SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
RADIO ONE, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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[X] No fee required.
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(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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Radio One, Inc.
5900 Princess Garden Parkway, 8/th/ Floor
Lanham, MD 20706
301-306-1111
April 24, 2001
Dear Fellow Stockholder:
You are cordially invited to attend the 2001 annual meeting of Stockholders
of Radio One, Inc. (the "Company"), to be held on Tuesday, June 5, 2001 at 9:30
a.m. local time, at the Hay Adams Hotel, 800 16/th/ Street, NW, Washington, D.C.
At this meeting you will be asked to vote on several proposals, all of
which are described in detail in the attached proxy statement. Also enclosed
are the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 2000, and a proxy card for each class of voting stock you hold.
Whether or not you plan to attend the Annual Meeting in person, it is
important that your shares be represented and voted at the meeting. After
reading the attached proxy statement, please sign, date, and promptly return the
proxy or proxies in the enclosed self-addressed envelope. No postage is
required if it is mailed in the United States. Submitting the proxy will not
preclude you from voting in person at the Annual Meeting should you later decide
to do so.
Your cooperation in promptly returning your completed proxy is greatly
appreciated. We look forward to seeing you at the annual meeting.
Sincerely,
/s/ Alfred C. Liggins, III
Alfred C. Liggins, III
Chief Executive Officer
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Radio One, Inc.
5900 Princess Garden Parkway, 7/th/ Floor
Lanham, MD 20706
301-306-1111
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
JUNE 5, 2001
NOTICE IS HEREBY GIVEN that the annual meeting of Stockholders (the
"Meeting") of RADIO ONE, INC., a Delaware corporation (the "Company") will be
held on June 5, 2001 at 9:30 a.m., local time, at the Hay Adams Hotel, 800
16/th/ Street, NW, Washington, D.C. to consider and act upon the following
matters:
1. The election of Terry L. Jones and Brian W. McNeill as Class A directors
to serve until the 2002 annual meeting of Stockholders or until their
successors are duly elected and qualified.
2. The election of Catherine L. Hughes, Alfred C. Liggins, III, Larry D.
Marcus, D. Geoffrey Armstrong, and L. Ross Love as directors to serve
until the 2002 annual meeting of Stockholders or until their successors
are duly elected and qualified.
3. The amendment of the Company's Amended and Restated Bylaws to permit
the filling of vacancies on the Board of Directors by majority vote of
the Stockholders or the Board of Directors.
4. The ratification of the amendment to the 1999 Option and Restricted
Stock Grant Plan increasing the number of shares of class D common stock
reserved for issuance under the Plan from 2,816,198 shares to 3,816,198
shares.
5. The ratification of the appointment of Arthur Andersen LLP as
independent public accountants for the Company for the year ended
December 31, 2001.
6. The transaction of such other business as may properly come before the
Meeting or any adjournment thereof.
The Board of Directors is not aware of any other business that will be
presented for consideration at the Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" EACH OF PROPOSALS 1, 2, 3, 4, AND 5 TO BE PRESENTED AT THE ANNUAL MEETING.
Only Stockholders of record at the close of business on April 16, 2001 will
be entitled to notice of and to vote at the Meeting or any adjournment thereof.
The Meeting may be adjourned from time to time without notice other than by
announcement at the Meeting. A list of Stockholders
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entitled to vote at the Meeting will be available for inspection by any
Stockholder, for any reason germane to the Meeting, during ordinary business
hours during the ten days prior to the Meeting at the Company's offices at 5900
Princess Garden Parkway, 7/th/ Floor, Lanham, Maryland 20706. If you wish to
view the list of Stockholders, please contact the Assistant Secretary's office
at (301) 306-1111.
We hope that you will be able to attend the Meeting in person. However,
whether or not you plan to attend, please complete, date, sign, and return the
enclosed proxy card promptly to ensure that your shares are represented at the
Meeting. If you do attend the Meeting, you may revoke your proxy if you wish to
vote in person. The return of the enclosed proxy card will not affect your
right to revoke your proxy or to vote in person if you do attend the Meeting.
By order of the Board of Directors
/s/ Linda J. Eckard Vilardo
Linda J. Eckard Vilardo
Vice President, General Counsel and
Assistant Secretary
Dated: April 24, 2001
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Radio One, Inc.
5900 Princess Garden Parkway, 7/th/ Floor
Lanham, MD 20706
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 5, 2001
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GENERAL
This proxy statement is furnished in connection with the solicitation on
behalf of the Board of Directors of RADIO ONE, INC. ("Radio One" or the
"Company") of proxies to be used at the annual meeting of Stockholders (the
"Meeting"), to be held on June 5, 2001 at 9:30 a.m., local time, at the Hay
Adams Hotel, 800 16/th/ Street, NW, Washington, D.C., and all adjournments
thereof. The proxy statement and a copy of the Company's Annual Report on Form
10-K for the year ended December 31, 2000 are first being mailed on or about
April 24, 2001 to Stockholders of record at the close of business on April 16,
2001.
A proxy card is enclosed. Whether or not you plan to attend the Meeting in
person, please date, sign and return the enclosed proxy card as promptly as
possible in the postage prepaid envelope provided. This will ensure that your
shares will be voted at the Meeting.
Proxies will be solicited by mail, and the Company will pay all expenses of
preparing and soliciting such proxies. The persons designated as proxy in any
duly executed proxy card received, will vote on all matters presented at the
Meeting in accordance with the specifications given therein by the person
executing such proxy or, in the absence of specified instructions, will vote in
favor of each of the proposals indicated on such proxy. The Board of Directors
does not know of any other matter that may be brought before the Meeting, but,
in the event that any other matter should come before the Meeting, the persons
named as proxy will have authority to vote all proxies not marked to the
contrary in their discretion as they deem advisable.
Any Stockholder may revoke his or her proxy at any time before the Meeting
by written notice to such effect received by the Company at the address set
forth above, attn: Linda J. Eckard Vilardo, Assistant Secretary, by delivery of
a subsequently dated proxy, or by attending the Meeting and voting in person.
THE MEETING
The Meeting will be held on June 5, 2001 at 9:30 a.m., local time, at the
Hay Adams Hotel, 800 16/th/ Street, NW, Washington, D.C.
PROPOSALS
At the Meeting, our Stockholders will be asked to (i) elect Brian W.
McNeill and Terry L. Jones as Class A Directors to serve until the 2002 annual
meeting of Stockholders or until their successors are duly elected and qualified
(Proposal 1); (ii) elect Catherine L. Hughes, Alfred C. Liggins, III, Larry D.
Marcus, D. Geoffrey Armstrong, and L. Ross Love as directors to serve until
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the 2002 annual meeting of Stockholders or until their successors are duly
elected and qualified (Proposal 2); (iii) amend the Company's Amended and
Restated Bylaws to permit the filling of vacancies on the Board of Directors by
majority vote of the Stockholders or the Board of Directors (Proposal 3); (iv)
ratify the amendment to the 1999 Option and Restricted Stock Grant Plan
increasing the number of shares of class D common stock reserved for issuance
under the Plan from 2,816,198 shares to 3,816,198 shares (Proposal 4); (v)
ratify the appointment of Arthur Andersen LLP as independent public accountants
for the Company for the year ended December 31, 2001 (Proposal 5); and (vi)
transact such other business as may properly come before the Meeting or any
adjournment thereof.
The Board of Directors is not aware of any other business that will be
presented for consideration at the Meeting.
HOW YOU CAN VOTE
You may submit your proxies by attending the Meeting and voting your shares
in person. You also may choose to submit your proxies by completing the enclosed
proxy card, dating and signing it, and returning it in the postage-paid envelope
provided. If you sign your proxy card and return it without marking any voting
instructions, your shares will be voted in favor of each of the proposals
presented at the Meeting for which you are eligible to vote. If your shares are
held in the name of a broker, bank or other record holder (i.e., in "Street
Name"), you must either direct the record holder of your shares how to vote your
shares or obtain a proxy from the record holder to vote at the Meeting.
VOTING AND SOLICITATION OF PROXIES
All shares of class A and class B common stock represented at the Meeting
by properly executed proxies received prior to the vote at the Meeting, unless
previously revoked (as described immediately below), will be voted in accordance
with the instructions indicated thereon. Class C and class D common stock are
not entitled to vote on any proposal presented at the Meeting. Where a properly
signed proxy is returned and no instructions are given, proxies will be voted as
follows:
- Proxies received from the holders of class A common stock will be
voted FOR all of the nominees for Class A Director (for which holders
of class B common stock are not eligible to vote).
- Proxies received from holders of class A common stock and class B
common stock will be voted FOR:
o All of the other nominees for Director;
o The amendment to the Company's Amended and Restated Bylaws to
permit filling of vacancies on the Board of Directors by majority
vote of the Stockholders or the Board of Directors;
o Ratification of the amendment to the 1999 Option and Restricted
Stock Grant Plan increasing the number of shares of class D
common stock reserved for issuance under the Plan from 2,816,198
shares to 3,816,198 shares;
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o Ratification of Arthur Andersen LLP as independent public
accountants for the Company for the 2001 fiscal year; and
o At the discretion of the proxies on any other matter that may be
properly brought before the Meeting.
No matters other than those referred to above are presently scheduled to be
considered at the Meeting. A broker who holds a Stockholder's shares in Street
Name will not be entitled to vote on Proposals 3 and 4 without instructions from
the beneficial owner of such shares. Pursuant to the Company's Amended and
Restated Bylaws, any question presented to a meeting of the Stockholders must be
approved (with certain exceptions) by the vote of a majority of the votes
eligible to be cast by the Stockholders at the Meeting, and, as a result,
abstentions will have the same effect as a vote against such proposal, whereas
broker non-votes will have no effect on the voting.
Abstentions may be specified on each proposal. Abstentions will be counted
as present for purposes of the item on which the abstention is noted and, thus,
have the effect of a vote against the proposal. Votes may be cast in favor of or
in opposition to each proposal or, in the case of the election of Directors,
votes may be cast in favor of the election of each nominee or withheld. Except
with respect to proposals requiring the affirmative vote of a majority of votes
entitled to be cast (Proposal 3), as to which broker non-votes have the effect
of a vote against the proposal, shares represented by a proxy as to which there
is a broker non-vote will not be counted toward the calculation of a majority of
votes and thus will have no effect on the outcome of the voting. (A broker non-
vote occurs when a nominee who holds shares for a beneficial owner does not vote
on a proposal because the nominee does not have discretionary voting power and
has not received voting instructions from the beneficial owner.)
A Stockholder giving a proxy may revoke such proxy at any time before the
proxy is voted. A proxy may be revoked by filing with Linda J. Eckard Vilardo,
Assistant Secretary of the Company at 5900 Princess Garden Parkway, 7/th/ Floor,
Lanham, Maryland 20706 either (i) a written notice of revocation, including by
telegram or facsimile, bearing a date later than the date of such proxy or (ii)
a later-dated proxy relating to the same shares. A Stockholder who gives a
proxy may also revoke such proxy by attending the Meeting and voting in person
(although mere attendance at the Meeting will not, in and of itself, constitute
a revocation of a proxy).
