8-K: Urban One Extends CEO Alfred Liggins' Employment Agreement

Urban One, Inc. has formalized a new employment agreement with its President and CEO, Alfred C. Liggins, III, effective retroactively to January 1, 2022, and extending through December 31, 2024, with automatic one-year renewals.

Summary

• Urban One has entered into a new employment agreement with CEO Alfred C. Liggins, III, effective January 1, 2022, and continuing through December 31, 2024, with automatic one-year extensions unless either party gives notice.
• Liggins' annual base salary is set at $1,250,000, subject to potential increases by the Compensation Committee.
• He is eligible for an annual bonus targeted at 100% of his base salary, with a minimum of 50% if the company exceeds 90% of its budget, and a maximum of 175% for superior performance.
• Liggins is also eligible for a TV One award, which is 4.17192% of any proceeds from distributions or liquidity events exceeding the company's investment in TV One.
• The agreement includes stock options and stock awards, with three annual grants of each valued at $474,610 and $1,423,828 respectively, and additional completion bonuses of 156,250 Class D options and 468,750 Class A restricted shares vesting on January 6, 2025.
• The agreement outlines severance terms, including payments and benefits upon termination without cause or for good reason, with enhanced benefits following a change of control.
• The agreement includes non-compete and non-solicitation clauses, and provisions for confidentiality and work product ownership.

Sentiment

Score: 7

Explanation: The document is a standard employment agreement, which is generally positive for the company as it secures the services of its CEO. The terms are reasonable and expected for a company of this size.

Positives

• The agreement provides a clear framework for the CEO's compensation and responsibilities.
• The potential for increased salary and bonuses incentivizes strong performance.
• The TV One award provides a significant potential payout based on the success of TV One.
• The stock options and awards align the CEO's interests with those of shareholders.
• The severance package provides financial security in the event of termination without cause or for good reason.
• The agreement includes a vehicle allowance, use of the corporate jet, and a personal assistant.

Negatives

• The non-compete clause could limit the CEO's future employment options.
• The agreement includes a clause that the company will impute income to the executive for certain benefits, which could increase his tax burden.
• The agreement includes a clause that the company may withhold from any amounts payable under this Agreement such taxes as shall be required to be withheld pursuant to any applicable law or regulation.

Risks

• The company's performance may not meet the targets required for the CEO to receive the maximum bonus.
• A change of control could trigger significant payouts to the CEO.
• The non-compete clause could be challenged in court.
• The company's financial performance could impact the value of the stock options and awards.

Future Outlook

The agreement provides for automatic one-year extensions unless either party provides written notice of non-renewal at least 60 days before the expiration of the current term.

Management Comments

• The Company cautions that certain statements in this Form 8-K may represent forward-looking statements.
• The Company undertakes no obligation to update such statements to reflect events or circumstances arising after such date and cautions investors not to place undue reliance on any such forward-looking statements.

Industry Context

This agreement is typical for executive compensation in the media industry, with a mix of base salary, performance-based bonuses, and equity incentives. The inclusion of a TV One award is specific to Urban One's business structure.

Comparison to Industry Standards

• The base salary of $1,250,000 is within the range for CEOs of mid-sized media companies, but the total compensation package including bonuses and equity is more performance-based than some peers.
• The TV One award is a unique feature, reflecting the specific history and structure of Urban One's assets, and is not a standard component of executive compensation packages in the broader media industry.
• The non-compete clause is standard for executive agreements, but the one-year duration is on the shorter end of the range seen in some industries.
• Companies like iHeartMedia and Cumulus Media have similar compensation structures for their CEOs, but the specific metrics and equity awards vary based on company size and performance.

Stakeholder Impact

• Shareholders will be impacted by the CEO's performance and the company's financial results.
• Employees will be impacted by the CEO's leadership and the company's overall strategy.
• The CEO's compensation package will impact the company's expenses.

Next Steps

• The company will continue to operate under the terms of the agreement.
• The Compensation Committee will review the CEO's performance and compensation annually.
• The company will monitor the performance of TV One to determine the value of the TV One award.

Key Dates

Keywords

employment agreement, CEO, Alfred Liggins, compensation, stock options, stock awards, severance, non-compete, TV One, Urban One