Citadel Broadcasting Corp. agreed to rescind a restricted-stock award to its chief executive officer and directors, and replace it with a stock-option grant, according to a creditor of the radio-station operator.
Because the grant has been revoked, a hearing to consider the matter tomorrow in U.S. Bankruptcy Court in Manhattan was postponed until Nov. 10, R2 Investments LDC, a Citadel debt holder, said today in a court filing.
R2 said last month that Citadel managers and board members improperly gave themselves restricted stock grants worth as much as $110 million, instead of the stock options called for in the Las Vegas-based broadcaster’s reorganization plan.
“To enable the company to focus on those business matters that will maximize value for its shareholders, including the anticipated refinancing, the members of Citadel’s executive management team and board of directors have voluntarily agreed to relinquish their restricted stock awards,” Jonathan Doorley, a spokesman for Citadel, said today in an e-mailed statement. “The company intends to issue such individuals options in accordance with the plan originally filed with the bankruptcy court.”
Jon Elsen, an outside spokesman for R2, said the company had no comment.
Citadel CEO Farid Suleman would have gotten restricted stock worth as much as $55 million over two years, R2 said in a court filing. Under the original plan, he would receive stock options based on the market price of the shares, vesting over three years.
Citadel said the amended plan for managers was approved by its new board, six of whose seven members were appointed by the company’s senior lenders, according to a filing last month in response to the motion by R2, a unit of Fort Worth, Texas-based Q Investments LP. The approved reorganization plan allowed the new board to set compensation, Citadel said.
The new Citadel board decided June 9 to authorize the issuance of restricted stock, Citadel said in its filing. The company emerged from Chapter 11 creditor protection on June 3, less than six months after its bankruptcy filing.
Citadel is the third-largest radio broadcaster in the U.S., with 224 stations including WLS in Chicago and WABC in New York. The company sought Chapter 11 protection in December, saying the recession had “put a chokehold on advertising spending,” its main source of revenue.
The case is In re Citadel Broadcasting Corp., 09-17442, U.S. Bankruptcy Court, Southern District of New York (Manhattan).