SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
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Rule 14a-6(e)(2)
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[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-11(c) or 14a-12
WESTWOOD ONE, INC.
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(Name of Registrant as Specified In Its Charter)
N/A
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WESTWOOD ONE, INC.
Dear Shareholders:
Enclosed with this letter is a Proxy Statement and proxy card for the
Annual Meeting of Shareholders of Westwood One, Inc. (the "Company") to be held
on May 13, 2004 at 10:00 a.m., Pacific Time, in the Napa Room of the The St.
Regis Hotel, 2055 Avenue of the Stars, Los Angeles, CA. A copy of the Company's
Annual Report on Form 10-K for the year ended December 31, 2003, which report
contains consolidated financial statements and other information of interest
with respect to the Company and its shareholders is also included with this
mailing.
The purpose of the Annual Meeting is to elect five directors, to ratify the
appointment of the Company's independent accountants and to conduct such other
business as may properly come before the meeting. At the Annual Meeting, the
holders of Common Stock, voting alone, will elect two members of the Company's
Board of Directors. Holders of Common Stock and Class B Stock, voting together,
will elect three members of the Company's Board of Directors, ratify the
appointment of the Company's independent accountants, and conduct such other
business as may properly come before the meeting
IT IS IMPORTANT THAT YOU MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY
CARD IN THE PROVIDED POSTAGE-PAID ENVELOPE IF YOU DO NOT INTEND TO BE PRESENT AT
THE MEETING. IF YOU DO LATER DECIDE TO ATTEND, YOUR PROXY WILL AUTOMATICALLY BE
REVOKED IF YOU VOTE IN PERSON. ACCORDINGLY, YOU ARE URGED TO MARK, SIGN, DATE
AND RETURN THE PROXY CARD NOW IN ORDER TO ENSURE THAT YOUR SHARES ARE
REPRESENTED AT THE MEETING.
We appreciate your continued support.
Sincerely,
WESTWOOD ONE, INC.
/S/ Norman J. Pattiz
--------------------
Norman J. Pattiz
Chairman of the Board
April 16, 2004
WESTWOOD ONE, INC.
40 West 57th Street, 5th Floor
New York, NY 10019
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 13, 2004
To Our Shareholders:
The Annual Meeting of the Shareholders of Westwood One, Inc. (the
"Company") will be held in the Napa Room of the St. Regis Hotel, 2055 Avenue of
the Stars, Los Angeles, CA, on May 13, 2004 at 10:00 a.m., Pacific Time for the
following purposes:
(1) To elect five members of the Company's Board of Directors;
(2) To ratify the selection of PricewaterhouseCoopers LLP as the Company's
independent accountants for the fiscal year ending December 31, 2004;
and
(3) To consider and act upon such other business as may properly come
before the meeting.
Shareholders of record at the close of business on April 13, 2004 will be
entitled to notice of and to vote at the Annual Meeting, and a list of such
shareholders will be available for examination during ordinary business hours at
least ten days prior to the Annual Meeting by any shareholder, for any purpose
germane to the Annual Meeting, at the Company's offices at 9540 Washington
Boulevard, Culver City, California 90232 (telephone [310] 204-5000).
Whether or not you intend to be present at the meeting, please mark, date,
sign and mail the enclosed proxy in the provided postage-paid envelope as
promptly as possible. You are cordially invited to attend the Annual Meeting and
your proxy will be revoked if you are present and vote in person.
By Order of the Board of Directors
/S/ Gary J. Yusko
-----------------
Gary J. Yusko
Secretary
Apri1 16, 2004
WESTWOOD ONE, INC.
40 West 57th Street
New York, NY 10019
Proxy Statement
GENERAL
This proxy statement (first mailed to shareholders on or about April 19
2004) is furnished in connection with the solicitation of proxies by Westwood
One, Inc., a Delaware corporation (the "Company"), for use at the Annual Meeting
of Shareholders of the Company to be held on May 13, 2004 at 10:00 a.m., Pacific
Time, in the Napa Room of the St. Regis Hotel, 2055 Avenue of the Stars, Los
Angeles, CA 90067, and any adjournments thereof, for the purposes set forth in
the accompanying Notice of Annual Meeting of Shareholders.
The Company's Annual Report on Form 10-K for the year ended December 31,
2003, including consolidated financial statements and other information,
accompanies this Proxy Statement but does not form a part of the proxy
soliciting material.
ABOUT THE MEETING
What is the purpose of the annual meeting?
At our annual meeting, shareholders will act upon the matters outlined in
the Notice of Annual Meeting of Shareholders accompanying this proxy statement,
including the election of directors, the ratification of the selection of the
Company's independent accountants, and such other business as may properly come
before the meeting. In addition, management will report on the performance of
the Company during 2003 and respond to questions from shareholders.
Who is entitled to vote at the meeting?
Only shareholders of record at the close of business on April 13, 2004, the
record date for the meeting, are entitled to receive notice of and to
participate in the annual meeting. If you were a shareholder of record on that
date, you will be entitled to vote all of the shares that you held on that date
at the meeting, or any postponements or adjournments of the meeting. As of the
record date, there were 97,179,567 shares of Common Stock outstanding, excluding
treasury shares, and 703,466 shares of Class B Stock outstanding.
What are the voting rights of holders of the Company's Common Stock and Class B
Stock?
Under the Company's certificate of incorporation, each holder of
outstanding Common Stock is entitled to cast one (1) vote for each share of
Common Stock held by such holder and each holder of Class B Stock is entitled to
cast fifty (50) votes for each share of Class B Stock held by such holder. Only
the Common Stock is publicly traded.
Who can attend the meeting?
All shareholders as of the record date, or their duly appointed proxies,
may attend the meeting. If you attend, please note that cameras, recording
devices and other electronic devices will not be permitted at the meeting.
Please also note that if you hold your shares in "street name" (that is,
through a broker or other nominee), you will need to bring a copy of a brokerage
statement reflecting your stock ownership as of the record date in order to gain
entrance.
What constitutes a quorum?
With respect to the election of the directors to be elected by the holders
of the Common Stock voting alone, the presence at the meeting, in person or by
proxy, of the holders of at least one-third of the shares of Common Stock
outstanding on the record date and the presence at the meeting, in person or by
proxy, of the holders of a majority of the aggregate voting power of the Common
Stock and the Class B Stock outstanding on the record date will constitute a
quorum, permitting the holders of Common Stock to take action on that matter.
With respect to all other matters to be voted on at the meeting, the presence at
the meeting, in person or by proxy, of the holders of a majority of the
1
aggregate voting power of the Common Stock and the Class B Stock outstanding on
the record date will constitute a quorum, permitting the shareholders to take
action on those matters.
Proxies received but marked as abstentions and broker non-votes will be
included in the calculation of the number of votes considered to be present at
the meeting for purposes of determining a quorum.
How do I vote?
If you complete and properly sign and date the accompanying proxy card and
return it to the Company, it will be voted as you direct. If you are a
registered shareholder and attend the meeting, you may deliver your completed
proxy card in person. "Street name" shareholders who wish to vote at the meeting
will need to obtain a proxy form from the institution that holds their shares.
Can I change my vote after I return my proxy card?
Yes. Even after you have submitted your proxy, you may change your vote at
any time before the proxy is exercised by filing with the Secretary of the
Company either a notice of revocation or a duly executed proxy bearing a later
date. In addition, the powers of the proxy holders will be suspended if you
attend the meeting in person and vote, although attendance at the meeting will
not by itself revoke a previously granted proxy.
What are the Board's recommendations?
Unless you give other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote in accordance with the recommendations
of the Board of Directors. The Board's recommendation is set forth together with
the description of each item in this proxy statement. In summary, the Board
recommends a vote:
-- FOR the election of the nominated directors; and
-- FOR ratification of the appointment of PricewaterhouseCoopers LLP as
the Company's independent accountants for fiscal 2004;
Management is not aware of any matters, other than those specified above,
that will be presented for action at the annual meeting, but if any other
matters do properly come before the meeting, the proxy holders will vote as
recommended by the Board of Directors or, if no recommendation is given, at
their discretion.
What vote is required to approve each item?
With respect to each matter to be voted on, the affirmative vote of a
majority of the votes entitled to be cast and represented in person or by proxy
at the meeting will be required to approve each such matter. Other than with
respect to the election of Mr. Holt and Mr. Smith, on all matters proposed the
Common Stock and the Class B Stock vote together as a class. With respect to the
election of Mr. Holt and Mr. Smith, the Common Stock votes separately as a class
and the Class B Stock is not entitled to vote. A properly executed proxy marked
"WITHHOLD AUTHORITY" with respect to the election of one or more directors will
not be voted with respect to the director or directors indicated, although it
will be counted for purposes of determining whether there is a quorum. A
properly executed proxy marked "ABSTAIN" with respect to any such matter will
not be voted, although it will be counted for purposes of determining whether
there is a quorum. Accordingly, an abstention will have the effect of a negative
vote.