COSTS OF SOLICITATION
Proxies are being solicited by and on behalf of the Company, and the
Company will pay the costs of soliciting proxies. The Company will solicit
proxies by mail, and the directors, officers and employees of the Company may
also solicit proxies by telephone, facsimile, telegram or in person. Those
persons will receive no additional compensation for these services but will be
reimbursed for reasonable out-of-pocket expenses. The Company will bear the
costs of preparing and mailing the proxy materials to such persons as brokerage
houses and other custodians, nominees and fiduciaries, for their forwarding of
the proxy materials to the beneficial owners. Upon request, the Company will
also reimburse such brokerage houses, custodians, nominees and fiduciaries for
their reasonable expenses in sending the proxy materials to the beneficial
owners.
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SHARES ENTITLED TO VOTE
Only Stockholders of record of Common Stock at the close of business on
April 16, 2001 (the "Record Date") will be entitled to notice of and to vote at
the Meeting. As of the Record Date, there were 22,529,344 shares of Class A
Common stock and 2,867,463 shares of class B common stock issued, outstanding
and eligible to vote. Each share of class A common stock is entitled to one
non-cumulative vote, and each share of class B common stock is entitled to ten
non-cumulative votes.
QUORUM
A quorum of Stockholders is necessary to take action at the Meeting. Each
share of class A common stock entitles the holder thereof to one vote. Each
share of class B common stock entitles the holder thereof to ten votes.
Accordingly a total of 51,203,974 votes may be cast at the Meeting. The holders
of shares of Common Stock representing a majority of all votes entitled to be
cast at the Meeting (25,601,988 votes), whether present in person or represented
by proxy at the Meeting, shall constitute a quorum. Abstentions and
instructions to withhold voting authority, but not broker non-votes, are counted
as present for purposes of determining whether there is a quorum. In the event
that a quorum is not obtained at the Meeting, we expect that the Meeting will be
adjourned or postponed to solicit additional proxies.
If a quorum is not present, the holders of the shares present in person or
represented by proxy at the Meeting and entitled to vote thereat shall have the
power, by the affirmative vote of the holders of a majority of such shares, to
adjourn the Meeting to another time or place. Unless the adjournment is for
more than thirty days or unless a new record date is set for the adjourned
meeting, no notice of the adjourned meeting need be given to any Stockholder,
provided that the time and place of the adjourned meeting is announced at the
Meeting at which the adjournment was taken. At the adjourned meeting, the
Company may transact any business which might have been transacted at the
original Meeting.
VOTE REQUIRED
A quorum being present at the Meeting, (a) the affirmative vote of a
majority of the votes cast by the holders of class A common stock will be
necessary for the approval and adoption of the proposal to elect Terry L. Jones
and Brian W. McNeill as Class A Directors, (b) the affirmative vote of a
majority of the votes represented by all outstanding shares of class A common
stock and class B common stock will be necessary for the approval and adoption
of the proposal to amend the Company's Amended and Restated By-laws to permit
filling of vacancies on the Board of Directors by majority vote of the
Stockholders or the Board of Directors, and (c) the affirmative vote of a
majority of the votes cast by all holders of class A common stock and class B
common stock will be necessary for the approval and adoption of the proposals
for (i) the election of the remaining director nominees, (ii) the ratification
of the amendment to the 1999 Option and Restricted Stock Grant Plan increasing
the number of shares of class D common stock reserved for issuance under the
Plan, and (iii) the ratification of the appointment of the independent public
accountants. Abstentions will be counted as votes against each proposal. Votes
cast by proxy or in person at the Meeting will be tabulated by the inspectors of
election appointed for the Meeting.
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VOTING SHARES COMMITTED
The Company has been advised by various members of management and the Board
of Directors who, in the aggregate, hold or otherwise have voting power with
respect to 1,517,123 shares of Class A Common Stock and 2,861,843 shares of
class B common stock (representing approximately 58.9% of the votes possible)
that they intend to vote such shares in favor of each of the proposals to be
presented for consideration and approval at the Meeting.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of our Common Stock as of March 31, 2001 by: (1) each person (or
group of affiliated persons) known by us to be the beneficial owner of more than
five percent of any class of Common Stock; (2) each of our top five most highly
compensated executive officers; (3) each of our directors and nominees; and (4)
all of our directors and officers as a group. The number of shares of each
class of Common Stock excludes the shares of any other class of Common Stock
issuable upon conversion of that class of Common Stock. Unless otherwise
indicated in the footnotes below, each Stockholder possesses sole voting and
investment power with respect to the shares listed. Information with respect to
the beneficial ownership of shares has been provided by the Stockholders.
Common Stock
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Class A Class B Class C Class D
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Percent
of Percent
Total of Total
Number Percent Number Percent Number Percent Number of Percent Economic Voting
of Shares of Class of Shares of Class of Shares of Class Shares of Class Interest Power
--------- --------- --------- --------- ---------- --------- --------- --------- -------- --------
Catherine L. Hughes 1,000 0.004% 851,536 29.7% 3,121,048 99.6% 7,772,168 13.3% 13.5% 16.6%
/(1)(2)(3)/
c/o Radio One
5900 Princess Garden
Parkway,
8/th/ Floor
Lanham, Maryland 20706
Alfred C. Liggins, 38,036 0.2 2,010,307 70.1 3,121,048 99.6 10,163,782 17.4 17.6 39.3
III/(1)(2)(4)/
c/o Radio One
5900 Princess Garden
Parkway,
8/th/ Floor
Lanham, Maryland 20706
Scott R. Royster/(5)/ 381,703 1.7 -- -- -- -- 783,403 1.3 1.3 0.7
c/o Radio One
5900 Princess Garden
Parkway,
8/th/ Floor
Lanham, Maryland 20706
Linda J. Eckard 24,308 0.004 -- -- -- -- 298,616 0.5 0.4 0.0
Vilardo/(6)/
c/o Radio One
5900 Princess Garden
Parkway,
8/th/ Floor
Lanham, Maryland 20706
Mary Catherine Sneed 230,922 1.0 -- -- -- -- 336,844 0.6 0.7 0.5
c/o Radio One
5900 Princess Garden
Parkway,
8/th/ Floor
Lanham, Maryland 20706
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Common Stock
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Class A Class B Class C Class D
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Percent
of Percent
Total of Total
Number Percent Number Percent Number Percent Number of Percent Economic Voting
of Shares of Class of Shares of Class of Shares of Class Shares of Class Interest Power
--------- --------- --------- --------- ---------- --------- --------- --------- -------- --------
Terry L. Jones/(7)/ 577,318 2.6 -- -- -- -- 1,144,436 2.0 2.0 1.1
c/o Syncom Capital
Corporation
8401 Colesville Road,
Suite 300
Silver Spring, MD 20910
Brian W. McNeill/(8)/ 492,258 2.2 -- -- -- -- 984,516 1.7 1.7 1.0
c/o Burr, Egan, Deleage
& Co.
One Post Office Square
Boston, MA 02109
Larry D. Marcus 2,500 * -- -- -- -- 17,000 * * *
248 Gay Avenue
Clayton, MO 63105
L. Ross Love 250 * -- -- -- -- 500 * * *
c/o Blue Chip
Broadcasting, Inc.
1821 Summit Road, Suite
401
Cincinnati, OH 45237
D. Geoffrey Armstrong -- -- -- -- -- -- -- -- -- --
c/o 310 Partners
600 Congress Ave.,
Suite 1400
Austin, TX 78701
Baron Capital Group, Inc 1,590,800 7.1 -- -- -- -- -- -- 1.8 3.1
767 Fifth Avenue
New York, NY 10153
Fidelity International 1,522,520 6.8 -- -- -- -- -- -- 1.8 3.0
Limited
Pembroke Hall, 42
Crowlane
Hamilton, Bermuda
FMR Corp. 2,069,170 9.2 -- -- -- -- 2,245,740 3.8 5.0 4.0
82 Devonshire Street
Boston, MA 02109
Janus Capital Corporation 2,196,690 9.8 -- -- -- -- 3,294,630 6.7 7.0 4.3
100 Fillmore Street
Denver, Colorado
80206-4923
Putnam Investments, Inc. 3,127,030 13.9 -- -- -- -- 4,850,616 8.3 9.2 6.1
One Post Office Square
Boston, MA 02109
The TCW Group, Inc. 2,907,150 12.9 -- -- -- -- -- -- 3.3 5.7
865 South Figueroa St.
Los Angeles, CA 90017
All Directors and Named 1,748,044 7.8 2,861,843 99.8 3,121,048 99.6 15,258,669 26.2 26.5 59.3
Executives as a group
(8 persons)
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* Less than .01%
(1) The shares of class C common stock and 6,242,096 shares of class D common
stock are held by Hughes-Liggins Family Partners, L.P., the limited partners
of which are the Catherine L. Hughes Revocable Trust, dated March 2, 1999
(of which Ms. Hughes is the trustee and sole beneficiary), and the Alfred C.
Liggins, III Revocable Trust, dated March 2, 1999 (of which Mr. Liggins is
the trustee and sole beneficiary), and the general partner of which is
Hughes-Liggins & Company, L.L.C., the members of which are the Catherine L.
Hughes Revocable Trust, dated March 2, 1999, and the Alfred C. Liggins, III
Revocable trust, dated March 2, 1999.
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(2) The shares of class A common stock and class B common stock are subject to a
voting agreement between Ms. Hughes and Mr. Liggins with respect to the
election of Radio One's directors.
(3) The shares of class B common stock and 1,528,072 shares of class D common
stock are held by the Catherine L. Hughes Revocable Trust, dated March 2,
1999.
(4) The shares B common stock and 3,921,686 shares of class D common stock are
held by the Alfred C. Liggins, III Revocable Trust, dated March 2, 1999.
(5) Includes 13,985 shares of class A common stock and 27,969 shares of class D
common stock obtainable upon the exercise of stock options exercisable
within 60 days of March 31, 2001.
(6) Includes 23,308 shares of class A common stock and 46,616 shares of class D
common stock obtainable upon the exercise of stock options exercisable
within 60 days of March 31, 2001.
(7) Includes 49,557 shares of class A common stock and 6,714 shares of class D
common stock held by Mr. Jones, 300 shares of class A common stock and 600
shares of class D common stock held by each of Mr. Jones' three daughters,
and 526,861 shares of class A common stock and 1,134,122 shares of class D
common stock held by Syncom Capital Corporation. Mr. Jones is the President
of Syncom Capital Corporation and may be deemed to share beneficial
ownership of shares of class A common stock held by Syncom Capital
Corporation by virtue of his affiliation with Syncom Capital Corporation.
Mr. Jones disclaims beneficial ownership in such shares.
