An SEC filing by Westwood One discloses that new President and CEO Thomas Beusse signed a three-year contract when he joined the company last week (1/9/08 RBR #5). With speculation in the marketplace about the company being sold in the next few years, we note that Beusse continues to be paid for two years and gets immediate vesting of some stock options if that employment period is cut short.
The new CEO of the nation’s largest radio network company will be paid a base salary of 700K per year and he’ll be eligible to as much as double that via a performance bonus. In any case, his bonus will be at least 300K this year. He’s been granted options to purchase one million shares of Westwood One stock and, based on performance as determined by the board of directors, could receive options for up to 625K shares each of the next two year.
Getting the new CEO in place is viewed as a positive by analyst Chris Ensley at Bear Stearns, but he is not yet changing his “peer perform” rating on the stock. Ensley notes that Westwood One needs to negotiate with its banks before its leverage ratio is set to step down at the end of Q1. He also notes that WW1 could be skating close to a bond covenant by mid-year, so negotiation with bondholders may be needed as well.
“We believe the CEO announcement is a clear positive that will enable Westwood One to address credit issues that are weighing heavily on the stock. With radio industry growth decelerating, we maintain our Peer Perform on Westwood One,” Ensley told clients.
RBR observation: While Beusse’s deal allows for the possibility of a buyout of the company, that is by no means a certainty. Until the credit markets improve dramatically, it is not likely that we will see many, if any, new private equity deals in broadcasting.