If you hold your shares in "street name" through a broker or other nominee,
your broker or nominee may not be permitted to exercise voting discretion with
respect to some or all of the matters to be acted upon. Thus, if you do not give
your broker or nominee specific instructions, your shares may not be voted on
those matters and will not be counted in determining the number of shares
necessary for approval. Shares represented by such "broker non-votes" will,
however, be counted in determining whether there is a quorum.
What is beneficial ownership?
Beneficial ownership has been determined in accordance with Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Under this Rule, certain shares may be deemed to be beneficially owned by more
than one person (such as where persons share voting power or investment power).
In addition, shares are deemed to be beneficially owned by a person if the
person has the right to acquire the shares (for example, upon exercise of an
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option) within 60 days of the date as of which the information is provided; in
computing the percentage of ownership of any person, the amount of shares
outstanding is deemed to include the amount of shares beneficially owned by such
person (and only such person) by reason of these acquisition rights. As a
result, the percentage of outstanding shares of any person as shown in the
following table does not necessarily reflect the person's actual voting power at
any particular date.
How much stock do the Company's largest shareholders and directors and executive
officers own?
The following table shows the amount of the Company's Common Stock and
Class B Stock beneficially owned (unless otherwise indicated) by our largest
shareholders (those who own more than 5% of the outstanding shares), directors,
the executive officers named in the Executive Compensation Summary Table below
and those directors and executive officers as a group. Except as otherwise
indicated, all information is as of April 13, 2004. At April 13, 2004, there
were 97,179,567 shares of Common Stock outstanding and 703,466 shares of Class B
Stock outstanding.
Aggregate Number of Shares Beneficially Owned (1)
--------------------------------------------------
Common Stock Class B Stock
------------------------- ---------------------
Number Percent Number Percent
------ ------- ------ -------
Infinity Network, Inc., a subsidiary of
Infinity Broadcasting Corporation (2) 16,000,000 16.5% - -
40 West 57th Street
New York, NY 10019
Massachusetts Financial Services Company (2) 8,066,997(4) 8.3% - -
500 Boylston St., 15 Floor
Boston, MA 02116
AXA Financial Inc. (2) 7,802,102(5) 8.0% - -
1290 Avenue of the Americas
New York, NY 10104
Goldman Sachs Asset Management (2) 6,271,643(6) 6.5% - -
One New York Plaza
New York, NY 10004
David I. Saperstein (2) 5,724,850(7) 5.9% - -
9601 Wilshire Blvd., Suite 730
Beverly Hills, CA 90210
Norman J. Pattiz (3) 356,330(8) * 703,380 99.9%
9540 Washington Blvd.
Culver City, CA 90232
Shane Coppola 170,000(9) * - -
David L. Dennis 166,210(10) * - -
Gerald Greenberg 18,000(9) * - -
Robert K. Herdman - - - -
Joel Hollander 209,200(11) * - -
Dennis F. Holt 67,000(9) * - -
Maria D. Hummer 26,000(12) * - -
Mel Karmazin 2,252,200(13) 2.3% - -
Steven A. Lerman 57,000(9) * - -
George L. Miles, Jr. 5,000(14) * - -
Joseph B. Smith 45,000(9) * - -
Farid Suleman 1,666,000(15) 1.7% - -
Charles I. Bortnick 130,364(16) * - -
Peter Kosann 71,322(17) * - -
All Current Directors and Executive 5,243,626(18) 5.1% 703,380 99.9%
Officers as a Group (17 persons)
---------------------
* Represents less than one percent (1%) of the Company's outstanding shares
of Common Stock.
(1) The persons in the table have sole voting and investment power with
respects to all shares of Common Stock and Class B Stock, unless otherwise
indicated.
(2) Tabular information and footnotes 4, 5, 6 and 7 are based on information
contained in the most recent Schedule 13D/13G filings and other information
made available to the Company. The shares indicated as held by Infinity
Network, Inc. are indirectly held by Infinity Media Corporation through its
ownership of 100% of the outstanding stock of Infinity Network, Inc.,
indirectly held by Infinity Broadcasting Corporation ("Infinity") through
its 100% ownership of the outstanding stock of Infinity Media Corporation,
and indirectly held by Viacom Inc. ("Viacom") through its ownership of 100%
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of the outstanding stock of Infinity. NAIRI Inc. owns approximately 68% of
the voting stock of Viacom, which in turn is a wholly owned subsidiary of
National Amusements, Inc. Beneficial ownership may also be attributed to
Sumner M. Redstone, as Mr. Redstone is the chairman of the Board and the
beneficial owner of a controlling interest in National Amusements, Inc.
(3) Mr. Pattiz owned Common Stock and Class B Stock representing approximately
26.6% of the total voting power of the Company as of April 13, 2004.
(4) Massachusetts Financial Services Company has sole voting power with respect
to 7,758.647 shares and sole dispositive power with respect to 8,066,997
shares.
(5) AXA Financial Inc. has sole voting power with respect to 2,913,786 shares,
sole dispositive power with respect to 7,801,138 shares, shared voting
power with respect to 3,700,864 shares and shared dispositive power with
respect to 964 shares.
(6) Goldman Sachs Asset Management has sole voting power with respect to
4,625,953 shares, shared voting power with respect to 888,900 shares, sole
dispositive power with respect to 5,382,743 shares and shared dispositive
power with respect to 888,900 shares.
(7) David I. Saperstein has sole voting and dispositive power for 5,724,850
shares.
(8) Includes stock options for 312,000 shares granted under the 1999 Plan.
(9) Represents stock options granted under the Company's Amended Stock
Incentive Plans.
(10) Includes stock options for 130,000 shares granted under the Company's
Amended Stock Incentive Plans. Does not include 4,000 shares held by Mr.
Dennis as custodian for his children, beneficial ownership of which Mr.
Dennis disclaims.
(11) Includes stock options for 190,000 shares granted under the 1999 Plan.
(12) Includes stock options for 21,000 shares granted under 1999 Plan.
(13) Includes stock options for 2,200,000 shares granted under the Company's
Amended Stock Incentive Plans.
(14) Includes stock options for 4,000 shares granted under the 1999 plan.
(15) Includes stock options for 1,566,000 shares granted under the Company's
Amended Stock Incentive Plans.
(16) Includes stock options for 130,000 shares granted under the 1999 plan.
(17) Includes stock options for 71,000 shares granted under the 1999 plan.
(18) Includes stock options for 4,998,000 shares granted under the Company's
Amended Stock Incentive Plans.
How is the Board of Directors structured and what are their terms?
The Board of Directors is divided into three classes (Class I, II, and
III), each class serving for three-year terms, which terms do not coincide. The
Board of Directors currently is comprised of thirteen individuals. Only one
class of directors is elected at each annual meeting. Of the directors, at least
33 1/3% must be independent outside directors, which are elected by Common
stockholders voting alone as a class. Pursuant to the Company's certificate of
incorporation, holders of Common Stock, voting alone, have the right to elect
20% of the Board of Directors, which is currently three directors. However, it
is currently intended that the holders of the Common Stock will vote alone to
elect all the independent directors, at least one of whom will be elected each
year, as set forth below. The remaining members of the Board are elected by all
shareholders voting together as a single class.
How many Board members are Independent under the listing standards of the New
York Stock Exchange?
The Board of Directors has determined that seven directors, representing a
majority of the Board members are "independent" under the listing standards of
the New York Stock Exchange (the "Exchange"). The Independent directors are
Mssrs. Dennis, Greenberg, Herdman, Holt, Miles and Smith and Ms. Hummer. In
order to assist the Board in making this determination, the Corporate Governance
Guidelines established by the Board identifies the requirements for determining
the independence of a Board member. These Guidelines are included on the
Company's website (www.westwoodone.com - under the caption Investor Relations).
The Board observes all criteria for independence established by the Exchange and
other governing laws and regulations.
How does the Board select nominees for the Board?
The Nominating and Governance Committee which consists solely of
independent directors, considers candidates for Board membership suggested by
its members and other Board members, as well as management and shareholders. A
shareholder who wishes to recommend a prospective nominee for the Board should
notify the Company's Secretary or any member of the Nominating and Governance
Committee in writing, including whatever supporting materials the shareholder
considers relevant to the potential candidate qualifications.
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Once a prospective nominee has been identified, the Committee, either with
or without Board input, determines whether to conduct a full evaluation of the
candidate. The preliminary determination is primarily based on the need for
additional Board members to fill vacancies or to expand the size of the Board as
well as a result of its review of the composition of the Board in light of the
characteristics of independence, diversity, age, skills, experience,
availability of service to Westwood One and other Board needs, including but not
limited to independence and audit committee financial expertise. After
completing their evaluation, the Committee makes a recommendation to the full
Board as to who should be nominated and the Board determines the nominee.
Who are the current Board members, what Board Committee's do they serve on and
what are their backgrounds and qualifications?
