors of another entity. See Certain
Relationships and Related Transactions.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD ON EXECUTIVE COMPENSATION
The Compensation Committee reviews the performance of the executive officers
of the Company, reviews and approves the compensation of the executive officers
of the Company, and reviews the compensation programs for other key employees,
including salary and cash bonus amounts. The Compensation Committee currently
consists of two outside Directors, Messrs. Terry L. Jones and Brian W. McNeill.
14
Compensation Policies and Philosophy
The financial success of the Company is linked to the ability of its
executive officers and managers to direct the Company's current operations, to
assess the advantages of potential acquisitions, and realign the operations of
the acquired entities with the operating policies of the Company. A major
objective of the Company's compensation strategy is to attract and retain top-
quality executive officers and managers. Another objective of the Company's
compensation strategy is to reward executive officers and managers based on the
financial performance of operations under their control. Financial incentives
are used to motivate those responsible to achieve the Company's financial goals
and to align the interests of the Company's managers with the interests of the
Company's stockholders.
In order to achieve the foregoing objectives, the Company uses a combination
of base salary, cash bonuses, and stock options, as well as the extension of
secured and unsecured loans for purposes germane to the mutual success of the
Company and its executive officers. To that end, in 2000 the Company extended
to Mr. Royster a secured loan in the amount of $7.0 million, bearing interest
at the applicable federal rate and evidenced by a full recourse promissory note
due on the earlier of October 18, 2010 or the sixtieth day following the
termination of Mr. Royster's employment. The purpose of the loan was to allow
Mr. Royster to purchase from the Company 333,334 unregistered shares of class A
common stock and 666,666 unregistered shares of class D common stock, each for
a purchase price of $7.00 per share, as provided for in his employment
agreement. The Company also in 2000 extended to Ms. Eckard Vilardo a secured
loan in the amount of $2,005,000, bearing interest at the applicable federal
rate and evidenced by a full recourse promissory note due on the earlier of
October 31, 2008 or the sixtieth day following the termination of Ms. Eckard
Vilardo's employment. The purpose of the loan was to allow Ms. Eckard Vilardo
to purchase from the Company 250,000 unregistered shares of class D common
stock for a purchase price of $8.02 per share, as provided for in her
employment agreement. (See "Executive Officers' Loans.")
In establishing the compensation levels for the Company's executive
officers, the Compensation Committee considers a number of factors, including
the level and types of compensation paid to executive officers in similar
positions by comparable companies. In addition, the Compensation Committee
evaluates the Company's performance by looking at factors such as performance
relative to competitors, performance relative to business conditions and the
success of the Company in meeting its financial objectives.
Components of Compensation
Executive officer base salaries are established in relation to salaries for
individuals in comparable positions paid by other companies in the radio
broadcast industry.
Executive officer cash bonuses are used to provide executive officers with
financial incentives to meet annual performance targets. The performance
targets are based on the Company's budgeted goals pursuant to a detailed annual
operating plan. Bonus recommendations for executive officers other than the
Chief Executive Officer ("CEO") are proposed by the CEO, reviewed and, when
appropriate, revised and approved by the Compensation Committee. The
Compensation Committee also establishes the bonus level for the CEO.
The Compensation Committee believes that equity ownership by the executive
officers, managers, and other employees of the Company provides incentive to
build stockholder value and aligns the interests of these employees with the
interests of stockholders. Upon hiring executive officers, managers, and
certain other key employees, the Board of Directors, typically approves stock
option grants under the 1999 Option and Restricted Stock Grant Plan, subject to
applicable vesting periods. Thereafter, the Board of Directors considers
awarding additional grants, usually on an annual basis, under the 1999 Option
and Restricted Stock Grant Plan. The Board of Directors believes these
additional annual grants will provide incentives for executive officers,
managers, and key employees to remain with the Company. Options are granted at
the current market price of the Company's Common Stock and, consequently, have
value only if the price of the Company's Common
15
Stock increases over the exercise price. The size of the initial and periodic
grants to employees other than the CEO and the executive officers are proposed
by the CEO, reviewed and, when appropriate, revised and approved by the Board
of Directors. The Board of Directors establishes the size of the initial and
periodic grants to the CEO and the executive officers.
Compensation of the CEO
Mr. Liggins is compensated with an annual base salary of $300,000 and annual
bonuses based on the performance of the Company. The Compensation Committee has
established base compensation for the CEO at a level appropriate for the duties
and scope of responsibilities of the position, and this level is intended to be
competitive with comparable broadcasting companies. The Compensation Committee
reviews the performance of the CEO of the Company, as well as other executive
officers of the Company annually.
Respectfully submitted,
Compensation Committee
Terry L. Jones
Brian W. McNeill
16
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The graphs below compare the cumulative total return on the Company's class
A common stock and class D common stock with the Nasdaq Stock Market (U.S.)
Index and a peer group of radio broadcasting companies (Clear Channel
Communications, Inc., Citadel Communications Corporation, Cox Radio, Inc.,
Emmis Communications Corp., Entercom Communications Corp., and Hispanic
Broadcasting Corporation) for the periods commencing on May 6, 1999, the first
day of trading of our class A common stock and June 6, 2000, the first day of
trading of our class D common stock, and each ending on December 31, 2000. The
data set forth in the table pertaining to the Company's class A common stock
assumes the value of an investment in the class A common stock and each Index
was $100 on May 6, 1999. The data set forth in the table pertaining to the
Company's class D common stock assumes the value of an investment in the class
D common stock and each Index was $100 on June 6, 2000.
