Cumulus Makes It Clear: Bonuses Are On The Way


On February 8, Shelley Chapman, Judge for the U.S. Bankruptcy Court for the Southern District of New York, approved Cumulus Media’ Incentive Compensation Programs.

Chapman’s order means hundreds of employees will see the pay out of their 2017 incentive bonuses, tied to the Cumulus 2017 and 2018 Incentive Compensation Programs. An objection to the company’s incentive compensation plan filed Tuesday by U.S. Trustee William Harrington led multiple news organizations to report that Chapman’s OK of the bonuses was now in jeopardy.

That’s not the case, Cumulus noted on Wednesday morning.

In a statement released by the company in response to the reports, the company said, “The objection filed last night has absolutely no impact on the authorizations the court gave the company on Feb. 8 to pay incentive compensation for employees who earned it in 2017, or will earn it in 2018.”

Cumulus added that the company will be making its incentive compensation payments to those employees, beginning with this week’s normal payroll cycle.

What Harrington is effectively objecting to, Cumulus explained, are the Quarterly Incentive Plan (QIP) and supplemental incentive plan (SIP) programs adjourned until March 12.

Although Harrington expressed disapproval in his Feb. 13 14-page filing of four Incentive Compensation Plans, Chapman’s approval of these plans effectively renders Harrington’s objection moot. Therefore, Cumulus will go ahead with payout of the following ICPs:

  • The Market Manager ICPs
  • Sales Manager ICPs
  • Programming Manager ICPs
  • Corporate ICPs

The total number of Cumulus employees in these ICPs is 574. Payments for 2017 “may range between $8,640,000 and $9,610,000,” Harrington notes.

Should they achieve budgeted targets for 2018, the first and second quarterly payouts under the 2018 ICPs will aggregate $10,810,000.

In his Feb. 13 objection, Harrington objects to this bonus motion on the grounds that “the Debtors have failed to meet their evidentiary burden of proof to show that the proposed bonus payments comply with Section 503(c) of the Bankruptcy Code.”

But, as Cumulus explained, this is a post-decision expression that has no bearing on its ability to move forward with the bonus payments not adjourned until mid-march.

Cumulus said, “The objection filed is common in these situations and applies only to a small number of senior executives whose compensation will be addressed at an upcoming hearing on March 12.”

Therefore, mid-March will see Chapman hear arguments solely on Cumulus’ QIP and SIP arrangements.

First revealed on May 18, 2017 in an SEC filing, the QIP represents a shift approved by Cumulus’ Board of Directors from an annual to a quarterly compensation plan for 2017.

Additionally, the board adopted a supplemental incentive plan for 2017, the so-called SIP.

This was done after being instructed to do so by the board’s Compensation Committee and the committee’s independent compensation consultant.

Under the 2017 SIP, target award opportunities are $1.47 million for CEO Mary Berner; $587,500 for EVP/Treasurer and CFO John Abbot; $480,000 for General Counsel Richard Denning; and $120,000 for Suzanne Grimes, Cumulus’ EVP/Corporate Marketing and President of Cumulus’ Westwood One division.


As explained by RBR+TVBR on Feb. 9, awards to named executive officers under the 2017 QIP are based on Cumulus achieving budgeted adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) levels. The target cash incentive award opportunity available to each named executive officer under the 2017 QIP is calculated as a percentage of each named executive officer’s base salary, all in accordance with the terms of each officer’s existing employment agreement. This means that performance is measured at the end of each quarter.

If target performance levels for the year-to-date period have been met or exceeded at the end of each quarter, 25% of the total annual target bonus will be awarded following the applicable quarter end date.

Simply put—If target performance levels for the year-to-date period aren’t met, there’s no bonus.

If Cumulus met or exceeded the full-year 2017 maximum EBITDA goal, each named executive officer is entitled under the 2017 QIP to a total payout for the full year equal to 150% of his or her respective 2017 QIP target award opportunity.

Cumulus’ SIP was adopted to, among other things, “further align key senior operating executives’ interests with those of stakeholders in light of the decline in value of outstanding equity awards.”

The 2017 SIP provides participants the opportunity to earn cash payments in rate-able installments over the three remaining fiscal quarters of 2017, based on the company’s year-to-date performance at the end of the respective period.

In order to be eligible to participate in the 2017 SIP, participants must agree to the cancellation of all of their respective outstanding equity incentive awards.

Under the 2017 SIP, target award opportunities are $1.47 million for CEO Mary Berner; $587,500 for EVP/Treasurer and CFO John Abbot; $480,000 for General Counsel Richard Denning; and $120,000 for Suzanne Grimes, Cumulus’ EVP/Corporate Marketing and President of Cumulus’ Westwood One division.

As Harrington noted in his Tuesday filing, Cumulus estimates that the 2017 payments under the QIP and SIP will be between $4.2 million and $4.8 million; if budgeted targets are achieved, $3.51 million will be paid out for the first and second quarters of 2018.

Harrington’s problem? “The Debtors cannot demonstrate that the 2017 bonuses they seek to pay are for incentive purposes and present difficult targets.”

He further explains, “Prior to commencing the cases the Debtors will have already met most, if not all, of the levels for the payment of bonuses for 2017, as the Debtors
commenced this case on Nov. 29, 2017. The bonuses, therefore, are for retention purposes. Accordingly, the 2017 bonuses do not comply with Section 503(c), as they are not incentive based, and cannot be paid to insiders.”