(3) | The amounts reported are dividends paid during 2012 on the shares of unvested restricted stock. SeeSecurity Ownership of Certain Beneficial Owners and Management.
| Messrs. Dombalagian and Ezersky resigned effective June 4, 2015 and thus did not receive the annual grant of restricted stock. |
| (3) | The amounts reported are dividends paid during the 2015 fiscal year on the shares of unvested restricted stock granted in 2014 and 2015. Messrs. Dombalagian and Ezersky received dividends only on the restricted stock granted in 2014 which vested on May 22, 2015. |
| (4) | Pursuant to the partnership agreement with his employer, Mr. Dombalagian remitted his compensation to MDP. |
| | | | | 31 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
ITEM TWO — RATIFICATION OF THE APPOINTMENT OF DELOITTE AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2016 FISCAL YEAR The Audit Committee has appointed and the Board has ratified the appointment of Deloitte as the Company’s independent registered public accounting firm for the 2016 fiscal year. As a matter of good corporate governance, we are seeking stockholder ratification of the appointment of Deloitte. If the stockholders do not ratify the appointment of Deloitte, the Audit Committee may review its future selection of auditors. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee believes that such a change would be in the best interests of the Company and its stockholders. One or more representatives of Deloitte are expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to answer appropriate questions. Unless marked to the contrary, proxies received will be voted “FOR” ratification of the appointment of Deloitte as the independent registered public accounting firm for the 2016 fiscal year. Vote Required for Ratification Ratification requires the affirmative vote of a majority of the votes cast by stockholders present in person or represented by proxy at the meeting and entitled to vote thereon. Since this proposal is considered a “routine” matter, broker non-votes do not arise and brokers and banks may exercise discretionary authority to vote your shares. Abstentions will have no effect on this item. Board recommends a vote “FOR” ratification of the appointment of Deloitte as our independent registered public accounting firm for the 2016 fiscal year. ITEM THREE — NON-BINDING, ANNUAL ADVISORY VOTE ON EXECUTIVE COMPENSATION As required by Section 14A of the Exchange Act, the Company is providing stockholders with an opportunity to cast an advisory vote on the compensation of our NEOs as disclosed in the CD&A, the compensation tables, narrative discussion, and related footnotes included in this proxy statement (“Say-on-Pay”). While the vote is advisory, and therefore non-binding on the Company, the Compensation Committee values the opinions of our stockholders and will take into account the outcome of the vote when considering future executive compensation decisions. As discussed in more detail in the CD&A, our executive compensation program is designed to attract and retain a talented team of executives who can deliver on our commitment to build long-term stockholder value. The Compensation Committee believes our program is competitive in the marketplace and links pay to Company performance. Accordingly, the Board recommends that you vote in favor of the following resolution: “RESOLVED, that the compensation paid to the Company’s NEOs, as disclosed pursuant to Item 402 of Regulation S-K, including the CD&A, compensation tables and narrative discussion is hereby APPROVED.” | | | | | 32 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
At the annual meeting of stockholders held in May 2011, the Board recommended, and approximately 89% of the Company’s stockholders who voted either in person or via proxy and entitled to vote supported an annual advisory vote on executive compensation. Therefore, the next non-binding advisory vote on executive compensation will be at the 2017 annual meeting. Vote Required for Approval Approval of the Say-on-Pay item requires the affirmative vote of a majority of the votes cast by stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. Broker non-votes and abstentions will have no effect on this item. Board recommends a vote “FOR” the Say-on-Pay advisory vote. EXECUTIVE OFFICERS Executive Officers Set forth below is the name, age, position and a brief summary of the business experience of each of our executive officers as of the Record Date for whom we file reports under Section 16 of the Securities Exchange Act of 1934 (the “Exchange Act”): | | | | | EXECUTIVE OFFICERS Name | | Executive OfficersAgeSet forth below is the name, age, position and a brief account
| | Position | | Lee Roy Mitchell | | 79 | | Chairman of the business experience of our named executive officersBoard; Director | | Mark Zoradi | | 62 | | Chief Executive Officer; Director | | Sean Gamble | | 41 | | Chief Financial Officer | | Valmir Fernandes | | 55 | | President-Cinemark International, L.L.C. | | Michael Cavalier | | 49 | | Executive Vice President-General Counsel and certain other officers for whom we file reports under Section 16 of the Exchange Act: | | | | | NameSecretary | | Tom Owens | | 59 | | Age | | Position | Lee Roy Mitchell
| | 76 | | Chairman of the Board; Director | Tim Warner | | 68 | | Chief Executive Officer; President; Chief Operating Officer | Robert Copple | | 54 | | Chief Financial Officer; Executive Vice President; Treasurer; Assistant Secretary | Valmir Fernandes | | 52 | | President-Cinemark International, L.L.C. | Michael Cavalier | | 46 | | Senior Vice President-General Counsel and Secretary | Tom Owens | | 56 | | Senior Vice President-Real Estate |
Lee Roy Mitchell is the founder of the Company. He has served as our Chairman of the Board since March 1996 and as a director since our inception in 1987. Mr. Mitchell served as our CEO from our inception until December 2006. Mr. Mitchell was Vice Chairman of the Board from March 1993 until March 1996 and President from our inception in 1987 until March 1993. Mr. Mitchell currently serves on the board of directors of NCMI. Mr. Mitchell has been engaged in the motion picture exhibition business for over 50 years. Mr. Mitchell is the husband of Tandy Mitchell, an employee of the Company, and the brother-in-law of Walter Hebert III, the Executive Vice President–Purchasing, of the Company. Mark Zoradi has served as our CEO since August 24, 2015. He has served as the Chief Operating Officer of Dreamworks Animation SKG from August 2014 until January 2015. Prior to his post at Dreamworks, Mr. Zoradi served as the President and Chief Operating Officer of Dick Cook Studios, a new media and entertainment start-up company, from January 2011 until July 2014. During his 30-year career at Disney from May 1980 until February 2010, Mr. Zoradi served in a variety of executive positions in various divisions including Home Entertainment, Disney Channel, Television, Worldwide Theatrical Distribution/Marketing, and as the President of the Motion Picture Group. Sean Gamblehas served as our CFO since August 2014. From February 2009 until April 2014, Mr. Gamble was the Executive Vice President and Chief Financial Officer (“CFO”) of Universal Pictures, a subsidiary of NBCUniversal (subsidiary of Comcast Corp.) and creator and distributor of theatrical and non-theatrical filmed entertainment. Prior to joining NBCUniversal, Mr. Gamble held several senior level positions with the General Electric Company, a multinational conglomerate corporation providing financing, expertise and infrastructure. | | | Steve Bunnell | | 53 | | Senior Vice President-Global Content Programming |
| 33 | | CINEMARK HOLDINGS, INC. | | Lee Roy Mitchell 2016 Proxy Statementhas served as Chairman of the Board since March 1996 and as a director since our inception in 1987. Mr. Mitchell served as our Chief Executive Officer from our inception until December 2006. Mr. Mitchell was Vice Chairman of the Board from March 1993 until March 1996 and was President from our inception in 1987 until March 1993. Mr. Mitchell currently serves on the board of directors of National CineMedia, Inc. Mr. Mitchell has been engaged in the motion picture exhibition business for over 50 years. Mr. Mitchell is the husband of Tandy Mitchell, an employee of the Company and the brother-in-law of Walter Hebert, III, the Senior Vice President – Purchasing of the Company. |
Tim Warnerhas served as the Chief Executive Officer since February 15, 2012 upon the retirement of Alan W. Stock. Mr. Warner served as President and Chief Operating Officer since December 2006, Senior Vice President from May 2002 until December 2006 and President of Cinemark International, L.L.C. from August 1996 until December 2006.
Robert Copplehas served as Executive Vice President since January 2007, as Senior Vice President, Treasurer, Chief Financial Officer and Assistant Secretary since August 2000 and also served as a director from September 2001 until April 2004. Mr. Copple was acting Chief Financial Officer from March 2000 until August 2000. From August 1997 until March 2000, Mr. Copple was President of PBA Development, Inc., an investment management and venture capital company controlled by Mr. Mitchell. From June 1993 until July 1997, Mr. Copple was Director of Finance of our company. Prior to joining our Company, Mr. Copple was a Senior Manager with Deloitte & Touche where he was employed from 1982 until 1993.
Valmir Fernandeshas served as our President of Cinemark International, L.L.C. since March 2007. From 1996 until March 2007, Mr. Fernandes was the General Manager of Cinemark Brasil S.A. Michael Cavalierhas served as our Executive Vice President-General Counsel and Secretary since February 2014, as Senior Vice President-General Counsel sinceand Secretary from January 2006 until February 2014, as Vice President-General Counsel and Secretary from August 1999 tountil January 2006, as Assistant Secretary from May 2001 until December 2003 and as Secretary since December 2003. From July 1997 until July 1999, Mr. Cavalier was General Counsel of our Company and from July 1993 until July 1997 was Associate General Counsel. Tom Owenshas served as our Executive Vice President-Real Estate since February 2014, as Senior Vice President-Real Estate since from January 2007 until February 2014, as Vice President-Development from December 2003 tountil January 2007 and as Director of Real Estate from April 2002 tountil December 2003. From 1998 until April 2001, Mr. Owens was President of NRE, a company he founded that specialized in the development and financing of motion picture theatres. From 1996 until 1998, Mr. Owens served as President of Silver Cinemas International, Inc., a motion picture exhibitor. From 1993 until 1996, Mr. Owens served as our Vice President-Development. 32
Steve Bunnellhas served as Senior Vice President-Film Licensing since May 2009 and became the Senior Vice President-Global Content Programming in June 2012. From March 2006 until May 2009, Mr. Bunnell was the Chairman of Distribution of The Weinstein Company, an independent film studio. From May 1993 until February 2006, Mr. Bunnell was the Senior Vice President and Head Film Buyer of Loews Cineplex Entertainment, the oldest theatre chain in North America until its merger with AMC Entertainment in 2006.
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EXECUTIVE COMPENSATION COMPENSATION DISCUSSION AND ANALYSIS The Compensation Discussion and Analysis (“CD&A”) describes discusses our executive compensation program. In 2012,program and the named executive officers werecompensation paid to our NEOs. It details our compensation philosophy, the following:structure of the compensation program and the ways in which the philosophy is implemented generally, as well as, specifically for individual performers. The CD&A helps readers better understand the information found in the Summary Compensation Table for 2015 and other accompanying tables located in this section of the proxy statement. | 1. | Lee Roy Mitchell, Chairman of the Board and founder of the Company, with the Company since its inception in 1987; |
| 2. | Alan W. Stock, Chief Executive Officer, retired effective February 15, 2012, after 26 years of service to the Company; |
| 3. | Tim Warner, Chief Executive Officer (effective February 15, 2012), President and Chief Operating Officer, with the Company for 17 years;. |
| 4. | Robert Copple, Chief Financial Officer, Executive Vice President, Treasurer and Assistant Secretary, with the Company for 17 years; |
| 5. | Valmir Fernandes, President of Cinemark International, L.L.C. with the Company for 16 years; and |
| 6. | Michael Cavalier, Senior Vice-President, General Counsel and Secretary, with the Company for 20 years. |
In this proxy statement, “executive officers” refers to all members of management, including the named executive officers, are referred to as “executive officers.”NEOs. Executive Summary The goal of
2015 Say-on-Pay Voting Results At the 2015 Annual Meeting, our executive compensation program is to align the executives’ and stockholders’ long-term interests. Our executive compensation program is structured to attract, motivate, reward and retain high caliber talent who will direct the Company to increase our long term competitive advantage and sustainable profitability, thereby contributing to the value of our stockholders’ investment. We use traditional compensation elements of annual base salary, annual cash incentives, long-term incentives, and employee benefits to deliver competitive and performance-based compensation. All our pay decisions for the executive officers are made solely by our Compensation Committee with input from the Chief Executive Officer (other than for himself). In evaluating the appropriateness of pay of the named executive officers, in addition to individual roles and responsibilities, the Compensation Committee takes into consideration compensation data for similarly placed executives in companies within our compensation peer group. Stockholder Support of Executive Compensation
At the 2012 Annual Meeting, the 2012 Say-On-Pay garnered the support of approximately 99%95% of the Company’svotes cast by stockholders who voted at the 2012 Annual Meeting eitherpresent in person or via proxy. Hence,represented by proxy and were entitled to vote at the 2015 Annual Meeting. Given the high approval, the Compensation Committee did not make any structural change to our executivethe compensation program for the 2015 fiscal year.
In line with our emphasis on pay-for-performance, retention oriented market competitive compensation and our performance relative to our peers, compensation awarded to our NEOs for the 2015 fiscal year were reflective of Cinemark’s record financial results. | | | | | 34 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
Cinemark Financial Performance in 2012.the 2015 Fiscal Year ObjectivesOur domestic operations set all-time records in nearly every key performance metric in 2015, including attendance, admissions revenues, concession revenues, total revenues, average ticket price, concession per patron and Adjusted EBITDA. We also continued our long-running series of Executive Compensationout-performing the North American industry by more than 200 basis points for the full-year, with box office growth of 9.6%.
Our international segment also achieved record attendance with more than 100 million patrons for the year. Despite the significant currency devaluations across our Latin America market throughout 2015, our Latin American segment generated growth in reported admissions revenues, concession revenues, total revenues and Adjusted EBITDA. Cinemark Financial Performance Over Five Years The objectives ofdata below shows our executive compensation program are as follows:growth in certain metrics over the five-year period, 2011 – 2015(1): Motivate our executives to:
| | | | | | | | | | | | | | | | | | | | | | Year | | Revenue In Millions | | | Net Income In Millions | | | Cash and Cash Equivalents in
Millions | | | Reported
Adjusted
EBITDA
in Millions | | | Diluted
Earnings
Per Share | | | | | | | | 2011 | | $ | 2,279.6 | | | $ | 130.6 | | | $ | 521.4 | | | $ | 519.5 | | | $ | 1.14 | | | | | | | | 2012 | | $ | 2,473.5 | | | $ | 168.9 | | | $ | 742.7 | | | $ | 589.2 | | | $ | 1.47 | | | | | | | | 2013 | | $ | 2,682.9 | | | $ | 148.5 | | | $ | 599.9 | | | $ | 625.3 | | | $ | 1.28 | | | | | | | | 2014 | | $ | 2,627.0 | | | $ | 192.6 | | | $ | 638.9 | | | $ | 596.5 | | | $ | 1.66 | | | | | | | | 2015 | | $ | 2,852.6 | | | $ | 216.9 | | | $ | 588.5 | | | $ | 663.8 | | | $ | 1.87 | |
| | Ø(1) | Achieve day-to-day operational efficiencyAll data as of and excellence; |
| Ø | Minimize incentives for imprudent risk taking in business practices; |
| Ø | Meet short-term strategic and financial goals; |
| Ø | Deliver on long-term business strategies that would enhance stockholder value through continued growth and competitiveness; and |
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Value and reward performance both over the short-term as well as the long-term to enable us to retain the executive talent.
Accordingly, our compensation program is structured to retain, attract and develop the best people and to link compensation to performance, by following the below principles:
Setting a level of compensation for each position that is competitive based on the skill and knowledge of the individual;
Recognizing the effort, leadership and responsibility needed to perform the job successfully and to achieve the performance goals; and
Using a mix of fixed and variable pay components with different time horizons and payout forms to reward and motivate achievements of short-term and long-term goals;
Company Performance Highlights in 2012
The fiscal year ended December 31, 2012 was another successful year for the Company. We achieved a 6.6% increase in worldwide attendance and set a Company record of 263.7 million patrons. We also reached a milestone in Latin America, surpassing 100 million patrons. Our worldwide admission revenues increased 7.4% in 2012, outperforming the estimated North American industry box office by approximately 130 basis points. In 2012, we continued to be the #1 attended worldwide exhibitor.
Some of the key indicators of the Company’s financial health and performance over the five year fiscal period, 2008-2012 are as follows:
The Company’s revenues for the year ended December 31, 2012 increased 8.5% to $2,473.5 million from $2,279.6 million for the year ended December 31, 2011 and 42% from $1,742.2 million for the year ended December 31, 2008.
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Net income (loss) attributable to the Company for the year ended December 31, 2012 increased to $168.9 million from $130.5 million for the year ended December 31, 2011 and from $(48.3) million for the year ended December 31, 2008.
Diluted earnings (loss) per share for the year ended December 31, 2012 was $1.47 compared to $1.14 for the year ended December 31, 2011 and $(0.45) for the year ended December 31, 2008.
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The Company ended 2012 with a solid balance sheet with strong cash flow from operating activities and a solid cash position at year-end of $742.6 million, an increase of 42% from $521.4 million at year-end 2011 and 112% from $349.6 million at year-end 2008.
Some of the other highlights of the Company’s performance in 2012 were as follows:
| • | | Adjusted EBITDA for the year ended December 31, 2012 increased 13.4% to $589.2 million from $519.5 million for the year ended December 31, 20112;
31. |
Continued strong performance by our international segment which generated revenues of approximately $777.7 million, or 31.4% of our total revenue;
Continued investment in the domestic and international theatre circuit by building new theatres, closing low performing theatres and acquiring high quality assets to further enhance the Company’s diversified footprint; and
Continued digital conversion of our international theatres, which are currently approximately 42% digital, and roll out of our Cinemark XD Extreme Digital Cinema and NextGen concepts.
