Citadel Broadcasting has asked US Bankruptcy Judge Burton Lifland to reject the motion filed by R2 Investments to void the restricted stock grants that the company’s board made to top executives and directors shortly after the company emerged from Chapter 11 reorganization.
Citadel’s filing says R2 was incorrect in claiming that the reorganization plan allowed only for stock options and not restricted stock grants. Rather, Citadel said, restricted stock grants are allowed by Delaware law and that restricted stock grants were included as an option for the new equity incentive program as described in a supplement to the Chapter 11 plan. That supplement, is says, is part of the plan, so R2 is just plain wrong in claiming that restricted stock grants aren’t allowed.
Also, Citadel says, the plan gives the new board the power, “in its sole discretion,” to amend, suspend or terminate the equity incentive plan.
At the same time that Citadel filed its response, two more creditors turned shareholders submitted their own filing to join R2 in demanding that the restricted stock grants be voided. Those two are Virtus Capital LLC and the Kenneth S. Grossman Pension Plan.