UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 19, 2005
SAGA COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in its Charter)
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Delaware
(State or other jurisdiction
of incorporation)
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1-11588
(Commission File Number)
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38-3042953
(IRS Employer
Identification No.) |
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73 Kercheval Avenue
Grosse Pointe Farms, MI
(Address of Principal Executive Offices)
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48236
(Zip Code) |
Registrant’s telephone number, including area code: (313) 886-7070
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
TABLE OF CONTENTS
Item 1.01. Entry into a Material Definitive Agreement.
Acceleration of Vesting of, and of Buyback and Cancellation of, Stock Options
On December 19, 2005, the Board of Directors and the Compensation Committee of the Board of
Directors of Saga Communication, Inc. (the “Company”) approved the acceleration of the vesting of:
(i) all options granted under the Company’s 1992 Stock Option Plan that had not yet vested or
options relating to 112,744 shares; and
(ii) all options granted to non-executive officers under the Company’s 2003 Stock Option Plan that
had not yet vested or options relating to 149,219 shares.
All of such options are “out-of-the-money” (the exercise price exceeds the closing price of the
stock as reported on the NYSE) as of the close of business on December 16, 2005.
As a result of the Committee’s action, the referenced options became exercisable as of the close of
business on December 19, 2005, rather than the later dates when such options, would have vested.
The table attached as Exhibit 99.1 summarizes the outstanding stock options held by the Company’s
executive officers and all other non-executive officers that were accelerated.
On December 19, 2005, the Board of Directors and the Committee also approved an offer to buy back
all options granted to executive officers under the Company’s 2003 Stock Option Plan for the
payment of $0.10 per share, a price determined after consulting an independent valuation firm, in
return for the cancellation of such options. All of such options are out-of-the-money as of the
close of business on December 16, 2005. The table attached as Exhibit 99.2 summarizes the
outstanding stock options held by the Company’s executive officers that were cancelled and the
consideration paid therefor. The Company must recognize the consideration paid to such executive
officers as compensation expense in 2005.
The decision to accelerate the vesting of, and to buyback and cancel, the referenced respective
stock options, which the Company believes is in the best interests of stockholders, was made
primarily to reduce share-based compensation expense that otherwise likely would be recorded in
future periods following the Company’s anticipated adoption in the first quarter of 2006 of
Statement of Financial Accounting Standards No. 123(R) entitled “Share-Based Payment: (“SFAS
123(R)”). On December 16, 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS
123(R) which requires all share-based payments to employees, including grants of employee stock
options, to be valued at fair value on the date of grant, and to be expensed over the applicable
vesting period. SFAS123(R) will require that compensation expense associated with stock options be
recognized in the income statement of the Company rather than as a footnote disclosure. The
Company must recognize compensation expense related to any awards that are not fully vested as of
the effective date, January 1, 2006. Upon adoption by the Company, SFAS123(R) also will apply to
options granted on or after January 1, 2006.
The Company estimates that these actions will result in a reduction of approximately $2.7 million,
net of income taxes, in the Company’s share-based compensation expense that likely would have been
recorded for 2006, 2007, 2008 and 2009 in the aggregate.
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1997 Non-Employee Director Stock Option Plan
On December 19, 2005, the Board of Directors approved amendments to the 1997 Non-Employee
Director Stock Option Plan attached hereto as Exhibit 10 (M). The changes to the Plan, as set
forth in Exhibit 10 (M), are intended to satisfy certain requirements of the Internal Revenue Code
under Section 409A relating to deferred compensation.
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