The continuing directors and nominees for director of the Company are:
Committee Assignments
--------------------------------------------------
Director Term Audit Compensation Nominating and
Name Age Since Class Expires Committee Committee Governance Committee
---- --- -------- ----- ------- --------- ------------ --------------------
Norman J. Pattiz 61 1974 I 2004
Mel Karmazin 60 1994 I 2004
Joseph B. Smith (Independent) 76 1994 I 2004 * *
Dennis F. Holt (Independent) 67 1999 I 2004 **
Shane Coppola 38 2003 I 2004
Farid Suleman 52 1994 II 2006
David L. Dennis (Independent) 55 1994 II 2006 ** * *
Maria D. Hummer (Independent) 59 2000 II 2006 *
George L. Miles, Jr. (Independent) 62 2002 II 2006 *
Gerald Greenberg (Independent) 61 1994 III 2005 ** *
Steven A. Lerman 57 1995 III 2005 *(1)
Joel Hollander 48 1999 III 2005
Robert K. Herdman (Independent) 55 2003 III 2005 *
*Member
**Chair
(1) Effective May 13, 2004, Mr. Lerman will no longer be a member of the
Audit Committee.
The principal occupations of the five director nominees and each of the
other eight continuing directors are as follows:
Mr. Pattiz - founded the Company in 1974 and has held the position of
Chairman of the Board since that time. He was also the Company's Chief Executive
Officer until February 3, 1994. Mr. Pattiz has served on the Broadcasting Board
of Governors of the United States of America, which oversees all U.S.
non-military international broadcasting since November 2000. Mr. Pattiz also
serves as a Regent of the University of California. He also serves on the Board
of the Annenberg School of Communication at the University of Southern
California ("USC"), and is past president of the Broadcast Education
Association. He is a member of California's Commission on Building for the 21st
Century, and he serves on the Board of RAND'S Center for Middle East Public
Policy, the Board of Trustees of the Museum of Television & Radio and the Board
of Directors of the Hollywood Radio & Television Society.
Mr. Karmazin - has been a director of the Company since February 3, 1994.
Mr. Karmazin was also President and Chief Executive Officer of the Company from
February 3, 1994 until October 8, 1998. Mr. Karmazin has been the president and
chief operating officer of Viacom since May 2000. Mr. Karmazin served as the
president and chief executive officer of CBS Corporation ("CBS") from January
1999 to May 2000, and served as president and chief operating officer of CBS
from April 1998 to December 1998. Mr. Karmazin was also the Chairman, President
and Chief Executive Officer of Infinity from December 1998 to February 2001 when
Infinity merged with Viacom. Mr. Karmazin joined CBS in December 1996 as
chairman and chief executive officer of CBS Radio. In May 1997, he also assumed
responsibility for CBS's owned television stations and became chairman and chief
executive officer of the CBS Station Group (Radio & Television) until April
1998. Prior to joining CBS, he was president and chief executive officer of
Infinity from 1981 until its acquisition by CBS in December 1996. Mr. Karmazin
was a director of CBS before its merger with Viacom and a director of Infinity
before its merger with Viacom. He is a director of Viacom and Blockbuster, a
member of the Board of Executives of the New York Stock Exchange and Vice
Chairman of the Board of Trustees of the Museum of Television and Radio.
5
Mr. Smith - has been a director of the Company since May 24, 1994. He was
previously a director of the Company from February 1984 until February 3, 1994.
Since April 1993, Mr. Smith has been the President of Unison Productions, Inc.,
through which he serves as an industry consultant involved in a number of
projects in the entertainment business.
Mr. Holt - has been a Director of the Company since September 22, 1999. Mr.
Holt was a director of Metro from October 1996 through September 22, 1999. Mr.
Holt has been the Chairman and Chief Executive Officer of Patriot Communications
LLC since March 1999. Patriot Communications LLC is one of the largest
telecommunications service bureaus in the U.S. Mr. Holt was also the Chairman
and Founder of Initiative Media (formerly Western International Media
Corporation) from founding the company in 1970 through January 2002. In March
2004, Mr. Holt founded US International Media, a media buying service. Mr. Holt
is a director of United Online (a member of its Compensation Committee); USC
Annenberg School for Communication; USC School of Policy, Planning and
Development; St. John's Hospital; and the Los Angeles Police Foundation. Mr.
Holt also serves as a member of Skull and Dagger, the Silver Shield Foundation,
and the SKIRBALL Cultural Center. Mr. Holt is an associate of the California
Institute of Technology. Mr. Holt was also awarded the Horatio Alger Association
award in 1998.
Mr. Coppola - was appointed to the Board of Directors of the Company on
October 1, 2003. Mr. Coppola became President and Chief Executive Officer of
Westwood One in May 2003. From May 2002 to May 2003, Mr. Coppola provided
consulting services to the Company's traffic operation as well as being the
founder and Managing Partner of Columbus Capital Partners, LLC. From September
1999 to May 2002, Mr. Coppola served as Executive Vice President of the
Company's Metro and Shadow Broadcasting operations. From 1992 to September 1999,
Mr. Coppola was a Director and Executive Vice President of Metro.
Mr. Suleman - has been a director of the Company since February 1994 and
was the Company's Executive Vice President and Chief Financial Officer from
February 1994 to March 2002. Mr. Suleman has been a Special Limited Partner with
Forstmann Little & Co. since March 2002 and Chairman of the Board and Chief
Executive Officer of Citadel Broadcasting Corp. ("Citadel") since March 2002. He
was President and Chief Executive Officer of Infinity from February 2001 to
March 2002. He was Executive Vice President, Chief Financial Officer, Treasurer
and a director of Infinity from September 1998 to February 2001 when Infinity
was acquired by Viacom. Mr. Suleman was named the Senior Vice President, Finance
of CBS in August 1998 and Senior Vice President and Chief Financial Officer of
the CBS Station Group in June 1997. In May 2000, CBS Corporation merged into
Viacom. From January 1997 to June 1997, he served as Senior Vice President and
Chief Financial Officer of CBS Radio. From 1986 until its acquisition by CBS in
December 1996, Mr. Suleman was Vice President, Finance, Chief Financial Officer
and a director of Infinity. Mr. Suleman is a director of McLeod USA
Incorporated.
Mr. Dennis - has been a director of the Company since May 24, 1994. Mr.
Dennis has been a private investor and consultant since December 2002 and has
served as Vice Chairman, Office of the President, Chief Corporate Officer and
Chief Financial Officer of Tenet Healthcare, a hospital owner and healthcare
provider, from March 2000 through November 2002. Mr. Dennis served as Managing
Director, Investment Banking for Donaldson, Lufkin & Jenrette Securities
Corporation from April 1989 to February 2000.
Ms. Hummer - has been a director of the Company since March 29, 2000. Ms.
Hummer has been Of Counsel to Manatt, Phelps & Phillips, LLP ("Manatt, Phelps"),
a law firm with offices in Los Angeles, Orange County, Palo Alto, Sacramento,
New York and Washington D.C., since January 1999. Prior to January 1999, Ms.
Hummer was a partner with Manatt, Phelps holding the positions of Chairman of
the Management Committee and Co-Managing Partner. Ms. Hummer is currently on the
Board of Directors, Los Angeles World Affairs Counsel; Board of Directors, The
Blue Ribbon (a support group of The Music Center of Los Angeles County); Board
of Trustees, Scripps College; Board of Trustees, UCLA/Armand Hammer Museum of
Art and Cultural Center; Board of Trustees, Mount St. Mary's College; Board of
Directors, Children's Institute International; and Board of Directors, The
Regency Club. Ms. Hummer is also a member of The Committee of 200 and the
National Women's Forum.
Mr. Miles - has been a director of the Company since December 9, 2002. Mr.
Miles has been President and Chief Executive Officer of WQED Multimedia since
1994. Mr. Miles is a CPA and is on the Board of Directors of WESCO
International, Inc. (Chairman of the Governance Committee); Equitable Resources
(Chairman of Governance Committee and member of Audit Committee);
Harley-Davidson, Inc. (serves on Governance and Audit Committees); Citizen's
Financial Group, Inc.; ATS-Chester, Inc.; Expeditionary Learning Outward Bound;
University of Pittsburgh; Allegheny Conference on Community Development; and the
Carnegie Museums of Pittsburgh, UPMC Health System. Mr. Miles is also on the
Pittsburgh Symphony Orchestra Board of Advisers and serves as a director of the
Mt. Ararat Community Activity Center's Executive Board.
6
Mr. Greenberg - has been a director of the Company since May 24, 1994.
Since February 2001, Mr. Greenberg has been President of Mirage Music
Entertainment, a company which owns the Mirage Record label. From April 1993 to
January 2001, Mr. Greenberg served as President of MJJ Music, a Michael
Jackson/Sony owned record label.
Mr. Lerman - has been a director of the Company since April 19, 1995. Since
1986, Mr. Lerman has been a member of the Washington, D.C. law firm of
Leventhal, Senter and Lerman, PLLC and is currently the manager of that firm.
Mr. Lerman, while not an employee of Infinity, serves as the General Counsel of
Infinity. Mr. Lerman was a director of Infinity from February 1992 through
December 1996. Mr. Lerman is a member of the Board of Directors and the Vice
President-Development of the Mid-Atlantic Regional Advisory Board of the
University of Pennsylvania.