(8) Includes 14,217 shares of class A common stock and 28,434 shares of class D
common stock held by Mr. McNeill and 478,041 shares of class A common stock
and 956,082 shares of class D common stock held by Alta Subordinated Debt
Partners III, L.P. Mr. McNeill is a general partner of Alta Subordinated
Debt Partners III, L.P. and Mr. McNeill may be deemed to share beneficial
ownership of shares of class A common stock and class D common stock held by
Alta Subordinated Debt Partners III, L.P. by virtue of his affiliation with
Alta Subordinated Debt Partners III, L.P. Mr. McNeill disclaims any
beneficial ownership of such shares.
NO APPRAISAL RIGHTS
Under the General Corporation Law of the State of Delaware, Stockholders of
the Company do not have appraisal rights in connection with the proposals upon
which a vote is scheduled to be taken at the Meeting.
PROPOSAL 1 - ELECTION OF CLASS A DIRECTORS
Pursuant to the Amended and Restated Bylaws of the Company (the "Bylaws"),
the Board by resolution at its meeting of April 2, 2001 has deemed it advisable
and in the best interest of the Company to increase the number of directors to
seven (7). At the Meeting, the holders of class A common stock, voting
separately as a class, will elect two Class A Directors to serve until the 2002
annual meeting and until their successors are duly elected and qualified. The
two nominees are Brian W. McNeill and Terry L. Jones. Each of them is an
incumbent director. These nominees have consented to serve if elected, but
should any nominee be unavailable to serve, your proxy will vote for the
substitute nominee recommended by the Board of Directors. The two nominees must
receive the affirmative vote of a majority of the votes cast by the holders of
the class A common stock to be elected. There is no cumulative voting for the
Board of Directors.
The tables below contain certain biographical information about the
nominees for Class A Director as well as our other directors and executive
officers.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT EACH HOLDER OF CLASS A COMMON
STOCK VOTE "FOR" THE ELECTION OF EACH OF THE PERSONS NOMINATED FOR CLASS A
DIRECTOR IN PROPOSAL 1.
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Nominees For Class A Director
Terry L. Jones Mr. Jones has been a director of Radio One since 1995. Since 1990,
Director since 1995 Mr. Jones has been President of Syndicated Communications, Inc., a
Age: 54 communications venture capital investment company, and its wholly
owned subsidiary, Syncom Capital Corporation. He joined
Syndicated Communications, Inc. in 1978 as a Vice President. Mr.
Jones serves in various capacities, including director, president,
general partner and vice president, for various other entities affiliated
with Syndicated Communications, Inc. He also serves on the board
of directors of Delta Capital Corporation, Sun Delta Capital Access
Center, Cyber Digital Inc. and the Southern African Enterprise
Development Fund. Mr. Jones earned his B.S. degree from Trinity
College, his M.S. from George Washington University and his
M.B.A. from Harvard Business School.
Brian R. McNeill Mr. McNeill has been a director of Radio One since 1995. Mr.
Director since 1995 McNeill is the Managing General Partner of Alta Communications,
Age: 45 which was founded in 1996 as the successor firm to Burr, Egan,
Deleage & Co., a major private equity firm specializing in the
telecommunications industry. Mr. McNeill began at Burr, Egan in
1986. He has served as a director in many private radio and television
broadcasting companies such as NextMedia, Marathon Media,
Telemundo Holdings and Shockley Communications. From 1979 to
1986, he worked at the Bank of Boston where he started and managed
that institution's broadcast lending group. Mr. McNeill is a graduate
of Holy Cross College and earned an M.B.A. from the Amos Tuck
School at Dartmouth College. He currently serves as a director of
Acme Communications, Inc., a public company with ownership
interests in nine television stations.
PROPOSAL 2-ELECTION OF OTHER DIRECTORS
The remaining five directors will be elected by the holders of the class A
common stock and class B common stock voting together at the Meeting, to serve
until the 2002 annual meeting and until their successors are duly elected and
qualified. The five nominees are Catherine L. Hughes, Alfred C. Liggins, III,
Larry D. Marcus, D. Geoffrey Armstrong, and L. Ross Love. Ms. Hughes, Mr.
Liggins and Mr. Marcus are incumbent directors. These nominees have consented
to serve if elected, but should any nominee be unavailable to serve, your proxy
will vote for the substitute nominee recommended by the Board of Directors. The
five persons nominated for director must receive the affirmative vote of a
majority of the votes cast by all Stockholders entitled to vote to be elected.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT EACH HOLDER OF CLASS A COMMON
STOCK AND CLASS B COMMON STOCK VOTE "FOR"
THE ELECTION OF EACH OF THE PERSONS NOMINATED FOR DIRECTOR
IN PROPOSAL 2.
Nominees for Other Director
Catherine L. Hughes Ms. Hughes has been Chairperson of the Board of Directors and
Chairperson of the Secretary of Radio One since 1980, and was Chief Executive Officer
Board and Secretary of Radio One from 1980 to 1997. She was one of the founders of
Director since 1980 Radio One's predecessor company in 1980. Since 1980, Ms. Hughes
Age: 53 has worked in various capacities for Radio One including President,
General Manager, General Sales Manager and talk show host. She
began her career in radio as General Sales Manager of WHUR-FM,
the Howard University-owned, urban-contemporary radio station.
Ms. Hughes is also the mother of Mr. Liggins, Radio One's Chief
Executive Officer, President, Treasurer and director.
Alfred C. Liggins, III Mr. Liggins has been Chief Executive Officer since 1997, and
Chief Executive Officer, President, Treasurer and a director of Radio One since 1989. Mr.
President and Treasurer Liggins joined Radio One in 1985 as an Account Manager at WOL-
Director since 1989 AM. In 1987, he was promoted to General Sales Manager and
Age: 36 promoted again in 1988 to General Manager overseeing Radio One's
Washington, D.C. operations. After becoming President, Mr. Liggins
engineered Radio One's expansion into other markets. Mr. Liggins
is a graduate of the Wharton School of Business/Executive M.B.A.
Program. Mr. Liggins is the son of Ms. Hughes, Radio One's
Chairperson and Secretary.
Larry D. Marcus Mr. Marcus became a director of Radio One in April 1999. Mr.
Director since 1999 Marcus is currently President of Peak Media L.L.C., which is the sole
Age: 52 management member of Peak Media Holdings L.L.C., the owner of
a television station in Johnstown, Pennsylvania, and the operator
under a time brokerage agreement of a television station in Altoona,
Pennsylvania. In 1989, Mr. Marcus became the Chief Financial
Officer of River City Broadcasting, L.P., licensee of ten television
stations and thirty-four radio stations located in medium to large
markets. River City Broadcasting was sold to Sinclair Broadcasting
in 1996. Mr. Marcus is a graduate of City College of New York.
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D. Geoffrey Armstrong Mr. Armstrong is a nominee for the Board of Directors. Mr.
Director Nominee Armstrong is currently Chief Executive Officer of 310 Partners, a
Age: 43 private investment firm. From March of 1999 through September,
2000, Mr. Armstrong was the Chief Financial Officer of AMFM, Inc.,
which was publicly traded on the New York Stock exchange until it
was purchased by Clear Channel Communications in September
2000. Between June 1998 and March 1999, Mr. Armstrong was Chief
Operating Officer and a director of Capstar Broadcasting Corporation,
which merged with AMFM, Inc. in July of 1999. Mr. Armstrong was
a founder of SFX Broadcasting, which was taken public in 1993, and
subsequently served as Chief Financial Officer, Chief Operating
Officer, and a director until the company was sold in 1998.
L. Ross Love Mr. Love is a nominee for the Board of Directors. Mr. Love is
Director Nominee currently President and CEO of Blue Chip Broadcasting, which is
Age: 54 being acquired by Radio One in a transaction expected to close this
summer. Mr. Love founded Blue Chip in 1995, growing the company
to nineteen stations in six markets. He is Blue Chip's largest
shareholder. Prior to starting Blue Chip, Mr. Love had a 28-year
career at Procter & Gamble, serving the last 10 years as Vice-
President, Advertising for P&G worldwide.
Executive Officers
In the table below we set forth certain information on those persons
currently serving as our executive officers. Biographical information on
Catherine L. Hughes, Chairperson of the Board and Secretary, and Alfred C.
Liggins, III, Chief Executive Officer, President and Treasurer, is included
above in the section "Nominees for Other Director."
Scott R. Royster Mr. Royster has been Executive Vice President of Radio One since
Executive Vice 1997 and Chief Financial Officer of Radio One since 1996. Prior to
President and Chief joining Radio One, he served as an independent consultant to Radio
Financial Officer One. From 1995 to 1996, Mr. Royster was a principal at TSG Capital
Age: 36 Group, LLC, a private equity investment firm located in Stamford,
Connecticut, which has been an investor in Radio One since 1987.
Mr. Royster has also served as an associate and later a principal at
Capital Resource Partners from 1992 to 1995, a private capital
investment firm in Boston, Massachusetts. Mr. Royster is a graduate
of Duke University and Harvard Business School.
Mary Catherine Sneed Ms. Sneed has been Radio One's Chief Operating Officer since
Chief Operating Officer January 1998. Prior to joining Radio One, she held various positions
Age: 49 with Summit Broadcasting including Executive Vice President of the
Radio Division, and Vice President of Operations from 1992 to 1995.
Ms. Sneed is a graduate of Auburn University.
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Linda J. Eckard Vilardo Ms. Eckard Vilardo has been General Counsel of Radio One since
Vice President, January 1998, Assistant Secretary of Radio One since April 1999, and
Assistant Secretary and Vice President of Radio One since February 2001. Prior to joining
General Counsel Radio One as General Counsel, Ms. Eckard Vilardo represented
Age: 43 Radio One as outside counsel from July 1995 until assuming her
current position. Ms. Eckard Vilardo was a partner in the
Washington, D.C. office of Davis Wright Tremaine LLP, from August
1997 to December 1997. Her practice focused on transactions and
FCC regulatory matters. Prior to joining Davis Wright Tremaine
LLP, Ms. Eckard Vilardo was a shareholder of Roberts & Eckard,
P.C., a firm that she co-founded in April 1992. Ms. Eckard Vilardo
is a graduate of Gettysburg College, the National Law Center at
George Washington University and the University of Glasgow. Ms.
Eckard Vilardo is admitted to the District of Columbia Bar and the
Bar of the United States Supreme Court.
Leslie J. Hartmann Ms. Hartmann has been Controller of Radio One since 1997 and Vice
Vice President of President of Finance since September 2000. Prior to joining Radio
Finance and Corporate One, she served as Vice President and Market Controller for
Controller Bonneville International Corporation in Phoenix, Arizona from 1991
Age: 39 to 1997. Ms. Hartmann is a graduate of the University of California
and has an M.B.A. degree from the University of Phoenix.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Radio One's
directors and executive officers and persons who beneficially own more than ten
percent of our common stock to file with the Securities and Exchange Commission
reports showing ownership of and changes in ownership of our Common Stock and
other equity securities. On the basis of reports and representations submitted
by Radio One's directors, executive officers, and greater than ten percent
owners, we believe that all required Section 16(a) filings for fiscal 2000 were
timely made.
