Emmis Communications says in an SEC filing that it is going to use some of the proceeds from the recent sale of its last television station, WVUE-TV (Fox) New Orleans, to compensate company executives who recently took pay cuts because of the company’s financial position. The compensation committee of Emmis’ board of directors has now authorized a quarterly bonus program for those top level employees which will fill the gap from those salary reductions. But there’s a catch. If performance targets are met, the bonus will be paid in cash. If the targets are not met, the gap-filling bonus will be paid in Emmis stock, so the execs will have to work harder to boost the stock price.
Here is the company’s description of the program, as filed with the SEC:
“On September 9, 2008, the Compensation Committee of the Board of Directors of Emmis Communications Corporation (the “Company”) approved the TV Proceeds Quarterly Bonus Program (the “Program”) under which the Company is paying quarterly bonuses to certain employees to offset salary reductions from the Company’s wholly-owned, direct subsidiary, Emmis Operating Company, and certain of its subsidiaries (collectively, “OpCo”). All of our Executive Officers are participating in the Program. Effective September 1, 2008, OpCo reduced to approximately $15,000 the salaries of certain of its most highly compensated employees in order to increase defined consolidated operating cash flow under OpCo’s Amended and Restated Revolving Credit and Term Loan Agreement dated as of November 2, 2006 (the “Credit Agreement”). Under the Program, the Company will pay the employees affected by the salary reduction quarterly bonuses in amounts equivalent to the forgone salary. The bonus will be paid at the beginning of each fiscal quarter either (i) in cash out of the net proceeds from the sale of WVUE-TV if certain performance targets from a prior quarter are met, or (ii) in shares of the Company’s Class A Common Stock under the Company’s 2004 Equity Compensation Plan if the performance targets are not met. The bonuses will likely be paid in cash because the quarterly performance target will be met if the Company’s actual station operating income exceeds 50% of projected station operating income for such quarter, as established at the beginning of the quarter.”