COMPARISON OF NINETEEN-MONTH CUMULATIVE TOTAL RETURN AMONG
RADIO ONE, INC. CLASS A COMMON STOCK, THE NASDAQ STOCK
MARKET (U.S.) INDEX, AND THE PEER GROUP INDEX
MAY 99 JUN 99 JUL 99 AUG 99 SEP 99 OCT 99 NOV 99 DEC 99 JAN 00 FEB 00
------- ------- ------- -------- ------- ------- ------- ------- ------- -------
Radio One, Inc. 100.00 134.296 128.339 120.397 119.856 144.043 182.491 265.704 220.939 189.892
Class A
The Nasdaq Stock 100.00 108.650 106.723 110.803 111.078 119.988 134.943 164.598 159.381 189.974
Market (U.S.) Index
Peer Group 100.00 103.768 101.248 100.536 113.755 124.591 127.788 141.444 128.754 100.698
MAR 00 APR 00 MAY 00 JUN 00 JUL 00 AUG 00 SEP 00 OCT 00 NOV 00 DEC 00
------- ------- -------- ------- ------- ------- ------- ------- ------- -------
Radio One, Inc. 192.419 167.509 206.498 243.998 192.413 173.842 68.608 65.513 87.695 88.211
Class A
The Nasdaq Stock 184.964 156.158 137.562 160.423 152.369 170.141 148.560 136.296 105.082 99.923
Market (U.S.) Index
Peer Group 107.632 108.677 110.003 109.783 110.174 102.295 81.112 86.965 73.399 71.534
COMPARISON OF SIX-MONTH CUMULATIVE TOTAL RETURN AMONG
RADIO ONE, INC. CLASS D COMMON STOCK, THE NASDAQ STOCK
MARKET (U.S.) INDEX, AND THE PEER GROUP INDEX
JUN 00 JUL 00 AUG 00 SEP 00 OCT 00 NOV 00 DEC 00
------- ------- ------- ------- ------ ------ -------
Radio One, Inc. Class D 100.00 74.020 68.8773 27.696 31.434 41.177 43.138
The Nasdaq Stock Market 100.00 98.784 110.305 96.314 88.363 68.127 64.786
(U.S.) Index
Peer Group 100.00 97.8676 90.869 72.052 77.251 65.201 63.549
17
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mableton
Radio One has entered into a Programming Management Agreement with Mableton
Investment Group, LLC ("MIG") to provide programming and other managerial
services through MIG to Station WAWE (FM), licensed to Mableton, Georgia, which
is in the Altanta, Georgia market. MIG in turn has a right to program the
station through a Time Brokerage Agreement with New Mableton Broadcasting
Corporation ("NMBC"), licensee of the station. MIG also has a minority interest
in NMBC and options to acquire all of the outstanding stock of NMBC. Radio One
will pay a fee for the right to program the station, along with expenses
incurred in operating the station, and will in turn share in the operating
profit, if any, from operating the station with MIG. Mr. Liggins, the Chief
Executive Officer of Radio One, is a member of MIG and serves as its Manager.
Syncom II Mableton Investment, Inc. is the other member of MIG. Syndicated
Communications Venture Partners II, LP is the shareholder of Syncom II Mableton
Investment, Inc. Terry L. Jones, a general partner of the general partner of
Syndicated Communications Venture Partners II, LP is also a member of Radio
One's Board of Directors. In addition, Radio One of Atlanta, Inc., a wholly
owned subsidiary of Radio One, will lease space in its studio facilities in
Atlanta to NMBC for the operation of the station.
Office Lease
We lease office space located at 100 St. Paul Street, Baltimore, Maryland
from Chalrep Limited Partnership, a limited partnership controlled by Ms.
Hughes and Mr. Liggins. The annual rent for the office space during 2000 was
approximately $220,000 and is expected to increase.
Music One, Inc.
Ms. Hughes and Mr. Liggins own a music company called Music One, Inc. We
sometimes engage in promoting the recorded music product of Music One, Inc. We
estimate that the dollar value of such promotion is nominal.
Allur-Detroit
Allur-Detroit, a wholly owned subsidiary of Radio One, leases the
transmitter site for WDMK-FM from American Signalling Corporation for
approximately $72,000 per year. American Signalling Corporation is a wholly-
owned subsidiary of Syndicated Communications Venture Partners II, L.P. Terry
L. Jones, a general partner of the general partner of Syndicated Communications
Venture Partners II, L.P., is also a member of Radio One's Board of Directors.
We believe that the terms of this lease are not materially different than if
the agreement were with an unaffiliated third party.
XM Satellite, Inc.
Radio One and XM Satellite Radio, Inc. have entered into a Programming
Partner Agreement whereby we will provide programming to XM Satellite Radio,
Inc. for distribution over satellite-delivered channels. At the time we entered
into this agreement, WorldSpace, Inc. held 20% of the stock of XM Satellite
Radio, Inc. Syndicated Communications Venture Partners II, L.P. owns
approximately 1.25% of the stock of WorldSpace, Inc. Terry L. Jones, a director
of Radio One, is also a director of WorldSpace, Inc.
NetNoir, Inc.