2 Reconciliations of non-GAAP financial measures are provided in footnote 23 on page F-46 of the 2012 Form 10-K.
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| | | | | 35 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
The Company also strengthened its performance over the past five years relative
Performance Relative to its peers. The one- year, three- year and five- year TSR for the Company are 45.1%, 99% and 76.6% respectively. Peers We compare our financial performance against our direct competitors in the movie exhibition industry (referred to as the ‘performance“performance peer group”). Our performance peer group includes the threefour publicly-held companies in our industry, namely, Regal Entertainment Group (RGC), AMC Entertainment Holdings, Inc. (AMC), Carmike (CKEC) and IMAX Corporation (IMAX). We believe that our custom performancethis peer group is an appropriate benchmark for evaluating our fiscalfinancial performance since we directly compete with these companiesthem for business and investor capital. Our financial performance relative to our performance peer group has been very strong over the past five years. Our Total Stockholder Return (“TSR”) (with dividends reinvested) for the one-year, cumulative three-year and cumulative five-year periods, as compared to our performance peers, are as follows: | | | | | | | | | | 1 YR
TSR | | 3YR
TSR | | 5YR
TSR | CNK | | (3.2%) | | 39.9% | | 120.6% | AMC | | (5.3%) | | N/A | | N/A | RGC | | (7.5%) | | 61.1% | | 114.2% | CKEC | | (12.7%) | | 52.9% | | 197.2% | IMAX | | 15.0% | | 58.1% | | 26.6% | Group | | (0.4%) | | 57.4% | | 76.0% |
The Company’s cumulative total return between 20082011 and 20122015 as compared to the performance peerRGC, CKEC and IMAX as a group and S&P 500 is presented below. | | | | | 36 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
Through
| * | Since AMC became publicly-owned in December 2013, it is not included in the five-year graphical presentation. |
NEO Compensation for the 2015 Fiscal Year | v | | The annual base salary of each NEO was increased by 3% from 2014. |
| v | | All participants to the Bonus Plan, including the NEOs, received 150% of their individual targets as cash bonus as the Company exceeded the set Adjusted EBITDA target of $643.6 million. |
| v | | Per their respective employment agreements, the target value of the long-term equity incentive awards granted to Mr. Warner and Mr. Copple were 200% and 150% of their respective annual base salaries. The Compensation Committee set the target value of the long-term equity incentive awards granted to Messrs. Fernandes and Gamble at 125% and 100% of their respective annual base salaries. |
| v | | Mr. Zoradi was not granted additional equity upon his appointment as the CEO. He was granted 2,642 shares in June 2015 pursuant to the annual director restricted stock grant when he was elected as a director. Similar to previous years, Mr. Mitchell was not granted any long-term equity incentive awards in 2015 due to his substantial ownership in the Company, at approximately 8% as of the Record Date. |
| v | | Perquisites continued to be very limited. Per the terms of Mr. Zoradi’s employment offer, we reimburse Mr. Zoradi for certain personal expenses in the amount of $30,000 annually. |
2015 Compensation Mix The presentations below show the mix of variable and fixed components of compensation as a percentage of total compensation at the target level for Mr. Warner individually, and for our other NEOs as a group. Mr. Zoradi’s compensation data was not included as he was the CEO for only four months and inclusion of his data would produce a skewed result. | | | | | 37 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
Variable compensation (cash bonus and long-term equity incentive award) as a percentage of total target compensation equals 72% for Mr. Warner and 60% for the other NEOs. Overall target total direct compensation (base salary, target bonus, and target value of long-term equity incentives) of Cinemark’s NEOs for the 2015 fiscal year were commensurate to the 25th percentile of our proxy peers (defined below) and within a competitive range of the general industry survey data. Key Governance Features of Executive Compensation The Board believes in strong governance with regards to our executive compensation program. As such, the Board has adopted certain governance measures to ensure good governance of executive compensation. The compensation related governance principles are as follows: | | | | | | Change of control | | The change of control payment provision in the employment agreements of the executive officers is subject to a “double trigger”. In the event of a change of control, compensation and benefits vest only if the executive officer’s employment is involuntarily terminated, without cause, or where a participant terminates employment for good reason, within one year of the change of control event. | | | | Golden parachute/Excise tax gross-up | | No “golden parachute” or excise tax gross-up in the event of a change of control. | | | | Deferred compensation/Pension plans | | None | | | Short sales of Company securities | | Prohibited by the Supplemental Policy Concerning Trading In Company Securities By Certain Designated Persons (“Supplemental Insider Trading Policy”). | | | | Purchases or sales of puts, calls or other derivative securities with respect to Company securities | | Prohibited by the Supplemental Insider Trading Policy. | | | | Hedging transactions such as zero-cost collars and forward sale contracts | | Prohibited by the Supplemental Insider Trading Policy. | | | | Hold Company securities in a margin account | | Prohibited by the Supplemental Insider Trading Policy. |
| | | | | 38 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
| | | | | | Pledge Company securities as collateral for a loan | | Prohibited by the Supplemental Insider Trading Policy (unless the covered person can clearly demonstrate the financial capacity to repay the non-margin loan without resorting to the pledged securities). |
DISCUSSION Our compensation program is designed to reward talent and performance in achieving the short-term and long-term interests of the Company’s stockholders. In order to achieve this goal, we have | v | Hire and retain top executives by paying and granting market competitive annual base salaries, cash bonuses and long-term equity incentive awards. |
| v | Pay for performance by tying a portion of the total annual compensation of an executive to Company and individual performance. |
| v | Motivate and reward long-term growth and profitability by rewarding achievement of long-term growth targets while minimizing incentives for imprudent risk-taking. |
We use traditional compensation elements of annual base salary, cash bonus, long-term equity incentives and employee benefits to deliver competitive and performance-based compensation. Our performance has established ourselvesus as one of the industry leaders. We believe hiring, motivating and retaining one of the best executive management teams in the industry has given us the leadership that is required to achieve high performance levels. Headed by the Chairman of the Board and the founder of the Company, Lee Roy Mitchell, our executive management team brings experience and industry knowledge that is quite unique. Our named executive officersNEOs have made their careers in the movie-exhibition industry. With the hiring of Mark Zoradi as our CEO and Sean Gamble as our CFO, we have added studio experience and a more diverse industry and their experience ranges from 16 to 54 years with the Company. Our management team has successfully navigated us through many industry and economic cycles. At Cinemark, we view our employees as an “investment” for the future. We invest in our employees for future opportunity to deliver more value to our stockholders and patrons.executive team. Compensation Highlights for 2012 for the Named Executive Officers
The highlights of theWe implement our compensation of the namedprinciples by structuring executive officers in 2012 were as follows:
Base Salary:
Mr. Stock’s annual base salary from January 1, 2012 – February 15, 2012, as Chief Executive Officer, was $646,522, an increase of 2% from his 2011 annual base salary.
Mr. Warner’s annual base salary from January 1, 2012 – February 15, 2012, as President and Chief Operating Officer, was $473,744, an increase of 2% from his 2011 annual base salary.
Effective February 15, 2012, Mr. Warner’s annual base salary was increased to $700,000, upon his appointment as the new Chief Executive Officer in addition to his roles as the President and Chief Operating Officer of the Company, an increase of 8% from Mr. Stock’s 2012 annual base salary.
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Mr. Copple’s annual base salary from January 1, 2012 – February 15, 2012, as Chief Financial Officer, was $445,877, an increase of 2% from his 2011 annual base salary.
Effective February 15, 2012, Mr. Copple’s annual base salary was increased to $500,000 as the Board recognized Mr. Copple’s increased leadership rolecompensation in the Company upon the change in the position of the Chief Executive Officer.
The annual base salaries of Messers. Mitchell, Fernandes and Cavalier increased by 2% from their respective 2011 annual base salaries.
SeeSummary Compensation Table for 2012 on page 54 for further detail regarding annual base salaries of the named executive officers.
Cash Bonus (Target Opportunity):
Effective February 15, 2012, Mr. Warner’s target annual cash bonus opportunity was increased from 75% to 100% to match Mr. Stock’s target annual cash bonus opportunity since 2008.
Effective February 15, 2012, Mr. Copple’s target annual cash bonus opportunity was increased from 75% to 100% to provide increased incentive for his performance in an enhanced leadership position.
The target annual cash bonus opportunities of Messers. Mitchell, Fernandes and Cavalier remained at the 2011 levels of 100% for Mr. Mitchell and 75% for Messers. Fernandes and Cavalier.
Cash Bonus (Performance Target and Payout):
In February 2012, the Compensation Committee pre-established the target annual cash bonus opportunity for the fiscal year 2012.
The target annual cash bonus opportunity for 2012 was set at Adjusted EBITDA of $545.6 million, a 5% increase over our 2011 results. The below table provides the performance targets pre-established by the Compensation Committee for 2012:
| | | | | | | | Year | | Adjusted EBITDA Levels (in millions) | | | | Minimum | | Target | | Maximum | | 2012 | | $ 491.0 | | $ 545.6 | | $ 572.9 |
The Adjusted EBITDA achieved by the Company in 2012 for purposes of the Bonus Plan was $589.2 million3. Consequently, the named executive officers (except Mr. Stock) and the participants to the Bonus Plan received the annual cash bonus for 2012 at the maximum level, which is 133.33% of their respective target annual cash bonus opportunity.
The actual amounts of annual cash bonus paid to each of the named executive officers in February 2013 for the 2012 fiscal year were as follows:following manner:
| v | | | setting a level of compensation for each position that is competitive based on the skill and knowledge of the individual; |
Name
| | Bonus
v | recognizing the effort, leadership and responsibility needed to perform the job successfully and to achieve the performance goals; and |
Lee Roy Mitchell
| | $v | 1,135,409 | | Tim Warner
| | $ | 933,310 | | Robert Copple
| | $ | 666,650 | | Valmir Fernandes
| | $ | 364,131 | | Michael Cavalier
| | $ | 362,266 | using a mix of fixed and variable pay components with different time horizons and payout forms to reward and motivate achievements of short-term and long-term goals. |
3 Reconciliations of non-GAAP financial measures are provided in footnote 23 on page F-46 of the 2012 Form 10-K.
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Mr. Stock did not receive any annual cash bonus for 2012.
SeeGrants of Plan-Based Awardsin 2012 on page 57 for further detail regarding the annual cash bonus granted to the named executive officers in 2012.
Equity Awards:
Our Restated Incentive Plan provides for the award of both time-based and performance-based equity grants. The Compensation Committee has determined that time-based equity awards is an appropriate vehicle for retention of executive management and rewarding performance over the short-term while performance-based equity awards provide a strong link to motivation for sustained performance. As discussed in greater detail in the sectionDesign of the Executive Compensation Program – Equity Incentive Compensation, every year the Compensation Committee makes a determination of the appropriate mix of time-based and performance-based compensation elements in light of the strategic plans and goals for the current and forthcoming years to balance the objectives of our executive compensation program.
In 2012, the Compensation Committee made the determination to award time-based restricted stock at a higher percentage than performance-based awards. This determination was based upon the recognition of the strong performance of the Company over the prior years, consideration of the growth plans for the ensuing years and particularly, expectation of additional leadership role of each named executive officer due to the change in the position of the Chief Executive Officer.
The following table provides the values of the equity grants made to the named executive officers on March 8, 2012.
| | | | | | | | | | Name | | Grant Date Value of Restricted Stock | | | Grant Date Value of
Performance Award (in the
form of Restricted Stock
Units) br (@ Target Vesting) | | Tim Warner | | $ | 1,619,892 | | | $ | 509,811 | | Robert Copple | | $ | 1,348,501 | | | $ | 291,298 | | Valmir Fernandes | | $ | 1,181,106 | | | $ | 229,616 | | Michael Cavalier | | $ | 1,162,548 | | | $ | 211,059 | |
The time-based restricted stock granted to Messers. Copple, Fernandes and Cavalier shall vest 50% in March 2014 and the remaining 50% in March 2016.
The payout of performance awards (in the form of restricted stock units) is based on the achievement of an IRR for the performance period from January 1, 2012 to December 31, 2014 and continued employment requirement until March 2016.
The time-based restricted stock granted to Mr. Warner in 2012 vests equally over the term of three years from March 2013 to March 2015. If the Restated Employment Agreement is not extended by one year to April 1, 2015, any outstanding restricted stock granted to Mr. Warner subject to time-based vesting shall immediately become vested as of the expiration date of April 1, 2014. Any equity awards with performance-based vesting shall remain outstanding through the remainder of the performance period, that is until December 31, 2014, and if or to the extent the performance provisions are attained, such equity awards shall become immediately and fully vested without regard to any continued employment requirement once the performance provisions have been certified by the Compensation Committee of the Company.
SeeGrants of Plan-Based Awards in 2012 table on page 57 for further detail regarding the equity awards granted to the named executive officers in 2012.
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No equity award was granted to Mr. Stock in 2012.
Also, as in previous years, no equity award was granted to Mr. Mitchell as the Compensation Committee determined that Mr. Mitchell has substantial equity stake in the Company, which, as of the Record Date, is approximately 9%.
The following chart compares the Total Actual Compensation of our Chief Executive Officer against the Company’s TSR over the last five years.
For purposes of this graph, the Total Actual Compensation of the Chief Executive Officer is comprised of the following components:
Annual base salary paid during each fiscal year;
Cash bonus paid under the Bonus Plan for each fiscal year (but paid in February/March of the following year);
Value of equity incentive awards that vested during each fiscal year;
For stock options, the value shown is the realized value based on the amount by which the market price at exercise exceeded the exercise price. The options were granted to the Chief Executive Officer in 2004 under the 2004 Cinemark, Inc. Long Term Equity Incentive Plan. The options were exercised in 2009. No options have been granted by the Company since 2004.
The value of time-based restricted stock awards was computed based upon the closing price of Common Stock on the vest date.
Performance-based awards do not vest at the end of the performance period but have an additional one year employment requirement. Hence, the value of performance-based awards was calculated as of the vest date. The first payout of the performance-based restricted stock units was in March 2012.
Value of all “other compensation” as disclosed in the Summary Compensation Table.
The TSR is the one- year TSR for the respective year.
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Overall, in 2012, the Company’s executive compensation program has benefited our stockholders. The structure of the program has ensured pay-for-performance thereby increasing shareholder return while retaining executive talent each of whom has been with the Company for a significant number of years.
The Process of Setting Executive Compensation How Do We Set Executive Compensation?
Compensation Committee. The Compensation Committee is responsible for:
establishing, evaluating and overseeing the Company’s compensation program;
determining the compensation of each of the named executive officers;
determining the compensation of the other executive officers and other senior officers as it deems appropriate;
establishing certain business criteria and performance targets relevant to the compensation of the Chief Executive Officer and other executive officers and evaluating their performance against such business criteria and performance targets; and
approving the grant of all equity and non-equity based compensation.
The Compensation Committee establishes the compensation of the Chief Executive Officer without management input, but may be assisted in this determination byCEO and certain other executive officers and our independent, outside compensation consultants.consultant assists the Compensation Committee upon its request. In establishing the compensation of the named executive officersNEOs (other than the Chief Executive Officer)CEO) and thecertain other executive officers, the Compensation Committee may consider the recommendations of the Chief Executive OfficerCEO and input received from the compensation consultants.consultant. The Compensation Committee determinesIf deemed appropriate, the level of annual cash incentive compensation and long-term equity incentive compensation during the first quarter of a fiscal year. The Compensation Committee advises the Board of its determination prior to implementation of suchthe compensation of the named executive officersCEO and certain other executive officers as it deems appropriate.prior to its implementation. While the Compensation Committee may consider input provided by the Board, the decisions regarding annual cash incentive compensation and long-term equity incentive compensation are made solely by the Compensation Committee. The below discussion elaborates on the role of each participant involved in setting executive compensation, and other factors that are considered in the process.
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Compensation ConsultantCommittee.: The Compensation Committee Charter authorizesis responsible for: | v | establishing, evaluating and overseeing the Company’s compensation program; |
| v | setting the annual base salaries of the NEOs and certain other executive officers as it deems appropriate; |
| v | establishing business criteria and setting performance targets for the cash bonus and the long-term equity incentive awards; |
| v | certifying the Company’s performance over the relevant performance periods for purposes of the cash bonus and the long-term equity incentive awards; and |
| v | evaluating the performance of the CEO and the NEOs against set business criteria and performance targets. |
Role of the CEO: In making compensation decisions for executive officers, the Compensation Committee solicits the views of our CEO and the compensation consultant. The CEO does not make recommendations to the Compensation Committee about his own compensation and none of our executive officers are involved in the Compensation Committee’s determination of their own compensation. Compensation Consultant: The Compensation Committee has the sole authority under the Compensation Committee Charter, to the extent it deems appropriate, to retain one or more consultants and has direct responsibility for the compensation consultantsand oversight of the work of any compensation consultant. The Compensation Committee also has the right to assist inreceive information it deems pertinent from management, employees, outside counsel and other advisers. The scope of the evaluationcompensation consultant’s engagement have covered the following: | v | make recommendations regarding the design of the Company’s executive compensation program and the competitiveness of individual compensation levels of the NEOs and certain other executive officers; |
| v | review and recommend appropriate changes to the Company’s executive compensation program; |
| v | advise the Compensation Committee on companies that should populate a peer group to be used by the Compensation Committee as reference points for executive compensation and suggest changes to the peer group as appropriate; |
| v | review, as requested, proposals related to executive compensation brought before the Compensation Committee and provide objective analysis and recommendations; |
| v | attend Compensation Committee meetings as requested; and |
| v | advise the Compensation Committee on emerging trends and issues related to the compensation of public company executive officers. |
For purposes of determining executive compensation. Since 2007,compensation for the 2015 fiscal year, the Compensation Committee has authorizedhired Pay Governance LLC (“Pay Governance”) to conduct a competitive review of our executive compensation program. Pay Governance analyzed Cinemark executive compensation in relation to competitive market data and included the following: | v | review of compensation peer group (defined below) financials; |
| v | competitive analysis of total direct compensation and its elements for Section 16 officers; and |
| v | review of aggregate equity program statistics. |
In light of the NYSE listing standards regarding independence of compensation consultants, the Compensation Committee evaluated the independence of Pay Governance. The Compensation Committee reviewed, among other items, a questionnaire executed by Pay Governance addressing its | | | | | 40 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
independence and that of the members of the consulting team, including the following factors: (i) other services provided to the Company management to engageby the outside compensation consultant, Longnecker & Associates (“(ii) fees paid by the Company as a percentage of the compensation consultant’s total revenue, (iii) policies or procedures of the compensation consultant that are designed to prevent conflicts of interest, (iv) any business or personal relationships between any of the members of the consulting team and a member of the Compensation Committee or any of the Company’s executive officers, and (v) any Common Stock owned by any of the members of the consulting team or any immediate family member. Based upon this review, the Compensation Committee concluded that the work performed by Pay Governance for the 2015 fiscal year did not raise any conflicts of interest. The compensation committee appointed Pearl Meyer as the Company’s compensation consultant for the 2016 fiscal year. Peer Review: We compete with a peer group of companies (referred here as the “compensation peer group”) for executive level talent. To attract, retain and motivate the highest caliber executive management team critical to our long-term success, the Compensation Committee believes the management team’s compensation should be aligned to similarly situated executives within our compensation peer group. For this purpose, the Compensation Committee requests the compensation consultant to provide compensation data annually, based on a peer review of Cinemark’s direct competitors and companies in the entertainment industry that are of similar size to Cinemark and could compete with us for executive talent. The compensation consultant typically provides compensation data for the 25th, 50th and 75th percentiles for each component of compensation and total target compensation for each NEO. While the Compensation Committee does not benchmark executive compensation, it does take into consideration the survey information provided by the compensation consultant to ensure that our compensation structure and targets are competitive with our compensation peer group. To determine executive compensation for the 2015 fiscal year, Pay Governance provided competitive compensation analysis from two sources – (i) most recent proxy data for NEO compensation and (ii) published general industry survey data for 2014 for the NEOs and certain other executive officers. The compensation peer group selected for the 2015 fiscal year represented an executive talent labor market similar to Cinemark and were of comparable size (median) in terms of revenue and market capitalization. The compensation peer group comprised of the following 11 companies (although it was noted that several peers have outlier pay practices and programs): | | | | AMC Entertainment Holdings, Inc. | | Netflix, Inc. | | Carmike Cinemas, Inc. | | Panera Bread Company | | Chipotle Mexican Grill, Inc. | | Regal Entertainment Group | | Dreamworks Animation SKG Inc. | | Sirius XM Holdings Inc. | | IMAX Corporation | | Wynn Resorts Ltd. | | Lions Gate Entertainment Corp. | | |
The compensation survey data was analyzed in relation to three groups – (i) the peer proxy group representing the full Cinemark compensation peer group (referred to as the “proxy peers”) (ii) the general industry survey group representing participants with revenue between $2 billion and $10 billion with sample size varying by position of the executive, and (iii) direct competitors—RGC, AMC, CKEC and IMAX. | | | | | 41 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
Timing: Annual base salaries are typically approved by the Compensation Committee towards the end of the last quarter of the previous fiscal year. The Company’s performance target for purposes of the Bonus Plan and individual target levels for cash bonus and long-term incentive awards are set during the first 90 days of the fiscal year. The timing of the performance-based compensation is dictated by the requirements of Section 162(m) to qualify such compensation as a deductible expense under Section 162(m) of the Code. SeeTax Considerations on page 49. Long-term equity incentive awards for the fiscal year are typically granted on the same day to all participants to the Amended and Restated Cinemark Holdings, Inc. 2006 Long Term Incentive Plan (the “L&AIncentive Plan”), to review executive compensation annually and make recommendations regardingincluding the Company’s executive compensation program. Pursuant toNEOs, at the rulesclosing price of the SEC and NYSE,Common Stock on the Board has determined that L&A is independent of management andprevious trading day or on the Compensation Committee. L&A provides to the Compensation Committee compensation data (including data provided by management) based upon review of compensation practices at appropriate peer companies and market survey. The Compensation Committee reviews and discusses the data with L&A and makes determinations of compensation levels of the executive officers. L&A does not provide any other services to the Company and works with the Company’s management only on matters for which the Compensation Committee is responsible. The consultant was re-engaged by management to make recommendations regarding the 2012 compensation levels of the named executive officers.
