The paths of the Bush tax cuts and the man who topped Billboard's Power 100 crossed on December 31, 2012: Irving Azoff's resignation from Live Nation gave him cash, stock, the right to manage certain artists such as the Eagles and engage in specific areas of the music business. The timing of his departure allowed him to collect certain bonuses, stock and other income early in order to realize significant tax savings that would be lost when Bush-era tax cuts lapse in 2013.
As a part of the agreement, Azoff will receive $3.5 million in bonuses and any base salary due through the end of the year. In addition, Live Nation granted an additional 196,000 shares of its common stock due under his employment agreement.
As Azoff told Billboard's Ray Waddell in a Q&A earlier today, the timing of his resignation was related to the higher tax burden that high income Americans will face in 2013. The company gave Azoff an early payment of an $8.2-million note due to him related to Ticketmaster's acquisition of Front Line, which would not have matured until October 1, 2013. Live Nation also accelerated the vesting of 1.47 million shares of restricted common stock that would have otherwise vested on October 29, 2013, and also accelerated vesting of nearly 664,000 shares and 326,000 options. In relation to Azoff's departure, Liberty Media purchased 1.7 million of his shares.
One cannot say how much Azoff will save by moving these transactions forward a year without knowing the tax basis of the common shares sold this year. However, as an example, realizing $8.2 million in income in 2012 rather than 2013 could save roughly $490,000 in California, according to a study on top marginal effective tax rates by two professors at Lynchburg's College School of Business and Economics (they expected the top marginal tax rate on wages in the state to climb to 51.9% from 45.9%).
Azoff's non-competition agreement grants him certain carve-outs "to manage certain artists and engage in certain other activities," according to Monday's SEC filing. He will continue to manage the Eagles, Christina Aguilera, Van Halen and Steely Dan, he told Billboard.
The details in the SEC filing explain that Azoff can sign a new established artist in limited circumstances and can represent up to five new less-established artists in both 2013 and 2014. An established artist is defined as having gross revenues over $5 million in the preceding 12 months; a less-established artist has gross revenues under $5 million in the previous 12 months. Azoff can represent an unlimited number of emerging artists, or those artists who have "no prior revenues" from the music business, although he told Billboard "it's too early to predict" whether he will sign and develop new acts.
In addition, the non-compete carve-out allows Azoff to participate in recorded music, music publishing, television (a project called "Marshall" is specifically named), music contest shows like "American Idol," motion pictures, book publishing, video games, non-concert live stage productions, production and financing, among other endeavors.