We have made a $750,000 loan to NetNoir, Inc., an internet portal service
provider. We provided $250,000 in cash and $500,000 of advertising in exchange
for the loan. The loan was converted into preferred stock in March 2000, when
we made a commitment to invest an additional $2.5 million worth of advertising
on our radio stations in exchange for an equity investment in NetNoir, Inc.
Several entities in which Terry L. Jones has an interest as an officer or
director own approximately 32% of the equity of NetNoir. Mr. Jones is a
Director of Radio One.
18
Executive Officers' Loans
In 1999, we extended an unsecured loan to Mr. Liggins in the amount of
$380,000, which bears interest at an annual rate of 5.56% and is evidenced by a
demand promissory note. As of December 31, 2000, the aggregate outstanding
principal and interest amount on this loan was approximately $435,000. The
purpose of the loan was to repay a loan that Mr. Liggins obtained from
NationsBank, Texas, N.A. in 1997 to purchase an additional interest in Radio
One.
In 1999, Radio One of Atlanta, Inc. extended an unsecured loan to Mary
Catherine Sneed, Chief Operating Officer of Radio One, in the original amount
of $262,539, which bears interest at an annual rate of 5.56% and is evidenced
by two demand promissory notes. As of December 31, 2000, the aggregate
outstanding principal and interest amount on this loan was approximately
$290,000. The purpose of this loan was to pay Ms. Sneed's tax liability with
respect to incentive stock grants of Radio One of Atlanta, Inc. stock received
by Ms. Sneed.
In 1999, we extended an unsecured loan to Mr. Royster in the amount of
$87,564, which bears interest at an annual rate of 5.56% and is evidenced by a
demand promissory note. As of December 31, 2000, the aggregate outstanding
principal and interest amount on this loan was approximately $96,000. The
purpose of this loan was to pay Mr. Royster's tax liability with respect to the
restricted stock grant that we made to Mr. Royster. In 2000, we extended to Mr.
Royster a secured loan in the amount of $7.0 million, which bears interest at
the applicable federal rate (published monthly by the Internal Revenue Service)
as defined in Section 1274 of the Internal Revenue Code of 1986, as amended,
and is evidenced by a full recourse promissory note due on the earlier of
October 18, 2010 or the sixtieth day following the termination of Mr. Royster's
employment. As of December 31, 2000, the aggregate outstanding principal and
interest amount on this loan was approximately $7,083,000. The purpose of the
loan was to allow Mr. Royster to purchase from us 333,334 unregistered shares
of class A common stock and 666,666 unregistered shares of class D common
stock, each for a purchase price of $7.00 per share, as provided for in his
employment agreement. Also, in 2000, we agreed to extend to Mr. Royster an
unsecured, interest free loan in the amount of $750,000 to be evidenced by a
non-recourse promissory note due on the earlier of January 1, 2005 or the
sixtieth day following the termination of Mr. Royster's employment. As of
December 31, 2000, Mr. Royster had not borrowed any funds in connection with
that agreement. The agreement to extend this loan was a term of Mr. Royster's
employment agreement with us.
In 2000, we extended an unsecured loan to Ms. Hughes in the amount of
$100,000, which bears interest at an annual rate of 5.73% and is evidenced by a
demand promissory note. As of December 31, 2000, the aggregate outstanding
principal and interest amount on this loan was approximately $106,000.
In 2000, we extended to Ms. Eckard Vilardo a secured loan in the amount of
$2,005,000, which bears interest at the applicable federal rate (published
monthly by the Internal Revenue Service) as defined in Section 1274 of the
Internal Revenue Code of 1986, as amended, and is evidenced by a full recourse
promissory note due on the earlier of October 31, 2008 or the sixtieth day
following the termination of Ms. Eckard Vilardo's employment. As of December
31, 2000, the aggregate outstanding principal and interest amount on this loan
was approximately $2,025,000. The purpose of the loan was to allow Ms. Eckard
Vilardo to purchase from us 250,000 unregistered shares of class D common stock
for a purchase price of $8.02 per share, as provided for in her employment
agreement.
PROPOSAL 3--AMENDMENT OF THE AMENDED AND RESTATED BYLAWS
TO PERMIT THE FILLING OF VACANCIES ON THE BOARD OF DIRECTORS
BY MAJORITY VOTE OF THE STOCKHOLDERS OR THE BOARD
Article III, Section 3 of the Company's Amended and Restated Bylaws
currently provides in pertinent part that "vacancies and newly created
directorships resulting from any increase in the authorized number of directors
may be filled only by the vote of a majority of the votes cast by all
stockholders then entitled to vote at an election of directors at an annual or
special meeting of stockholders...." In its current form, this provision limits
the ability of the Board of Directors to respond rapidly to Radio One's growth
and to
19
opportunities to add qualified individuals to the Board, and may hinder the
Board in its efforts to carry on the business of the Company in the face of the
death, resignation or removal of a Director. In order to give the Board the
necessary flexibility to respond rapidly to such opportunities or challenges,
the Board of Directors proposes that Article III, Section 3 of the Amended and
Restated Bylaws be amended to allow the Board, in addition to the Stockholders,
to fill such vacancies as they occur.