Mr. Hollander - has been a director of the Company since September 22,
1999. Mr. Hollander has been the Chief Operating Officer of Infinity since June
2003. Mr. Hollander was the Company's President and Chief Executive Officer from
October 1998 to June 2003. Mr. Hollander was Vice President and General Manager
of Infinity's New York radio station WFAN from April 1992 to October 1998. Mr.
Hollander is Chairman of the CJ Foundation for SIDS and a member of the Board of
Directors of Tomorrow's Childrens Fund.
Mr. Herdman - was appointed to the Board of Directors of the Company on
October 1, 2003. Mr. Herdman has been a consultant to Ernst & Young LLP ("E&Y")
since May 2003 and a Managing Director of Kalorama Partners LLC (a Washington,
D.C. consulting firm) and a consultant to the Corporate Responsibility practice
of Howrey Simon Arnold & White LLP since June 2003. Mr. Herdman was the Chief
Accountant of the U.S. Securities and Exchange Commission ("SEC") from October
2001 until November 2002. Mr. Herdman was a Vice Chairman at E&Y from 1989
through September 2001, and was E&Y's senior technical partner. Mr. Herdman was
on the AICPA's SEC Practice Section Executive Committee from 1995 - 2001 and was
a member of the AICPA's Board of Directors from 2001 - 2002. Mr. Herdman is a
director of Household International, Inc. (Vice Chairman of Audit Committee) and
is a member of the Board of Advisors of EPG, Inc., a family-owned business in
Aurora, Ohio.
What committees has the Board established and what are the roles of the
Committees?
The Board of Directors has an Audit Committee, Nominating and Governance
Committee, and Compensation Committee. The Board has adopted a written charter
for each of these committees. The full text of each charter and the Company's
Corporate Governance guidelines are available on the Company's website at
www.westwoodone.com and are available in print to any shareholder that requests
them. Committee membership is composed entirely of non-employee, independent
members of the Board of Directors, except for Mr. Lerman who serves on the Audit
Committee. Effective May 13, 2004, Mr. Lerman will no longer serve on the Audit
Committee. Under their Charters, each of these Committees is authorized and
assured of appropriate funding to retain and consult with external advisors,
consultants and counsel.
The Audit Committee
The current members of the Audit Committee are Messrs. Dennis (Chairman),
Herdman, Lerman, Miles and Smith. Pursuant to the Sarbanes-Oxley Act of 2002
(the "Act") and the New York Stock Exchange ("NYSE") listing standards, Messrs.
Dennis, Herdman, Miles and Smith meet the requirements of independents
proscribed thereunder. In addition, Messrs. Dennis, Herdman and Miles are
considered "Financial Experts" pursuant to the Act and the NYSE listing
standards. For further information concerning each of the foregoing members'
qualifications as "Financial Experts", see "Who are the current Board members,
what Board Committees do they serve on and what are their backgrounds and
qualifications?" above.
The Audit Committtee is responsible for, among other things, the
appointment, compensation, retention and oversight of the Company's independent
auditor; reviewing with the independent auditor the scope of the audit plan and
audit fees; and reviewing the Company's financial statements and related
disclosures. The Committee meets separately with senior management of the
Company, the Company's General Counsel and its independent auditor on a regular
basis. For additional information on the Committee's role and its oversight of
the independent auditor during 2003, see "Report of the Audit Committee". There
were nine meetings of the Audit Committee during fiscal 2003.
The Nominating and Governance Committee
The current members of the Nominating and Governance Committee are Messrs.
Holt (Chairman), Dennis and Greenberg and Ms. Hummer. Each member of the
Nominating and Governance Committee meets the independence requirements of the
Exchange. The Nominating and Governance Committee is responsible for overseeing
7
the development and implemenation of the Company's policies and practices with
regard to corporate governance. The Nominating and Governance Committee is
charged with recommending possible qualified candidates to the Board for
election as directors of the Company and to recommend a slate of directors that
the Board proposes for election by shareholders at the annual meeting. The
Committee will also consider, at meetings of the Committee, those
recommendations by shareholders which are submitted, along with biographical and
business experience information, to the Company at its principal executive
office. There were two informal meetings of the Committee in 2003.
The Compensation Committee
The current members of the Compensation Committee are Messrs. Greenberg
(Chairman), Dennis and Smith. Each member of the Compensation Committee meets
the independent requirements of the Exchange. The Committee reviews, at the
behest of the Board, compensation strategy and structure for key senior
executives. The Committee also reviews and approves the Company's plans and
policies and generally oversees the Company's incentive compensation and equity
based plans. The Committee administers the Company's Amended Stock Incentive
Plan, and is authorized to approve, and may negotiate, employment arrangements
with key executives of the Company and its subsidiaries. There were six meetings
of the Compensation Committee in 2003.
The Board may from time to time, establish or maintain additional
committees as necessary or appropriate.
How often did the Board meet during 2003?
The Board of Directors met five times during 2003. Each director attended
more than 75% of the total number of meetings of the Board and Committees on
which he or she served. The Board also meets in non-management executive
sessions and has selected Mr. Holt as presiding director for the non-management
executive sessions.
How are directors compensated?
Cash Compensation: Directors of the Company who are not officers received
$3,750 per meeting attended for their services as directors and $1,875 per
meeting attended for their services as committee members. During 2003, Messrs.
Dennis, Greenberg, Herdman, Holt, Lerman, Miles, Smith, Suleman and Ms. Hummer
received $46,875, $30,000, $7,500, $18,750, $35,625, $30,000, $31,875, $18,750
and $31,875, respectively, in Board and Board Committee fees. Mr. Karmazin has
elected not to receive cash compensation for his services as a director.
Options: Directors of the Company who are not officers receive a mandatory
grant of stock options to acquire 10,000 shares of Common Stock each year. Each
grant is made on the date of the Company's annual shareholder meeting or on the
date they are appointed to the Board of Directors. Mr. Karmazin has elected not
to receive mandatory grants of stock options normally provided to non-officer
directors.
Does the Company have a Code of Ethics?
Yes. The Company has a Code of Ethics that is applicable to all employees,
officers and directors of the Company. In addition to its Code of Ethics, the
Company has a Supplemental Code of Ethics for its Chief Executive Officer, Chief
Operating Officer, Chief Financial Officer and Executive Vice President-Finance.
Both the Code of Ethics and the Supplemental Code of Ethics are available on the
Company's website (www.westwoodone.com).
Stockholder Communications with Directors
The Board has established a process to receive communications from
stockholders by mail. Stockholders may contact any of the non-management
directors as a group, any Board committee or any chair of any such committee. To
communicate with the Board of Directors, any individual directors or any group
or committee of directors, correspondence should be addressed to the Board of
Directors or any such individual directors or group or committee of directors by
either name or title. All such correspondence should be sent to Westwood One,
Inc., c/o Non-management Directors, 40 West 57th Street, New York, NY 10019.
8
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Messrs. Karmazin, Hollander and Coppola are officers or employees of
Infinity, which beneficially owns 16.5% of the Common Stock of the Company.
Infinity manages the business and operations of the Company pursuant to the
terms of a Management Agreement ("Management Agreement" or the "Agreement"), by
providing to the Company the services of a chief executive officer and a chief
financial officer. The Agreement was entered into in March 1999 and was
subsequently amended to, among other things, extend the Agreement until March
31, 2009. Pursuant to the Management Agreement, the Company is obligated to pay
to Infinity an annual base fee subject to an annual increase by a percentage
amount equal to the increase based on a specified consumer price index. The fee
paid to Infinity in 2003 aggregated $2,793,000. Effective April 1, 2004, the
Company will be obligated to pay to Infinity an annual base fee in the amount of
$3,000,000 subject to an annual increase for each year thereafter by a
percentage amount equal to the increase in a specified price index for the prior
year.
In addition, the Company pays to Infinity incentive bonus compensation in
an amount equal to 10% of the amount by which the Company's operating cash flow
exceeds a target amount for the applicable year, subject to certain adjustments.
The Company must also reimburse Infinity for certain out-of-pocket expenses
incurred by Infinity in performing the services contemplated by the Management
Agreement consistent with past practice. Infinity did not earn an incentive
bonus in fiscal 2003. As additional compensation to Infinity under the
Management Agreement, Infinity was granted seven warrants to purchase an
aggregate 4,500,000 shares of the Company's Common Stock (comprised of two
warrants to purchase 1,000,000 Common shares per warrant and five warrants to
purchase 500,000 Common shares per warrant). Of the seven warrants issued, the
two one million share warrants have an exercise price of $43.11 and $48.36,
respectively, and become exercisable if the average price of the Company's
Common Stock reaches a price of $64.67 and $77.38, respectively, for at least 20
out of 30 consecutive trading days for any period throughout the ten year term
of the warrants.