IMPORTANT INFORMATION CONCERNING THE BOARD OF DIRECTORS AND
CERTAIN COMMITTEES THEREOF
The Board of Directors has an Audit Committee and a Compensation Committee.
The Audit Committee is governed by a charter which was adopted by the Board on
June 12, 2000 (the "Charter"). A copy of the Charter is attached to this Proxy
Statement as Appendix 1. The functions of the Audit Committee include (i)
selecting independent auditors for the Company, (ii) reviewing
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and arranging the scope of audits of the Company's financial statements and
reviewing with the independent auditors and management of the Company the
results thereof, including evaluation of the internal accounting controls, and
(iii) reviewing and approving the Company's accounting principles and methods of
their application. The members of the Audit Committee are Messrs. Jones and
McNeill. The Audit Committee held one meeting during the last fiscal year.
The members of the Compensation Committee are Messrs. Jones and McNeill.
The functions of the Compensation Committee are to (i) approve policies, plans
and performance criteria concerning the salaries, bonuses and other compensation
of the executive officers of the Company, (ii) review and approve the salaries,
bonuses and other compensation of the executive officers of the Company, (iii)
review the compensation programs for other key employees, including salary and
cash bonus amounts, (iv) establish and review policies regarding executive
officer perquisites, (v) engage experts on compensation matters, if and when the
members of the Compensation Committee deem it proper or advisable to do so, and
(vi) perform such other duties as shall from time to time be delegated by the
Board. The Compensation Committee held one meeting during the last fiscal year.
The Board of Directors held a total of nine meetings during the last fiscal
year. Each incumbent director who was a director of the Company during the
fiscal year ended December 31, 2000 attended more than 75% of the aggregate
number of meetings of the Board, and the committees of which they were members,
that were held during the period such director was a member of the Board of
Directors.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Committee has reviewed and discussed with management of the Company and
Arthur Andersen LLP, the independent auditing firm of the Company, the audited
financial statements of the Company as of December 31, 2000 (the "Audited
Financial Statements"). In addition, we have discussed with Arthur Andersen LLP
the matters required by Codification of Statements on Auditing Standards No. 61.
The Committee also has received and reviewed the written disclosures and
the letter from Arthur Andersen LLP required by Independence Standards Board
Standard No. 1, and we have discussed with that firm its independence from the
Company. We also have discussed with management of the Company and the auditing
firm such other matters and received such assurances from them as we deemed
appropriate.
Management is responsible for the Company's internal controls and the
financial reporting process. Arthur Andersen LLP is responsible for performing
an independent audit of the Company's financial statements in accordance with
generally accepted auditing standards and issuing a report thereon.
Based on the foregoing review and discussions and a review of the report of
Arthur Andersen LLP with respect to the Audited Financial Statements, and
relying thereon, we have recommended to the Company's Board of Directors the
inclusion of the Audited Financial Statements in the Company's Annual Report on
Form 10-K of the year ended December 31, 2000.
-17-
Respectfully submitted,
Audit Committee
Terry L. Jones
Brian W. McNeill
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation of Directors
Our non-officer directors are reimbursed for all out-of-pocket expenses
related to meetings attended. In addition, Mr. Marcus receives an annual stipend
of $24,000. Our other non-officer directors receive no additional compensation
for their services as directors. Our officers who serve as directors do not
receive compensation for their services as directors other than the compensation
they receive as officers of Radio One.
Compensation of Executive Officers
The following information relates to compensation of our Chief Executive
Officer and each of our most highly compensated executive officers (the "Named
Executives") for the fiscal years ended December 31, 2000, 1999, and 1998 (as
applicable):
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Summary Compensation Table
Long-Term Compensation Awards
--------------------------------------------
Securities
Restricted Underlying All Other
Name and Principal Positions Year Salary Bonus Stock Awards Options Compensation/(3)/
- ---------------------------- ---- ------ ------- ------------- ---------- -----------------
Catherine L. Hughes ................................... 2000 $250,000 $200,000 -- -- $3,404
Chairperson of the Board of Directors and Secretary 1999 250,000 150,000 -- -- 6,167
1998 225,000 100,000 -- -- 3,232
Alfred C. Liggins, III ................................ 2000 300,000 300,000 -- -- 3,328
Chief Executive Officer, President, Treasurer and 1999 300,000 250,000 -- -- 6,230
Director 1998 225,000 100,000 -- -- 3,567
Scott R. Royster ...................................... 2000 300,000 125,000 37,292/(1)/ 5,153
Executive Vice President and Chief Financial Officer 1999 200,000 175,000 $225,000/(2)/ 18,646 7,739
1998 165,000 50,000 -- -- --
Mary Catherine Sneed .................................. 2000 220,000 175,000 -- -- --
Chief Operating Officer 1999 220,000 50,000 -- -- --
1998 200,000 50,000 -- -- --
Linda J. Eckard Vilardo ............................... 2000 200,000 95,000 -- 62,154/(1)/ --
General Counsel 1999 175,000 90,000 -- 31,077 --
1998 150,000 25,000 -- -- --
(1) On June 6, 2000, we issued a stock dividend, payable to all holders of Radio
One's class A, class B and class C common stock , of two shares of Radio
One's class D common stock for each share of Class A, Class B and Class C
Common Stock held by such Holders as of May 30, 2000. Pursuant to the
provisions of the 1999 Stock Option and Restricted Stock Grant Plan, the
shares underlying the options previously granted were adjusted accordingly
to reflect the class D dividend. The options set forth in the table below
for 2000 represent those shares.
(2) Represents 51,194 shares of class A common stock. As of December 29, 2000,
Mr. Royster held 33,694 shares of such stock with a value (based on the last
reported sale price for class A common stock on the Nasdaq National Market
on such date of $10.6875) of $360,104.62, and 102,388 shares of class D
common stock with a value as of December 29, 2000 (based on the last
reported sale price for class D common stock on the Nasdaq National Market
on such date of $11.00) of $1,126,268.00. Twenty-five percent of the stock
vested on the date of grant; the remaining stock will vest in equal
increments every month beginning February 28, 1999 and ending December 31,
2001.
(3) Represents personal use of vehicle and other taxable fringe benefits. In
addition, Ms. Hughes, Mr. Royster and Ms. Eckard Vilardo received loans from
us in 2000. See "Executive Officers' Loans," below.
Option Grants in Last Fiscal Year
Potential Realization
Value at Assumed Annual
% of Total Rates of Stock Price
Options Appreciation for Option
Number of Securities Granted to Term
Underlying Options Employees in Exercise Expiration ------------------------
Name Granted Fiscal Year/(1)/ Price Date 5% 10%
- ---- -------------------- ------------------ --------- ---------- ------------ -----------
Scott R. Royster ......... 37,292 3.2% $8.11 May 5, 2009 $190,201.70 $482,008.47
Linda J. Eckard Vilardo .. 62,154 5.4% $8.11 May 5, 2009 $317,006.24 $803,356.07
(1) On June 6, 2000, we issued a stock dividend, payable to all holders of
Radio One's class A, class B and class C common stock , of two shares of
Radio One's class D common stock for each share of Class A, Class B and
Class C Common Stock held by such Holders as of May 30, 2000. Pursuant to
the provisions of the 1999 Stock Option and Restricted Stock Grant Plan,
the shares underlying the options previously granted were adjusted
accordingly to reflect the class D dividend. The options set forth in this
table for 2000 represent those shares.
-19-
Fiscal Year-End Option Values
Number of Securities Underlying Unexercised Value of Unexercised In-the-Money
Options at Fiscal Year-End Options at Fiscal Year-End
-------------------------------------------- -----------------------------------------------
Name Exercisable Unxercisable Exercisable Unexercisable
- ---- --------------------- -------------------- ---------------------- ----------------------
Class A Class D Class A Class D Class A Class D Class A Class D
--------- ---------- -------- ---------- ---------- ---------- --------- -----------
Scott R. Royster 13,985 27,969 4,661 9,323 $40,661.39 $ 80,830.41 $13,551.86 $26,943.47
Linda J. Eckard Vilardo 23,308 46,616 7,769 15,538 $67,768.01 $134,720.24 $22,588.37 $44,904.82
Employment Agreements
Mr. Scott R. Royster Employment Agreement. Effective as of October 18,
2000, we entered into an amended and restated employment agreement with Mr.
Royster pursuant to which his employment term was extended through October 17,
2005, with an optional five year extension upon mutual agreement of the parties.
Pursuant to the terms of the employment agreement, Mr. Royster serves as our
Chief Financial Officer and Executive Vice President and receives an annual base
salary of $300,000, subject, under the terms of the employment agreement, to an
annual increase of not less than 5% and an annual cash bonus at the discretion
of the Board of Directors. If Mr. Royster remains employed by the company
through and including December 31, 2004, he will receive a retention bonus of
$750,000, and if he is employed on October 18, 2010, he will receive an
additional retention bonus in the amount of $7.0 million. In connection with
the employment agreement, Mr. Royster agreed to purchase from us and we agreed
to sell to him 333,334 unregistered shares of class A common stock and 666,666
unregistered shares of class D common stock, each for a purchase price of $7.00
per share. The purchase price for such shares was funded by a loan from us
evidenced by a full recourse promissory note from Mr. Royster. Under the terms
of the employment agreement, Mr. Royster also received from us an interest free
loan in the amount of $750,000 due on the earlier of January 1, 2005 or the
sixtieth day following the termination of Mr. Royster's employment. We could
incur severance obligations under the terms of the employment agreement in the
event that Mr. Royster's employment is terminated.
Ms. Linda J. Eckard Vilardo Employment Agreement. Effective as of October
31, 2000, we entered into an amended and restated employment agreement with Ms.
Eckard Vilardo pursuant to which her employment term was extended through
October 31, 2004, with an optional four year extension upon mutual agreement of
the parties. Pursuant to the terms of the employment agreement, Ms. Eckard
Vilardo serves as our General Counsel, Assistant Secretary and Vice President
and receives an annual base salary of $220,000, subject, under the terms of the
employment agreement, to an annual increase of not less than 5% and an annual
cash bonus at the discretion of the Board of Directors. If Ms. Eckard Vilardo
remains employed by the company through and including October 31, 2008, she will
receive a retention bonus of approximately $2.0 million. In connection with the
employment agreement, Ms. Eckard Vilardo agreed to purchase from us and we
agreed to sell to her 250,000 unregistered shares of class D common stock for a
purchase price of $8.02 per share. The purchase price for such shares was
funded by a loan from us evidenced by a full recourse promissory note from Ms.
Eckard Vilardo. We could incur severance
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obligations under the terms of the employment agreement in the event that Ms.
Eckard Vilardo's employment is terminated.
401(k) Plan
We adopted a defined contribution 401(k) savings and retirement plan
effective August 1, 1994. Employees are eligible to participate after
completing 90 days of service and attaining age 21. Participants may contribute
up to 15% of their gross compensation subject to certain limitations.