If the proposed amendment is adopted, Article III, Section 3 of the
Company's Amended and Restated Bylaws will be amended to read as follows:
"Section 3. Vacancies. Except as otherwise provided by the certificate of
incorporation of the Corporation or any amendments thereto, vacancies and
newly created directorships resulting from any increase in the authorized
number of directors may be filled by a majority vote of the holders of the
Corporation's outstanding stock entitled to vote thereon or by a majority
vote of the Board of Directors. Each director so chosen shall hold office
until a successor is duly elected and qualified or until his or her earlier
death, resignation or removal as herein provided."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT EACH HOLDER OF CLASS A
COMMON STOCK AND CLASS B COMMON STOCK VOTE "FOR" THE PROPOSAL TO AMEND THE
BYLAWS TO ALLOW THE FILLING OF VACANCIES BY A MAJORITY OF THE STOCKHOLDERS OR
THE BOARD.
PROPOSAL 4--RATIFICATION OF THE AMENDMENT TO THE 1999 OPTION AND RESTRICTED
STOCK GRANT PLAN INCREASING THE NUMBER OF SHARES OF CLASS D COMMON STOCK
RESERVED FOR ISSUANCE UNDER THE PLAN
At the Meeting, we will ask the Stockholders to approve the amendment to the
1999 Option and Restricted Stock Grant Plan (the "Plan") increasing the number
of shares of class D common stock reserved for issuance under the plan from
2,816,198 shares to 3,816,198 shares.
On March 10, 1999, we adopted the Plan, which was also approved by the
Stockholders on March 10, 1999. The Plan is designed to provide incentives
relating to equity ownership to present and future executive, managerial and
other key employees, directors and other individuals who perform substantial
work for Radio One and our subsidiaries as may be selected in the sole
discretion of the committee that administers the Plan. Approximately 8
executives and 55 other employees and other individuals have received grants
under the Plan. The Plan was amended by the Board of Directors as of March 10,
1999, June 14, 2000, September 27, 2000 and April 2, 2001. The Plan provides
for the granting to participants of stock options and restricted stock grants
as the Compensation Committee of the Board of Directors, or such other
committee of the Board of Directors as the Board of Directors may designate
(the "Committee") deems to be consistent with the purposes of the Plan. An
aggregate of 1,408,099 shares of class A common stock and 3,816,198 shares of
class D non-voting common stock have been reserved for issuance under the Plan,
as amended.
On April 2, 2001, the Board adopted a resolution amending Article IV of the
Plan to provide that the aggregate number of shares of class D common stock
that may be issued upon the exercise of grants and options granted under the
Plan shall not exceed 3,816,198, which increases the number of shares of class
D common stock reserved for issuance under the Plan by 1,000,000 shares. The
purpose of the increase is to provide sufficient shares for future awards under
the Plan. The Board of Directors believes that it is in the best interests of
the Company to have sufficient shares available under the Plan to provide
awards to certain of its executive, managerial and other key employees,
directors and individuals who perform substantial work for Radio One and our
subsidiaries. In fiscal year ending December 31, 2000, the Company granted
71,276 class A and 747,886 class D awards under the Plan, and the Board of
Directors believes that it is prudent to increase the number of shares of class
D common stock available under the plan for future awards, as the granting of
such awards is a critical part of the Company's long term compensation
strategy. The Board of Directors believes that the Company and its Stockholders
significantly benefit from the latitude afforded by the Plan in
20
tailoring incentive compensation for the retention of key personnel, to support
corporate and business objectives, and to anticipate and respond to a changing
business environment and competitive compensation practices. The opportunity
afforded these employees to increase their proprietary interest in the Company
is an essential element of an effective management incentive program. The Board
of Directors also believes that the awards granted pursuant to the Plan are
valuable in attracting and retaining highly qualified non-employee directors
and management personnel and in providing additional motivation to non-employee
directors and management to use their best efforts on behalf of the Company.
As of December 31, 2000, we have granted options to purchase 278,484 shares
of class A common stock having a weighted average exercise price of $11.7699
per share, and 1,149,672 shares of class D common stock having a weighted
average exercise price of $10.1219 per share.
The Committee has exclusive discretion to select the participants, to
determine the type, size and terms of each award, to modify the terms of
awards, to determine when awards will be granted and paid, and to make all
other determinations which it deems necessary or desirable in the
interpretation and administration of the Plan. The Plan terminates on March 9,
2009, which is ten years from the date that the Plan was approved and adopted
by the Stockholders of Radio One. Generally, a participants' rights and
interest under the Plan are not transferable except by will or by the laws of
descent and distribution, unless the Committee provides otherwise.
Options, which include non-qualified stock options ("NQSOs") and incentive
stock options ("ISOs"), are rights to purchase a specified number of shares of
common stock at a price fixed by the Committee. The option price may be less
than, equal to or greater than the fair market value of the underlying shares
of common stock, but in no event will the exercise price of an ISO be less than
the fair market value on the date of grant (110% of fair market value for
participants who are 10% owners of Radio One). Options will expire not later
than ten years after the date on which they are granted. Options will become
exercisable at such times and in such installments as the Committee shall
determine. Upon termination of a participant's employment with Radio One,
options that are not vested will be forfeited immediately, and options that are
vested will be forfeited unless exercised by the participant by the thirtieth
day (one year in the case of the participant's termination of employment due to
death or disability) following such termination, or such longer period
following termination to the extent specifically approved by and in accordance
with the policies of the Committee, but in no event after the stated date of
expiration of the option. Payment of the option price must be made in full at
the time of exercise in such form (including, but not limited to, cash or
common stock of Radio One) as the Committee may determine.