The exercise prices for the five remaining warrants is equal to $38.87,
$44.70, $51.40, $59.11 and $67.98, respectively. These warrants each have a term
of 10 years and become exercisable on January 2, 2005, 2006, 2007, 2008, and
2009, respectively, subject to a trading price condition. The trading price
condition specifies the average price of the Company's Common Stock for each of
the 15 trading days prior to January 2 of the applicable year (commencing on
January 2, 2005 with respect to the first 500,000 warrant tranche and each
January 2 thereafter for each of the remaining four warrants) must be at least
equal to both the exercise price of the warrant and 120% of the corresponding
prior year 15 day trading average. In the case of the $38.87 warrants, the
Company's average stock price for the 15 trading days prior to January 2, 2005
must equal or exceed $40.56 for the warrants to become exercisable.
The Company and Infinity have also entered into a registration rights
agreement with respect to the shares of Common Stock issuable upon exercise of
the warrants pursuant to which the Company granted to Infinity specified demand
and registration rights.
The Management Agreement provides that all transactions (other than the
Management Agreement and Representation Agreement to operate the CBS Radio
Networks which were ratified by the Company's shareholders) between the Company
and Infinity or its affiliates will be on a basis that is at least as favorable
to the Company as if the transaction were entered into with an independent third
party. In addition, subject to specified exceptions, all agreements between the
Company and Infinity or any of its affiliates must be approved by the Board of
Directors.
The Company has a Representation Agreement with Infinity to operate the CBS
Radio Networks until March 31, 2009. The Company retains all revenue and is
responsible for all expenses of the CBS Radio Networks. In addition, a number of
Infinity's radio stations are affiliated with the Company's radio networks and
the Company purchases several programs from Infinity. During 2003, the Company
incurred expenses aggregating approximately $80,659,000 under the Representation
Agreement and for Infinity affiliations and programs.
Mr. Suleman has been Chairman of Board and Chief Executive Officer of
Citadel since April 2002. Many of the radio stations owned by Citadel have been
broadcast programming produced by the Company both before and after Mr. Suleman
became an officer of Citadel. During 2003, the Company paid Citadel owned
stations approximately $1,649,000 pursuant to the terms of the stations
affiliation agreements with the Company. In addition, the Company paid $400,000
to Aviation 1 LLC, a company owned by Forstmann Little, for use of a private
jet.
Mr. Lerman has been a member of the Washington, D.C. law firm of Leventhal,
Senter and Lerman, PLLC since 1986. From time to time, the Company engages
Leventhal, Senter and Lerman, PLLC in certain matters. The fees associated with
those engagements aggregated approximately $20,000 in 2003. In addition,
Leventhal, Senter and Lerman PLLC provides services to Infinity and Mr. Lerman
serves as Infinity's General Counsel.
9
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than ten percent of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Executive officers,
directors and more than ten percent shareholders are required by Securities and
Exchange Commission regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from its directors and executive officers, the Company
believes that during 2003 its executive officers, directors and more than ten
percent beneficial owners complied with all SEC filing requirements applicable
to them, with the exception of Mr. Pattiz who inadvertently failed to timely
file two reports (one disclosing a stock option grant and the second which
transferred stock owned to a charitable trust) and Mr. Kosann who failed to
timely file two reports (one disclosing his ownership upon becoming an executive
officer and the second reporting a stock option grant). These transactions on
behalf of the aforementioned have subsequently been reported.
Report of the Audit Committee
The Audit Committee operates pursuant to its Charter, which was revised and
approved by the Board of Directors is available on the Company's website
(www.westwoodone.com) The Charter, which complies with applicable SEC
regulations, and New York Stock Exchange rules, addresses five broad areas of
responsibility of the Committee:
1) Reviewing and discussing the preparation of quarterly and annual
financial reports with the Company's management and its independent
auditors;
2) Supervising the relationship between the Company and its independent
accountants, including discussing the matters required by SAS 61
(Codification of Standards on Auditing Standards) with its independent
auditors, evaluating the independence of the auditors in accordance
with Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), and recommending their appointment
or removal, reviewing the scope of their audit and non-audit services
and related fees;
3) Overseeing management's implementation of effective systems of
internal controls;
4) Reviewing and approving the internal corporate audit staff functions;
and
5) Reviewing and investigating any matters pertaining to the integrity of
management, including conflicts of interest, or adherence to standards
of business conduct.
The Committee or its Chairman has reviewed and discussed, with both
management and its independent auditors all financial statements prior to their
filing with the SEC. Management advised the Committee in each case that all
financial statements were prepared in accordance with generally accepted
accounting principles, and reviewed significant issues with the Committee. The
Committee also held discussions with the Company's independent auditors
concerning the matters required to be discussed by SAS 61.
The Committee appointed PricewaterhouseCoopers LLP ("PWC") as our
independent auditors for the year ended December 31, 2003 and reviewed with the
Company's financial managers, the independent auditors, and the director of
internal audit, their overall audit scopes and plans.
The Committee also discussed with PWC their independence and received from
PWC the written disclosures and the letter from PWC required by Independence
Standards Board Standard No. 1, Independence Discussions with Audit Committees.
In addition, the Committee pre-approved PWC'S audit and audit related fees and
has determined that the provision of non-audit services by PWC is compatible
with maintaining their independence.
The Committee also has discussed with the Company's independent auditors,
with and without management present, their recommendations regarding the
Company's internal accounting controls and the overall quality of the Company's
financial reporting and disclosures.
The Committee frequently met in private session separately with the senior
members of the Company, the Company's director of internal audit, the Company's
General Counsel and the Company's independent auditors. Based on its reviews and
discussions referred to above, the Committee recommended to the Board of
Directors that the Board approve the inclusion of the Company's audited
financial statements in the Company's Annual Report on Form 10-K for the year
ended December 31, 2003 with the Securities Exchange Commission. The Committee
also recommended to the Board of Directors the approval selection of the
Company's independent auditors for the year ending December 31, 2004.
10
Fees to Independent Auditors
The following table presents fees for professional services rendered by
PricewaterhouseCoopers LLP ("PWC") for the audit of the Company's financial
statements for fiscal 2003 and 2002 as well as fees billed for audit-related
services, tax services and all other services rendered by PWC for 2003 and 2002.
(in thousands) 2003 2002
---- ----
(1) Audit fees $391 $288
(2) Audit-related fees (a) 225 118
(3) Tax service fees - -
(4) All other services - -
(a) Such services included employee benefit plan audits, audits required
by state municipilaties, internal control reviews and consultations
regarding financial accounting and reporting standards.
As discussed above, all audit-related services were approved by the Audit
Committee, which concluded that the provision of such services by PWC did not
impair that firm's independence in the conduct of the audit.
Audit Committee Pre-Approval Policies and Procedures
All audit and non-audit services provided to the Company by PWC in 2003
were pre-approved by the Audit Committee. Under the Company's pre-approval
policies and procedures, the Chair of the Audit Committee is authorized to
pre-approve the engagement of PWC to provide certain specified audit and
non-audit services, and the engagement of any accounting firm to provide certain
specified audit services.
EXECUTIVE COMPENSATION
Report of the Compensation Committee
What are the duties and responsibilities of the Compensation Committee in
establishing compensation?
The Compensation Committee has the following responsibilities pursuant to
its Charter (a copy of which is available on the Company's website at
www.westwoodone.com):
-- Establish, oversee and recommend to the Board the implementation of
overall compensation policies for Senior Executive Officers as well as
for compensation provided to officers pursuant to the Management
Agreement and the Chairman of the Board.
-- Review and approve corporate goals and objectives relative to the
compensation of Senior Executive Officers.
-- Review the results of and procedures for the evaluation of other
executive officers by the Chief Executive Officer.
-- At the direction of the Board, establish compensation for the
Company's non-employee directors.
-- Oversee the administration of all qualified and non-qualified employee
compensation and benefit plans, including stock incentive plans.
Each of the members of the Compensation Committee are independent with the
meaning of the Company's Corporate Governance Guidelines and the listing
standards of the New York Stock Exchange.
In carrying out its responsibilities, the Committee is authorized to engage
outside advisors to consult with the Committee as it deems appropriate.
What are the objectives of the Company's executive compensation policy?
The objective of the Company's executive compensation policy is to attract,
retain and motivate management in a manner that is in the best interests of its
shareholders. To meet that objective, compensation for Senior Executive Officers
and other management is comprised of three components: a base salary, an annual
incentive bonus, and periodic grants of stock-based compensation (non-qualified
stock options). The Committee believes the granting of stock options more
closely aligns the interest of executives and management to the interests of its
shareholders.
Tax Deductibility Under Section 162(M). Current U.S. tax law has a
$1,000,000 annual tax deduction limit on compensation the Company pays to the
Chief Executive Officer and the four other most highly compensated executive
11
officers. The limit does not apply to "performance-based" compensation (as
defined under the Code and related regulations). In general, compensation is
performance-based only if payment is contingent upon attainment of
pre-established objective performance goals that are set by the Committee. The
Committee may use its discretion to set actual compensation below the maximum
amount calculated by application of the Company performance criteria.The
Committee's general policy is to structure compensation programs that allow the
Company to fully deduct the compensation under Section 162(M) requirements. The
Committee also believes that the Company needs flexibility to meet its incentive
and retention objectives, even if the Company may not deduct all of the
compensation.