Stock Option Plan
On March 10, 1999 we adopted a stock plan which was also ratified by the
Stockholders of the Company on March 10, 1999. The plan is designed to provide
incentives relating to equity ownership to present and future executive,
managerial and other key employees, directors and individuals who perform
substantial work for Radio One and our subsidiaries as may be selected in the
sole discretion of the committee that administers the plan. The plan was
amended by the Board of Directors as of March 10, 1999, June 14, 2000, September
27, 2000 and April 2, 2001. The plan, as amended, provides for the granting to
participants of stock options and restricted stock grants as the Compensation
Committee of the Board of Directors, or such other committee of the Board of
Directors as the Board of Directors may designate (the "Committee") deems to be
consistent with the purpose of the plan. An aggregate of 1,408,099 shares of
class A common stock (voting) and 3,816,198 shares of class D common stock (non-
voting) have been reserved for issuance under the plan, as amended. The plan
affords Radio One latitude in tailoring incentive compensation for the retention
of key personnel, to support corporate and business objectives, and to
anticipate and respond to a changing business environment and competitive
compensation practices. As of December 31, 2000, we have granted options to
purchase 278,484 shares of class A common stock having a weighted average
exercise price of $11.7699 per share and 1,149,672 shares of class D common
stock, having a weighted average exercise price of $10.1219 per share.
For a complete discussion of the provisions of the Plan, see "Proposal 4 -
Ratification of the Amendment to the 1999 Option and Restricted Stock Grant Plan
Increasing the Number of Shares of Class D Common Stock Reserved for Issuance
Under the Plan."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Radio One has formed a Compensation Committee of the Board of Directors,
and all of the directors serving on such Compensation Committee are directors
who are not employees of Radio One. The Compensation Committee is comprised of
Messrs. Terry L. Jones and Brian W. McNeill. No member of our Compensation
Committee has a relationship that would constitute an interlocking relationship
with executive officers or directors of another entity. See Certain
Relationships and Related Transactions.
-21-
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD
ON EXECUTIVE COMPENSATION
The Compensation Committee reviews the performance of the executive
officers of the Company, reviews and approves the compensation of the executive
officers of the Company, and reviews the compensation programs for other key
employees, including salary and cash bonus amounts. The Compensation Committee
currently consists of two outside directors, Messrs. Terry L. Jones and Brian
W. McNeill.
Compensation Policies and Philosophy
The financial success of the Company is linked to the ability of its
executive officers and managers to direct the Company's current operations, to
assess the advantages of potential acquisitions, and realign the operations of
the acquired entities with the operating policies of the Company. A major
objective of the Company's compensation strategy is to attract and retain top-
quality executive officers and managers. Another objective of the Company's
compensation strategy is to reward executive officers and managers based on the
financial performance of operations under their control. Financial incentives
are used to motivate those responsible to achieve the Company's financial goals
and to align the interests of the Company's managers with the interests of the
Company's stockholders.
In order to achieve the foregoing objectives, the Company uses a
combination of base salary, cash bonuses, and stock options, as well as the
extension of secured and unsecured loans for purposes germane to the mutual
success of the Company and its executive officers. To that end, in 2000 the
Company extended to Mr. Royster a secured loan in the amount of $7.0 million,
bearing interest at the applicable federal rate and evidenced by a full recourse
promissory note due on the earlier of October 18, 2010 or the sixtieth day
following the termination of Mr. Royster's employment. The purpose of the loan
was to allow Mr. Royster to purchase from the Company 333,334 unregistered
shares of class A common stock and 666,666 unregistered shares of class D common
stock, each for a purchase price of $7.00 per share, as provided for in his
employment agreement. The Company also in 2000 extended to Ms. Eckard Vilardo a
secured loan in the amount of $2,005,000, bearing interest at the applicable
federal rate and evidenced by a full recourse promissory note due on the earlier
of October 31, 2008 or the sixtieth day following the termination of Ms. Eckard
Vilardo's employment. The purpose of the loan was to allow Ms. Eckard Vilardo
to purchase from the Company 250,000 unregistered shares of class D common stock
for a purchase price of $8.02 per share, as provided for in her employment
agreement. (See Executive Officers' Loans.)
In establishing the compensation levels for the Company's executive
officers, the Compensation Committee considers a number of factors, including
the level and types of compensation paid to executive officers in similar
positions by comparable companies. In addition, the Compensation Committee
evaluates the Company's performance by looking at factors such as performance
relative to competitors, performance relative to business conditions and the
success of the Company in meeting its financial objectives.
-22-
Components of Compensation
Executive officer base salaries are established in relation to salaries for
individuals in comparable positions paid by other companies in the radio
broadcast industry.
Executive officer cash bonuses are used to provide executive officers with
financial incentives to meet annual performance targets. The performance
targets are based on the Company's budgeted goals pursuant to a detailed annual
operating plan. Bonus recommendations for executive officers other than the
Chief Executive Officer ("CEO") are proposed by the CEO, reviewed and, when
appropriate, revised and approved by the Compensation Committee. The
Compensation Committee also establishes the bonus level for the CEO.
The Compensation Committee believes that equity ownership by the executive
officers, managers, and other employees of the Company provides incentive to
build stockholder value and aligns the interests of these employees with the
interests of stockholders. Upon hiring executive officers, managers, and
certain other key employees, the Board of Directors, typically approves stock
option grants under the Incentive Plan, subject to applicable vesting periods.
Thereafter, the Board of Directors considers awarding additional grants, usually
on an annual basis, under the Incentive Plan. The Board of Directors believes
these additional annual grants will provide incentives for executive officers,
managers, and key employees to remain with the Company. Options are granted at
the current market price of the Company's Common Stock and, consequently, have
value only if the price of the Company's Common Stock increases over the
exercise price. The size of the initial and periodic grants to employees other
than the CEO and the executive officers are proposed by the CEO, reviewed and,
when appropriate, revised and approved by the Board of Directors. The Board of
Directors establishes the size of the initial and periodic grants to the CEO and
the executive officers.
Compensation of the CEO
Mr. Liggins is compensated with an annual base salary of $300,000 and
annual bonuses based on the performance of the Company. The Compensation
Committee has established base compensation for the CEO at a level appropriate
for the duties and scope of responsibilities of the position, and this level is
intended to be competitive with comparable broadcasting companies. The
Compensation Committee reviews the performance of the CEO of the Company, as
well as other executive officers of the Company annually.
Respectfully submitted,
Compensation Committee
Terry L. Jones
Brian W. McNeill
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STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The graphs below compare the cumulative total return on the Company's class
A common stock and class D common stock with the Nasdaq Stock Market (U.S.)
Index and a peer group of radio broadcasting companies (Clear Channel
Communications, Inc., Citadel Communications Corporation, Cox Radio, Inc., Emmis
Communications Corp., Entercom Communications Corp., and Hispanic Broadcasting
Corporation) for the periods commencing on May 6, 1999, the first day of trading
of our class A common stock and June 6, 2000, the first day of trading of our
class D common stock, and each ending on December 31, 2000. The data set forth
in the table pertaining to the Company's class A common stock assumes the value
of an investment in the class A common stock and each Index was $100 on May 6,
1999. The data set forth in the table pertaining to the Company's class D
common stock assumes the value of an investment in the class D common stock and
each Index was $100 on June 6, 2000.
COMPARISON OF NINETEEN-MONTH CUMULATIVE TOTAL RETURN AMONG
RADIO ONE, INC. CLASS A COMMON STOCK, THE NASDAQ STOCK
MARKET (U.S.) INDEX, AND THE PEER GROUP INDEX
MAY 99 JUN 99 JUL 99 AUG 99 SEP 99 OCT 99 NOV 99 DEC 99 JAN 00 FEB 00
------- ------- ------- -------- ------- ------- ------- ------- ------- -------
Radio One, Inc. 100.00 134.296 128.339 120.397 119.856 144.043 182.491 265.704 220.939 189.892
Class A
The Nasdaq Stock 100.00 108.650 106.723 110.803 111.078 119.988 134.943 164.598 159.381 189.974
Market (U.S.) Index
Peer Group 100.00 103.768 101.248 100.536 113.755 124.591 127.788 141.444 128.754 100.698
MAR 00 APR 00 MAY 00 JUN 00 JUL 00 AUG 00 SEP 00 OCT 00 NOV 00 DEC 00
------- ------- -------- ------- ------- ------- ------- ------- ------- -------
Radio One, Inc. 192.419 167.509 206.498 243.998 192.413 173.842 68.608 65.513 87.695 88.211
Class A
The Nasdaq Stock 184.964 156.158 137.562 160.423 152.369 170.141 148.560 136.296 105.082 99.923
Market (U.S.) Index
Peer Group 107.632 108.677 110.003 109.783 110.174 102.295 81.112 86.965 73.399 71.534
COMPARISON OF SIX-MONTH CUMULATIVE TOTAL RETURN AMONG
RADIO ONE, INC. CLASS D COMMON STOCK, THE NASDAQ STOCK
MARKET (U.S.) INDEX, AND THE PEER GROUP INDEX
JUN 00 JUL 00 AUG 00 SEP 00 OCT 00 NOV 00 DEC 00
------- ------- ------- ------- ------ ------ -------
Radio One, Inc. Class D 100.00 74.020 68.8773 27.696 31.434 41.177 43.138
The Nasdaq Stock Market 100.00 98.784 110.305 96.314 88.363 68.127 64.786
(U.S.) Index
Peer Group 100.00 97.8676 90.869 72.052 77.251 65.201 63.549
-24-
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mableton
Radio One has entered into a Programming Management Agreement with Mableton
Investment Group, LLC ("MIG") to provide programming and other managerial
services through MIG to Station WAWE (FM), licensed to Mableton, Georgia, which
is in the Altanta, Georgia market. MIG in turn has a right to program the
station through a Time Brokerage Agreement with New Mableton Broadcasting
Corporation ("NMBC"), licensee of the station. MIG also has a minority interest
in NMBC and options to acquire all of the outstanding stock of NMBC. Radio One
will pay a fee for the right to program the station, along with expenses
incurred in operating the station, and will in turn share in the operating
profit, if any, from operating the station with MIG. Mr. Liggins, the Chief
Executive Officer of Radio One, is a member of MIG and serves as its Manager.
Syncom II Mableton Investment, Inc. is the other member of MIG. Syndicated
Communications Venture Partners II, LP is the shareholder of Syncom II Mableton
Investment, Inc. Terry L. Jones, a general partner of the general partner of
Syndicated Communications Venture Partners II, LP is also a member of Radio
One's Board of Directors. In addition, Radio One of Atlanta, Inc. will lease
space in its studio facilities in Atlanta to NMBC for the operation of the
station.
Office Lease
We lease office space located at 100 St. Paul Street, Baltimore, Maryland
from Chalrep Limited Partnership, a limited partnership controlled by Ms. Hughes
and Mr. Liggins. The annual rent for the office space during 2000 was
approximately $220,000 and is expected to increase.
Music One, Inc.