Options granted under the Plan may, but need not, qualify for an exemption
from the "short swing liability" provisions of Section 16(b) of the Securities
Exchange Act of 1934 pursuant to Rule 16b-3 and/or qualify as "performance-
based compensation" that is exempt from the $1 million limitation of the
deductibility of compensation under Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"). Stockholder approval of the Plan was required
to satisfy the "performance-based compensation" exemption under Section 162(m)
of the Code and for options to qualify as ISOs under the Plan.
Grants are awards of restricted common stock at no cost to participants and
are generally subject to vesting provisions as determined by the Committee.
Upon termination of a participant's employment with Radio One, grants that are
not vested will be forfeited immediately and grants that are vested will be
forfeited unless exercised by the participant by the thirtieth day (one year in
the case of the participant's termination of employment due to death or
disability) following such termination, or such longer period following
termination to the extent specifically approved by and in accordance with the
policies of the Committee, but in no event after the stated date of expiration
of the option.
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, or any other change in the shares of common
stock, the Committee may make any adjustments it deems appropriate in the
number and kind of shares as to which options or restricted stock grants may be
granted under the Plan, the number and type of shares covered by outstanding
options or grants of restricted stock, the exercise prices specified in such
awards and any other provisions of the Plan, including vesting.
21
U.S. Federal Income Tax Consequences of Options
The following discussion of the U.S. federal income tax consequences of
options granted to U.S. employees, nonemployees under the Plan is intended to
be a summary of applicable U.S. federal law as currently in effect. State and
local tax consequences may differ, and tax laws may be amended or interpreted
differently during the term of the Plan or of options issued thereunder.
Further, the tax consequences under laws or applicable customs or rules of
foreign jurisdictions will also differ.
Because the U.S. federal income tax rules governing options and related
payments are complex and subject to frequent change, and they depend on the
participant's individual circumstances, participants are advised to consult
their tax advisors prior to exercise of options or dispositions of stock
acquired pursuant to options.
ISOs and NQSOs are treated differently for federal income tax purposes. ISOs
are intended to comply with the requirements of Section 422 of the Code. NQSOs
need not comply with such requirements.
An optionee is not taxed on the grant or, except as described below,
exercise of an ISO. The difference between the exercise price and the fair
market value of the common stock on the exercise date will, however, be a
positive adjustment for purposes of the alternative minimum tax, and thus an
optionee could be subject to the alternative minimum tax as a result of the
exercise of an ISO. If the optionee is an employee of Radio One or a subsidiary
at all times during the period beginning on the grant date and ending on the
date three months before the exercise date and if the optionee holds the common
stock acquired upon exercise of an ISO for at least two years following the
grant date of the related option and more than one year following exercise, the
optionee's gain, if any, upon a subsequent disposition of such common stock is
long-term capital gain. The measure of the gain is the difference between the
proceeds received on disposition and the optionee's basis in the common stock
(which generally equals the exercise price). If an optionee disposes of common
stock acquired pursuant to exercise of an ISO before satisfying the
requirements described above, the optionee may recognize both ordinary income
and capital gain in the year of disposition. The amount of the ordinary income
will be (1) the amount realized on disposition less the optionee's adjusted
basis in the common stock (usually the exercise price) or (2) the difference
between the fair market value of the common stock on the exercise date and the
exercise price, as appropriate. The balance of the consideration received on
such a disposition will be long-term capital gain if the stock had been held
for more than one year following exercise of the ISO. The Company is not
entitled to an income tax deduction on the grant or exercise of an ISO or on
the optionee's disposition of the common stock after satisfying the
requirements described above. If the employment and holding period requirements
are not satisfied, the Company will be entitled to a deduction in the year the
optionee disposes of the common stock in an amount equal to the ordinary income
recognized by the optionee.
An optionee is not taxed on the grant of an NQSO, assuming the NQSO does not
have a "readily ascertainable fair market value" for tax purposes on the date
of grant. On exercise, however, the optionee recognizes ordinary income equal
to the difference between the option price and the fair market value of the
common stock acquired on the date of exercise. The Company is entitled to an
income tax deduction in the year of exercise in the amount recognized by the
optionee as ordinary income. Any gain on the subsequent disposition of the
shares is long term capital gain if the common stock is held for more than one
year following exercise. The Company does not receive a deduction for this
gain.
Special rules will apply in cases where a recipient of an option pays the
exercise or purchase price of the option or applicable withholding tax
obligations under the Plan by delivering previously owned common stock or by
reducing the number of shares of common stock otherwise issuable pursuant to
the Option. The surrender or withholding of such shares will in certain
circumstances result in the recognition of income with respect to such common
stock or a carryover basis in the common stock acquired and may constitute a
disposition for purposes of applying the ISO holding periods discussed above.
The Company generally will be entitled to withhold any required taxes in
connection with the exercise or payment of an option and may require the
participant to pay such taxes as a condition to exercise of an option.
22
The Plan provides for accelerated vesting or payment of an option in
connection with a change in control of the Company. In that event and depending
upon the individual circumstances of the optionee, certain amounts with respect
to such option may constitute "excess parachute payments" under the "golden
parachute" provisions of the Code. Pursuant to these provisions, an optionee
will be subject to a 20% excise tax on any "excess parachute payments," and the
Company will be denied any deduction with respect to such payments. Optionees
should consult their tax advisors as to whether accelerated vesting of an
option in connection with a change of control of the Company would give rise to
an excess parachute payment.