How is the compensation of the Company's Chief Executive Officer determined?
The services of the Company's Chief Executive Officer ("CEO") are provided
by Infinity pursuant to the terms of the Management Agreement, which was
approved by the Company's shareholders. In consultation with the Committee,
determines the base salary and incentive bonus payable to the CEO. Additionally,
the Committee alone determines the size and frequency of any stock-based
compensation provided to the CEO. In making that determination, the Committee
considered past practices, experience and the Company's overall financial
performance.
How were the base salaries, bonuses and levels of stock option grants determined
for the Chairman of the Board and executive officers?
Compensation for the Chairman of the Board
Mr. Pattiz, in his role as Chairman of the Board of Westwood, has continued
to emphasize the Company's values and has helped assist the Company in its
endeavors throughout 2003. The Board is pleased with Mr. Pattiz' leadership and
as a result desired to renew his agreement with the Company. The Committee
retained an outside independent executive compensation consultant to conduct a
review of similarly situated Chairman. Accordingly, the Compensation Committee
together with the full Board extended Mr. Pattiz' existing contract for an
additional five (5) years commencing December 1, 2003. Mr. Pattiz' base salary
will be $400,000 per annum. In addition Mr. Pattiz will be entitled to a grant
of 50,000 stock options per year under the Company's stock option plan.
Compensation Philosophy
Executive officers receive annual compensation, (excluding employee
benefits), which is comprised of base salary and incentive compensation.
Incentive compensation consists of a cash bonus and equity based awards (stock
options). In awarding compensation, we consider the financial results of the
Company and individual managerial performance as well as an individual's
performance in achieving strategic business objectives. We believe the
compensation of our executives is sufficient to motivate our executives to
enable the Company to be competitive to both attract and retain executives,
which we believe is critical to the Company's long term success and the creation
of shareholder value.
In determining base salary, we consider an individual's performance,
experience and responsibilities. Base salary creates a secure base of cash
compensation, which is competitive in the industry. With regard to individual
performance, we rely to a large extent on the Chief Executive Officer's
evaluation of individual executive officers performance. Incentive compensation,
consisting of both cash incentives and long-term incentives (equity), reflects
overall Company performance and operating group performance, where appropriate.
Long term incentives in the form of stock options, vest over a period of five
years. We believe that equity based compensation, the value of which depends on
the Company's future performance and stock price, provides a continuous
incentive to the Executive and aligns their interests to our shareholders.
Summary
We believe that attracting and retaining talented and motivated executives
and employees is important in creating shareholder value. We will continue to
evaluate and update our compensation programs and policies to assure that they
enable the Company to be competitive and retain the best talent. It is our
intention to reward its employees and keep them performance driven as well as
foster their equity ownership. We believe our 2003 program met those objectives.
The Compensation Committee
Gerald Greenberg, Chairman of the Compensation Committee
David L. Dennis
Joseph B. Smith
12
Compensation Committee Interlocks and Insider Participation
As stated above, the Company's Compensation Committee is comprised solely
of independent outside directors. The Compensation Committee consists of Mr.
Greenberg, Mr. Dennis and Mr. Smith. The Company has no interlocking
relationships or other transactions involving any of our Compensation Committee
members that are required to be reported pursuant to applicable Securities and
Exchange Commission rules.
EXECUTIVE OFFICERS
Disclosure regarding compensation is provided for each of the executive
officers of the Company (collectively, the "Named Executive Officers") who
served as executive officers at the end of or during the fiscal year ended
December 31, 2003:
Norman J. Pattiz............ The Company's Chairman of the Board at
December 31, 2003.
Joel Hollander.............. The Company's Chief Executive Officer and
President from January 1, 2003 to June, 2003.
Shane Coppola............... The Company's Chief Executive Officer and
President at December 31, 2003.
Charles I. Bortnick......... The Company's Chief Operating Officer at
December 31, 2003.
Jacques Tortoroli........... The Company's Executive Vice President and
Chief Financial Officer at December 31, 2003.
Andrew Zaref................ The Company's Executive Vice President and
Chief Financial Officer effective
January 8, 2004.
Peter Kosann................ The Company's President, Sales at
December 31, 2003.
The professional background of the Executive Officers who are not also
directors of the Company follows:
Charles I. Bortnick
Charles I. Bortnick (age 49) has been Chief Operating Officer at Westwood
One since August 2002. From September 1999 to July 2002, Bortnick served as
Chief Operating Officer/President of Westwood's Metro Networks/Shadow
Broadcasting Services. From 1996 until the Westwood One/Metro Networks merger in
September 1999, Bortnick served as President of Metro Networks. Mr. Bortnick is
a board member of the Radio Advertising Bureau and the March of Dimes AIR
Awards.
Jacques Tortoroli
Jacques Tortoroli (age 46), as a result of the Infinity Management
Agreement, was Chief Financial Officer ("CFO") of Westwood One until January
2004. Mr. Tortoroli is also the CFO of Infinity Broadcasting Corporation. Prior
to his appointment as CFO in July 2002, Tortoroli served as CFO of the
e-Services consultancy Scient, Inc. from December 2001 to June 2002. Tortoroli
was with Young and Rubicam, Inc. where he served as CFO of Y&R Advertising,
Senior Vice President - Finance and Chief Accounting Officer, and CFO of Young &
Rubicam, Inc. from April 1998 to October 2001. Previously, Tortoroli spent 12
years with PepsiCo, Inc. including financial roles in PepsiCo, Inc. and
Pepsi-Cola International. He served multi-year assignments in the Company's
London and Rome based operations and served as Vice President and Controller of
Pepsi-Cola International. Mr. Tortoroli is a director of Ibiquity and a member
of the Board of Trustees of St. Thomas Acquinas College; the RDG Group; and the
Advertising Education Foundation. He is a CPA licensed in New York State.
13
Andrew Zaref
Andrew Zaref (age 38) serves as the Chief Financial Officer of the Company
and is responsible for the Company's financial affairs and shareholder relations
activities. Prior to joining the Company in January 2004, Mr. Zaref served as an
Audit Partner in the Information, Communications, and Entertainment practice of
KPMG LLP. While at KPMG, Mr. Zaref played a key role in advising numerous high
profile media and technology clients. Mr. Zaref is a CPA licensed in New York
State.
Peter Kosann
Peter Kosann (age 34) has been President, Sales at Westwood One since May
2003. Mr. Kosann was the Company's Executive Vice President - Network
Advertising Sales from January 2001 to May 2003; Senior Vice President -
Affiliate Sales and New Media from December 1999 to January 2001 and Vice
President Affiliate Sales from May 1999 to December 1999. Mr. Kosann was
employed by Bloomberg Financial Markets from November 1992 to May 1999 in
several media sales and business development capacities.
Employment Agreements
The Company has a written employment agreement with Mr. Pattiz, effective
October 27, 2003, pursuant to which Mr. Pattiz is to serve as Chairman of the
Board of the Company for a five-year term ending November 30, 2008 at an annual
salary of $400,000. The agreement also provides that Mr. Pattiz will receive an
annual stock option grant to acquire 50,000 shares on December 1 of each
contract year and provides additional benefits which are standard for executives
in the industry. The agreement generally will be terminable by Mr. Pattiz upon
ninety days' written notice to the Company; it will be terminable by the Company
only in the event of death, permanent and total disability, or for "cause." In
the event of permanent and total disability, Mr. Pattiz will receive his base
salary for the following twelve months and 75% of his base salary for the
remainder of the term of the agreement. In the event of a "change of control,"
as defined in the agreement, any unvested options granted pursuant to this
agreement will become immediately exercisable and Mr. Pattiz will continue to
receive any base compensation he would have otherwise been entitled to receive
for the remaining term of the agreement. In addition, Mr. Pattiz has full "piggy
back registration rights" and limited demand registration rights with respect to
any and all of the Common Stock owned by Mr. Pattiz.
The Company has a written employment agreement with Mr. Bortnick through
December 31, 2004, pursuant to which Mr. Bortnick is to serve as the Company's
Chief Operating Officer. Mr. Bortnick's agreement provides for an annual salary
of $450,000 and a bonus potential of $325,000 in 2004. In addition, the
agreement provides additional benefits which are standard for executives in the
industry, including participation in the Company's stock option plan. If the
agreement is not renewed, Mr. Bortnick is entitled to a payment equivalent to
ninety days' base pay. The agreement generally will be terminable by Mr.
Bortnick upon ninety days' written notice to the Company; it will be terminable
by the Company only in the event of death, permanent and total disability, or
for "cause".
The Company has a written employment agreement with Mr. Zaref effective
January 1, 2004, pursuant to which Mr. Zaref is to serve as the Chief Financial
Officer for a three-year term ending December 31, 2006 at an initial annual
salary of $350,000. Mr. Zaref's salary increases 7% each January 1 during the
contract term. In addition to his salary Mr. Zaref is eligible for a potential
initial annual bonus of $150,000 and stock option grants as determined by the
Compensation Committee of the Board of Directors. In addition, the Agreement
provides additional benefits standard for executives in the industry. The
Agreement is terminable by the Company in the event of death, permanent and
total disability or for "cause".