Role of Chief Executive Officer and Management. As part of our annual budget and performance review, the Chief Executive Officer conducts a review of the aggregate level of our executive compensation. The review considers financial and non- financial criteria to measure our performance against internal goals and the
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performance of our competitors in the theatrical exhibition industry. Annually, the Chief Executive Officer provides recommendations to the Compensation Committee for specific levels of annual base salary, target levels for annual performance-based cash incentive payments and long-term equity based compensation of the executive officers (other than for himself). Management also provides to the Compensation Committee data related to the competitive market for executives, compensation levels and compensation practices of companies in the theatrical exhibition industry and companies of comparable size and financial performance with whom we may compete for talent. All decisions with regards to executive compensation are made solelygrant day (both permitted by the Compensation Committee.Incentive Plan).
Design of the Executive Compensation Program The principal elementsdesign of our executive compensation are as follows:is consistent with the compensation structure used in our industry: | v | performance-based cash bonus; |
| v | service-based equity award; |
| v | performance-based equity award vesting after a performance period and a subsequent period of continued employment; and |
annual
Annual base salaries; annual performance-based cash incentive compensation or annual cash bonus;salary and
equity-based incentive compensation (time-based and performance-based awards).
Generally, total benefits are the only fixed components of the summary compensation of allan executive officers is distributed betweenas the three elements.values of those components are not subject to Company performance or fluctuations in the price of our Common Stock. Cash bonus and long-term equity incentive awards are the performance-based components of compensation. We believe thisthe distribution between fixed and variableperformance-based components maintainsoffers a competitive compensation program while appropriately mitigating risk.
Annual base salary and time-based equity awards are the fixed components of the total compensation of an executive as such components are subject only to the continued employment of the executive. Cash bonus and performance-based equity awards are the variable components as the amounts of such compensation are subject to Company performance over a one- and three- year period respectively. Base Salary: The annual base salary represents minimum payment for a satisfactory level of individual performance for the duration of employment with the Company. The Compensation Committee seeks to keep annual base salary competitive to help attract and retain qualified executives. Annual base salaries for the executive officers are determined by the Compensation Committee based on a variety of factors including: | v | nature and responsibility of the position; |
| v | expertise of the individual executive; |
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expertise of the individual executive;
competitiveness of the market for the executive’s services;
potential for driving the Company’s success in the future;
the performance reviews and recommendations of the Chief Executive Officer (except in the case of his own compensation); and
other judgmental factors deemed relevant by the Compensation Committee such as recommendations of the compensation consultant.
| v | competitiveness of the market for the executive’s services; |
| v | potential for driving the Company’s success in the future; |
| v | compensation peer group data; |
| v | the performance reviews and recommendations of the CEO (except in the case of his own compensation); and |
| v | other judgmental factors deemed relevant by the Compensation Committee. |
The Compensation Committee has not adopted any formula with specific weightings assigned to any of the factors above. As of December 31, 2012, theThe Company hadhas employment agreements with certain executive officers - Messers. Mitchell, Warner, Copple, Cavalier, Fernandes, Bunnell and Carmony.each NEO. Under the employment agreements, the annual base salaries are subject to annual review by the Compensation Committee and can be increased but not decreased.
The average increase inIn 2015, the base salary of each NEO was increased by 3% over their respective 2014 salaries.
With respect to the compensation peer group, the annual base salaries were below market median – 71% of median on average – and more competitive with the executive officers, other than the named executive officers, in 2012 was approximately 4%. 25th percentile.Cash Bonus: 43
SeeSummary Compensation TablePursuant to our compensation philosophy of pay for 2012 on page 54 for the annual base salaries paid to the named executive officers in 2012.
Cash Incentive Compensation
At the 2008 Annual Meeting, the stockholders approved the performance-based cash incentive compensation pursuant to the Bonus Plan. In setting total compensation, the Compensation Committee considers annual cash incentives based on the Company’s annual performance, to be an important tool in motivating and rewarding the performance of thewe provide participants to the Bonus Plan. The objective of theour Bonus Plan isan opportunity to make annualearn a cash bonus paymentstied to individuals based on the achievement of certainannual Company performance measured against pre-established performance metrics set as goals for the Company to achieve during the fiscal year that would contributeby the Compensation Committee. This opportunity is intended to compensate participants for achieving short-term financial and operational goals of the Company with individual targets based on the participant’s position and potential contribution to the growth, profitability and increased valueachievement of the Company. However, whileCompany’s targets. While the annual cash bonus provides an additional compensation opportunity it also subjects the Bonus Plan participant to the financial risks of the Company. Consequently, annual cash bonus percentages are commensurate with the participant’s position and potential impact on the Company’s performance. As such, the named executive officers and certain other executive officers have a higher target annual cash bonus opportunity as compared to other participants. The Compensation Committee has determined that the positions of the Chairman of the Board and that of the Chief Executive Officer have the greatest management and oversight responsibilities in directing the Company’s growth. Consequently, the Compensation Committee deems it appropriate to incentivize the Chairman of the Board and the Chief Executive Officer by apportioning a higher percentage of their annual base salary as the target annual cash bonus opportunity as compared to the other named executive officers.
Also, as discussed previously, in February 2012, upon the change in the position of the Chief Executive Officer, the Board recognized the additional leadership role expected of Mr. Copple upon the change in the position of the Chief Executive Officer. Based upon that determination, effective February 15, 2012, the Compensation Committee raised the target annual cash bonus opportunity of Mr. Copple from 75% to 100% of his annual base salary.
The following steps are performed annually for the Bonus Plan: (1)Setting a Target Cash Bonus. DuringIn order to qualify the cash bonus as fully tax deductible to the Company under Section 162(m) of the Code, the Compensation Committee sets the Company’s target performance metric for the fiscal year and the target bonus for each NEO (as a percentage of annual base salary) before the end of the first quarter90 days of the fiscal year, the Compensation Committee approves the threshold, target and maximum level of annual cash bonus for the participants to the Bonus Plan. The target annual cash bonus amount is generally set at a percentage of the participant’s annual base salary although the Compensation Committee may take into account other factors deemed relevant, such as the individual’s performance and contributions outside of the quantitative targets and recommendations from the Chief Executive Officer (except for target annual cash bonus amounts for himself). The bonus opportunities of the named executive officers for the 2012 fiscal year were as follows:
| | | | | | | | Name | | Threshold (as % of Target) | | Target (as % of Base Salary) | | Maximum (as % of
Target) | Lee Roy Mitchell | | 33.33% | | 100% | | 133.33% | Tim Warner | | 33.33% | | 100% | | 133.33% | Robert Copple | | 33.33% | | 100% | | 133.33% | Valmir Fernandes | | 33.33% | | 75% | | 133.33% | Michael Cavalier | | 33.33% | | 75% | | 133.33% |
year. Each participant under the Bonus Plan is entitled to receive a ratable portion of histhe participant’s target annual cash bonus based upon the Company’s level of achievement of the performance metric within a range of threshold and maximum percentage of the target performance metric. Thus, theThe actual amount of annual cash bonuses paid, if any, may result in a annual cash bonus that is greater or less than the stated target (and could be zero) depending on whether, and to what extent, the applicable performance and other conditions are satisfied. While the Compensation Committee sets individual targets for each NEO and certain other key executive officers, it authorizes the CEO and the President to set the target bonuses of the other participants to the Bonus Plan. In setting the target bonus percentages of each NEO, the Compensation Committee takes into consideration the peer review compensation data and such other factors as deemed relevant, such as the individual’s potential contribution to the Company’s performance, the executive’s prior performance, overall market conditions, market variables in a specific sector, contributions outside of the quantitative targets and recommendations from the CEO (except for target cash bonus amounts for himself). 44
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Under the Bonus Plan, the maximum annual cash bonus amount of a named executive officerNEO is capped at the lesser of 200% of such named executive officer’s annualNEO’s annual base salary ator $3 million. For the time2015 fiscal year, the target annual cash bonus is determined.percentages of Messrs. Mitchell, Warner, Zoradi and Copple were set pursuant to their respective individual employment agreements. The cash bonus targets for Messrs. Gamble and Fernandes were set by the Compensation Committee in March. (2)SettingDetermining the Company’s Pre-Established Performance TargetMetric. DuringIn determining the first quarter of each fiscalCompany’s performance target for the year, the Compensation Committee establishes the performance target of the Company for the year. Performance target may includeconsider factors, by way of example but not limitation, any or all of the following: revenue; net sales; operating income; earnings before all or any of interest, taxes, depreciation and/or amortization (“EBIT”, “EBITA”, or “EBITDA”); Adjusted EBITDA; Adjusted EBITDA Margin; cash flow; working capital and components thereof; return on equity or average stockholder’s equity; return on assets; market share; sales (net or gross) measured by product line, territory, customer(s), or other category; stock price; earnings per share; earnings from continuing operations; net worth; credit rating; levels of expense, cost or liability by category, operating unit or any other delineation; any increase or decrease of one or more of the foregoing over a specified period; or implementation or completion of critical projects. With respect to certain participants who are not named executive officers, these targets may also include such objective or subjective performance goals as As previously discussed, in 2015 the Compensation Committee may, from timerevised the cash bonus targets to time, establish. Themake the bonus program competitive with the bonus programs of our direct competitors and to more accurately compensate management for performance. Beginning 2015, the pre-established performance metric of Adjusted EBITDA performance levelsmay be adjusted based on a variance, year over year, between the actual North American industry box office and the estimated industry attendance used to set the Adjusted EBITDA target at the beginning of the fiscal year. The target Adjusted EBITDA for the 2015 fiscal year was set by the Compensation Committee, for purposes of the Bonus Plan, at $643.6 million, which amount could be adjusted based upon the difference between the actual industry attendance and the attendance expectations used in setting the Adjusted EBITDA target for 2012, before payment of annualthe year.
The cash bonuses,bonus scale for 2015 was set by the Compensation Committee in March 2012 as follows: | | | | | Adjusted
EBITDA
Levels
| | Amounts
(in millions)
| | Minimum
| | $ | 491.0 | | Target
| | $ | 545.6 | | Maximum
| | $ | 572.9 | |
The Adjusted EBITDA target of $545.6 million was set approximately 5% higher than the Adjusted EBITDA achieved by the Company during the 2011 fiscal year. The Adjusted EBITDA achieved by the Company in 2012 for purposes of the Bonus Plan was $596.8 million. The reported Adjusted EBITDA was $589.2 million after adjustment for payment of annual cash bonuses of $7.6 million4.
(3)Measuring Performance. Prior to making any paymentspayouts under the Bonus Plan, the Compensation Committee will certify whetherassesses and certifies the applicableCompany’s performance factors were attained.in the first quarter of a fiscal year for the prior year. In reaching its conclusions,assessment, the Compensation Committee willmay make, if needed, certain adjustments as specified in the Bonus Plan. Such adjustments include, but are not limited to, factors such as changes in accounting principles and extraordinary, unusual or non-recurring events that were not included in the operating budget for the performance periodfiscal year being considered (such as the disposition of a theatre or theatres or the cessation of operation of a theatre as a result of a natural disaster). The Compensation Committee may, in its discretion, at any time, establish (and, once | | | | | 44 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
established, rescind, waive or amend) additional conditions and terms of payment of the annual cash bonus (including, but not limited to, the achievement of other financial, strategic or individual goals, which may be objective or subjective) as it may deem desirable in carrying out the purposes of the Bonus Plan andPlan. The Compensation Committee may also take into account such other factors as it deems appropriate in administering any aspect of the Bonus Plan, including to reducereducing the amount of the annual cash bonus at any time prior to payment based on such criteria as it shall determine, including, but not limited to, individual merit and the attainment of specified levels of one or any combination of the performance factors. However, theThe Compensation Committee cannot, however, adjust upwards the cash incentive compensationbonus payable to a named executive officerNEO or waive the achievement of a performance target requirement for a named executive officerNEO except in the case of the death or disability of the executive or a change-in-controlchange of control of the Company. Measuring the 2015 Fiscal Year Performance: 4 ReconciliationsNo adjustment (as discussed above) was made to the target Adjusted EBITDA of non-GAAP financial measures are provided$643.8 million for the purpose of determining cash bonus payouts under the Bonus Plan since the actual industry attendance figures for the 2015 fiscal year remained within the range of attendance expectations used in footnote 23 on page F-46 of the 2012 Form 10-K.
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In February 2013, the Compensation Committee certified, based uponsetting the Adjusted EBITDA leveltarget for the year. The target Adjusted EBITDA achieved by the Company in 2012, that the annualwas $676.7 million which was calculated, similar to previous years, using reported Adjusted EBITDA of $663.8 million with adjustments for cash bonus payment for the 2012 fiscal year is 133.33%and certain severance expenses. (See footnote 20 on page F-39 of the target annual cash2015 Form 10-K for reconciliations of non-GAAP financial measures). Cash bonus opportunity of each participantpayouts were at the maximum and all participants to the Bonus Plan.Plan, including the NEOs, received cash bonus at 150% of their individual targets.
SeeSummary Compensation Table for 2012Mr. Fernandes’ target cash bonus is calculated based on page 54 for the actual annual cash bonuses paidaverage of reported Adjusted EBITDA and international Adjusted EBITDA. Despite a record-setting performance by our international segment in 2015, the international Adjusted EBITDA was adversely affected by the unusual foreign exchange translation adjustments occurring due to the named executive officerssubstantial unforeseen currency devaluations across our Latin America operations. As a result, the portion of Mr. Fernandes’ cash bonus which was based upon the international Adjusted EBITDA was negatively impacted. Had the currency impact been excluded, the international Adjusted EBITDA portion of Mr. Fernandes’ cash bonus would have resulted in a payout of 150% of his individual target. Since this was a condition over which Mr. Fernandes had no control, following our compensation philosophy of pay for 2012.
Equity Incentive Compensation
At the 2008 Annual Meeting, the stockholders approved the Restated Incentive Plan pursuant to whichperformance, the Compensation Committee annuallyawarded Mr. Fernandes a discretionary bonus of $132,128 to adjust his cash bonus portion that was subject to the international Adjusted EBITDA to its maximum level. His total cash bonus, including the discretionary bonus, yielded a bonus payment of 150% of his individual target level, consistent with other NEOs.
As percentage of annual base salary, the cash bonus targets of the NEOs were competitive with that of the compensation peer group. Equity Incentive Compensation: In addition to the cash bonus, the Compensation Committee also awards time-basedservice-based and performance-based equity compensation. Time-basedincentive compensation annually, pursuant to the Incentive Plan. Service-based equity compensation enables us to attract and retain highly qualified executive officers as leaders to ensure our continued success. Long-term performance-basedPerformance based equity compensation encourages Company’s long-term growth and aligns the executive’s interests with the interests of our stockholders. Pursuant to the Restated Incentive Plan, restricted stock and performance awards (in the form of restricted stock units) have been granted annually to eligible employees, including the named executive officers. Typically, grants to all eligible employees, including the named executive officers,NEOs, are made on the same day (withinand, to avail of tax deductibility for performance-based awards, within the first 90 days of the fiscal quarter).year.
No stock options have been granted by the Company since 2004. The Compensation Committee has concluded that restricted stock and performance awardsrestricted stock units are a superior vehicle of incentive compensation rather than stock options by allowingsince stock options do not allow our executives to benefit from our dividend policy. | | | | | 45 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
The Compensation Committee determines the split between service-based and performance-based awards taking into consideration various factors such as Company’s performance with respect to its industry competitors on a historical basis, individual leadership, contribution of individual executive officers to Company operations, and projected state of the economy over the performance period. Generally, the total grant date value of equity incentive award is split equally between service-based and performance-based awards (at the target level) with the maximum potential of the performance-based awards at 150% of the value of the service-based restricted stock award. In certain years the Compensation Committee has adjusted the percentage split of the performance-based and service-based awards to appropriately incentivize and motivate the executive officers in response to Company performance and targeted goals. Restricted Stock. Stock.Generally, restricted stock is awarded to eligible employees annually as a retention incentive. Periodic awards of restricted stock can also be made at the discretion of the Compensation Committee and such periodic awards have been made in certain limited instances to attract executive talent. Grants of restricted stock are generally based upon a percentage of the eligible employee’s annual base salary. However, such grants could be subject to some adjustment based on the individual employee’s performance during the previous fiscal year. The Chief Executive Officer, given his leadership position, role in Company growth and risk undertaking in decision-making, is awarded restricted stock at a higher percentage of annual base salary compared to the other named executive officers and executive officers. All participants to the Restated Incentive Plan are eligible to receive restricted stock. Restricted stock granted under the Restated Incentive Plangrants typically vests 50% on each of the second and fourth anniversaries of the grant date subject to continuous employment through the vest dates. As disclosed earlier in this proxy statement,However, the restricted stock granted to Mr. Warner in 2012 vests in equal amounts over a three year vest period from March 2013 to March 2015. Restrictedand the restricted stock awards granted to Mr. WarnerGamble in years prior to 2012 shall remain subject to the four year vesting similar to that2014 vest equally over three years. Additionally, all of other executive officers. Mr. Warner’s outstanding restricted stock vested as specified in his employment agreement when his employment agreement expired on April 1, 2016. All of Mr. Copple’s outstanding restricted stock also vested pro rata as specified in his employment agreement when he terminated his employment for Good Reason (as defined in his employment agreement) effective March 4, 2016.
Recipients of restricted stock awards are permitted to: (i)
| (i) | receive dividends on the restricted stock to the extent dividends are paid by the Company on shares of its Common Stock, and |
| (ii) | to vote such Common Stock during the restriction period. |
The Company’s current dividend rate is $0.27 per quarter. (ii) to vote such Common Stock during the restriction period.
Performance Awards.Performance awards entitle recipients to vest in or acquire shares of Common Stock upon the attainment of specified performance goals over the performance period established by the Compensation Committee. Only the named executive officersNEOs and certain executive officers who have a significant impact on the Company’s long-term performance are eligible to receivehave been awarded performance awards. 46
Performance awards can be granted in the form of restricted stock or restricted stock units although since 2008 the performance awards have only been granted as restricted stock units. The performance goals are based on one or more pre-established objective criteria that specify the number of shares of Common Stock under the performance award that will be issued (if the performance award is in the form of restricted stock unit) or shall vest (if the performance award is in the form of restricted stock) ifupon attaining the performance goal is attained. During the first quarter of a fiscal year, the Compensation Committee approves the performance goal for the year. Common Stock received upongoals. After attainment of the performance goals, under a restricted stock unit awardthe underlying Common Stock may be subject to additional time-basedservice-based vesting conditions. Any dividends that are attributable to the underlying Common Stock relating to a restricted stock unit based performanceperformance-based award will be accrued and paid to the recipient when the established vesting conditions are satisfied. Since 2008, theCurrently our performance goal has beenis based on an implied equity value concept that determinesmeasures the change in an internal rate of return (“IRR”) during a performance period. For restricted stock units granted from 2008 until 2013, the performance period. period was a three-year period with an additional one-year service requirement.