As described above, options granted under the Plan may qualify as
"performance-based compensation" under Section 162(m) of the Code in order to
preserve federal income tax deductions by the Company with respect to any
compensation required to be taken into account under Section 162 of the Code
that is in excess of $1,000,000 and paid to a covered employee (as defined in
Section 162(m)(3) of the Code). Compensation for any year that is attributable
to an option granted to a covered employee and that does not so qualify may not
be deductible by the Company to the extent such compensation, when combined
with other compensation paid to such employee for the year, exceeds $1,000,000.
The following table shows the grants under the 1999 Option and Restricted
Stock Grant Plan as of December 29, 2001.
1999 Option and Restricted Stock Grant Plan Grant Summary
Number of Number of Expiration
President Name and Position Class A Shares Class D Shares Date
--------------------------- -------------- -------------- -----------
Scott R. Royster, Executive Vice 18,646 37,292 May 5, 2009
President...........................
and Chief Financial Officer
Linda J. Eckard Vilardo, Vice 31,077 62,154 May 5, 2009
President,..........................
Assistant Secretary and General
Counsel
Executive Group...................... 49,723 99,446 May 5, 2009
Non-Executive Director Group......... 0 0 n/a
Non-Executive Officer Employee 228,761 444,892 May 5, 2009
Group...............................
On March 31, 2001, the last sale price reported for the class A common stock
on the Nasdaq Stock Market's National Market System was $17.563 per share, and
the last sale price reported for the class D common stock on the Nasdaq Stock
Market's National Market System was $15.375 per share.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT EACH HOLDER OF CLASS A
COMMON STOCK AND CLASS B COMMON STOCK VOTE "FOR" THE RATIFICATION OF THE
AMENDMENT TO THE 1999 OPTION AND RESTRICTED STOCK GRANT PLAN INCREASING THE
NUMBER OF SHARES OF CLASS D COMMON STOCK RESERVED FOR ISSUANCE UNDER THE PLAN.
PROPOSAL 5--RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Company's financial statements for the year ended December 31, 2000 have
been audited by Arthur Andersen LLP, independent public accountants.
Representatives of Arthur Andersen LLP are expected to be present at the
Meeting to respond to appropriate questions, and will have an opportunity to
make a statement if they so desire.
23
FISCAL 2000 AUDIT FIRM FEE SUMMARY
Audit Fees
Arthur Andersen LLP billed the Company an aggregate of $110,000 in fees for
professional services rendered in connection with the audit of the Company's
financial statements for the most recent fiscal year and the reviews of the
financial statements included in each of the Company's Quarterly Reports on
Form 10-Q during the fiscal year ended December 31, 2000.
Financial Information Systems Design and Implementation Fees
Arthur Andersen LLP did not perform or bill the Company for professional
services during the fiscal year ended December 31, 2000 in connection with the
design and implementation of financial information systems.
All Other Fees
Arthur Andersen LLP billed the Company an aggregate of $856,000 in fees for
other services rendered to the Company and its affiliates for the fiscal year
ended December 31, 2000, primarily related to SEC filings associated with
equity offerings, an employee benefit plan audit, acquisition audits, SEC
filings assistance, tax compliance and consulting. The Audit Committee has
concluded that the provision of such services to the Company is compatible with
maintaining Arthur Andersen LLP's independence.
The Board of Directors has appointed Arthur Andersen LLP as independent
auditors to audit the financial statements of the Company for the year ending
December 31, 2001. Unless otherwise directed, the persons named in the
accompanying proxy will vote in favor of the ratification of the appointment of
Arthur Andersen LLP.
THE BOARD RECOMMENDS THAT THE HOLDERS OF CLASS A COMMON STOCK AND CLASS B
COMMON STOCK VOTE "FOR" THE RATIFICATION OF ARTHUR ANDERSEN LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 2001.
STOCKHOLDER PROPOSALS FOR THE 2002 ANNUAL MEETING
The Company will hold its next annual meeting on or about April 30, 2002. To
be considered for inclusion in the proxy materials for the annual meeting,
Stockholder proposals to be presented at such annual meeting must be submitted
in writing and received by the Company no later than January 31, 2002. Other
proposals that are not included in the proxy materials will be considered
timely and may be eligible for presentation at the Company's annual meeting on
April 30, 2002 if they are received by the Company in the form of a written
notice no later than January 31, 2002.
OTHER BUSINESS
The Board of Directors does not know of any business to be brought before
the Meeting other than the matters described in the Notice of Annual Meeting.
However, if a Stockholder properly brings any other matters for action, each
person named in the accompanying proxy intends to vote the proxy in accordance
with his or her judgment on such matters.
By Order of the Board of Directors,
/s/ Linda J. Eckard Vilardo
-------------------------------------
Linda J. Eckard Vilardo
Vice President, General Counsel, and
Assistant SecretaryAssistant
Secretary
24
Appendix 1
RADIO ONE, INC.
AUDIT COMMITTEE CHARTER
This audit committee charter has been adopted by the board of directors of
RADIO ONE, INC. (the "Corporation") in order to establish and set forth the
operating procedures, membership qualifications, duties and responsibilities of
the Corporation's audit committee. In general, the audit committee has been
established by this board for the purpose of (i) monitoring the integrity of
the Corporation's financial reporting process and systems of internal controls
regarding finance, accounting and legal compliance, (ii) monitoring the
independence and performance of the Corporation's independent auditors and
internal auditing department and (iii) providing appropriate avenues of
communication among the board of directors and the Corporation's independent
public accountants and internal auditors.