The Company has a written employment agreement with Mr. Kosann, effective
May 1, 2003, pursuant to which Mr. Kosann is to serve as the President of Sales
for a three-year term ending April 30, 2006 at an initial annual salary of
$425,000. Mr. Kosann's annual salary increases 3% each January 1 during the
contract term. In addition to his salary, Mr. Kosann is eligible for a potential
annual bonus of $575,000 and stock option grants, as determined by the
Compensation Committee of the Board of Directors. In addition, the agreement
provides additional benefits which are standard for executives in the industry.
The agreement generally will be terminable by the Company only in the event of
death, permanent and total disability, or for "cause".
14
EXECUTIVE COMPENSATION SUMMARY TABLE
The following table sets forth the compensation received by the Named
Executive Officers for the years ending December 31, 2003, 2002 and 2001.
Annual Compensation
-----------------------------------------------------------------------------------------
Long-Term
Compensation
Securities
Name and Fiscal Other Annual Underlying All Other
Principal Position Year Salary ($) Bonus ($) Compensation ($) Options (#) Compensation ($)
(1)
------------------ ------ --------- --------- ---------------- -------------- ----------------
Norman J. Pattiz 2003 $492,000 -- -- 50,000 --
Chairman of the Board 2002 500,000 -- -- -- --
2001 500,000 -- -- 20,000 --
Joel Hollander (2) 2003 -- -- -- 250,000 --
Chief Executive Officer 2002 -- -- -- 250,000 --
and President 2001 -- -- -- 100,000 --
Shane Coppola (2) 2003 -- -- -- 250,000 --
Chief Executive Officer
and President
Charles I. Bortnick (3) 2003 425,000 -- -- 75,000 $3,000 (6)
Chief Operating Officer 2002 420,000 $150,000 $70,000 50,000 2,569 (6)
Jacques Tortoroli (2 and 4) 2003 -- -- -- -- --
Chief Financial Officer 2002 -- -- -- 50,000 --
Peter Kosann (5) 2003 399,000 60,000 -- 75,000 3,000 (6)
President, Sales
---------------------------------
(1) This column includes the aggregate cost to the Company (if such amount
exceeded the lesser of $50,000 or 10% of such officer's salary and bonus)
of providing various prerequisites and other personal benefits.
(2) Mr. Hollander assumed his position effective October 8, 1998, pursuant to
the terms of the Management Agreement between the Company and Infinity. Mr.
Coppola assumed this position effective May 14, 2003 pursuant to the terms
of the Management Agreement. Messrs. Hollander and Tortoroli did not
receive any cash compensation from the Company. Mr. Coppola does not
receive any cash compensation from the Company for serving as its Chief
Executive Officer and President. Mr. Coppola received $4,500 in 2003 for
consulting services. All compensation under the Management Agreement is
paid to Infinity. Mr. Hollander was granted 100,000 options to purchase
Common Stock in 2001 and 250,000 options in 2002 and 2003. Mr. Coppola was
granted 250,000 options in 2003 and Mr. Tortoroli was granted 50,000
options in 2002.
(3) Appointed Chief Operating Officer of the Company in July, 2002.
(4) Appointed Executive Vice President and Chief Financial Officer of the
Company in July, 2002 and was replaced by Andrew Zaref in January 2004.
(5) Appointed President, Sales in May 2003.
(6) All other Compensation consisted of Company contributions to the employee
Savings and Profit-Sharing Plan.
15
The following two tables provide information on stock option grants made to
the Named Executive Officers in 2003, options exercised during 2003 and options
outstanding on December 31, 2003.
OPTION GRANTS IN FISCAL YEAR 2003
Individual Grants
---------------------------------------------------------------------------------------------------------
Potential Realizable Value at
Number of % of Total Assumed Annual Rates of Stock
Securities Options Granted Exercise or Price Appreciation for Option Term
Underlying Options to Employees in Base Price Expiration ----------------------------------
Name Granted (# Fiscal Year (4) ($/Share) Date 5% ($) 10% ($)
---- ------------------ --------------- ----------- ---------- ----------------------------------
Norman Pattiz 50,000 3.4% $30.99 12/01/13 $ 976,185 $ 2,463,705
Shane Coppola 50,000 (1) 16.9% $33.41 5/19/13 5,262,075 13,280,475
Joel Hollander 250,000 (2) 16.9% $32.90 3/25/13 5,181,750 13,077,750
Chuck Bortnick 75,000 5.1% $30.19 9/30/13 1,426,478 3,600,158
Peter Kosann 75,000 5.1% $30.19 9/30/13 1,426,478 3,600,158
(1) These options were granted under the 1999 Plan on May 19, 2003 and become
exercisable 20% per year on each anniversary date between 2004 and 2008.
(2) These options were granted under the 1999 Plan on March 25, 2003 and become
exercisable 20% per year on each anniversary date between 2004 and 2008.
(3) These options were granted under the 1999 Plan on September 30, 2003 and
become exercisable 20% per year on each anniversary date between 2004 and
2008.
(4) Percentage calculations exclude the impact of a mandatory grant of 80,000
options at $33.30 per share on May 28, 2003 and 10,000 options at $30.59
per share on October 1, 2003 to outside directors (10,000 each to Messrs.
Dennis, Greenberg, Herdman, Holt, Lerman, Miles, Smith and Suleman and Ms.
Hummer) which in accordance with the terms of the 1999 Plan, become
exercisable 20% per year on each May 28 or October 1 between 2004 and 2008.
AGGREGATED OPTION EXERCISES IN FISCAL 2003
AND FISCAL YEAR END OPTION VALUES
Number of Securities
Underlying Value of Unexercised,
Unexercised Options In-the-Money Options
Shares at Fiscal Year End (#) at Fiscal Year End ($) (1)
Acquired Value ---------------------- --------------------------
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ------------ ----------- ------------- ----------- -------------
Norman J. Pattiz 300,000 $5,545,040 312,000 50,000 $6,289,200 $ 161,000
Shane Coppola -- -- 120,000 355,000 1,499,700 1,541,750
Joel Hollander -- -- 310,000 530,000 6,062,000 1,391,500
Charles I. Bortnick -- -- 130,000 220,000 1,499,700 1,643,250
Peter Kosann 21,000 364,760 61,000 173,000 321,500 826,200
Jacques Tortoroli -- -- 10,000 40,000 -- --
-----------------------------
(1) On December 31, 2003, the closing per share price for the Company's Common
Stock on the New York Stock Exchange was $34.21.
16
SHAREHOLDER RETURN PERFORMANCE GRAPH
The performance graph below compares the performance of the Company's
Common Stock to the Dow Jones Equity Market Index and the Dow Jones Media
Industry Index for the Company's last five and ten calendar years. The graph
assumes that $100 was invested in the Company's Common Stock and each index on
December 31, 1998 and December 31, 1993.
The following tables set forth the closing price of the Company's Common
Stock at the end of each of the last five and ten calendar years.
FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
CUMULATIVE TOTAL RETURN
Base Year 1998 1999 2000 2001 2002 2003
---- ---- ---- ---- ---- ----
Westwood One $100 $249 $127 $197 $245 $224
DJ Equity Market $100 $123 $111 $98 $76 $100
DJ Media Industry $100 $159 $113 $104 $71 $93
Westwood One Closing Stock Price $15.25 $38.00 $19.31 $30.05 $37.36 $34.21
17
TEN-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
CUMULATIVE TOTAL RETURN
Base Year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Westwood One $100 $116 $169 $199 $443 $364 $907 $461 $718 $892 $817
DJ Equity Market $100 $100 $137 $167 $220 $275 $338 $306 $270 $210 $275
DJ Media Industry $100 $99 $127 $144 $225 $290 $461 $325 $299 $205 $269
Westwood One Closing
Stock Price $4.19 $4.88 $7.06 $8.31 $18.56 $15.25 $38.00 $19.31 $30.05 $37.36 $34.21
18
PROPOSAL 1 - ELECTION OF DIRECTORS
At the annual meeting, holders of Common Stock, voting alone, will elect
the independent Class I directors and holders of Common Stock and Class B Stock,
voting together, will elect the other Class I directors, for three-year terms,
until their successors are elected and qualified. The Board of Directors has
nominated Norman J. Pattiz, Mel Karmazin, Joseph B. Smith (independent
director), Dennis F. Holt (independent director), and Shane Coppola to serve
three-year terms ending in 2007. All nominees currently serve as Class I
directors of the Company. Unless otherwise indicated on any proxy, the persons
named as proxy voters on the enclosed proxy card intend to vote the stock
represented by each proxy to elect these nominees. The nominees are willing to
serve as directors, but should any or all refuse to or be unable to serve, the
named proxy holders will vote for one or more other persons nominated by the
Board of Directors.