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Beginning in 2014, the Compensation Committee changed the performance period to a two-year period with an additional two-year service requirement. This change of the performance period was based on an annual re-evaluation of the Company’s growth, strategic plan and results delivered in the past years. The implied equity value is based on a valuation formula utilizing a multiple of reported Adjusted EBITDA (subject to certain specified adjustments). and other factors that produces a fundamental valuation of Cinemark equity. IRR represents the growth in this implied equity value. Each performance target underlying the performance awards has a threshold, target and maximum level of payment opportunity,and vest on a pro rata basis according to the IRR achieved during the performance period, with the maximum payment opportunitylevel equal to 150% of the individual’s target opportunity based upon the IRR during the performance period.target. The targets for the current fiscal year are established in writing by the Compensation Committee inwithin the first quarter90 days of the fiscal year. The number of shares of Common Stock an executive may receive upon the attainment of a performance goal cannot be determined at the date of grant because the payment of such compensation is contingent upon attainment of the IRR and is further subject to the discretion of the Compensation Committee.IRR. If at the end of the performance period the Compensation Committee determinescertifies that the performance target has been met, the shares of Common Stock underlying the restricted stock units are subject to each performance award shall be further subject to a one year time-basedan additional service-based vesting restriction contingent upon the employee’s continued service.service until the vest date. On March 8, 2012,In October 2015, the performance awards were granted inCompensation Committee reviewed the form ofIRR formula for the restricted stock units (“2012 RSU Award”). The following table sets forthgranted in March 2013 and 2014. Upon review, the variousCompensation Committee determined that it was in the Company’s best interest to adjust the IRR percentagesformula for the 2013 and 2014 fiscal years because of the extra-ordinary adverse impact of the devaluation of the Latin American currencies on the Company’s foreign cash and international Adjusted EBITDA. Currency devaluations and the numberresulting foreign currency translation adjustments are outside of correspondingthe control of management and reported amounts did not accurately reflect management’s performance and the Company’s outperformance of its peers. The Compensation Committee made an adjustment for purposes of calculating the IRR for the restricted stock units granted in 2013 and 2014 as follows – if at the end of the applicable performance period the exchange rate of the local currencies of the Company’s foreign operations has fluctuated by more than +/- 7.5% against the U.S. dollar compared to the foreign exchange rates for such currencies at the beginning of the applicable performance period, then the impact of the foreign exchange rate to be used for translation of all of the countries’ Adjusted EBITDA and cash holdings for purposes of the IRR calculation would be capped at the 7.5% collar. In March 2016, the Compensation Committee certified the results for the vesting of the restricted stock units granted in 2013 and 2014 and approved the vesting of 100% of the maximum shares of Common Stock underlying the performancerestricted stock units which will be issued in March 2017 and March 2018 respectively, upon satisfaction of the additional service requirement.
Additionally, for the restricted stock units granted for the 2015 fiscal year, the Compensation Committee granted the awards with IRR percentages that can be earnedwere revised from those of previous years. The change in IRR percentages was warranted due to a decrease in the rate of cost of capital by each eligible participant:150 basis points since 2008 when the IRR percentages were first set. Thus, the IRR percentages for the 2015 grant were set as follows: | | | | | | Level | | IRR | | Performance Shares Issuable | Threshold | | IRR equal to 8.5%7.5% but less than 10.5%9.5% | | 331/3%⁄3% of the maximum performance shares issuable | Target | | IRR equal to 10.5%9.5% but less than 12.5%11.5% | | 66 2/3%⁄3% of the maximum performance shares issuable | Maximum | | IRR equal to or greater than 12.5%11.5% | | 100% of the maximum performance shares issuable |
The 2012 RSU Award shall vest on a
| | | | | 47 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
Payout is prorated basis according tofor performance between threshold and target and between target and maximum. If the IRR achieved byfor the Company during theapplicable performance period is at least 7.5%, which is from January 1, 2012 to December 31, 2014. Forthe threshold, at least one-third of the restricted stock units vest. If the IRR for the applicable performance period is at least 9.5%, which is the target, at least two-thirds of the restricted stock units vest. If the IRR for the applicable performance period is at least 11.5%, which is the maximum, 100% of the restricted stock units vest. As an example, if the Company achieves an IRR equal to 11.5%10.5%, the number of restricted stock units that shall vest will be greater than the target but less than the maximum number that would have vested had the Company achieved the highest IRR. Similar to performance awards of previous years, the 2012 RSU Award is subject to The restricted stock units granted in 2015 have a further time-based vesting restriction of one year after 2014 and shall vest upon the employee’s continued service through March 2016. SeeGrants of Plan Based Awards in 2012 table on page 57 for further detail regarding the equity awards granted to the named executive officers in 2012.
In February 2013, the Compensation Committee certified that the Company had achieved the highest level of IRR for thetwo-year performance period, from January 1, 2010 to2015 until December 31, 2012. Consequently,2016, and a two-year service requirement. Once the Compensation Committee has certified the IRR achieved during the performance period, the award recipient must still satisfy an additional two-year service period until March 2019. However, under the terms of the respective employment agreements, the Common Stock underlying the performance awards (in the form of restricted stock units)units granted to the named executive officers in March 2010each of Messrs. Warner and Copple shall be issued pro rata as specified in their employment agreements, to the extent they vest, at the end of the performance period. All restricted stock units of Mr. Warner and Mr. Copple which were outstanding but for which performance has been certified by the Compensation Committee as of their respective employment termination dates, vested pro rata as specified in their employment agreements, without any continued service requirement. Such restricted stock units were granted in 2012 (for Mr. Copple only), 2013 and 2014. The restricted stock units granted in 2012 vested at 76.67% of the maximum amounts subject to continued employmentand the restricted stock units granted in 2013 and 2014 vested at 100% of the namedmaximum. Subject to the additional service requirement, the vest dates for these awards would have been March 8, 2016, March 29, 2017 and March 26, 2018.
In 2015, the service-based restricted stock awards and the performance-based restricted stock unit awards were granted as a 50/50 mix (at the target level) with the value of the potential maximum level of performance-based grant at 150% of the value of the service-based equity grant. This distribution of equity grants is consistent with our compensation philosophy to motivate our executive officer until March 2014. SeeOutstanding Equity Awards at December 31, 2012 table on page 59officers to increase stockholder value over the long-term while still providing incentive for continuity and short-term performance. Compared to the compensation peer group, the long-term incentive grants for the number of performance awards that will vestNEOs were below the 25th percentile for each named executive officer. the 2015 fiscal year.47
Perquisites: With limited exceptions, the Compensation Committee’s policy is to provide benefits and perquisites to our named executive officersNEOs that are substantially the same as those offered to our other employees at or above the level of vice president. The benefits and perquisites that may be available in addition to those available to our other employees include life insurance premiums and long-term disability insurance and executive disability insurance. Pursuant to his employment agreement, we reimburse Mr. Zoradi for certain personal expenses in the amount of $30,000 annually. 401(k) Plan: We sponsor a defined contribution savings plan, or 401(k) Plan, whereby certain employees may elect to contribute, in whole percentages between 1% and 50% of such employee’s cash compensation, provided no employee’s elective contribution shall exceed the amount permitted under Section 402(g) of the Code ($17,00018,000 for 20122015, $17,500 for 2014 and $16,500$17,500 for 2011 and 2010)2013). In 2012,2015, participants over the age of 50 could contribute an additional $5,500.$6,000. We may make an annual discretionary matching contribution up to a maximum of 6% of the employee’s annual contributioncash compensation to the 401(k) Plan.Plan, subject to the limits specified by | | | | | 48 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
Section 402(g) of the Code. In 2012,2015, our annual discretionary matching contribution was 100% up to 3% and 75% for the remaining 3% of the employee’s contribution. Our discretionary matching contributions immediately vest. Competitive Positioning
The Compensation Committee aims to competitively align executive compensation. The Compensation Committee believes that our success depends upon our ability to successfully motivate, attract and retain the highest caliber and experienced executive talent whovest but payments are critical to the execution of our business plans, strategies and overall corporate long-term success. In order to gauge the reasonableness and competitiveness of our executive compensation as compared to the market, the Compensation Committee considers compensation data (total as well as individual components of compensation i.e. annual base salary, targeted annual incentive and long-term incentive opportunities) for similarly-situated executives at a comparison group of companies (referred to as the “compensation peer group”) with whom we compete for executive level talent. The Compensation Committee, with input from management and L&A, annually reviews the companies included within our compensation peer group and may add or eliminate companies as determined appropriate.
For purposes of 2012 executive compensation, the Compensation Committee deemed it appropriate to assess compensation competitiveness with respect to a group of companies broader than the current performance peer group. The selection criteria the Compensation Committee utilized to identify companies for the 2012 compensation peer group was a combination of various factors such as revenue size, asset size, market capitalization, business models that are particularly relevant to Cinemark’s growthmade in the past five years and its continued strategic expansion in the international markets, which is considered in the industry to be an increasingly important componentfirst quarter of the overall box office revenues. Based upon that assessment the following companies within the leisure, hospitality and entertainment services industry comprised our compensation peer group for 2012:year.
| | | | | | | Carmike Cinemas, Inc.
| | | | Netflix, Inc. | | | Chipotle Mexican Grill, Inc.
| | | | Panera Bread Co. | | | Dreamworks Animation SKG, Inc.
| | | | Regal Entertainment Group | | | IMAX Corporation
| | | | Sirius XM Radio Inc. | | | Lion Gate Entertainment Corp.
| | | | Wynn Resorts Ltd. | | |
48
L&A compiled compensation data for the peer group from a variety of sources, including proxy statements and other publicly filed documents. L&A also provided published survey compensation data from multiple sources, including the following surveys:
Economic Research Institute, Mercer, Inc., Kenexa and Towers Watson. For each survey, L&A adjusted the data to appropriately reflect companies of a similar size to the Company.
The following provides an overview of the competitive positioning of the compensation of the Company’s named executive officers as compared to the competitive market:
| • | | Overall, annual base salaries of the Company’s top five executives are aligned below the market 50th percentile;
|
| • | | In terms of targeted cash compensation (annual base salary + targeted annual cash incentive), the top five executives are aligned between the market 25th and 50th percentiles;
|
| • | | In terms of grant date fair value of long-term incentives, the top five executives are aligned between the market 25th and 50th percentiles;
|
| • | | Overall, our executive team’s total compensation packages (annual base salary + targeted annual cash incentive + long-term incentives) are aligned between the market 25th and 50th percentiles.
|
Tax Considerations The Compensation Committee considers the tax effectsimpact to the Company when making executive compensation decisions and has a practice of delivering compensation in a tax-efficient manner whenever reasonable. However, the priority of the Compensation Committee is to provide competitive compensation that would serve the objectives of retention, reward and motivation in the best possible mix of the various compensation components in a particular year. Therefore, in certain years some compensation paid to the named executive officersNEOs may not be deductible by the Company due to the limitations of Section 162(m) of the Code. Section 162(m) provides that the amount of compensation that we may deduct each year for our “covered employees” - the Chief Executive OfficerCEO and each of the three most highly paid officers (other than our Chief Financial Officer)CFO) - is $1 million. Elements of compensation whichthat qualify as “performance-based compensation” are deductible even if in excess of this $1 million limit. In structuring the compensation programs that apply to the covered employees, wethe Compensation Committee considered the requirements and consequences of Section 162(m) of the Code. We designed several elements of our overall compensation program in the form of performance-based compensation. The performance awards (in the form of restricted stock units)units are intended to qualify as performance-based compensation and shall therefore be fully tax deductible. Similarly, annual cash bonuses paid pursuant to the Bonus Plan are intended to qualify as performance-based compensation. In addition to annual cash bonuses and performance awards,restricted stock units, the Company has also granted, and may continue to grant, time-basedservice-based restricted stock awards to covered employees that are not intended to be performance-based compensation and will count against the $1 million compensation deduction limit. During 2012, the covered employees, primarily due to the substantial appreciation in the value of Company Stock,In 2015, Messrs. Copple and Fernandes recognized compensation in excess of $1 million upon vesting of the restricted stock granted in 20082011 and 2010 that was not performance-based2013 and Mr. Warner also recognized compensation in part, is not deductible byexcess of $1 million due to the Company under Section 162(m)vesting of the Code.restricted stock granted in 2011, 2012, 2013 and 2014. While the Compensation Committee has taken into account the potential application of Section 162(m) of the Code on compensation decisions and the Company generally seeks to ensure the deductibility of the incentive compensation paid to the covered employees, the Compensation Committee intends to retain the flexibility 49
necessary to continue the competitive pay practices of the Company. Therefore, not all incentive compensation awards may be fully deductible by the Company. In addition, there may be ambiguities regarding how the conditions to qualify as “performance-based” compensation will be interpreted and administered under the income tax regulations, so that amounts that the Company intends or expects to qualify as deductible may not so qualify. Accordingly, there is no certainty that all elements of compensation discussed in this proxy statement will in fact be deductible. Compensation Risk Assessment The Compensation Committee reviews and approves the design, goals and payouts under the Bonus Plan and the Incentive Plan. The Compensation Committee monitors whether the Company’s compensation programs for executives and employees encourage unnecessary or excessive risk taking. Upon such consideration the Compensation Committee has concluded that the Company’s compensation programs do not create risks that are reasonably likely to have a material adverse effect | | | | | 49 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
on the Company. Below are some of the highlights of the Company’s compensation program which mitigate risks associated with compensation: | v | the Company’s performance metrics are established within the first 90 days of the fiscal year; |
| v | a mix of cash and long-term equity incentive awards; |
| v | cash bonus tied to Company’s overall annual performance and measured against pre-established objective business criteria; |
| v | equity compensation split between long-term and short-term, to balance retention and reward for short-term performance with motivation to increase long-term stockholder value; |
| v | equity compensation vesting is multi-year service-based and performance-based (with overlapping performance periods); |
| v | Compensation Committee has discretion to reduce but may not adjust upward or waive achievement of performance targets for the cash bonus; and |
| v | cash bonus payouts are capped at the lesser of 200% of base salary or $3 million. |
Compensation Committee Report The Compensation Committee has reviewed and discussed the CD&A as required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, the Compensation Committee recommended to the Board that the CD&A be included in this proxy statement and incorporated by reference in the Company’s 2015 Form 10-K, and the Board has approved the recommendation. Respectfully submitted, Nina Vaca (Chair) Benjamin Chereskin Donald Soderquist Carlos Sepulveda Securities Authorized for Issuance Under Equity Compensation Plans | | | | | | | | Plan Category | | Number of Securities to be Issued upon Exercise of Outstanding Options,
Warrants and Rights(1) | | Weighted
Average
Exercise Price of Outstanding
Options,
Warrants and Rights | | Number of Securities
Remaining Available for
Future Issuance Under Equity Compensation
Plans (Excluding Securities
Reflected in the First
Column) | | Equity compensation plans approved by security holders | | 544,076 | | N/A | | 7,361,757 | | Equity compensation plans not approved by security holders | | - | | - | | - | | | | Total | | 544,076 | | N/A | | 7,361,757 | | | |
| (1) | Represents unearned shares underlying restricted stock units, assuming the achievement of maximum performance goals. |
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Summary Compensation Table for 2015 The following table sets forth summary information concerning the total compensation earned by our NEOs for each of the last three completed fiscal years. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | Salary
($)(1) | | Bonus(2) | | Stock Awards ($)(3) | | Non-Equity Incentive Plan Compensation ($)(4) | | All Other Compensation ($)(5) | | Total ($) | | Lee Roy Mitchell | | | | 2015 | | | | | 912,474 | | | | | | | | | | - | | | | | 1,368,711 | | | | | 21,603 | | | | | 2,302,788 | | | Chairman of the Board | | | | 2014 | | | | | 885,897 | | | | | | | | | | - | | | | | 737,953 | | | | | 21,754 | | | | | 1,645,604 | | | | | | 2013 | | | | | 860,094 | | | | | | | | | | - | | | | | 1,146,763 | | | | | 14,275 | | | | | 2,021,132 | | | Tim Warner | | | | 2015 | | | | | 824,000 | | | | | | | | | | 1,647,929 | | | | | 1,236,000 | | | | | 156,529 | | | | | 3,864,458 | | | Former Chief Executive Officer | | | | 2014 | | | | | 825,247 | | | | | | | | | | 1,599,952 | | | | | 666,400 | | | | | 356,074 | | | | | 3,447,673 | | | and Vice Chairman of the Board | | | | 2013 | | | | | 707,000 | | | | | | | | | | 1,001,381 | | | | | 942,643 | | | | | 238,535 | | | | | 2,889,559 | | | Mark Zoradi | | | | 2015 | | | | | 301,500 | | | | | | | | | | 109,986 | | | | | 427,398 | | | | | 23,306 | | | | | 862,190 | | | Chief Executive Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Robert Copple | | | | 2015 | | | | | 618,000 | | | | | | | | | | 926,971 | | | | | 927,000 | | | | | 156,887 | | | | | 2,628,858 | | | Former President & Chief | | | | 2014 | | | | | 616,935 | | | | | | | | | | 899,980 | | | | | 499,800 | | | | | 344,169 | | | | | 2,360,884 | | | Operating Officer | | | | 2013 | | | | | 505,000 | | | | | | | | | | 572,216 | | | | | 673,316 | | | | | 240,864 | | | | | 1,991,396 | | | Sean Gamble | | | | 2015 | | | | | 463,500 | | | | | | | | | | 463,442 | | | | | 521,438 | | | | | 30,674 | | | | | 1,479,054 | | | Chief Financial Officer | | | | 2014 | | | | | 164,423 | | | | | | | | | | 249,992 | | | | | 117,077 | | | | | 4,801 | | | | | 536,293 | | | Valmir Fernandes | | | | 2015 | | | | | 484,100 | | | | | 132,128 | | | | | 605,054 | | | | | 485,100 | | | | | 131,524 | | | | | 1,837,906 | | | | | | | | | | | President – Cinemark | | | | 2014 | | | | | 470,000 | | | | | | | | | | 587,467 | | | | | 395,932 | | | | | 287,278 | | | | | 1,740,677 | | | International | | | | 2013 | | | | | 367,781 | | | | | | | | | | 450,694 | | | | | 397,771 | | | | | 188,396 | | | | | 1,404,642 | |
| (1) | See Design of the Executive Compensation Program – Annual Base Salary beginning on page 42 for a discussion of how the annual base salary is determined. See 2015 Compensation Mix beginning on page 37 for the percentage of total annual compensation for the 2015 fiscal year paid as annual base salary. |
The amount reported for Mr. Zoradi includes $16,568 paid to him as annual cash retainers as a director from June 4 until August 23 and the base salary of $284,932 paid to him as CEO from August 24 until December 31. His annualized base salary was $800,000. | (2) | Mr. Fernandes’ target cash bonus is calculated based on the average of reported Adjusted EBITDA and international Adjusted EBITDA. SeeDesign of the Execution Compensation Program – Cash Bonus beginning on page 43. Despite a record-setting performance by our international segment in 2015, the international Adjusted EBITDA, was adversely affected by the unusual foreign exchange translation adjustments occurring due to the substantial unforeseen currency devaluations across our Latin America operations. As a result, the portion of Mr. Fernandes’ cash bonus which was based upon the international Adjusted EBITDA was negatively impacted. Had the currency impact been excluded, the international Adjusted EBITDA portion of Mr. Fernandes’ cash bonus would have resulted in a payout of 150% of his individual target. Since this was a condition over which Mr. Fernandes had no control, following our compensation philosophy of pay for performance, the Compensation Committee awarded Mr. Fernandes a discretionary bonus of $132,128 to adjust his cash bonus portion that was subject to the international Adjusted EBITDA to its maximum level. His total cash bonus, including the discretionary bonus, yielded a cash bonus payment of 150% of his individual target level, consistent with other NEOs. SeeGrants of Plan-Based Awards in 2015 table for the maximum amount that was payable to Mr. Fernandes. |
| (3) | The reported amounts reflect the aggregate grant date fair values of the long-term equity incentive awards granted during the 2015, 2014 and 2013 fiscal years, computed in accordance with FASB ASC Topic 718. The amounts shown exclude the impact of estimated forfeitures. See Note 16 to the Company’s 2015 Form 10-K for a discussion of the assumptions used in determining the grant date fair values of these long-term equity incentive awards, including forfeiture assumptions and the period over which the Company will recognize compensation expense for such awards. |