Ms. Hughes and Mr. Liggins own a music company called Music One, Inc. We
sometimes engage in promoting the recorded music product of Music One, Inc. We
estimate that the dollar value of such promotion is nominal.
Allur-Detroit
Allur-Detroit leases the transmitter site for WDMK-FM from American
Signalling Corporation for approximately $72,000 per year. American Signalling
Corporation is a wholly-owned subsidiary of Syndicated Communications Venture
Partners II, L.P. Terry L. Jones, a general partner of the general partner of
Syndicated Communications Venture Partners II, L.P., is also a member of Radio
One's board of directors. We believe that the terms of this lease are not
materially different than if the agreement were with an unaffiliated third
party.
XM Satellite, Inc.
Radio One and XM Satellite Radio, Inc. have entered into a Programming
Partner Agreement whereby we will provide programming to XM Satellite Radio,
Inc. for distribution over satellite-delivered channels. At the time we entered
into this agreement, Worldspace, Inc. held 20% of the stock of XM Satellite
Radio, Inc. Syndicated Communications Venture Partners II, L.P. owns
-25-
approximately 1.25% of the stock of Worldspace, Inc. Terry L. Jones, a director
of Radio One, is also a director of Worldspace, Inc.
NetNoir, Inc.
We also made a $750,000 loan to NetNoir, Inc., an internet portal service
provider. We provided $250,000 in cash and $500,000 of advertising in exchange
for the loan. The loan was converted into preferred stock in March 2000, when
we made a commitment to invest an additional $2.5 million worth of advertising
on our radio stations in exchange for an equity investment in NetNoir, Inc.
Several entities in which Mr. Jones has an interest as an officer or director
own approximately 32% of the equity of NetNoir. Mr. Jones is a director of Radio
One.
Executive Officers' Loans
In 1999, we extended an unsecured loan to Mr. Liggins in the amount of
$380,000, which bears interest at an annual rate of 5.56% and is evidenced by a
demand promissory note. As of December 31, 2000, the aggregate outstanding
principal and interest amount on this loan was approximately $435,000. The
purpose of the loan was to repay a loan that Mr. Liggins obtained from
NationsBank, Texas, N.A. in 1997 to purchase an additional interest in Radio
One.
In 1999, Radio One of Atlanta, Inc. extended an unsecured loan to Mary
Catherine Sneed, Chief Operating Officer of Radio One, in the original amount of
$262,539, which bears interest at an annual rate of 5.56% and is evidenced by
two demand promissory notes. As of December 31, 2000, the aggregate outstanding
principal and interest amount on this loan was approximately $290,000. The
purpose of this loan was to pay Ms. Sneed's tax liability with respect to
incentive stock grants of Radio One of Atlanta, Inc. stock received by Ms.
Sneed.
In 1999, we extended an unsecured loan to Mr. Royster in the amount of
$87,564, which bears interest at an annual rate of 5.56% and is evidenced by a
demand promissory note. As of December 31, 2000, the aggregate outstanding
principal and interest amount on this loan was approximately $96,000. The
purpose of this loan was to pay Mr. Royster's tax liability with respect to the
restricted stock grant that we made to Mr. Royster. In 2000, we extended to Mr.
Royster a secured loan in the amount of $7.0 million, which bears interest at
the applicable federal rate (published monthly by the Internal Revenue Service)
as defined in Section 1274 of the Internal Revenue Code of 1986, as amended, and
is evidenced by a full recourse promissory note due on the earlier of October
18, 2010 or the sixtieth day following the termination of Mr. Royster's
employment. As of December 31, 2000, the aggregate outstanding principal and
interest amount on this loan was approximately $7,083,000. The purpose of the
loan was to allow Mr. Royster to purchase from us 333,334 unregistered shares of
class A common stock and 666,666 unregistered shares of class D common stock,
each for a purchase price of $7.00 per share, as provided for in his employment
agreement. Also, in 2000, we agreed to extend to Mr. Royster an unsecured,
interest free loan in the amount of $750,000 to be evidenced by a non-recourse
promissory note due on the earlier of January 1, 2005 or the sixtieth day
following the termination of Mr. Royster's employment. As of December 31, 2000,
Mr. Royster had not borrowed any funds in connection with that agreement. The
agreement to extend this loan was a term of Mr. Royster's employment agreement
with us.
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In 2000, we extended an unsecured loan to Ms. Hughes in the amount of
$100,000, which bears interest at an annual rate of 5.73% and is evidenced by a
demand promissory note. As of December 31, 2000, the aggregate outstanding
principal and interest amount on this loan was approximately $106,000.
In 2000, we extended to Ms. Eckard Vilardo a secured loan in the amount of
$2,005,000, which bears interest at the applicable federal rate (published
monthly by the Internal Revenue Service) as defined in Section 1274 of the
Internal Revenue Code of 1986, as amended, and is evidenced by a full recourse
promissory note due on the earlier of October 31, 2008 or the sixtieth day
following the termination of Ms. Eckard Vilardo's employment. As of December
31, 2000, the aggregate outstanding principal and interest amount on this loan
was approximately $2,025,000. The purpose of the loan was to allow Ms. Eckard
Vilardo to purchase from us 250,000 unregistered shares of class D common stock
for a purchase price of $8.02 per share, as provided for in her employment
agreement.
PROPOSAL 3 - AMENDMENT OF THE AMENDED AND RESTATED BYLAWS
TO PERMIT THE FILLING OF VACANCIES
Article III, Section 3 of the Company's Amended and Restated Bylaws
currently provides in pertinent part that "vacancies and newly created
directorships resulting from any increase in the authorized number of directors
may be filled only by the vote of a majority of the votes cast by all
stockholders then entitled to vote at an election of directors at an annual or
special meeting of stockholders...." In its current form, this provision limits
the ability of the Board of Directors to respond rapidly to Radio One's growth
and to opportunities to add qualified individuals to the Board, and may hinder
the Board in its efforts to carry on the business of the Company in the face of
the death, resignation or removal of a director. In order to give the Board the
necessary flexibility to respond rapidly to such opportunities or challenges,
the Board of Directors proposes that Article III, Section 3 of the Amended and
Restated Bylaws be amended to allow the Board, in addition to the Stockholders,
to fill such vacancies as they occur.
If the proposed amendment is adopted, Article III, Section 3 of the
Company's Amended and Restated Bylaws will be amended to read as follows:
"Section 3. Vacancies. Except as otherwise provided by the certificate of
--------- ---------
incorporation of the Corporation or any amendments thereto, vacancies and
newly created directorships resulting from any increase in the authorized
number of directors may be filled by a majority vote of the holders of the
Corporation's outstanding stock entitled to vote thereon or by a majority
vote of the Board of Directors. Each director so chosen shall hold office
until a successor is duly elected and qualified or until his or her earlier
death, resignation or removal as herein provided."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT EACH HOLDER OF CLASS A COMMON
STOCK AND CLASS B COMMON STOCK VOTE "FOR" THE PROPOSAL TO AMEND THE BYLAWS TO
ALLOW THE FILLING OF VACANCIES BY A MAJORITY OF THE STOCKHOLDERS OR THE BOARD.
-27-
PROPOSAL 4 - RATIFICATION OF THE AMENDMENT TO THE 1999 OPTION AND RESTRICTED
STOCK GRANT PLAN INCREASING THE NUMBER OF SHARES OF
CLASS D COMMON STOCK RESERVED FOR ISSUANCE UNDER THE PLAN
At the Meeting, we will ask the Stockholders to approve the amendment to
the 1999 Option and Restricted Stock Grant Plan (the "Plan") increasing the
number of shares of class D common stock reserved for issuance under the plan
from 2,816,198 shares to 3,816,198 shares.
On March 10, 1999, we adopted the Plan, which was also approved by the
Stockholders on March 10, 1999. The Plan is designed to provide incentives
relating to equity ownership to present and future executive, managerial and
other key employees, directors and other individuals who perform substantial
work for Radio One and our subsidiaries as may be selected in the sole
discretion of the committee that administers the Plan. Approximately 8
executives and 55 other employees and other individuals have received grants
under the Plan. The Plan was amended by the Board of Directors as of March 10,
1999, June 14, 2000, September 27, 2000 and April 2, 2001. The Plan provides for
the granting to participants of stock options and restricted stock grants as the
Compensation Committee of the Board of Directors, or such other committee of the
Board of Directors as the Board of Directors may designate (the "Committee")
deems to be consistent with the purposes of the Plan. An aggregate of 1,408,099
shares of class A common stock and 3,816,198 shares of class D non-voting common
stock have been reserved for issuance under the Plan, as amended.
On April 2, 2001, the Board adopted a resolution amending Article IV of the
Plan to provide that the aggregate number of shares of class D common stock that
may be issued upon the exercise of grants and options granted under the Plan
shall not exceed 3,816,198, which increases the number of shares of class D
common stock reserved for issuance under the Plan by 1,000,000 shares. The
purpose of the increase is to provide sufficient shares for future awards under
the Plan. The Board of Directors believes that it is in the best interests of
the Company to have sufficient shares available under the Plan to provide awards
to certain of its executive, managerial and other key employees, directors and
individuals who perform substantial work for Radio One and our subsidiaries. In
fiscal year ending December 31, 2000, the Company granted 71,276 class A and
747,886 class D awards under the Plan, and the Board of Directors believes that
it is prudent to increase the number of shares of class D common stock available
under the plan for future awards, as the granting of such awards is a critical
part of the Company's long term compensation strategy. The Board of Directors
believes that the Company and its Stockholders significantly benefit from the
latitude afforded by the Plan in tailoring incentive compensation for the
retention of key personnel, to support corporate and business objectives, and to
anticipate and respond to a changing business environment and competitive
compensation practices. The opportunity afforded these employees to increase
their proprietary interest in the Company is an essential element of an
effective management incentive program. The Board of Directors also believes
that the awards granted pursuant to the Plan are valuable in attracting and
retaining highly qualified non-employee directors and management personnel and
in providing additional motivation to non-employee directors and management to
use their best efforts on behalf of the Company.
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As of December 31, 2000, we have granted options to purchase 278,484 shares
of class A common stock having a weighted average exercise price of $11.7699 per
share, and 1,149,672 shares of class D common stock having a weighted average
exercise price of $10.1219 per share.
The Committee has exclusive discretion to select the participants, to
determine the type, size and terms of each award, to modify the terms of awards,
to determine when awards will be granted and paid, and to make all other
determinations which it deems necessary or desirable in the interpretation and
administration of the Plan. The Plan terminates on March 9, 2009, which is ten
years from the date that the Plan was approved and adopted by the Stockholders
of Radio One. Generally, a participants' rights and interest under the Plan are
not transferable except by will or by the laws of descent and distribution,
unless the Committee provides otherwise.