The election of Messrs. Pattiz, Karmazin, Smith, Holt and Coppola will
require the affirmative vote of a majority of the votes entitled to be cast and
represented in person or by proxy at the meeting. With respect to the election
of Mssrs. Pattiz, Karmazin and Coppola, the Common Stock and the Class B Stock
vote together as a class. With respect to the election of Mr. Smith and Mr.
Holt, the Common Stock votes separately as a class and the Class B Stock is not
entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION
OF NORMAN J. PATTIZ, MEL KARMAZIN, JOSEPH B. SMITH, DENNIS F. HOLT AND SHANE
COPPOLA AS CLASS I DIRECTORS.
PROPOSAL 2 - SELECTION OF INDEPENDENT ACCOUNTANTS
Action will be taken at the annual meeting to ratify the selection of
PricewaterhouseCoopers LLP as independent accountants of the Company for the
fiscal year ending December 31, 2004. PricewaterhouseCoopers LLP has been the
independent accountants of the Company since 1984. The Company knows of no
direct or material indirect financial interest of PricewaterhouseCoopers LLP in
the Company or of any connection of that firm with the Company in the capacity
of promoter, underwriter, voting trustee, officer or employee.
Representation of Independent Accountants at Annual Meeting
A representative of PricewaterhouseCoopers LLP will be present at the
annual meeting, will have an opportunity to make a statement if they so desire
and will be available to respond to appropriate questions.
The affirmative vote of a majority of the Common Stock and Class B Stock,
voting together as a single class, represented in person or by proxy at the
annual meeting is required to ratify the selection of PricewaterhouseCoopers
LLP.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE TO RATIFY THE
SELECTION OF PRICEWATERHOUSECOOPERS LLP.
OTHER MATTERS
The Board of Directors does not intend to bring other matters before the
meeting except items required to conduct the meeting. In addition, the Company
has not received notice from any shareholder of an intent to present a proposal
at the meeting. On any matter properly brought before the meeting by the Board
or by others, the persons named as proxies in the accompanying proxy, or their
substitutes will vote in accordance with their best judgment.
19
SOLICITATION
The cost of preparing, assembling, printing and mailing this proxy
statement and the accompanying proxy card will be borne by the Company. The
Company has requested banks and brokers to solicit their customers who are
beneficial owners of Common Stock listed of record in the names of the banks and
brokers, and will reimburse these banks and brokers for the reasonable
out-of-pocket expenses of their solicitations. The original solicitation of
proxies by mail may be supplemented by telephone, telegram and personal
solicitation by officers and other regular employees of the Company, but no
additional compensation will be paid on account of these additional activities.
MacKenzie Partners may solicit proxies by mail, telephone, telegraph and
personal solicitation, and will request banks, brokers and other nominees,
fiduciaries and custodians nominally holding shares of Common Stock of record to
forward proxy soliciting material to the beneficial owners of such shares. For
these services, the Company will pay MacKenzie Partners a fee estimated not to
exceed $3,500, plus reimbursement for expenses.
SHAREHOLDER PROPOSALS FOR 2004
Under the rules of the Securities and Exchange Commission, any shareholder
proposal intended for inclusion in the proxy material for the Annual Meeting of
Shareholders to be held in 2005 must be received by the Company by December 31,
2004 to be eligible for inclusion in such proxy material. Proposals should be
addressed to Gary J. Yusko, Secretary, Westwood One, Inc., 40 West 57th Street,
5th Floor, New York, NY 10019. Proposals must comply with the proxy rules of the
Securities and Exchange Commission relating to shareholder proposals in order to
be included in the proxy materials. Additionally, the Company's proxy holders
for the Company's 2005 Annual Meeting of Shareholders will have discretionary
authority to vote on any shareholder proposal that is presented at such annual
meeting but that is not included in the Company's proxy materials, unless notice
of such proposal is received by the Secretary of the Company on or before March
30, 2005.
By Order of the Board of Directors
/S/ Gary J. Yusko
----------------------------------
Gary J. Yusko
Secretary
New York, New York
April 14, 2004
PROXY
WESTWOOD ONE, INC.
Proxy for 2004 Annual Meeting of Shareholders for Holders of Common Stock
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
WESTWOOD ONE, INC.
The undersigned shareholder of Westwood One, Inc., a Delaware corporation
(the "Company"), hereby appoints Gary J. Yusko and Tina Haut as the
undersigned's proxies, each with full power of substitution to attend and act
for the undersigned at the Annual Meeting of Shareholders of the Company to be
held on May 13, 2004 at 10:00 a.m., Pacific Time, in The Napa Room of the St.
Regis Hotel, 2055 Avenue of the Stars, Los Angeles, California 90067 and any
adjournments thereof, and to represent and vote as designated on the reverse
side all of the shares of Common Stock of the Company that the undersigned would
be entitled to vote.
The proxies, and each of them, shall have all the powers that the
undersigned would have if acting in person. The undersigned hereby revokes any
other proxy to vote at the Annual Meeting and hereby ratifies and confirms all
that the proxies, and each of them, may lawfully do by virtue hereof. With
respect to matters not known at the time of the solicitation of this proxy, the
proxies are authorized to vote in accordance with their best judgments.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
----------- -----------
SIDE SIDE
A-1
X Please mark votes as in this example.
-----
The proxies present at the Annual Meeting, either in person or by substitute (or
if only one shall be present and act, then that one), shall vote the shares
represented by this proxy in the manner indicated below by the shareholder. IF
NO INSTRUCTIONS TO THE CONTRARY ARE INDICATED ON THIS PROXY, IT WILL BE VOTED
FOR ITEMS 1 and 2 SHOWN BELOW. The Board of Directors recommends a vote FOR all
nominees in Item 1 and FOR Item 2.
1. Election of Class I Directors. Nominees: (01) Norman J. Pattiz,
(02) Mel Karmazin, (03) Joseph B. Smith, (04) Dennis F. Holt,
(05) Shane Coppola
----- FOR ALL NOMINEES ----- WITHHELD FROM ALL NOMINEES
----- FOR ALL NOMINEES EXCEPT AS NOTED ABOVE
2. Ratification of the selection of PricewaterhouseCoopers LLP as the
independent accountants of the Company for the fiscal year ending December
31, 2004.
FOR AGAINST ABSTAIN
----- ----- -----
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
-----
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY
PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED.
IMPORTANT: In signing this proxy, please sign your
name or names on the signature line in the same way
as indicated on this proxy. When signing as an
attorney, executor, administrator, trustee or
guardian, please give your full title as such.
EACH JOINT OWNER MUST SIGN.
Signature: Date: Signature: Date:
------------- ------- ------------- -------
A-2
PROXY
WESTWOOD ONE, INC.
Proxy for 2004 Annual Meeting of Shareholders for Holders of Class B Stock
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
WESTWOOD ONE, INC.
The undersigned shareholder of Westwood One, Inc., a Delaware corporation
(the "Company"), hereby appoints Gary J. Yusko and Tina Haut as the
undersigned's proxies, each with full power of substitution to attend and act
for the undersigned at the Annual Meeting of Shareholders of the Company to be
held on May 13, 2004 at 10:00 a.m., Pacific Time, in The Napa Room of the St.
Regis Hotel, 2055 Avenue of the Stars, Los Angeles, California 90067 and any
adjournments thereof, and to represent and vote as designated on the reverse
side all of the shares of Class B Stock of the Company that the undersigned
would be entitled to vote.
The proxies, and each of them, shall have all the powers that the
undersigned would have if acting in person. The undersigned hereby revokes any
other proxy to vote at the Annual Meeting and hereby ratifies and confirms all
that the proxies, and each of them, may lawfully do by virtue hereof. With
respect to matters not known at the time of the solicitation of this proxy, the
proxies are authorized to vote in accordance with their best judgments.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
----------- -----------
SIDE SIDE
A-3
X Please mark votes as in this example.
-----
The proxies present at the Annual Meeting, either in person or by substitute (or
if only one shall be present and act, then that one), shall vote the shares
represented by this proxy in the manner indicated below by the shareholder. IF
NO INSTRUCTIONS TO THE CONTRARY ARE INDICATED ON THIS PROXY, IT WILL BE VOTED
FOR ITEMS 1 and 2 SHOWN BELOW. The Board of Directors recommends a vote
FOR nominees in Item 1 and FOR Item 2.
1. Election of Class II Director.
Nominees: (01) Norman J. Pattiz, (02) Mel Karmazin,
(03) Shane Coppola
----- FOR ALL NOMINEES ----- WITHHELD FROM ALL NOMINEES
2. Ratification of the selection of PricewaterhouseCoopers LLP as the
independent accountants of the Company for the fiscal year ending December
31, 2004.
FOR AGAINST ABSTAIN
----- ----- -----
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
-----
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY
PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED.
IMPORTANT: In signing this proxy, please sign your
name or names on the signature line in the same ways
as indicated on this proxy. When signing as an
attorney, executor, administrator, trustee or
guardian, please give your full title as such.
EACH JOINT OWNER MUST SIGN.
Signature: Date: Signature: Date:
------------- ------- ------------- -------
A-4