Citadel Broadcasting execs get new stock options


CEO Farid Suleman and other top executives of Citadel Broadcasting have been granted new stock options vesting over three years. The options replace the restricted stock grants that were withdrawn after some of the company’s new shareholders charged that they violated the company’s restructuring plan from its Chapter 11 exit.

The new stock options were granted by the board of directors on Friday (11/19) and filed with the SEC on Tuesday (11/23). All of the grants have two exercise prices – $28 and $32 – and vest in three equal annual installments beginning June 3, 2011.

As you would expect, Suleman received the biggest option grants. He received options for 1,897,193 at the $28 exercise price and 632,398 at the $32 price.

COO Judy Ellis has received 99,798 options at the $28 price and 33,265 at the $32 price. VP and General Counsel Jacquelyn Orr received 79,838 at the $28 price and 26,613 at the $32 price. CFO Randy Taylor received 79,838 at the $28 price and 26,613 at the $32 price. And Sr. VP of Finance & Administration Patricia Stratford received 56,137 at the $28 price and 18,711 at the $32 price.

What are those options worth today? Nothing. Nada. Zipo. They are currently out of the money. Citadel’s thinly traded Class A stock traded Tuesday (11/24) at $24.50 in the over-the-counter pink sheets market.

If by June 3, 2013 Citadel’s stock is worth a lot more, those options will be worth something – the difference between the exercise price and the market price for the stock. By then, also, Citadel should be trading on a regular exchange, which was stated as an objective in the Chapter 11 plan.

Citadel’s directors also got new option grants: 47,434 each at the $28 price and 15,811 at the $32 price. The directors are William Campbell, Jack Sander, Doreen Wright, Gregory Mrva and Jonathan Mandel.

RBR-TVBR observation:
This certainly addresses the objection by R2 Investments, which noted that the restricted stock originally granted would still be worth tens of millions of dollars even if the Citadel management team did a terrible job and drove the stock price down, rather than up. This way they have to get the stock price up to get any payoff.