Erica Farber has been a member of the Board of Directors at Arbitron since September 2010, so the directors of the Radio Advertising Bureau certainly knew about her Arbitron post when she was hired for the RAB’s #2 post a few months back and most recently elevated to President and CEO. Is there potential for conflict in wearing those two hats?
According to the proxy that Arbitron filed with the SEC for its May 22nd shareholders meeting, where Farber is a candidate for re-election to the board, she resigned from the board’s Compensation and Human Resources Committee in November 2011 after accepting employment with the RAB. She remains on the Nominating and Corporate Governance Committee. Under the heading “Certain Relationships and Related Transactions” the Arbitron proxy disclosed that Arbitron had made payments to the RAB of $237K in 2009, $225K in 2010 and $215K from January 1, 2011 through November 11, 2011.
But that didn’t disqualify the RAB executive from serving on the Arbitron Board of Directors and the company determined that she qualifies as an independent director.
“The Board determined Ms. Farber’s continued service as a member of the Board while employed as an executive officer of the Radio Advertising Bureau is in the best interests of the Company and its stockholders because it will allow Ms. Farber to provide the Board with a unique perspective and deeper insight on issues of importance to many of the Company’s customers and the radio industry generally,” said the Arbitron proxy.
Farber was paid a total of $158,059 in 2011 for her service on the Arbitron board. That’s the least of any non-employee director who was on the board for the entire year. She, like all of the outside directors, received an annual retainer of $30,000. The rest of her $55,500 in cash payments was for attending meetings and serving on committees. She received $100,008 worth of deferred stock units vesting over three years and $2,551 of “dividend equivalent units.”
The new RAB CEO has served on the Arbitron board twice. She was a Director from March 30, 2001 to July 14, 2006 while serving as Publisher and CEO of Radio & Records. She resigned when the publication was purchased by VNU, now known as Nielsen.
“Please accept this letter as my formal resignation as a board of director of Arbitron effective immediately. Due to the upcoming ownership change of my company it would be a conflict of interest for me to remain on the board. I wish you and the company much continued success. Sincerely, Erica Farber,” she said at that time in her resignation letter to Arbitron’s Chairman.
RBR-TVBR sought comment from Farber and RAB Chairman Scott Herman of CBS Radio on whether there was any conflict in her dual roles at RAB and Arbitron. What we received was a statement from Leah Kamon, RAB Sr. VP of Marketing and Communications: “The RAB Executive Committee reviewed Erica’s Arbitron board seat when she first joined the organization and determined it was not an issue. If at any point, a conflict came up, Erica would recuse herself accordingly.”
RBR-TVBR observation: There’s no conflict with SEC or NYSE rules in holding both posts. But will some broadcasters be nervous that the new CEO of the RAB is also getting a paycheck from the radio industry’s near-monopoly ratings provider?