Composition and Term. The audit committee shall be initially comprised of
two or more directors, as determined by the board. No later than June 14, 2001,
the audit committee shall be comprised of three or more directors, as
determined by the board. Each of the members of the audit committee shall be
independent non-executive directors, free from any relationship that, in the
judgment of the board, would interfere with the exercise of his or her
independent judgment. No later than June 14, 2001, each of the members of the
audit committee shall meet the definition of independent director under the
Nasdaq National Market rules for audit committees, as amended, which, for ease
of reference, is set forth in its entirety at the end of this audit committee
charter. Each member of the audit committee must be able to read and understand
financial statements, including the Corporation's balance sheet, income
statement and cash flow statement, or will become able to do so within a
reasonable time after his or her appointment to the audit committee. In
addition, no later than June 14, 2001, at least one member of the audit
committee must have past employment experience in accounting, or any other
comparable experience or background that has resulted in such member having
financial sophistication, including being or having been a chief executive
officer, chief financial officer or other senior officer with financial
oversight responsibilities.
The committee members shall be appointed for one year terms at the annual
meeting of the board, upon the recommendation of the chairman of the board. The
chairman of the audit committee shall be designated by the board.
Vacancies. Any vacancy in the audit committee shall be filled by a vote a
majority of directors then in office. Any vacancy shall be filled at the first
board meeting following the creation of the vacancy or as soon as possible
thereafter.
Administrative Matters. The committee shall meet at such times and from
time-to-time as it deems to be appropriate, but not less than two times each
year, and such meetings may be held telephonically. The committee shall report
to the full board of directors at the first board meeting following each such
committee meeting.
Duties and Responsibilities. The duties of the committee shall include the
following:
-- make recommendations to the board of directors as to:
. the selection of the firm of independent public accountants to
examine the books and accounts of the Corporation for each fiscal
year (including an annual review of the independence of the public
accountants based upon its receipt from such accountants of a formal
written statement delineating all relationships between such
accountants and the Corporation, consistent with Independence
Standards Board Standard No. 1 ("ISBS"), and the committee's
discussions with such accountants with respect to any disclosed
relationship or services that may impact the objectivity and
independence of the accountants);
. the proposed arrangement for the independent public accountants for
each fiscal year, including their risk assessment process in
establishing the scope of the examination, the proposed fees and the
reports to be rendered; and
25
. the advisability of having the independent public accountants make
specified studies and reports as to auditing matters, accounting
procedures, tax or other matters;
-- review the results of the year-end audit of the Corporation, including:
. the audit report, the published financial statements, the management
representation letter, any report prepared by the independent public
accountants with respect to the Corporation's internal controls, any
other pertinent reports and management's responses concerning those
reports, if any;
. any material accounting issues among management, the Corporation's
internal auditing staff and the independent public accountants;
. other matters required to be communicated to the committee under
generally accepted auditing standards, as may be amended from time
to time, by the independent public accountants; and
. with respect to interim financial information, the committee's
chairman will meet with management and the independent public
accountants to discuss the quarterly review results, when required
as a result of the independent public accountant's disagreement with
management, significant judgmental items recorded in the financial
statements or other significant items in which the chairman believes
requires such a discussion;
-- monitor the external audit process, including:
. review the scope and approach of the annual audit with the
independent auditors;
. review the independent auditors' identification of issues and
business and financial risks and exposures; and
. instruct the independent auditors to communicate directly to the
audit committee on any significant difficulties or disputes with
management;
-- discuss with the independent public accountants those matters required
to be discussed by Statement on Auditing, Standards No. 61 ("SAS"), as
may be modified or supplemented from time to time;
-- review with management and the independent public accountants such
accounting policies (and changes therein) of the Corporation, including
any financial reporting issues which could have a material impact on the
Corporation's financial statements as are deemed appropriate for review
by the committee prior to any interim or year-end filings with the SEC
or other regulators;
-- review the coordination between the independent public accountants and
internal auditing staff and review the risk assessment processes, scopes
and procedures of the Corporation's internal audit work and whether such
risk assessment process, scopes and procedures are adequate to attain
the internal audit objectives, as determined by the Corporation's
management and approved by the committee; review the significant
findings of the internal auditors for each fiscal year; review the
quality and composition of the Corporation's internal audit staff;
-- beginning with all votes of stockholders occurring after December 15,
2000, to prepare on an annual basis for inclusion in the Corporation's
proxy statement a report that states whether the audit committee has:
(i) reviewed and discussed the audited financial statements with
management; (ii) discussed with the independent public accountants the
matters required to be discussed by SAS No. 61; (iii) received from such
accountants disclosures regarding the accountant's independence required
by ISBS No. 1, and discussed with the accountants their independence;
and (iv) based upon the discussions described herein, recommended to the
board of directors that the audited financial statements be included in
the Corporation's Annual Report on Form 10-K.
-- meet annually with principal corporate counsel, and outside counsel when
appropriate, to review legal and regulatory matters, if any, that may
have a material impact on the financial statements of the Corporation.
26
The committee shall also undertake such additional activities within the
scope of its primary function as the committee may from time to time determine.
The committee may retain independent counsel, accountants or others to assist
it in the conduct of any investigation.