Options, which include non-qualified stock options ("NQSOs") and incentive
stock options ("ISOs"), are rights to purchase a specified number of shares of
common stock at a price fixed by the Committee. The option price may be less
than, equal to or greater than the fair market value of the underlying shares of
common stock, but in no event will the exercise price of an ISO be less than the
fair market value on the date of grant (110% of fair market value for
participants who are 10% owners of Radio One). Options will expire not later
than ten years after the date on which they are granted. Options will become
exercisable at such times and in such installments as the Committee shall
determine. Upon termination of a participant's employment with Radio One,
options that are not vested will be forfeited immediately, and options that are
vested will be forfeited unless exercised by the participant by the thirtieth
day (one year in the case of the participant's termination of employment due to
death or disability) following such termination, or such longer period following
termination to the extent specifically approved by and in accordance with the
policies of the Committee, but in no event after the stated date of expiration
of the option. Payment of the option price must be made in full at the time of
exercise in such form (including, but not limited to, cash or common stock of
Radio One) as the Committee may determine.
Options granted under the Plan may, but need not, qualify for an exemption
from the "short swing liability" provisions of Section 16(b) of the Securities
Exchange Act of 1934 pursuant to Rule 16b-3 and/or qualify as "performance-based
compensation" that is exempt from the $1 million limitation of the deductibility
of compensation under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"). Stockholder approval of the Plan was required to satisfy
the "performance-based compensation" exemption under Section 162(m) of the Code
and for options to qualify as ISOs under the Plan.
Grants are awards of restricted Common Stock at no cost to participants and
are generally subject to vesting provisions as determined by the Committee. Upon
termination of a participant's employment with Radio One, grants that are not
vested will be forfeited immediately and grants that are vested will be
forfeited unless exercised by the participant by the thirtieth day (one year in
the case of the participant's termination of employment due to death or
disability) following such termination, or such longer period following
termination to the extent specifically approved by and in accordance with the
policies of the Committee, but in no event after the stated date of expiration
of the option.
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, or any other change in the shares of common
stock, the Committee may make any adjustments it deems appropriate in the number
and kind of shares as to which options or restricted stock grants may be granted
under the Plan, the number and type of shares covered by outstanding
-29-
options or grants of restricted stock, the exercise prices specified in such
awards and any other provisions of the Plan, including vesting.
U.S. Federal Income Tax Consequences of Options
The following discussion of the U.S. federal income tax consequences of
options granted to U.S. employees, nonemployees under the Plan is intended to be
a summary of applicable U.S. federal law as currently in effect. State and
local tax consequences may differ, and tax laws may be amended or interpreted
differently during the term of the Plan or of options issued thereunder.
Further, the tax consequences under laws or applicable customs or rules of
foreign jurisdictions will also differ.
Because the U.S. federal income tax rules governing options and related
payments are complex and subject to frequent change, and they depend on the
participant's individual circumstances, participants are advised to consult
their tax advisors prior to exercise of options or dispositions of stock
acquired pursuant to options.
ISOs and NQSOs are treated differently for federal income tax purposes.
ISOs are intended to comply with the requirements of Section 422 of the Code.
NQSOs need not comply with such requirements.
An optionee is not taxed on the grant or, except as described below,
exercise of an ISO. The difference between the exercise price and the fair
market value of the common stock on the exercise date will, however, be a
positive adjustment for purposes of the alternative minimum tax, and thus an
optionee could be subject to the alternative minimum tax as a result of the
exercise of an ISO. If the optionee is an employee of Radio One or a
subsidiary at all times during the period beginning on the grant date and ending
on the date three months before the exercise date and if the optionee holds the
common stock acquired upon exercise of an ISO for at least two years following
the grant date of the related option and more than one year following exercise,
the optionee's gain, if any, upon a subsequent disposition of such common stock
is long-term capital gain. The measure of the gain is the difference between
the proceeds received on disposition and the optionee's basis in the common
stock (which generally equals the exercise price). If an optionee disposes of
common stock acquired pursuant to exercise of an ISO before satisfying the
requirements described above, the optionee may recognize both ordinary income
and capital gain in the year of disposition. The amount of the ordinary income
will be (1) the amount realized on disposition less the optionee's adjusted
basis in the common stock (usually the exercise price) or (2) the difference
between the fair market value of the common stock on the exercise date and the
exercise price, as appropriate. The balance of the consideration received on
such a disposition will be long-term capital gain if the stock had been held for
more than one year following exercise of the ISO. The Company is not entitled
to an income tax deduction on the grant or exercise of an ISO or on the
optionee's disposition of the common stock after satisfying the requirements
described above. If the employment and holding period requirements are not
satisfied, the Company will be entitled to a deduction in the year the optionee
disposes of the common stock in an amount equal to the ordinary income
recognized by the optionee.
An optionee is not taxed on the grant of an NQSO, assuming the NQSO does
not have a "readily ascertainable fair market value" for tax purposes on the
date of grant. On exercise, however,
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the optionee recognizes ordinary income equal to the difference between the
option price and the fair market value of the common stock acquired on the date
of exercise. The Company is entitled to an income tax deduction in the year of
exercise in the amount recognized by the optionee as ordinary income. Any gain
on the subsequent disposition of the shares is long term capital gain if the
common stock is held for more than one year following exercise. The Company does
not receive a deduction for this gain.
Special rules will apply in cases where a recipient of an option pays the
exercise or purchase price of the option or applicable withholding tax
obligations under the Plan by delivering previously owned common stock or by
reducing the number of shares of common stock otherwise issuable pursuant to the
Option. The surrender or withholding of such shares will in certain
circumstances result in the recognition of income with respect to such common
stock or a carryover basis in the common stock acquired and may constitute a
disposition for purposes of applying the ISO holding periods discussed above.
The Company generally will be entitled to withhold any required taxes in
connection with the exercise or payment of an option and may require the
participant to pay such taxes as a condition to exercise of an option.
The Plan provides for accelerated vesting or payment of an option in
connection with a change in control of the Company. In that event and depending
upon the individual circumstances of the optionee, certain amounts with respect
to such option may constitute "excess parachute payments" under the "golden
parachute" provisions of the Code. Pursuant to these provisions, an optionee
will be subject to a 20% excise tax on any "excess parachute payments," and the
Company will be denied any deduction with respect to such payments. Optionees
should consult their tax advisors as to whether accelerated vesting of an option
in connection with a change of control of the Company would give rise to an
excess parachute payment.
As described above, options granted under the Plan may qualify as
"performance-based compensation" under Section 162(m) of the Code in order to
preserve federal income tax deductions by the Company with respect to any
compensation required to be taken into account under Section 162 of the Code
that is in excess of $1,000,000 and paid to a covered employee (as defined in
Section 162(m)(3) of the Code). Compensation for any year that is attributable
to an option granted to a covered employee and that does not so qualify may not
be deductible by the Company to the extent such compensation, when combined with
other compensation paid to such employee for the year, exceeds $1,000,000.
The following table shows the grants under the 1999 Option and
Restricted Stock Grant Plan.
1999 Option and Restricted Stock Grant Plan Grant Summary
Number of Number of
Name and Position Class A Shares Class D Shares Expiration Date
- ---------------------------------------------------------------------------------------------
Scott R. Royster, Executive Vice 18,646 37,292 May 5, 2009
President and Chief Financial Officer
Linda J. Eckard Vilardo, Vice President, 31,077 62,154 May 5, 2009
Assistant Secretary and General Counsel
Executive Group 49,723 99,446 May 5, 2009
Non-Executive Director Group 0 0 n/a
Non-Executive Officer Employee Group 228,761 444,892 May 5, 2009
-31-
On March 31, 2001, the last sale price reported for the class A common
stock on the Nasdaq Stock Market's National Market System was $17.563 per share,
and the last sale price reported for the class D common stock on the Nasdaq
Stock Market's National Market System was $15.375 per share.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT EACH HOLDER OF CLASS A COMMON
STOCK AND CLASS B COMMON STOCK VOTE "FOR" THE RATIFICATION OF THE AMENDMENT TO
THE 1999 OPTION AND RESTRICTED STOCK GRANT PLAN INCREASING THE NUMBER OF SHARES
OF CLASS D COMMON STOCK RESERVED FOR ISSUANCE UNDER THE PLAN .
PROPOSAL 5 - RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Company's financial statements for the year ended December 31, 2000
have been audited by Arthur Andersen LLP, independent public accountants.
Representatives of Arthur Andersen LLP are expected to be present at the Meeting
to respond to appropriate questions, and will have an opportunity to make a
statement if they so desire.
FISCAL 2000 AUDIT FIRM FEE SUMMARY
Audit Fees.
Arthur Andersen LLP billed the Company an aggregate of $110,000 in fees for
professional services rendered in connection with the audit of the Company's
financial statements for the most recent fiscal year and the reviews of the
financial statements included in each of the Company's Quarterly Reports on Form
10-Q during the fiscal year ended December 31, 2000.
Financial Information Systems Design and Implementation Fees
Arthur Andersen LLP did not perform or bill the Company for professional
services during the fiscal year ended December 31, 2000 in connection with the
design and implementation of financial information systems.
All Other Fees
Arthur Andersen LLP billed the Company an aggregate of $856,000 in fees for
other services rendered to the Company and its affiliates for the fiscal year
ended December 31, 2000, primarily related to an employee benefit plan audit,
acquisition audits, SEC filings assistance, tax compliance and consulting. The
Audit Committee has concluded that the provision of such services to the Company
is compatible with maintaining Arthur Andersen LLP's independence.
The Board of Directors has appointed Arthur Andersen LLP as independent
auditors to audit the financial statements of the Company for the year ending
December 31, 2001. Unless otherwise
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directed, the persons named in the accompanying proxy will vote in favor of the
ratification of the appointment of Arthur Andersen LLP.
THE BOARD RECOMMENDS THAT THE HOLDERS OF CLASS A COMMON STOCK AND CLASS B COMMON
STOCK VOTE "FOR" THE RATIFICATION OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE YEAR
ENDING DECEMBER 31, 2001.
STOCKHOLDER PROPOSALS FOR THE 2002 ANNUAL MEETING
The Company will hold its next annual meeting on or about April 30, 2002.
To be considered for inclusion in the proxy materials for the annual meeting,
Stockholder proposals to be presented at such annual meeting must be submitted
in writing and received by the Company no later than January 31, 2002. Other
proposals that are not included in the proxy materials will be considered timely
and may be eligible for presentation at the Company's annual meeting on April
30, 2002 if they are received by the Company in the form of a written notice no
later than January 31, 2002.
OTHER BUSINESS
The Board of Directors does not know of any business to be brought before
the Meeting other than the matters described in the Notice of Annual Meeting.
However, if a Stockholder properly brings any other matters for action, each
person named in the accompanying proxy intends to vote the proxy in accordance
with his or her judgment on such matters.
By Order of the Board of Directors,
Linda J. Eckard Vilardo
Vice President, General Counsel,
and Assistant Secretary
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Appendix 1
RADIO ONE, INC.
