How Did Investors React To Townsquare Option Reset?


Townsquare Media has gotten the green light from its board and its majority shareholders to engage in a one-time stock option repricing program.

The option repricing plan, which was approved Nov. 29 and shared with the Securities & Exchange Commission on Thursday (12/8) via a “DEF 14C” filing, reduces the exercise price of all outstanding stock options with a price higher than $9 per share.

Stockholder approval of the option repricing was required under NYSE rules and the terms of a 2014 Incentive Plan initiated by Townsquare.

Here’s what the option repricing plan does:

Exercising a stock option can now be done at $9 or, if greater, the closing price of a share of the company’s Class A shares on the date the option repricing takes effect. Townsquare predicts that will be on or about Dec. 28.

Investors reacted positively to the news, sending TSQ shares up by nearly 9% in mid-afternoon trading on Thursday, to $9.65 a share.

That climb represents a recovery in Townsquare shares to where they were in early October; TSQ dipped as low as $8.20 a share on Nov. 3 but gradually reclaimed value.

In explaining the option repricing OK, Townsquare’s board believes the move “is in the best interest of stockholders and the company, as the repriced stock options will provide added incentives to retain and motivate key contributors of the company, which is necessary for the company’s future success and growth in the value of its shares.”

The move did not require the consent or authorization from all shareholders, without a meeting.

Who is eligible to benefit from the repricing?

Chairman/CEO Steven Price, for one. He holds 1.92 million shares eligible for the option repricing, and the weighted average exercise price comes in at $11.07 for the Townsquare top man. His shares comprise 27.6% of the total shares eligible for options repricing. His total shares represent 13.5% ownership of Townsquare; The Madison Square Garden Co. holds a 17.4% equity stake in the company, while certain funds managed by Oaktree Capital Management hold 46.2% of the company equity.

EVP/CFO Stuart Rosenstein holds approximately 1.01 million eligible shares eligible for repricing, at a weighted average exercise price of $11.13.

Executive Group employees hold 4.79 million shares eligible for repricing, at a weighted average exercise price of $11.14; the non-executive officer employee group has 2.14 million eligible shares, at a weighted average exercise price of $11.29.