Adoption. This audit committee charter was formally adopted by the board of
directors on June 12, 2000. In accordance with paragraph (e)(3) under Item 7 of
Schedule 14A, this audit committee charter, as may be amended from time to
time, shall be included as an appendix to the Corporation's proxy statement at
least once every three years beginning with respect to the Corporation's first
proxy statement relating to a vote of stockholders occurring after December 15,
2000. In addition, this audit committee charter shall be filed with the Nasdaq
National Market prior to June 14, 2000 and resubmitted in the event of its
amendment.
Definition. For purposes of determining those directors that are eligible to
serve on the audit committee, an "independent director" means a person other
than an officer or employee of the Corporation or its subsidiaries or any other
individual having a relationship which, in the opinion of the Corporation's
board of directors, would interfere with the exercise of independent judgment
in carrying out the responsibilities of a director. The following persons shall
not be considered independent:
(a) a director who is employed by the Corporation or any of its affiliates
for the current year or any of the past three years;
(b) a director who accepts any compensation from the Corporation or any of
its affiliates in excess of $60,000 during the previous fiscal year,
other than compensation for board service, benefits under a tax-
qualified retirement plan, or non-discretionary compensation;
(c) a director who is a member of the immediate family of an individual who
is, or has been in any of the past three years, employed by the
Corporation or any of its affiliates as an executive officer. Immediate
family includes a person's spouse, parents, children, siblings, mother-
in-law, father-in-law, brother-in-law, sister-in-law, son-in-law, and
anyone who resides in such person's home;
(d) a director who is a partner in, or a controlling shareholder or an
executive officer of, any for-profit business organization to which the
Corporation made, or from which the Corporation received, payments
(other than those arising solely from investments in the Corporation's
securities) that exceed 5% of the Corporation's consolidated gross
revenues for that year, or $200,000, whichever is more, in any of the
past three years; and
(e) a director who is employed as an executive of another entity where any
of the Corporation's executives serve on that entity's compensation
committee.
27
FORM OF PROXY
RADIO ONE, INC.
5900 Princess Garden Parkway
Lanham, Maryland 20706
This Proxy is solicited by the Board of Directors
for the Annual Meeting of Stockholders to be held on June 5, 2001.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders of Radio One, Inc. (the "Company") and the accompanying Proxy
Statement. The undersigned holder of Class A and/or Class B common stock hereby
appoints Scott R. Royster and Linda J. Eckard Vilardo, and each of them
individually, as proxies, each with the powers the undersigned would possess if
personally present, and each with full power of substitution, to vote as
specified in this proxy all of the shares of Class A and/or Class B common stock
of the Company which the undersigned is entitled to vote at the Annual Meeting
of Stockholders of the Company to be held June 5, 2001, and at any adjournments
or postponements thereof.
With respect to such other matters that may properly come before the Annual
Meeting or any adjournment or postponement of the Annual Meeting, the proxies
named above are authorized to vote upon those matters in their discretion. The
undersigned Stockholder hereby revokes any proxy or proxies heretofore executed
for such matters.
You are encouraged to specify your choices by marking the appropriate box
(SEE REVERSE SIDE) but you need not mark any box if you wish to vote in
accordance with the Board of Directors' recommendations. Your shares cannot be
voted unless you sign, date and return this card.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
PROPOSALS 1, 2, 3, 4 AND 5.
SEE REVERSE SIDE
Please mark your vote as in this example: [X]
When this proxy card is properly executed, the shares to which it relates
will be voted in accordance with the directions indicated hereon. If no
direction is made, the shares will be voted FOR the proposal below.
1. Election of Class A Directors
FOR [ ] WITHHOLD AUTHORITY [ ] EXCEPTION [ ]
to vote for all nominees listed below
Nominees: Brian W. McNeill and Terry L. Jones. (INSTRUCTIONS: to
withhold authority to vote for any individual nominee, mark the "EXCEPTION"
box and write that nominee's name in the space provided below.)
Exception:
----------------------------------------------------------
2. Election of Other Directors
FOR [ ] WITHHOLD AUTHORITY [ ] EXCEPTION [ ]
to vote for all nominees listed below
Nominees: Catherine L. Hughes, Alfred C. Liggins, III, Larry D. Marcus, D.
Geoffrey Armstrong and L. Ross Love. (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.)
Exception:
----------------------------------------------------------
3. Approval of the amendment of the Company's Amended and Restated Bylaws to
permit filling of vacancies on the Board of Directors by majority vote of
the Stockholders or the Board of Directors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Ratification of the amendment to the 1999 Option and Restricted Stock Grant
Plan increasing the number of shares of class D common stock reserved for
issuance under the Plan from 2,816,198 shares to 3,816,198 shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. Approval of the appointment of Arthur Andersen LLP as independent public
accountants for the Company for the year ended December 31, 2001.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
By signing this proxy card, you acknowledge receipt of the Notice of Annual
Meeting of Stockholders to be held June 5, 2001 and the Proxy Statement dated
April 24, 2001.
DATE SIGNATURE(S)
---- ------------
__________________ __________________________________________
__________________ __________________________________________
__________________ __________________________________________
__________________ __________________________________________
__________________ __________________________________________
NOTE: Please sign exactly as your name(s) appear(s) hereon. When signing as
attorney, executor, administrator, trustee or guardian, please give full
title as such. If more than one name is shown (including in the case of
owners in joint tenancy), each party must sign.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING