Recently, there was a blurb in the trade press about an SEC filing regarding retention bonuses at Audacy.
Now, when Jason and I first discussed the purpose and goals of my column, research was primary. Almost all of my media career has been spent in the research end of the business and I feel at home talking about how the various ratings systems work as well as doing some teaching for those of you who live with the data day to day. So far, I’ve either stayed away from non-research topics or put a research spin on them.
For this column, I’ll stray from research a bit.
I’m not out to bash Audacy, per se, but rather it’s a “last in, first out” reaction. Other radio companies may have offered similar bonus schemes in the past, but Audacy’s recent action caught my attention.
After reading the article, I reviewed the company’s filing in the SEC’s Edgar database. If you haven’t used Edgar before, it’s an open website allowing you to examine any filing from a public company. With respect to this item, you can look at Audacy’s 8-K filing of June 23 reporting for June 19, 2023, covering “retention” bonuses for some employees of the company.
The “top five” executives will share a total of $3.2 million if they all stick around for the next twelve months. The filing goes on to mention that other Audacy executives will receive retention bonuses as well including “Market Managers, the Company’s Regional Presidents, and members of the Company’s corporate team who are Executive Vice Presidents or higher within the organization.”
The company was not required to disclose the dollar amounts of the bonuses for these employees, but we can safely assume each covered individual received a lower amount than the reported amounts for the “top five”. The bonuses were paid out on June 23, 2023 per the filing, but if a recipient leaves the company early, they are required to pay back the bonus. Feel free to read the filing for yourself.
Many people in the media have bonus plans. I’ve personally had bonus plans and bonuses can work well as an incentive. I don’t know the rationale behind these particular bonuses, but can speculate that perhaps some of the top people at Audacy were getting restless if they held stock options.
If you’ve followed the company’s stock, it fell to as low as six cents per share prior to the company executing a 1 for 30 reverse stock split, in other words, 30 old shares equaled one new share. At six cents per share for the old shares, the new shares would be priced at $1.80, in other words, above the threshold for maintaining a listing on the New York Stock Exchange, although as I write this, the stock is closer to one dollar.
If you had an option award with a strike price of, say, five dollars per share under the old system, there was no way that you could ever expect to cash in. Additionally, if you purchased Audacy stock as a loyal employee who believed in the future of the company, you’ve undoubtedly lost money. The retention bonus can be viewed as a salve to heal the financial wounds especially as the company has begun negotiations with its lenders. I get it.
Here’s my point: When nearly everyone in the business is concerned about the medium’s future, shouldn’t companies be investing in the business? More live and local talent, marketing, learning how to reach new generations, research, and investment in a better system for measuring audiences would be a better use of limited dollars, in my opinion. Perhaps Audacy (and other group owners) could have placed some paid ads with All Access preventing what so many of us in the business are lamenting come August 15 after Joel Denver’s recent announcement.
Even if my speculation above about financial losses or lost opportunities is correct, how many high-level execs at Audacy are likely to jump ship in the next year? Does anyone think David Field is thinking about leaving, considering Audacy is effectively a family business? He’s been paid a million dollars before taxes to make sure that he’ll still be running the show at the end of June 2024.
This is not a comment on David Field’s performance as CEO of Audacy, but rather the need for a retention bonus to keep him and other Audacy executives in place for a relatively short time. In the interest of full disclosure, I do not own any Audacy stock (I did own some Entercom stock many years ago, and sold it at a small profit, if memory serves) and I don’t directly own any other radio stocks although it’s possible that I have a mutual fund that owns one.
My point is that if we’re serious about reinventing broadcast radio to not only survive, but thrive in an extremely competitive consumer marketplace, then the industry must invest in the business. Not all of the investments will pan out, but in 2023, I don’t believe that millions of dollars in retention bonuses is the best use of limited funds by any radio company, especially one that is in financial straits.
Let’s meet again next week.