AUDIT COMMITTEE CHARTER
This audit committee charter has been adopted by the board of directors of
RADIO ONE, INC. (the "Corporation") in order to establish and set forth the
operating procedures, membership qualifications, duties and responsibilities of
the Corporation's audit committee. In general, the audit committee has been
established by this board for the purpose of (i) monitoring the integrity of
the Corporation's financial reporting process and systems of internal controls
regarding finance, accounting and legal compliance, (ii) monitoring the
independence and performance of the Corporation's independent auditors and
internal auditing department and (iii) providing appropriate avenues of
communication among the board of directors and the Corporation's independent
public accountants and internal auditors.
Composition and Term. The audit committee shall be initially comprised of
two or more directors, as determined by the board. No later than June 14, 2001,
the audit committee shall be comprised of three or more directors, as determined
by the board. Each of the members of the audit committee shall be independent
non-executive directors, free from any relationship that, in the judgment of the
board, would interfere with the exercise of his or her independent judgment. No
later than June 14, 2001, each of the members of the audit committee shall meet
the definition of independent director under the Nasdaq National Market rules
for audit committees, as amended, which, for ease of reference, is set forth in
its entirety at the end of this audit committee charter. Each member of the
audit committee must be able to read and understand financial statements,
including the Corporation's balance sheet, income statement and cash flow
statement, or will become able to do so within a reasonable time after his or
her appointment to the audit committee. In addition, no later than June 14,
2001, at least one member of the audit committee must have past employment
experience in accounting, or any other comparable experience or background that
has resulted in such member having financial sophistication, including being or
having been a chief executive officer, chief financial officer or other senior
officer with financial oversight responsibilities.
The committee members shall be appointed for one year terms at the annual
meeting of the board, upon the recommendation of the chairman of the board. The
chairman of the audit committee shall be designated by the board.
Vacancies. Any vacancy in the audit committee shall be filled by a vote a
majority of directors then in office. Any vacancy shall be filled at the first
board meeting following the creation of the vacancy or as soon as possible
thereafter.
Administrative Matters. The committee shall meet at such times and from
time-to-time as it deems to be appropriate, but not less than two times each
year, and such meetings may be held telephonically. The committee shall report
to the full board of directors at the first board meeting following each such
committee meeting.
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Duties and Responsibilities. The duties of the committee shall include the
following:
- make recommendations to the board of directors as to:
o the selection of the firm of independent public accountants to examine
the books and accounts of the Corporation for each fiscal year
(including an annual review of the independence of the public
accountants based upon its receipt from such accountants of a formal
written statement delineating all relationships between such
accountants and the Corporation, consistent with Independence Standards
Board Standard No. 1 ("ISBS"), and the committee's discussions with
such accountants with respect to any disclosed relationship or services
that may impact the objectivity and independence of the accountants);
o the proposed arrangement for the independent public accountants for
each fiscal year, including their risk assessment process in
establishing the scope of the examination, the proposed fees and the
reports to be rendered; and
o the advisability of having the independent public accountants make
specified studies and reports as to auditing matters, accounting
procedures, tax or other matters;
- review the results of the year-end audit of the Corporation, including:
o the audit report, the published financial statements, the management
representation letter, any report prepared by the independent public
accountants with respect to the Corporation's internal controls, any
other pertinent reports and management's responses concerning those
reports, if any ;
o any material accounting issues among management, the Corporation's
internal auditing staff and the independent public accountants;
o other matters required to be communicated to the committee under
generally accepted auditing standards, as may be amended from time to
time, by the independent public accountants; and
o with respect to interim financial information, the committee's chairman
will meet with management and the independent public accountants to
discuss the quarterly review results, when required as a result of the
independent public accountant's disagreement with management,
significant judgmental items recorded in the financial statements or
other significant items in which the chairman believes requires such a
discussion;
- monitor the external audit process, including:
-35-
o review the scope and approach of the annual audit with the independent
auditors;
o review the independent auditors' identification of issues and business
and financial risks and exposures; and
o instruct the independent auditors to communicate directly to the audit
committee on any significant difficulties or disputes with management;
- discuss with the independent public accountants those matters required to
be discussed by Statement on Auditing, Standards No. 61 ("SAS"), as may
be modified or supplemented from time to time;
- review with management and the independent public accountants such
accounting policies (and changes therein) of the Corporation, including
any financial reporting issues which could have a material impact on the
Corporation's financial statements as are deemed appropriate for review
by the committee prior to any interim or year-end filings with the SEC or
other regulators;
- review the coordination between the independent public accountants and
internal auditing staff and review the risk assessment processes, scopes
and procedures of the Corporation's internal audit work and whether such
risk assessment process, scopes and procedures are adequate to attain the
internal audit objectives, as determined by the Corporation's management
and approved by the committee; review the significant findings of the
internal auditors for each fiscal year; review the quality and
composition of the Corporation's internal audit staff;
- beginning with all votes of stockholders occurring after December 15,
2000, to prepare on an annual basis for inclusion in the Corporation's
proxy statement a report that states whether the audit committee has: (i)
reviewed and discussed the audited financial statements with management;
(ii) discussed with the independent public accountants the matters
required to be discussed by SAS No. 61; (iii) received from such
accountants disclosures regarding the accountant's independence required
by ISBS No. 1, and discussed with the accountants their independence; and
(iv) based upon the discussions described herein, recommended to the
board of directors that the audited financial statements be included in
the Corporation's Annual Report on Form 10-K.
- meet annually with principal corporate counsel, and outside counsel when
appropriate, to review legal and regulatory matters, if any, that may
have a material impact on the financial statements of the Corporation.
The committee shall also undertake such additional activities within the
scope of its primary function as the committee may from time to time determine.
The committee may retain independent counsel, accountants or others to assist it
in the conduct of any investigation.
-36-
Adoption. This audit committee charter was formally adopted by the board
of directors on June 12, 2000. In accordance with paragraph (e)(3) under Item 7
of Schedule 14A, this audit committee charter, as may be amended from time to
time, shall be included as an appendix to the Corporation's proxy statement at
least once every three years beginning with respect to the Corporation's first
proxy statement relating to a vote of stockholders occurring after December 15,
2000. In addition, this audit committee charter shall be filed with the Nasdaq
National Market prior to June 14, 2000 and resubmitted in the event of its
amendment.
Definition. For purposes of determining those directors that are eligible
to serve on the audit committee, an "independent director" means a person other
than an officer or employee of the Corporation or its subsidiaries or any other
individual having a relationship which, in the opinion of the Corporation's
board of directors, would interfere with the exercise of independent judgment in
carrying out the responsibilities of a director. The following persons shall
not be considered independent:
(a) a director who is employed by the Corporation or any of its affiliates
for the current year or any of the past three years;
(b) a director who accepts any compensation from the Corporation or any of
its affiliates in excess of $60,000 during the previous fiscal year,
other than compensation for board service, benefits under a tax-
qualified retirement plan, or non-discretionary compensation;
(c) a director who is a member of the immediate family of an individual
who is, or has been in any of the past three years, employed by the
Corporation or any of its affiliates as an executive officer.
Immediate family includes a person's spouse, parents, children,
siblings, mother-in-law, father-in-law, brother-in-law, sister-in-law,
son-in-law, and anyone who resides in such person's home;
(d) a director who is a partner in, or a controlling shareholder or an
executive officer of, any for-profit business organization to which
the Corporation made, or from which the Corporation received, payments
(other than those arising solely from investments in the Corporation's
securities) that exceed 5% of the Corporation's consolidated gross
revenues for that year, or $200,000, whichever is more, in any of the
past three years; and
(e) a director who is employed as an executive of another entity where any
of the Corporation's executives serve on that entity's compensation
committee.
-37-
FORM OF PROXY
RADIO ONE, INC.
5900 Princess Garden Parkway
Lanham, Maryland 20706
This Proxy is solicited by the Board of Directors
for the Annual Meeting of Stockholders to be held on June 5, 2001.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders of Radio One, Inc. (the "Company") and the accompanying Proxy
Statement. The undersigned holder of Class A and/or Class B common stock hereby
appoints Scott R. Royster and Linda J. Eckard Vilardo, and each of them
individually, as proxies, each with the powers the undersigned would possess if
personally present, and each with full power of substitution, to vote as
specified in this proxy all of the shares of Class A and/or Class B common stock
of the Company which the undersigned is entitled to vote at the Annual Meeting
of Stockholders of the Company to be held June 5, 2001, and at any adjournments
or postponements thereof.
With respect to such other matters that may properly come before the Annual
Meeting or any adjournment or postponement of the Annual Meeting, the proxies
named above are authorized to vote upon those matters in their discretion. The
undersigned Stockholder hereby revokes any proxy or proxies heretofore executed
for such matters.
You are encouraged to specify your choices by marking the appropriate box
(SEE REVERSE SIDE) but you need not mark any box if you wish to vote in
accordance with the Board of Directors' recommendations. Your shares cannot be
voted unless you sign, date and return this card.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
PROPOSALS 1, 2, 3, 4 AND 5.
SEE REVERSE SIDE
Please mark your vote as in this example: [X]
When this proxy card is properly executed, the shares to which it relates
will be voted in accordance with the directions indicated hereon. If no
direction is made, the shares will be voted FOR the proposal below.
1. Election of Class A Directors
FOR [ ] WITHHOLD AUTHORITY [ ] EXCEPTION [ ]
to vote for all nominees listed below
Nominees: Brian W. McNeill and Terry L. Jones. (INSTRUCTIONS: to
withhold authority to vote for any individual nominee, mark the "EXCEPTION"
box and write that nominee's name in the space provided below.)
Exception:
----------------------------------------------------------
2. Election of Other Directors
FOR [ ] WITHHOLD AUTHORITY [ ] EXCEPTION [ ]
to vote for all nominees listed below
Nominees: Catherine L. Hughes, Alfred C. Liggins, III, Larry D. Marcus, D.
Geoffrey Armstrong and L. Ross Love. (INSTRUCTIONS: to withhold
authority to vote for any individual nominee, mark the "EXCEPTIONS" box and
write that nominee's name in the space provided below.)
Exception:
----------------------------------------------------------
3. Approval of the amendment of the Company's Amended and Restated Bylaws to
permit filling of vacancies on the Board of Directors by majority vote of
the Stockholders or the Board of Directors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Ratification of the amendment to the 1999 Option and Restricted Stock Grant
Plan increasing the number of shares of class D common stock reserved for
issuance under the Plan from 2,816,198 shares to 3,816,198 shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. Approval of the appointment of Arthur Andersen LLP as independent public
accountants for the Company for the year ended December 31, 2001.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
By signing this proxy card, you acknowledge receipt of the Notice of Annual
Meeting of Stockholders to be held June 5, 2001 and the Proxy Statement dated
April 24, 2001.
DATE SIGNATURE(S)
---- ------------
__________________ __________________________________________
__________________ __________________________________________
__________________ __________________________________________
__________________ __________________________________________
__________________ __________________________________________
NOTE: Please sign exactly as your name(s) appear(s) hereon. When signing as
attorney, executor, administrator, trustee or guardian, please give full
title as such. If more than one name is shown (including in the case of
owners in joint tenancy), each party must sign.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING