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The long-term equity incentive awards granted were restricted stock and restricted stock units. Mr. Mitchell was not awarded any equity due to his substantial equity ownership in the Company. Mr. Zoradi was granted restricted stock on June 15, 2015 as the annual director restricted stock grant when he was elected as a director. The grant date fair values were calculated based upon the closing price of Common Stock on March 18, 2015 of $43.28, March 26, 2014 of $28.54 and March 28, 2013 of $29.44 per share for Messrs. Warner, Copple, Gamble and Fernandes. The grant date fair value of the restricted stock granted to Mr. Zoradi was based on the closing price of Common Stock on June 15, 2015 of $41.63 per share. For purposes of the Summary Compensation Table for 2015, payment at the target level was assumed as the most probable outcome for the restricted stock units. As required by the rules of the SEC, the table below provides the grant date fair values of the restricted stock units at the maximum level of payment: | | | | | | | | | | | | | | Name | | 2015 | | | 2014 | | | 2013 | | Lee Roy Mitchell | | | - | | | | - | | | | - | | Tim Warner | | $ | 1,235,947 | | | $ | 1,199,964 | | | $ | 751,073 | | Mark Zoradi | | | - | | | | - | | | | - | | Robert Copple | | $ | 695,207 | | | $ | 674,971 | | | $ | 429,176 | | Sean Gamble | | $ | 347,582 | | | | - | | | | - | | Valmir Fernandes | | $ | 453,791 | | | $ | 440,601 | | | $ | 338,030 | |
The terms of the restricted stock and restricted stock units are discussed under Design of the Executive Compensation Program – Equity Incentive Compensation beginning on page 45 and the footnote disclosures to the Grants of Plan-Based Awards in 2015 table. See also 2015 Compensation Mix beginning on page 37 for the percentage of total compensation for the 2015 fiscal year granted as long-term equity incentive awards at the target level. | (4) | The reported amounts are the cash bonuses earned by the NEOs for the 2015, 2014 and 2013 fiscal years. Pursuant to the Bonus Plan, the cash bonuses earned for a fiscal year are paid in February or March of the following year subject to the attainment of performance targets set by the Compensation Committee at the beginning of the covered fiscal year. The cash bonuses for the 2015, 2014 and 2013 fiscal years were paid on February 25, 2016, February 19, 2015 and February 28, 2014 respectively. Mr. Fernandes’ cash bonus for all three years was calculated based on the average of worldwide Adjusted EBITDA and international Adjusted EBITDA performances. See Design of the Executive Compensation Program – Cash Bonus beginning on page 43 for a discussion of the amount of cash bonus paid in proportion to total compensation. See also2015 Compensation Mix beginning on page 37 for the percentage of total compensation for the 2015 fiscal year paid as cash bonus. |
| (5) | The compensation reported in this column include the following: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Fiscal
Year | | Annual Matching
Contributions to
401(k) Savings
Plan ($) | | Life, Group and
Disability
Insurance
Premiums Paid
by Company ($) | | Dividends Paid on
Restricted Stock and Vested
RSU(i) ($) | | Tax Gross-
up | | Other ($) | Lee Roy Mitchell | | | | 2015 | | | | | 13,913 | | | | | 7,690 | | | | | - | | | | | - | | | | | - | | | | | | 2014 | | | | | 13,650 | | | | | 7,918 | | | | | - | | | | | 186(ii) | | | | | - | | | | | | 2013 | | | | | 13,387 | | | | | 888 | | | | | - | | | | | - | | | | | - | | | | | | 2015 | | | | | 13,913 | | | | | 30,296 | | | | | 112,320 | | | | | - | | | | | | | | Tim Warner | | | | 2014 | | | | | 13,650 | | | | | 23,452 | | | | | 316,232 | | | | | 2,740(ii) | | | | | - | | | | | | 2013 | | | | | 13,387 | | | | | 3,430 | | | | | 221,718 | | | | | - | | | | | - | | | Mark Zoradi | | | | 2015 | | | | | - | | | | | 3,173 | | | | | 1,321 | | | | | - | | | | | 18,812(iv) | | Robert Copple | | | | 2015 | | | | | 13,913 | | | | | 18,687 | | | | | 124,287 | | | | | - | | | | | - | | | | | | 2014 | | | | | 13,650 | | | | | 19,896 | | | | | 307,525 | | | | | 3,098(ii) | | | | | - | | | | | | 2013 | | | | | 13,387 | | | | | 6,989 | | | | | 215,205 | | | | | 5,283(iii) | | | | | - | |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Fiscal
Year | | Annual Matching
Contributions to
401(k) Savings
Plan ($) | | Life, Group and
Disability
Insurance
Premiums Paid
by Company ($) | | Dividends Paid on
Restricted Stock and Vested
RSU(i) ($) | | Tax Gross-
up | | Other ($) | | Sean Gamble | | | | 2015 | | | | | 13,913 | | | | | 6,875 | | | | | 9,886 | | | | | - | | | | | - | | | | | | 2014 | | | | | - | | | | | 1,142 | | | | | 3,522 | | | | | 137(ii) | | | | | - | | Valmir Fernandes | | | | 2015 | | | | | 13,913 | | | | | 13,996 | | | | | 103,615 | | | | | - | | | | | - | | | | | | 2014 | | | | | 13,650 | | | | | 13,412 | | | | | 257,641 | | | | | 2,575(ii) | | | | | - | | | | | | 2013 | | | | | 13,387 | | | | | 3,162 | | | | | 141,847 | | | | | - | | | | | 30,000(v) | |
| (i) | Dividends paid on all outstanding restricted stock and dividends paid on restricted stock units at the time of issuance of the underlying Common Stock. The restricted stock units granted on March 31, 2011 vested at the maximum level and the accrued dividends outstanding on the underlying Common Stock were paid on March 31, 2015. See Design of the Executive CompensationProgram – Equity Incentive Compensationbeginning on page 45 for a discussion of the dividend payment on restricted stock and restricted stock units. |
| (ii) | Taxes paid by the Company on executive disability and long-term disability. |
| (iii) | Includes $12.91 paid by the Company for Medicare taxes attributed to life insurance policy purchased for Mr. Copple and $5,270 paid by the Company as premium for Mr. Coppell’s medical insurance. |
| (iv) | Pursuant to Mr. Zoradi’s employment offer, the Company paid $6,250 for Mr. Zoradi’s personal travel expenses and $12,562 for his moving expenses and rent. |
| (v) | Expatriate allowance pursuant to Mr. Fernandes’ employment agreement. |
For a narrative description of the amounts reported in the Summary Compensation Table for 2015, see Design of the Executive Compensation Program beginning on page 42 for a discussion of the various elements of compensation, including a general description of the formula or criteria to be applied in determining the amounts payable, the material terms of long-term equity incentive awards, the vesting schedule and whether the equity granted shall receive dividends, Grants of Plan-Based Awards in 2015table for details of the equity granted in 2015 andDiscussion of the Terms of the Employment Agreements with Our NEOs beginning on page 58 for a discussion of the material terms of the employment agreement of each NEO. | | | | | 53 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
Grants of Plan-Based Awards in 2015 The following table specifies the grants of awards made under the Incentive Plan and the Bonus Plan to the NEOs during and with respect to the 2015 fiscal year. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Grant
Date(1) | | Approval Date(2) | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(3) | | Estimated Future Payouts Under Equity Incentive Plan Awards(4) | | All Other Stock Awards(5) | | Grant Date FV of Stock Awards(6) | | | | | | | | Threshold | | Target | | Maximum | | Threshold | | Target | | Maximum | | | | | Lee Roy Mitchell | | | | 2/25/2016 | | | | | 2/16/2016 | | | | $ | 821,227 | | | | $ | 912,474 | | | | $ | 1,368,711 | | | | | - | | | | | - | | | | | - | | | | | - | | | | | - | | Tim Warner | | | | 2/25/2016 | | | | | 2/16/2016 | | | | $ | 741,600 | | | | $ | 824,000 | | | | $ | 1,236,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3/18/2015 | | | | | 3/13/2015 | | | | | | | | | | | | | | | | | | | | 9,519 | | | | | 19,038 | | | | | 28,557 | | | | | | | | | $ | 823,965 | | | | | | 3/18/2015 | | | | | 3/13/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 19,038 | | | | $ | 823,965 | | Mark Zoradi | | | | 6/15/2015 | | | | | - | | | | $ | 94,968 | | | | $ | 284,932 | | | | $ | 427,398 | | | | | - | | | | | - | | | | | - | | | | | - | | | | | - | | Robert Copple | | | | 2/25/2016 | | | | | 2/16/2016 | | | | $ | 556,200 | | | | $ | 618,000 | | | | $ | 927,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3/18/2015 | | | | | 3/13/2015 | | | | | | | | | | | | | | | | | | | | 5,355 | | | | | 10,709 | | | | | 16,063 | | | | | | | | | $ | 463,486 | | | | | | 3/18/2015 | | | | | 3/13/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 10,709 | | | | $ | 463,486 | | Sean Gamble | | | | 2/25/2016 | | | | | 2/16/2016 | | | | $ | 312,863 | | | | $ | 347,625 | | | | $ | 521,438 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3/18/2015 | | | | | 3/13/2015 | | | | | | | | | | | | | | | | | | | | 2,677 | | | | | 5,354 | | | | | 8,031 | | | | | | | | | $ | 231,721 | | | | | | 3/18/2015 | | | | | 3/13/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5,354 | | | | $ | 231,721 | | Valmir Fernandes | | | | 2/25/2016 | | | | | 2/16/2016 | | | | $ | 370,337 | | | | $ | 411,485 | | | | $ | 617,228 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3/18/2015 | | | | | 3/13/2015 | | | | | | | | | | | | | | | | | | | | 3,495 | | | | | 6,990 | | | | | 10,485 | | | | | | | | | $ | 302,527 | | | | | | 3/18/2015 | | | | | 3/13/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 6,990 | | | | $ | 302,527 | |
| (1) | The dates the Company paid the cash bonus and granted the long-term equity incentive awards. |
| (2) | The dates the Compensation Committee approved the payouts of the cash bonus and the grants of thelong-term equity incentive awards. |
| (3) | See Design of the Executive Compensation Program – Cash bonus beginning on page 43 for a description of the cash bonus process under the Bonus Plan. See2015 Executive Compensation Highlights: Cash Bonus on page 6 for the target bonus opportunities of each NEO for the 2015 fiscal year. See 2015 Compensation Mix beginning on page 37 for the percentage of total compensation for the 2015 fiscal year paid as cash bonus. See Summary Compensation Table for 2015 on page 51 and the related footnote disclosure for the actual cash bonus amounts paid to each NEO for the 2015 fiscal year. |
| (4) | On March 18, 2015, the Compensation Committee awarded restricted stock units under the Incentive Plan for an aggregate maximum of 72,952 hypothetical shares of restricted stock to Messrs. Warner, Copple, Gamble and Fernandes. The number of shares underlying each restricted stock unit award was determined in part by reference to the closing price of Common Stock on March 18, 2015 of $43.28 per share. |
| SeeDesign of the Executive Compensation Program – Equity Incentive Compensation – Performance Awards beginning on page 46 for a discussion of the terms of the restricted stock units. |
| Holders of restricted stock units receive dividends that are attributable to the underlying Common Stock to the extent issued at the time of vest. The dividend is paid at the same rate the dividend is paid to other stockholders, which is currently $0.27 per share of Common Stock per fiscal quarter. |
| (5) | On March 18, 2015, the Compensation Committee awarded an aggregate of 48,635 shares of restricted stock under the Incentive Plan to Messrs. Warner, Copple, Gamble and Fernandes. The number of shares underlying each award was determined by reference to the closing price of the Common Stock on March 18, 2015 of $43.28 per share. |
| SeeDesign of the Executive Compensation Program– Equity Incentive Compensation – Restricted Stock on page 46 for a discussion of the terms of the restricted stock. |
| Holders of restricted stock receive non-forfeitable dividends to the extent declared by our Board, at the same rate paid to other stockholders of the Company. The current dividend rate is $0.27 per share of Common Stock per fiscal quarter. |
| (6) | The aggregate grant date fair values of restricted stock and restricted stock units were determined using the closing price of Common Stock on March 18, 2015 of $43.28 per share. Pursuant to the rules of the SEC, for purposes of the Grants of Plan-Based Awards in 2015 table the aggregate grant date fair values of restricted stock units were determined based upon the target level of payment as the most probable outcome and were computed in |
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| accordance with FASB ASC Topic 718. The amounts shown exclude the impact of estimated forfeitures. See Note 16 to the Company’s 2015 Form 10-K, for discussion of the assumptions used in determining the grant date fair values of these share awards, including forfeiture assumptions, and the period over which the Company will recognize compensation expense for such awards. |
For a narrative description of the amounts reported in the Grants of Plan Based Awards in 2015, see Design of the Executive Compensation Program beginning on page 42 for a general description of the formula or criteria to be applied in determining the amounts payable, the material terms of long-term equity incentive awards and the vesting schedule, explanation of the amount of salary and cash bonus in proportion to total compensation and theDiscussion of the Terms of the Employment Agreements with Our NEOs beginning on page 58 for a discussion of the material terms of the employment agreement of each NEO. Outstanding Equity Awards at Fiscal Year-End The following table lists the restricted stock and restricted stock units outstanding for each NEO as of December 31, 2015. There were no stock options outstanding for any NEO as of December 31, 2015. | | | | | | | | | | | | | | | | | | | | | | | | Stock Awards | | Name | | Number of Shares or Units of Stock That Have Not Vested # | | Market Value of Shares or Units of Stock That Have Not Vested $(9) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
#(10) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested $(11) | Lee Roy Mitchell | | | | - | | | | | - | | | | | - | | | | | - | | Tim Warner | | | | 19,038 | (2) | | | | 636,440 | | | | | 9,519 | | | | | 318,220 | | | | | | 14,015 | (3) | | | | 468,521 | | | | | | | | | | | | | | | | 5,670 | (4) | | | | 189,548 | | | | | | | | | | | | | | | | 0 | (5) | | | | | | | | | | | | | | | | | | | | 27,579 | (6) | | | | 921,966 | | | | | | | | | | | | | | | | 25,512 | (7) | | | | 852,866 | | | | | | | | | | | | | | | | 42,045 | (8) | | | | 1,405,564 | | | | | | | | | | | | Mark Zoradi | | | | 2,642 | (1) | | | | 88,322 | | | | | | | | | | | | Robert Copple | | | | 10,709 | (2) | | | | 358,002 | | | | | 5,355 | | | | | 179,018 | | | | | | 15,767 | (3) | | | | 527,091 | | | | | | | | | | | | | | | | 4,860 | (4) | | | | 162,470 | | | | | | | | | | | | | | | | 31,172 | (5) | | | | 1,042,080 | | | | | | | | | | | | | | | | 15,758 | (6) | | | | 526,790 | | | | | | | | | | | | | | | | 14,578 | (7) | | | | 487,343 | | | | | | | | | | | | | | | | 23,650 | (8) | | | | 790,620 | | | | | | | | | | | | Sean Gamble | | | | 5,354 | (2) | | | | 178,984 | | | | | 2,677 | | | | | 89,492 | | | | | | 4,696 | (3) | | | | 156,987 | | | | | | | | | | | | Valmir Fernandes | | | | 6,990 | (2) | | | | 233,676 | | | | | 3,495 | | | | | 116,838 | | | | | | 10,292 | (3) | | | | 344,062 | | | | | | | | | | | | | | | | 3,828 | (4) | | | | 127,970 | | | | | | | | | | | | | | | | 27,303 | (5) | | | | 912,739 | | | | | | | | | | | | | | | | 12,421 | (6) | | | | 415,234 | | | | | | | | | | | | | | | | 11,482 | (7) | | | | 383,843 | | | | | | | | | | | | | | | | 15,438 | (8) | | | | 516,092 | | | | | | | | | | | |
| (1) | The number of shares granted to Mr. Zoradi as a director on June 15, 2015 pursuant to the Director Compensation Policy. The shares vest on June 15, 2016. |
| (2) | The number of shares of restricted stock granted on March 18, 2015. |
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| The reported shares for Mr. Warner vested 50% on March 18, 2016 and per the terms of his employment agreement, the remaining 50% vested on April 1, 2016 upon the expiration of the term of his employment agreement. |
| The reported shares for Mr. Copple vested pro rata as specified in his employment agreement upon his resignation effective March 4, 2016. |
| The reported shares for Messrs. Gamble and Fernandes vest equally on March 18, 2017 and March 18, 2019. |
| (3) | The number of shares of restricted stock granted on March 26, 2014 and remaining outstanding as of December 31, 2015. |
| The reported shares for Mr. Warner vested on March 26, 2016. |
| The reported shares for Mr. Copple vested pro rata as specified in his employment agreement upon his resignation effective March 4, 2016. |
| The reported shares for Mr. Fernandes vest equally on March 26, 2016 and March 26, 2018. |
| The reported shares for Mr. Gamble vest equally on August 27, 2016 and August 27, 2017. |
| (4) | The number of shares of restricted stock granted on March 29, 2013 and remaining outstanding as of December 31, 2015. |
| The reported shares for Mr. Warner vested on March 29, 2016. |
| The reported shares for Mr. Copple vested pro rata as specified in his employment agreement upon his resignation effective March 4, 2016. |
| The reported shares for Mr. Fernandes vest on March 29, 2017. |
| (5) | The number of shares of restricted stock granted on March 8, 2012 and remaining outstanding as of December 31, 2015.The reported shares vested on March 8, 2016. However, the reported shares for Mr. Copple vested pro rata as specified in his employment agreement upon his resignation effective March 4, 2016. |
| (6) | The reported shares represent the number of shares of Common Stock underlying the restricted stock units granted on March 8, 2012. The relevant performance condition was based on an IRR over the three-year performance period from January 1, 2012 until December 31, 2014. On February 11, 2015, the Compensation Committee approved the level of IRR achieved by the Company over the three-year performance period and determined that 76.67% of the maximum (115% of the target) of the restricted stock units shall vest. The shares of Common Stock underlying the restricted stock units were issued on March 8, 2016. The reported shares for Mr. Copple vested pro rata as specified in his employment agreement upon his resignation effective March 4, 2016. |
| (7) | The reported shares represent the number of shares of Common Stock underlying the restricted stock units granted on March 29, 2013. The relevant performance condition was based on an IRR over the three-year performance period from January 1, 2013 until December 31, 2015. On February 17, 2016, the Compensation Committee approved the level of IRR achieved by the Company over the three-year performance period and determined that the restricted stock units shall vest at the maximum. Subject to continued employment, the shares of Common Stock underlying the restricted stock units will be issued on March 29, 2017. |
| However, the restricted stock units reported for Mr. Warner and Mr. Copple vested pro rata as specified in their respective employment agreements, without any continued service requirement and the shares of Common Stock underlying the restricted stock units were issued on April 1, 2016 and March 4, 2016 respectively. |
| (8) | The reported shares represent the number of shares of Common Stock underlying the restricted stock units granted on March 26, 2014. The relevant performance condition was based on an IRR over the two-year performance period from January 1, 2014 until December 31, 2015. On February 17, 2016, the Compensation Committee approved the level of IRR achieved by the Company over the two-year performance period and determined that the restricted stock units shall vest at the maximum. Subject to continued employment, the shares of Common Stock underlying the restricted stock units will be issued on March 26, 2018. |
| The restricted stock units reported for Mr. Warner and Mr. Copple vested pro rata as specified in their respective employment agreements, without any continued service requirement and the shares of Common Stock underlying the restricted stock units were issued on April 1, 2016 and March 4, 2016 respectively. |
| (9) | The fair market value of the restricted stock was calculated based on the closing price of Common Stock on December 31, 2015 of $33.43 per share. |
| (10) | The number of shares of Common Stock underlying the restricted stock units granted on March 18, 2015. Pursuant to the rules of the SEC, the reported numbers are based on the assumption of achievement of the threshold performance target for the 2015 Grant. The payouts of the restricted stock units are subject to the |
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| Company achieving performance targets over the two-year performance period from January 1, 2015 until December 31, 2016 and satisfaction of an additional employment requirement. To the extent they vest and subject to continued employment, the common stock underlying the restricted stock units shall be issued on March 18, 2019. Per the terms of the employment agreements of Messrs. Warner and Copple, the reported number of shares of Common Stock underlying the restricted stock units remain outstanding and shall vest pro rata as specified in their respective employment agreements, to the extent the IRR is achieved over the two-year performance period. |
| (11) | The fair market value of the unearned restricted stock units was determined based on the achievement of threshold performance targets at the closing price of Common Stock on December 31, 2015 of $33.43 per share. |
Stock Option Exercises and Stock Vested in 2015 The following table provides information on the vesting of restricted stock and restricted stock units during 2015 for each of the NEOs. There were no outstanding stock options for any of the NEOs as of December 31, 2015. Stock Vested | | | | | | | | | | Name | | Stock Awards | | | | | Number of Shares Acquired on Vesting(1) # | | | Value Realized on Vesting ($)(2) | | Lee Roy Mitchell | | | - | | | | - | | Tim Warner | | | 69,332 | | | | 2,993,094 | | Mark Zoradi | | | - | | | | - | | Robert Copple | | | 28,091 | | | | 1,253,562 | | Sean Gamble | | | 2,348 | | | | 83,213 | | Valmir Fernandes | | | 24,396 | | | | 1,088,774 | |
| (1) | The reported numbers include Common Stock from the following vest events: |
| i. | Fifty percent of the restricted stock granted on March 31, 2011 vested on March 31, 2015; |
| ii. | The shares of Common Stock underlying the restricted stock units granted in 2011. In February 2014, the Compensation Committee certified that the Company had achieved the highest level of IRR over the three-year performance period from January 1, 2011 until December 31, 2013. The Common Stock underlying the restricted stock units were issued on March 31, 2015. |
| iii. | One-third of Mr. Warner’s restricted stock granted on March 8, 2012 vested on March 8, 2015; |
| iv. | One-third of Mr. Warner’s restricted stock and 50% of the restricted stock of Messrs. Copple and Fernandes granted on March 29, 2013 vested on March 29, 2015; |
| v. | Fifty-percent of Mr. Warner’s restricted stock granted on March 26, 2014 vested on March 26, 2015; and |
| vi. | One-third of Mr. Gamble’s restricted stock granted on August 27, 2014 vested on August 27, 2015. |
| (2) | The aggregate dollar amount realized upon vesting was calculated based upon the closing price of Common Stock on the following dates: |
| i. | March 30, 2015 of $44.67 per share; |
| ii. | March 6, 2015 of $41.21 per share; |
| iii. | March 27, 2015 of $44.41 per share; |
| iv. | March 30, 2015 of $43.52 per share; and |
| v. | August 26, 2015 of $35.44 per share. |
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Discussion of the Terms of the Employment Agreements with our Named Executive OfficersNEOs We have employment agreements with our named executive officersNEOs and certain other executive officers. Consistent with our compensation philosophy, the Company entered into the employment agreements to more closely align the compensation of certain executive officers with market competitive compensation. Effective February 15, 2012, upon his retirement as the Chief Executive Officer of the Company, Mr. Stock’s employment agreement dated June 16, 2008 was terminated. No further payments are payable by us to Mr. Stock under the employment agreement. However, post-termination obligations of the Company and Mr. Stock (other than compensation payments) shall remain in effect under the employment agreement.
Mr. Stock remains in a consulting role with the Company pursuant to the Consulting Agreement. During the Term, subject to standard withholding and other authorized deductions, the Company shall pay Mr. Stock the following fixed sums for his consulting services:
| | | Period | | Amount | February 16, 2012 – December 31, 2012
| | $1,300,000 | January 1, 2013 – December 31, 2013
| | $1,001,025 | January 1, 2014 – April 30, 2014
| | $333,675 |
Also, any outstanding equity awards with time-based or performance-based provisions granted to Mr. Stock shall vest in accordance with such equity award agreement and any remaining unvested or unearned equity awards at the end of the Term shall be forfeited. SeeOutstanding Equity Awards at December 31, 2012 table on page 59 for the number of restricted stock and performance awards that will vest as of April 30, 2014.
In the event of death or disability (as defined in the Consulting Agreement) of Mr. Stock before the expiration of the Term, Mr. Stock or his estate shall be entitled to receive all remaining unpaid compensation through the end of the Term and all equity awards, time-based or performance-based, that vest after Mr. Stock’s death or disability but prior to the end of the Term shall be deemed to have been earned or vested. Mr. Stock and his dependents are entitled to continue to participate in the Company’s welfare benefit plans and insurance programs on the same term as similarly situated executives actively employed during the Term.
Below is a summary of the key provisions of the current employment agreements of Messers.Messrs. Mitchell, Warner, Copple, FernandesZoradi, Gamble and Cavalier. Unless otherwise statedFernandes. Although Mr. Warner’s employment agreement terminated effective April 1, 2016 and Mr. Copple’s employment agreement terminated effective March 4, 2016, the summary below includes material terms of their employment agreements since their compensation for the 2015 fiscal year were governed by the terms of thetheir respective employment agreements are identical.agreements. Term The initial term of Mr. Warner’s Restated Employment AgreementZoradi’s employment agreement terminates on April 1, 2014.August 23, 2018. However, the Company may elect to extend the term for another one yearan additional one-year period at the end of the term.upon six months’ notice to Mr. Zoradi. The initial termterms of the employment agreements of Messers.Messrs. Mitchell, Copple,Gamble and Fernandes and Copple wasis three years. However, atAt the end of each year, of the term, the term is extended for an additional one yearone-year period unless the named executive officer’sNEO’s employment is terminated. 50
Annual Base CompensationSalary The annual base salaries are subject to review each year by our Compensation Committee for increase (but not decrease) each year. . Cash Bonus In addition to annual base salaries, the named executive officersNEOs are eligible to receive an annuala cash incentive compensationbonus upon ourthe Company meeting certain performance targets established by ourthe Compensation Committee for the fiscal year. Mr. Warner, Mr. Zoradi and Mr. Copple’s target bonus shall not be less than 100% and the maximum target shall not be less than 150% of their respective annual base salaries. Messrs. Mitchell, Gamble and Fernandes do not have a target cash bonus percentage specified in their employment agreements. Long-term Equity Incentive Awards The NEOs are entitled to participate in and receive grants of long-term equity incentive awards under the Company’s Incentive Plan. Mr. Warner and Mr. Zoradi’s long-term equity incentive awards must be at least 200% of their respective base salaries and Mr. Copple’s long-term equity incentive awards must be at least 150% of his annual base salary. Benefits The NEOs qualify for our 401(k) matching program and are also entitled to certain additional benefits including life insurance and disability insurance. Pursuant to his employment agreement, Mr. Mitchell is entitled to life insurance benefits of not less than $5 million and disability benefits of not less than 66% of his base salary. | | | | | 58 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
Perquisites Under his employment agreement, Mr. Mitchell is entitled to a luxury automobile and a membership at a country club. Currently, Mr. Mitchell does not have a luxury automobile or a country club membership paid for by the Company. Unless Mr. Mitchell’s employment is terminated by us for cause or under a voluntary termination, Mr. Mitchell will also be entitled, for a period of five years, to tax preparation assistance upon termination of his employment. Mr. Zoradi is entitled to receive an annual personal expense allowance of $30,000 for personal travel and living expenses, reduced by standard withholding and other authorized deductions. The employment agreements of Messrs. Warner, Zoradi, Copple, Gamble and Fernandes provide that unless the executive’s employment is terminated by us for cause the executive will be entitled to office space and support services for a period of not more than three (3) months following the date of any termination. Covenants All the employment agreements contain various covenants, including covenants related to confidentiality and non-competition (other than certain permitted activities as defined therein). In addition, Mr. Mitchell’s employment agreement has a covenant of non-solicitation (as defined in the employment agreement). All non-compete covenants have a term of one year after termination of the executive’s employment. However, if employment is terminated for Good Reason (as defined in the employment agreements), the covenant of non-competition becomes null and void. The non-solicitation covenant in Mr. Mitchell’s employment agreement has a term of three years after termination of Mr. Mitchell’s employment. Severance Payments The employment agreements provide for severance payments upon termination of employment, the amount and nature of which depends upon the reason for termination. Termination for Good Reason or Without Cause If Mr. Mitchell resigns for good reason (as defined in the agreement) or is terminated by us without cause, Mr. Mitchell shall receive in a lump sum, subject to applicable Section 409A requirements, accrued compensation (which includes unpaid annual base salary, a pro rata annual cash bonus for the fiscal year in which the termination occurs and any previously vested long-term equity incentive awards and benefits such as retirement benefits and vacation pay, in accordance with the terms of the plan or agreement pursuant to which such long-term equity incentive awards or benefits were granted) through the date of termination (the “Accrued Employment Entitlements”); an amount equal to Mr. Mitchell’s annual base salary in effect as of the date of such termination, payable in accordance with the Company’s normal payroll practices for a period of twelve (12) months; an amount equal to the most recent annual cash bonus Mr. Mitchell received for the fiscal year prior to the date of such termination, payable within thirty (30) days of termination and Mr. Mitchell and his dependents will be entitled to continue to participate in the Company’s welfare benefit plans and insurance programs for twelve (12) months from the termination date. Any outstanding stock options granted to Mr. Mitchell shall be vested and/or exercisable for the period through the date of such termination of employment, and shall remain exercisable, in accordance with the terms contained in the plan and the agreement pursuant to which such option awards were granted. | | | | | 59 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
If Mr. Mitchell resigns for good reason (as defined in his employment agreement), he shall receive all of the above stated payments and benefits except that the base salary shall be payable in a lump sum subject to the requirements of Section 409A of the Code. If Mr. Warner resignsor Mr. Zoradi resign for good reason (as defined in the agreement), is terminated by us without cause or upon expiration of the termterms of the Restated Employment Agreement, Mr. Warneremployment agreements, they shall receive, accrued compensation through the date of termination;Accrued Employment Entitlements; an amount equal to Mr. Warner’s annualtheir base salary in effect as of the date of such termination payable in accordance with the Company’s normal payroll practices for a periodthrough the end of twelve (12) months, and Mr. Warnerthe term, subject to the requirements of Section 409A of the Code; the executive and his dependents will also be entitled to continue to participate in the Company’s welfare benefit plans and insurance programs for a period of twenty-four (24) months from the termination date. The annual base salary payable to Mr. Warner shall be payable in accordance with the Company’s normal payroll practices. Anydate; any outstanding long-term equity incentive awards with time-basedservice-based vesting provisions shall become immediately vested as of the termination date and any long-term equity incentive awards with performance-based vesting provisions shall remain outstanding through the remainder of the applicable performance period, and if or to the extent the performance provisions are attained, shall become vested without regard to any continued employment requirement. If Messers.Messrs. Copple, FernandesGamble or Cavalier resigns for good reason (as defined in the agreement) orFernandes is terminated by us without cause, the executive shall receive in a lump sum, subject to applicable Section 409A requirements,accrued compensation through the date of termination;Accrued Employment Entitlements; two times the annual base salary in effect as of the date of such termination, payable in accordance with the Company’s normal payroll practices for a period of twenty-four (24) months; ; an amount equal to the most recent annual cash bonus received by the executive for the fiscal year ended prior to the date of such termination, payable in a lump sum within thirty (30) days of termination; outstanding stock options will become fully vested and exercisable upon such termination; long-term equity incentive awards other than stock options with time-basedservice-based vesting provisions shall become vested on a pro rata basis and long-term equity incentive awards other than stock options with performance-based vesting provisions shall remain outstanding through the remainder of the applicable performance period and if or to the extent the performance provisions are attained shall become vested on a pro rata basis without any regard to any continued employment requirement. The executive and executive’s dependents will also be entitled to continue to participate in the Company’s welfare benefit plans and insurance programs for a period of twenty-four (24) months from the termination date. If Messrs. Copple, Gamble or Fernandes resigns for good reason (as defined in their respective employment agreement) the executive shall receive all of the above stated payments and benefits except that the base salary shall be payable in a lump sum subject to the requirements of Section 409A of the Code. 51
Termination Due to Death or Disability In the event an executive’s employment is terminated due to his death or disability (as defined in the employment agreement), the executive or his estate will receive: accrued compensation through the date of termination;Accrued Employment Entitlements; a lump sum payment equal to twelve (12) months of executive’s annual base salary as in effect at the time of termination, provided, in the case of disability, such amount shall be offset by the amount of annual base salary paid by the Company to executive or his representative following the date he was first unable to substantially perform his duties under his employment agreement through the date of termination, and any benefits payable to executive and/or his beneficiaries in accordance with the terms of any applicable benefit plan. Theplan and the executive (in disability) and executive’s dependents will be entitled to continue to participate in the Company’s welfare benefit plans and insurance programs for twelve (12) months from the termination date. All outstanding long-term equity incentive awards shall vest in accordance with the Incentive Plan. | | | | | 60 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
Termination Forfor Cause or Voluntary Termination In the event an executive’s employment is terminated by us for cause or under a voluntary termination (other than termination due to disability or good reason), the executive will receive accrued annual base salary through the date of termination and any previously vested rights under a stock option or similar award issued under an incentive compensation plan in accordance with the terms of such plan. Termination Due to Change-in-ControlChange of Control Mr. Mitchell does not have a change-in-controlchange of control provision in his employment agreement. In the event an executive’s employment is terminated by us (other than for disability, death or cause) or by executive for good reason within one (1) year after a change-in-controlchange of control (as defined in the employment agreement), the executive shall receive accrued compensation through the date of termination; sum of two times executive’s annual base salary and one and one half times the most recent annual cash bonus received by executive for any fiscal year ended prior to the date of termination payable in a lump sum within thirty (30)30 days of termination and executive and executive’s dependents shall be entitled to continue to participate in the Company’s welfare benefit plans and insurance programs for a period of thirty (30)30 months from the termination date. Any outstanding equity award granted to the executive shall become fully vested and/or exercisable as of the date of such termination and shall remain exercisable in accordance with the terms of the plan or agreement pursuant to which such long-term equity incentive awards were granted. Benefits
The named executive officers qualify for our 401(k) matching program and are also entitled to certain additional benefits including life insurance and disability insurance. Pursuant to his employment agreement, Mr. Mitchell is entitled to life insurance benefits of not less than $5 million and disability benefits of not less than 66% of annual base salary.
Perquisites
Under his employment agreement, Mr. Mitchell is entitled to a luxury automobile and a membership at a country club. Currently, Mr. Mitchell does not have a luxury automobile or a country club membership paid for by the Company.
Unless Mr. Mitchell’s employment is terminated by us for cause or under a voluntary termination, Mr. Mitchell will also be entitled, for a period of five years, to tax preparation assistance upon termination of his employment.
The employment agreements of Messers. Warner, Copple, Fernandes and Cavalier, provide that unless the executive’s employment is terminated by us for cause the executive will also be entitled to office space and support services for a period of not more than three months (3) following the date of any termination.
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Covenants
All the employment agreements contain various covenants, including covenants related to confidentiality, non-competition (other than certain permitted activities as defined therein) and non-solicitation.
Additional informationInformation on amounts payable had a termination for good reason, a change-in-control,change of control, death or disability occurred on December 31, 20122015 may be found under the headings —– “Potential Payments Upon Termination by us Without Cause or by Executive for Good Reason”, “Potential Payments Upon Termination due to Change-in-ControlChange of control” and “Potential Payments Upon Death or Disability.”
Compensation Risk Assessment
The Compensation Committee reviews, approves and certifies the design, goals and payouts under the Bonus Plan and the Restated Incentive Plan. The Compensation Committee monitors whether the Company’s compensation programs for executives and employees encourage unnecessary or excessive risk taking. Upon such consideration the Compensation Committee has concluded that the Company’s compensation programs do not create risks that are reasonably likely to have a material adverse effect on the Company. Below are some of the highlights of the Company’s compensation program which mitigate risks associated with compensation:
The Company’s performance metrics are established within the first 90 days of the fiscal year;
A mix of cash and equity awards with emphasis on equity;
Annual cash incentive tied to Company’s overall annual performance and measured against a pre-established objective business criteria;
Equity compensation split between long-term and short-term, balancing retention and motivation with long-term Company performance;
Equity compensation vesting is multi-year time-based and performance-based (with overlapping performance periods);
Compensation Committee has discretion to reduce but may not adjust upward or waive achievement of performance targets for the annual cash incentive award;
The Bonus Plan caps the annual cash incentive award payouts at 200% of a named executive officer’s annual base salary and subject to approval by the stockholders of Item 5, will be capped at the lesser of 200% of annual base salary or $3 million;
Certain hedging transactions by named executive officers are prohibited;
Double trigger for involuntary termination of employment upon change-in-control; and
No change-in-control provision in Mr. Mitchell’s employment agreement.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the CD&A required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, the Compensation Committee recommended to the Board that the CD&A be included in this proxy statement and incorporated by reference in our 2012 Form 10-K and the Board has approved the recommendation.
Respectfully submitted,
Benjamin D. Chereskin (Chairman)
Vahe A. Dombalagian
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Summary Compensation Table for 2012
The following table contains summary information concerningtables provide the total compensation earned by our Chief Executive Officer, Chief Financial Officeramounts payable to the NEOs pursuant to their respective employment agreements upon severance without cause, for a good reason, for cause, death or disability and our three other most highly compensated executive officers serving in this capacity aschange of control, assuming such triggering event occurred on December 31, 2012 and whose total compensation exceeded $100,000 for the fiscal year ended December 31, 2012. Pursuant to the rules of the SEC, the compensation paid to Mr. Stock for his services as the Chief Executive Officer from January 1, 2012 until February 15, 2012 and the payments made to him pursuant to the Consulting Agreement have also been disclosed in the table. Also, since Mr. Cavalier was not a named executive officer in 2011 and 2010, his summary compensation information for 2011 and 2010 have been omitted. | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | | Salary ($)(1) | | | Stock
Awards ($)(2) | | | Non-Equity
Incentive Plan
Compensation
($)(3) | | All Other
Compensation
($)(4) | | Total ($) | | Lee Roy Mitchell | | | 2012 | | | | 851,758 | | | | - | | | 1,135,409 | | 114,449 | | | 2,101,616 | | Chairman of the Board | | | 2011 | | | | 834,880 | | | | - | | | 1,069,064 | | 114,114 | | | 2,018,058 | | | | | | 2010 | | | | 818,510 | | | | - | | | 1,091,347 | | 113,008 | | | 2,022,865 | | | | | | | | | | | | | | | | | | | | | | | | Alan W. Stock | | | 2012 | | | | 99,465 | | | | - | | | - | | 1,531,767 | | | 1,631,232 | | Chief Executive Officer (January 1, 2012 –February 15, 2012) | | | 2011 | | | | 633,845 | | | | 837,333 | | | 811,638 | | 137,794 | | | 2,420,609 | | | | | | 2010 | | | | 621,417 | | | | 2,610,736 | | | 828,556 | | 114,289 | | | 4,174,997 | | | | | | | | | | | | | | | | | | | | | | | | Tim Warner | | | 2012 | | | | 700,000 | | | | 2,129,704 | | | 933,310 | | 207,655 | | | 3,970,669 | | Chief Executive Officer, President & Chief Operating Officer | | | 2011 | | | | 464,455 | | | | 490,832 | | | 446,051 | | 111,210 | | | 1,512,548 | | | | | | 2010 | | | | 455,348 | | | | 2,289,346 | | | 455,348 | | 86,523 | | | 3,286,564 | | | | | | | | | | | | | | | | | | | | | | | | Robert Copple | | | 2012 | | | | 500,000 | | | | 1,639,799 | | | 666,650 | | 198,929 | | | 3,005,378 | | Chief Financial Officer, Executive VP & Treasurer | | | 2011 | | | | 437,134 | | | | 461,962 | | | 419,813 | | 112,358 | | | 1,431,267 | | | | | | 2010 | | | | 428,563 | | | | 2,262,532 | | | 428,563 | | 87,300 | | | 3,206,958 | | | | | | | | | | | | | | | | | | | | | | | | Valmir Fernandes | | | 2012 | | | | 364,140 | | | | 1,410,722 | | | 364,131 | | 166,173 | | | 2,305,166 | | President – Cinemark International | | | 2011 | | | | 357,000 | | | | 409,001 | | | 379,328 | | 120,999 | | | 1,266,328 | | | | | | 2010 | | | | 350,000 | | | | 1,908,864 | | | 350,000 | | 105,341 | | | 2,714,205 | | | | | | | | | | | | | | | | | | | | | | | | Michael Cavalier | | | 2012 | | | | 362,275 | | | | 1,373,606 | | | 362,266 | | 164,342 | | | 2,262,489 | | Senior Vice President – General Counsel & Secretary | | | | | | | | | | | | | | | | | | | | |
(1) | The salary reported for Mr. Stock is the salary paid to him from January 1, 2012 – February 15, 2012, based on his salary for 2012 which was set at $646,522 by the Compensation Committee.
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Effective February 15, 2012, Mr. Warner’s salary was increased from $473,744 to the reported amount upon his appointment as the new Chief Executive Officer of the Company.
Effective February 15, 2012, Mr. Copple’s salary was increased from $445,877 to the reported amount as the Board recognized his increased leadership role in the Company upon the change in the position of the Chief Executive Officer.
SeeCompensation Discussion & Analysis for an explanation of the amount of annual base salary paid in proportion to total compensation.
(2) | The reported amounts reflect the aggregate grant date fair value of restricted stock and performance awards (in the form of restricted stock units) granted to the named executive officers in 2012, 2011 and 2010, computed in accordance with FASB ASC Topic 718. The amounts shown exclude the impact of estimated forfeitures. See Note 19 to the Company’s 2012 Form 10-K, for discussion of the assumptions used in determining the fair values of these stock awards, including forfeiture assumptions and the period over which the Company will recognize compensation expense for such awards.
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The grant date fair values were calculated based upon the closing price of the Company’s Common Stock on March 8, 2012 of $21.63, March 31, 2011 of $19.35 and March 31, 2010 of $18.34 per share.
No equity awards were granted to Mr. Stock in 2012 as he had retired from the Company by the grant date.
The target level of payment was assumed as the most probable outcome for the performance awards (in the form of restricted stock units) for purposes of the Summary Compensation Table. The table below provides the fair values of the performance awards (in the form of restricted stock units) at the grant dates in 2012, 2011 and 2010 assuming that the highest level of IRR is achieved:
| | | | | | | | | | | | | | Name | | 2012 | | | 2011 | | | 2010 | | Alan W. Stock | | | - | | | $ | 594,219 | | | $ | 1,499,533 | | Tim Warner | | $ | 764,794 | | | $ | 348,319 | | | $ | 1,258,491 | | Robert Copple | | $ | 436,991 | | | $ | 327,828 | | | $ | 1,238,390 | | Valmir Fernandes | | $ | 344,458 | | | $ | 290,250 | | | $ | 1,041,914 | | Michael Cavalier | | $ | 316,620 | | | | - | | | | - | |
In February 2013, the Compensation Committee certified that the Company had achieved the highest level of IRR for the performance period from January 1, 2010 to December 31, 2012. Consequently, the performance awards (in the form of restricted stock units) that were granted to Messers. Warner, Copple, Fernandes and Cavalier on March 31, 2010 (the “2010 Grant”), shall vest in the maximum amounts subject to continuous employment of the named executive officer until March 31, 2014.
Pursuant to the terms of the Consulting Agreement, the restricted stock and the performance awards (in the form of restricted stock units) granted to Mr. Stock under the 2010 Grant shall also vest on March 31, 2014. However, Mr. Stock shall forfeit 50% of the restricted stock and 100% of the performance awards (in the form of restricted stock units) granted to him on March 31, 2011 (the “2011 Grant”).
The specific terms of the restricted stock and performance awards are discussed in more detail underCompensation Discussion and Analysis. See alsoGrants of Plan-Based Awardstable.
The grant date fair values for the equity awards do not necessarily correspond to the actual values that will be realized by the named executive officers. The actual values realized will depend on the market value of the Common Stock on the vesting dates of the restricted stock and the performance awards.
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(3) | The reported amounts are the annual cash bonuses earned by the named executive officers for the fiscal year. Pursuant to the Bonus Plan, the annual cash bonuses earned for a fiscal year are paid in February or March of the following year subject to the attainment of pre-established performance targets set by the Compensation Committee at the beginning of the covered fiscal year. The 2012 annual cash bonuses were paid on February 21, 2013, the 2011 annual cash bonuses were paid on February 24, 2012 and the 2010 annual cash bonuses were paid on February 24, 2011. Mr. Fernandes’s annual cash bonus was calculated using an average of worldwide EBITDA and international EBITDA performance.
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(4) | The compensation reported in this column includes the following:
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| | | | | | | | | | | | | | | | | | | | | | Name | | Fiscal
Year | | | Company
Matching
Contributions to
401(k) Savings
Plan | | | Life, Group and
Disability
Insurance
Premiums Paid
by Company | | | Dividends
Paid on
Restricted
Stock and Vested
RSU(3) | | | Other | | Lee Roy Mitchell | | | 2012 | | | $ | 13,125 | | | $ | 101,324 | (1) | | | - | | | | - | | | | | 2011 | | | $ | 12,863 | | | $ | 101,252 | (1) | | | - | | | | - | | | | | 2010 | | | $ | 12,863 | | | $ | 100,145 | (1) | | | - | | | | - | | Alan W. Stock | | | 2012 | | | $ | 3,462 | | | $ | 3,617 | | | $ | 219,418 | | | $ | 1,305,270 | (4) | | | | 2011 | | | $ | 12,863 | | | $ | 3,452 | | | $ | 121,479 | | | | - | | | | | 2010 | | | $ | 12,863 | | | $ | 3,695 | | | $ | 97,731 | | | | - | | Tim Warner | | | 2012 | | | $ | 13,125 | | | $ | 4,242 | | | $ | 190,288 | | | | - | | | | | 2011 | | | $ | 12,863 | | | $ | 3,963 | | | $ | 94,385 | | | | - | | | | | 2010 | | | $ | 12,863 | | | $ | 2,990 | | | $ | 70,670 | | | | - | | Robert Copple | | | 2012 | | | $ | 13,125 | | | $ | 4,498 | | | $ | 176,023 | | | $ | 5,283 | (5) | | | | 2011 | | | $ | 12,863 | | | $ | 7,370 | (2) | | $ | 92,126 | | | | - | | | | | 2010 | | | $ | 12,863 | | | $ | 5,690 | | | $ | 68,747 | | | | - | | Valmir Fernandes | | | 2012 | | | $ | 13,125 | | | $ | 4,923 | | | $ | 118,125 | | | $ | 30,000 | (6) | | | | 2011 | | | $ | 12,863 | | | $ | 4,631 | | | $ | 73,506 | | | $ | 30,000 | (6) | | | | 2010 | | | $ | 12,863 | | | $ | 3,122 | | | $ | 52,001 | | | $ | 37,356 | (6) | Michael Cavalier | | | 2012 | | | $ | 13,125 | | | $ | 4,919 | | | $ | 146,278 | | | $ | 20.00 | (7) |
(1) | Includes $1,436 paid by the Company for medicare taxes attributed to life insurance policy purchased for Mr. Mitchell.
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(2) | Includes $25 paid by the Company as premium for Mr. Coppell’s medical insurance.
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(3) | Includes dividends paid on all outstanding restricted stock and the dividends that were paid on the performance awards (in the form of restricted stock units) under the 2008 Grant upon vesting on March 28, 2012. Under the Restated Incentive Plan any dividends attributable to the underlying Common Stock of a performance award is paid to the grantee to the extent declared by our Board if and at the time the restricted stock unit awards vest.
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(4) | Includes $1,300,000 consulting fees paid to Mr. Stock for his consulting services from February 16, 2012 until December 31, 2012; also includes $5,270 paid by the Company as premium for Mr. Stock’s’s medical insurance.
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(5) | Includes $12.91 paid by the Company for medicare taxes attributed to life insurance policy purchased for Mr. Coppell and $5,270 paid by the Company as premium for Mr. Coppell’s medical insurance.
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(6) | Expatriate allowance pursuant to Mr. Fernandes’s employment agreement.
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(7) | The reported amount was paid by the Company for medicare taxes attributed to life insurance policy purchased for Mr. Cavalier.
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SeeCompensation Discussion & Analysis for a discussion of the elements of compensation.
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Grants of Plan-Based Awards in 2012
The following table specifies the grants of awards made under the Restated Incentive Plan and the Bonus Plan to the named executive officers during and with respect to the fiscal year ended December 31, 2012.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Grant
Dates | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other
Stock
Awards:
Number of Shares of Stock
or
Units(3) | | | Grant
Date Fair Value
of Stock
Awards(4) | | | | | | | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold (#) | | | Target (#) | | | Maximum (#) | | | (#) | | | ($) | | Lee Roy Mitchell | | | 2/21/13 | | | | 283,891 | | | | 851,758 | | | | 1,135,649 | | | | - | | | | - | | | | - | | | | - | | | | - | | Tim Warner | | | 2/21/13 | | | | 233,310 | | | | 700,000 | | | | 933,310 | | | | | | | | | | | | | | | | | | | | | | | | | 3/08/12 | | | | | | | | | | | | | | | | 11,785 | | | | 23,570 | | | | 35,358 | | | | | | | | 509,811 | | | | | 3/08/12 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 74,891 | | | | 1,619,892 | | Robert Copple | | | 2/21/13 | | | | 166,650 | | | | 500,000 | | | | 666,650 | | | | | | | | | | | | | | | | | | | | | | | | | 3/08/12 | | | | | | | | | | | | | | | | 6,734 | | | | 13,467 | | | | 20,203 | | | | | | | | 291,298 | | | | | 3/08/12 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 62,344 | | | | 1,348,501 | | Valmir Fernandes | | | 2/21/13 | | | | 91,026 | | | | 273,105 | | | | 364,131 | | | | | | | | | | | | | | | | | | | | | | | | | 3/08/12 | | | | | | | | | | | | | | | | 5,308 | | | | 10,616 | | | | 15,925 | | | | | | | | 229,616 | | | | | 3/08/12 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 54,605 | | | | 1,181,106 | | Michael Cavalier | | | 2/21/13 | | | | 90,560 | | | | 271,706 | | | | 362,266 | | | | | | | | | | | | | | | | | | | | | | | | | 3/08/12 | | | | | | | | | | | | | | | | 4,879 | | | | 9,758 | | | | 14,638 | | | | | | | | 211,059 | | | | | 3/08/12 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 53,747 | | | | 1,162,548 | |
(1) | In March 2012, under the terms of the Bonus Plan, the Compensation Committee established performance targets for the 2012 fiscal year. The Compensation Committee approved the 2012 annual cash bonuses on February 11, 2013 which were paid on February 21, 2013. SeeCompensation Discussion and Analysis for a description of the annual cash bonus process under the Bonus Plan and an explanation of the amount of annual cash bonus paid in proportion to total compensation. SeeSummary Compensation Table for 2012 for the actual annual cash bonus amounts paid to each named executive officer for 2012.
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(2) | On March 8, 2012 (the “2012 Grant”), under the terms of the Restated Incentive Plan, the Compensation Committee approved performance awards (in the form of restricted stock units) for an aggregate maximum of 86,124 hypothetical shares of restricted stock to our named executive officers, except Mr. Mitchell, who, the Compensation Committee determined, has sufficient equity ownership to align his interests with the interests of the stockholders. The number of shares underlying each performance award was determined in part by reference to the closing price of the Common Stock on March 8, 2012 of $21.63 per share.
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For Messers. Copple, Fernandes and Cavalier, the performance awards vest based on a combination of financial performance factors and continued service. The performance period for the 2012 Grant ends December 31, 2014. All payouts of performance awards, subject to attainment of performance targets, will be in the form of restricted stock that shall vest if the named executive officer continues to provide services through March 8, 2016.
Pursuant to the terms of the Restated Employment Agreement, upon expiration of the Restated Employment Agreement, the performance awards (in the form of restricted stock units) awarded to Mr. Warner under the 2012 Grant shall remain outstanding through the remainder of the performance period ending December 31,
57
2014 and if or to the extent the performance provisions are attained, the performance awards shall become immediately and fully vested without regard to any continued employment requirement once the performance provisions have been certified by the Compensation Committee.
Restricted stock unit awards are eligible to receive dividend equivalent payments to the extent declared by our Board if and at the time the restricted stock unit awards vest and at the same rate paid to other stockholders of the Company, currently at $0.21 per share. SeeCompensation Discussion and Analysisfor a discussion of performance awards.
No performance awards were granted to Mr. Stock in 2012.
(3) | In March 2012, under the terms of the Restated Incentive Plan, the Compensation Committee also approved restricted stock awards for an aggregate of 245,587 shares of restricted stock to our named executive officers, except Mr. Mitchell. The number of shares underlying each award was determined by reference to the closing price of the Common Stock on March 8, 2012 of $21.63 per share.
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For Messers. Copple, Fernandes and Cavalier, the restricted stock vest as follows subject to continued service: 50% on March 8, 2014 and the remaining 50% on March 8, 2016. Holders of restricted stock receive non-forfeitable dividends to the extent declared by our Board, at the same rate paid to other stockholders of the Company, currently at $0.21 per share. SeeCompensation Discussion and Analysisfor a discussion of restricted stock.
The restricted stock awarded to Mr. Warner under the 2012 Grant vests equally on March 8, 2013, March 8, 2014 and March 8, 2015.
Pursuant to the terms of the Restated Employment Agreement, upon expiration of the Restated Employment Agreement prior to the complete vesting of the restricted stock awarded to Mr. Warner under the 2012 Grant, the outstanding restricted stock shall immediately vest without regard to any continued employment requirement.
No restricted stock was granted to Mr. Stock in 2012.
(4) | The grant date fair values of restricted stock and performance awards (in the form of restricted stock units) were determined using the closing price of the Common Stock on March 8, 2012 of $21.63 per share. The grant date fair values of performance awards were determined based upon the target level of payment as the most probable outcome and were computed in accordance with FASB ASC Topic 718. The amounts shown exclude the impact of estimated forfeitures. See Note 19 to the Company’s 2012 Form 10-K, for discussion of the assumptions used in determining the fair values of these share awards, including forfeiture assumptions, and the period over which the Company will recognize compensation expense for such awards.
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58
Outstanding Equity Awards at December 31, 2012
The following table lists the restricted stock and performance awards (in the form of restricted stock units) for each named executive officer outstanding as of December 31, 2012. There were no stock options outstanding for any named executive officer as of December 31, 2012.
| | | | | | | | | | | | | | | | | | | | Stock Awards | | | Name | | Number of Shares
or Units of Stock
that have not
vested (#) | | | Market Value of
Shares or Units of
Stock that have not
vested(7) | | | Equity Incentive Plan
Awards: Number of
Unearned Shares,
Units or Other
Rights that have not
vested (#) | | | Equity Incentive Plan
Awards: Market or
Payout Value of
Unearned Shares, Units
or Other Rights that
have not vested(10) | | Lee Roy Mitchell | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | Alan W. Stock | | | 22,800 | (2) | | $ | 592,344 | | | | 10,237 | (9) | | $ | 265,957 | | | | | | 43,922 | (3) | | $ | 1,141,094 | | | | | | | | | | | | | | 20,041 | (4) | | $ | 520,665 | | | | | | | | | | | | | | 81,763 | (5) | | $ | 2,124,203 | | | | | | | | | | | | | | 60,121 | (6) | | $ | 1,561,944 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Tim Warner | | | 74,891 | (1) | | $ | 1,945,668 | | | | 11,785 | (8) | | $ | 306,174 | | | | | | 13,365 | (2) | | $ | 347,223 | | | | 6,001 | (9) | | $ | 155,906 | | | | | | 39,541 | (3) | | $ | 1,027,275 | | | | | | | | | | | | | | 11,748 | (4) | | $ | 305,213 | | | | | | | | | | | | | | 68,620 | (5) | | $ | 1,782,748 | | | | | | | | | | | | | | 35,242 | (6) | | $ | 915,587 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Robert Copple | | | 62,344 | (1) | | $ | 1,619,697 | | | | 6,734 | (8) | | $ | 174,949 | | | | | | 12,579 | (2) | | $ | 326,802 | | | | 5,648 | (9) | | $ | 146,735 | | | | | | 39,175 | (3) | | $ | 1,017,767 | | | | | | | | | | | | | | 11,057 | (4) | | $ | 287,261 | | | | | | | | | | | | | | 67,524 | (5) | | $ | 1,754,274 | | | | | | | | | | | | | | 33,169 | (6) | | $ | 861,731 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Valmir Fernandes | | | 54,605 | (1) | | $ | 1,418,638 | | | | 5,308 | (8) | | $ | 137,902 | | | | | | 11,137 | (2) | | $ | 289,339 | | | | 5,000 | (9) | | $ | 129,900 | | | | | | 33,104 | (3) | | $ | 860,042 | | | | | | | | | | | | | | 6,586 | (4) | | $ | 171,104 | | | | | | | | | | | | | | 56,811 | (5) | | $ | 1,475,950 | | | | | | | | | | | | | | 15,108 | (6) | | $ | 392,506 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Michael Cavalier | | | 53,747 | (1) | | $ | 1,396,347 | | | | 4,879 | (8) | | $ | 126,756 | | | | | | 10,221 | (2) | | $ | 265,542 | | | | 4,588 | (9) | | $ | 119,196 | | | | | | 33,080 | (3) | | $ | 859,418 | | | | | | | | | | | | | | 8,984 | (4) | | $ | 233,404 | | | | | | | | | | | | | | 56,739 | (5) | | $ | 1,474,079 | | | | | | | | | | | | | | 26,950 | (6) | | $ | 700,161 | | | | | | | | | |
| (1) | The reported numbers represent the number of shares of restricted stock awarded under the 2012 Grant.
|
For Messers. Copple, Fernandes and Cavalier, subject to continued employment, 50% of the 2012 Grant shall vest on March 8, 2014 and the remaining 50% on March 8, 2016.
Mr. Warner’s 2012 Grant vests equally on March 8, 2013, March 8, 2014 and March 8, 2015. Pursuant to the terms of the Restated Employment Agreement, upon expiration of the Restated Employment Agreement prior to the complete vesting of the restricted stock awarded to Mr. Warner under the 2012 Grant, the outstanding restricted stock shall immediately vest without regard to any continued employment requirement.
No restricted stock was granted to Mr. Stock as he had retired from the Company effective February 15, 2012.
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| (2) | The reported numbers represent the number of shares of restricted stock awarded under the 2011 Grant. Fifty percent of the 2011 Grant vested on March 31, 2013 and, subject to continued employment, the remaining 50% shall vest on March 31, 2015.
|
| (3) | The reported numbers represent 50% of the restricted stock awarded under the 2010 Grant. Fifty percent of the 2010 Grant vested on March 31, 2012 and, subject to continued employment, the reported shares shall vest on March 31, 2014.
|
| (4) | The reported numbers represent 50% of the restricted stock granted on March 27, 2009 (the “2009 Grant”). Fifty percent of the 2009 Grant vested on March 27, 2011 and the reported shares vested on March 27, 2013.
|
| (5) | The reported numbers represent the number of shares of Common Stock underlying the performance awards (in the form of restricted stock units) of the 2010 Grant. The relevant performance condition was based on an IRR for the three year performance period from January 1, 2010 to December 31, 2012. On February 11, 2013, the Compensation Committee certified that the Company had achieved the highest level of IRR for the performance period from January 1, 2010 to December 31, 2012. The shares of Common Stock underlying the performance awards will be issued on March 31, 2014 upon satisfaction of an additional service requirement as of that date.
|
| (6) | The reported numbers represent the number of shares of Common Stock underlying the performance awards (in the form of restricted stock units) of the 2009 Grant. The relevant performance condition was based on an IRR for the three year performance period from January 1, 2009 to December 31, 2011. On February 21, 2012, the Compensation Committee certified that the Company had achieved the highest level of IRR for the performance period from January 1, 2009 to December 31, 2011. The shares of Common Stock underlying the performance awards were subject to an additional service requirement and were issued on March 27, 2013.
|
| (7) | The market value of the restricted stock was valued at the closing price of the Common Stock on December 31, 2012 of $25.98 per share.
|
| (8) | The reported numbers represent the number of shares of Common Stock underlying the performance awards (in the form of restricted stock units) of the 2012 Grant. For Messers. Copple, Fernandes and Cavalier, the payout of the performance awards are subject to achieving performance targets over a three year performance period from January 1, 2012 to December 31, 2014 and satisfying an additional service requirement. Subject to continued employment, the performance awards shall vest on March 8, 2016. The reported shares are based on the assumption of achievement of the threshold performance goals for such award.
|
Pursuant to the terms of the Restated Employment Agreement, upon expiration of the Restated Employment Agreement, the performance awards (in the form of restricted stock units) awarded to Mr. Warner under the 2012 Grant shall remain outstanding through the remainder of the performance period ending December 31, 2014 and if or to the extent the performance provisions are attained, the performance awards shall become immediately and fully vested without regard to any continued employment requirement once the performance provisions have been certified by the Compensation Committee.
No performance award was granted to Mr. Stock as he had retired from the Company effective February 15, 2012.
| (9) | The reported numbers represent the number of shares of Common Stock underlying the performance awards (in the form of restricted stock units) of the 2011 Grant. The payout of the performance awards are subject to achieving performance targets over a three year performance period from January 1, 2011 to December 31, 2013 and satisfying an additional service requirement. Subject to continued employment, the performance awards shall vest on March 31, 2015. The reported shares are based on the assumption of achievement of the threshold performance goals for such award.
|
| (10) | The market value of the unearned performance awards (in the form of restricted stock units) was determined based on the achievement of threshold performance goals at the closing price of the Common Stock on December 31, 2012 of $25.98 per share.
|
60
Stock Option Exercises and Stock Vested in 2012
The following table provides information on the vesting of restricted stock and performance awards during 2012 for each of the named executive officers. There were no outstanding stock options for any of the named executive officers as of December 31, 2012.
Stock Vested
| | | | | | | | Name | | Stock Awards | | | | Number of Shares
Acquired on
Vesting (#)(1) | | | Value Realized on
Vesting(1) ($)(2) | Lee Roy Mitchell | | | - | | | - | Alan W. Stock | | | 102,415 | | | $2,277,117 | Tim Warner | | | 73,830 | | | $1,639,425 | Robert Copple | | | 71,447 | | | $1,586,263 | Valmir Fernandes | | | 48,631 | | | $1,067,251 | Michael Cavalier | | | 59,300 | | | $1,316,423 |
(1) | The reported shares include Common Stock from the following vest events:
|
| i. | Fifty percent of the 2010 Grant which vested on March 31, 2012; |
| ii. | Fifty percent of the restricted stock granted on March 28, 2008 (the “2008 Grant”) which vested on March 28, 2012; and |
| iii. | The shares of Common Stock underlying the performance awards (in the form of restricted stock units) of the 2008 Grant. Messers. Stock, Warner, Copple and Cavalier were granted the performance awards on March 28, 2008. Mr. Fernandes was granted the performance award on April 10, 2008. In February 2011, the Compensation Committee certified that the Company had achieved the highest level of IRR for the performance period from January 1, 2008 to December 31, 2010. The performance award vested and the underlying Common Stock was issued in March 2012 upon satisfaction of the additional service requirement. |
(2) | The aggregate dollar amount realized upon vesting was calculated based upon the closing price of Common Stock on the vesting dates which were as follows:
|
| i. | March 31, 2012 of $22.08 per share; |
| ii. | March 28, 2012 of $22.35 per share; and |
| iii. | April 10, 2012 of $21.66 per share |
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Potential Payments upon Termination by us Without Cause or by Executive for Good Reason The employment agreements with the named executive officers require us to provide compensation in the event of termination of employment by us without cause or by the named executive officer for good reason. The amount of compensation payable to each named executive officer upon such termination is listed in the table below assuming such triggering event occurred on December 31, 2012.
| | Name | | Salary(1) | | | Bonus(2) | | | Health
Insurance(3) | | | Life and
Disability
Insurance(3) | | | Assistance
(4) | | | Value of
Equity
Awards(5) | | | Total | | | Salary (1) | | Bonus (2) | | Health Insurance(3) | | Life and Disability Insurance(3) | | Assistance(4) | | Value of Equity Awards(5) | | Total | Lee Roy Mitchell | | $ | 851,758 | | | $ | 2,204,473 | | | $ | 6,159 | | | $ | 99,888 | | | $ | 86,500 | | | $ | - | | | $ | 3,248,778 | | | $ | 912,474 | | | $ | 2,106,664 | | | $ | 7,205 | | | $ | 7,690 | | | $ | 86,500 | | | $ | - | | | $ | 3,120,533 | | Tim Warner | | $ | 700,000 | | | $ | 933,310 | | | $ | 21,122 | | | $ | 8,484 | | | $ | 828 | | | $ | 7,709,981 | | | $ | 9,373,725 | | | $ | 274,667 | | | $ | 1,236,000 | | | $ | 12,084 | | | $ | 60,592 | | | $ | 828 | | | $ | 5,413,821 | | | $ | 6,997,992 | | Mark Zoradi | | | $ | 2,133,333 | | | $ | 427,397 | | | $ | 2,820 | | | $ | 6,347 | | | $ | 828 | | | $ | 88,322 | | | $ | 2,659,547 | | Robert Copple | | $ | 1,000,000 | | | $ | 1,086,463 | | | $ | 25,044 | | | $ | 8,996 | | | $ | 828 | | | $ | 4,732,387 | | | $ | 6,853,718 | | | $ | 1,236,000 | | | $ | 1,426,800 | | | $ | 15,058 | | | $ | 37,374 | | | $ | 828 | | | $ | 3,592,789 | | | $ | 6,308,849 | | Sean Gamble | | | $ | 927,000 | | | $ | 638,515 | | | $ | 13,430 | | | $ | 13,749 | | | $ | 828 | | | $ | 259,149 | | | $ | 1,852,671 | | Valmir Fernandes | | $ | 728,280 | | | $ | 743,459 | | | $ | 25,044 | | | $ | 9,846 | | | $ | 828 | | | $ | 3,616,052 | | | $ | 5,123,509 | | | $ | 968,200 | | | $ | 1,013,160 | | | $ | 15,058 | | | $ | 27,991 | | | $ | 828 | | | $ | 2,717,892 | | | $ | 4,743,130 | | Michael Cavalier | | $ | 724,550 | | | $ | 703,364 | | | $ | 25,044 | | | $ | 9,838 | | | $ | 828 | | | $ | 3,927,345 | | | $ | 5,390,969 | | |
| (1) | Except for Messers. Mitchell and Warner,Based on the annual base salaries in effect as of December 31, 2015, the amounts reported are calculated as follows: one-time the annual base salary for Mr. Mitchell and two times the annual base salary in effect as of December 31, 2012. For Messers. Mitchellfor Messrs. Copple, Gamble and Warner it is the annual base salary in effect as of December 31, 2012.Fernandes. The amounts will bereported for Messrs. Warner and Zoradi are based on
|
| | | | | 61 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
| payments at the rate of $824,000 and $800,000 per year respectively until the end of the Term (as defined in their respective employment agreements). Subject to Treasury Regulations as specified in the respective employment agreements, the amounts would have been payable in a lump sum. Otherwise, according to the Company’s normal payroll practices for a period of 24 months to Messers.Messrs. Copple, FernandesGamble and Cavalier,Fernandes; for a period of 12 months to Mr. Mitchell and through the end of the term or renewal termTerm (as defined in the employment agreement) to Mr. Warner and through the end of the Restated Employment AgreementTerm or Renewal Term (as defined in the employment agreement) to Mr. Warner.Zoradi. |
| (2) | Except forFor Mr. Warner and Mr. Zoradi, the amount is the cash bonus each of them would have received for the 2015 fiscal year. For Messrs. Copple, Gamble and Fernandes, the amounts reported are calculated as follows: the sum of the annual cash bonus the named executive officerNEO would have received for the 2015 fiscal year ended December 31, 2012 and the annual cash bonus received by the named executive officerNEO for the 2014 fiscal year. Mr. Fernandes’ bonus includes the additional $132,128 payout for the 2015 fiscal year. The cash bonuses for the 2015 fiscal year ended December 31, 2011. For Mr. Warner, the amount is the annual cash bonus he would have receivedbeen payable to the NEOs at the same time as payments are made to other similarly situated executives. The cash bonuses for the 2014 fiscal year ended December 31, 2012. The annual cash bonus iswould have been payable to Messers.Messrs. Mitchell, Copple, FernandesGamble and CavalierFernandes in a lump sum within 30 days of termination, and to Mr. Warner at the same time as the annual cash bonus payments are made to other similarly situated active executives pursuant to the terms of the Bonus Plan.
termination. |
| (3) | The amounts reported are calculated as follows: welfare benefit plans and insurance programs for a period of 12 months for Mr. Mitchell and 24 months for Messers.Messrs. Warner, Zoradi, Copple, FernandesGamble and Cavalier.Fernandes. Disability insurance includes premiums for long-term disability, individual disability income protection and short-term disability. |
| (4) | Mr. Mitchell is entitled to receive tax preparation assistance for five years following the date of termination. We estimate the cost of such preparation to be approximately $17,300 per year. Messrs. Warner, Zoradi, Copple, Gamble and Fernandes are entitled to use our office space for a period of three months following the date of termination. The amount reported is based on the use of a 144 square foot office at a rental rate of approximately $23 per square foot per annum. |
| (5) | The amounts reported have been determined based on the following provisions in the respective employment agreements. |
Pursuant to Mr. Warner’s and Mr. Zoradi’s employment agreements, any outstanding equity award with time-based vesting provisions would have vested as of the termination date. Any long-term equity incentive awards with performance-based vesting provisions would have remained outstanding through the remainder of the applicable performance period and if or to the extent the performance provisions are attained shall vest without regard to any continued employment requirement. Pursuant to the employment agreements of Messrs. Copple, Gamble and Fernandes, any outstanding long-term equity incentive awards with time-based vesting provisions would have vested on a pro rata basis. Any long-term equity incentive awards with performance-based vesting provisions would have remained outstanding through the remainder of the applicable performance period and if or to the extent the performance provisions are attained shall vest without regard to any continued employment requirement on a pro rata basis. The pro rata basis for the long-term equity incentive awards is based on the percentage determined by dividing (i) the number of days from and including the grant date of such long-term equity incentive award through the termination date of the NEO’s employment, by (ii) the number of days from the grant date to the full vesting date/end of the applicable performance period, as applicable, of such long-term equity incentive awards. Based on the above provisions, the total number of shares of Common Stock subject to the long-term equity incentive awards that would have vested for each of Messrs. Warner, Zoradi, Copple, Gamble and Fernandes on December 31, 2015 are as follows: Restricted Stock: | | | | Name | | Number of Shares | Lee Roy Mitchell | | - | Tim Warner | | 38,723 | Mark Zoradi | | 2,642 | Robert Copple | | 46,682 | Sean Gamble | | 4,216 | Valmir Fernandes | | 37,555 |
| | | | | 62 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
Restricted stock units: As disclosed previously, the restricted stock units granted in 2012 vested at 76.67% of the maximum, and the restricted stock units granted in 2013 and 2014 shall vest at the maximum. We assumed for purposes of this disclosure that the restricted stock granted in 2015 shall also vest at the maximum. | | | | Name | | Number of Shares | Lee Roy Mitchell | | - | Tim Warner | | 123,222 | Mark Zoradi | | - | Robert Copple | | 60,790 | Sean Gamble | | 3,536 | Valmir Fernandes | | 43,746 |
There were no outstanding stock options for any of the NEOs as of December 31, 2015. The values of the equity awards have been calculated using the closing price of Common Stock on December 31, 2015 of $33.43 per share. Potential Payments upon Termination for Cause If a NEO terminates his employment voluntarily, or is terminated for cause, we are only required to pay any accrued unpaid base salary through the date of such termination. Potential Payments upon Termination due to Change of Control | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Salary | | Bonus | | Health
Insurance | | Life and
Disability
Insurance | | Assistance | | Value of Equity
Awards | | Total | | Lee Roy Mitchell | | | $ | - | | | | $ | - | | | | $ | - | | | | $ | - | | | | $ | - | | | | $ | - | | | | $ | - | | Tim Warner | | | $ | 1,648,000 | | | | $ | 2,235,600 | | | | $ | 30,210 | | | | $ | 75,740 | | | | $ | 828 | | | | $ | 5,413,821 | | | | $ | 9,404,199 | | Mark Zoradi | | | $ | 1,600,000 | | | | $ | 427,397 | | | | $ | 7,050 | | | | $ | 7,934 | | | | $ | 828 | | | | $ | 88,322 | | | | $ | 2,131,531 | | Robert Copple | | | $ | 1,236,000 | | | | $ | 1,676,700 | | | | $ | 37,645 | | | | $ | 46,718 | | | | $ | 828 | | | | $ | 4,422,388 | | | | $ | 7,420,279 | | Sean Gamble | | | $ | 927,000 | | | | $ | 697,053 | | | | $ | 33,575 | | | | $ | 17,187 | | | | $ | 828 | | | | $ | 604,448 | | | | $ | 2,280,091 | | | Valmir Fernandes | | | $ | 968,200 | | | | $ | 1,211,126 | | | | $ | 37,645 | | | | $ | 34,989 | | | | $ | 828 | | | | $ | 3,277,043 | | | | $ | 5,529,830 | |
| (1) | There is no change of control provision in Mr. Mitchell’s employment agreement. |
| (2) | The amounts reported are calculated as follows: two times the annual base salary in effect as of December 31, 2015 payable in a lump sum within 30 days of such termination. |
| (3) | The amounts reported are calculated as follows: the sum of the cash bonus the NEO would have received for the 2015 fiscal year and one and a half times the cash bonus received by the NEO for five years. Messers.the 2014 fiscal year, payable in a lump sum within 30 days of such termination. Mr. Fernandes’ bonus includes the additional $132,128 payout for the 2015 fiscal year. |
| (4) | The amounts reported are calculated as follows: welfare benefit plans and insurance programs for a period of 30 months. Disability insurance includes premiums for long-term disability, individual disability income protection and short-term disability. |
| (5) | Messrs. Warner, Zoradi, Copple, FernandesGamble and CavalierFernandes are entitled to use our office space for a period of three months following the date of termination. The reported amount is based on the use of a 144 square foot office at a rental rate of approximately $23 per square foot per annum. |
(5)(6) | The amounts reported have been determined based on the following provisions in the respective employment agreements.
|
Pursuant to Mr. Warner’s employment agreement, any outstanding equity award with time-based vesting provisions shall immediately become vested as of the termination date. Any equity awards with performance-based vesting provisions shall remain outstanding through the remainder of the applicable performance period and if or to the extent the performance provisions are attained shall vest without regard to any continued employment requirement.
Based on the above provisions, Mr. Warner would have vested in 139,545 shares of restricted stock and 157,221 performance awards (in the form of restricted stock units).
Pursuant to the employment agreements of Messers. Copple, Fernandes and Cavalier, any outstanding equity award with time-based vesting provisions shall vest on a prorata basis. Any equity awards with performance-based vesting provisions shall remain outstanding through the remainder of the applicable performance period
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and if or to the extent the performance provisions are attained shall vest without regard to any continued employment requirement on a pro rata basis. The pro rata basis for the equity awards is based on the percentage determined by dividing (i) the number of days from and including the grant date of such equity award through the termination date of the executive’s employment, by (ii) the number of days from the grant date to the full vesting date/end of the applicable performance period, as applicable, of such equity awards.
Based on the above provision, the total number of equity awards that each of Messers. Copple, Fernandes and Cavalier would have vested in on December 31, 2012 are as follows:
Restricted Stock:
| | | Name | | Number of Shares | Robert Copple
| | 64,791 | Valmir Fernandes
| | 53,077 | Michael Cavalier
| | 54,451 |
Performance awards (in the form of restricted stock units), based on the assumption that the maximum IRR would be achieved over the performance period:
| | | Name | | Number of Shares | Robert Copple
| | 117,364 | Valmir Fernandes
| | 86,109 | Michael Cavalier
| | 96,717 |
There were no outstanding stock options for any of the named executive officers as of December 31, 2012.
The values of the equity awards have been calculated using the closing price of our Common Stock on December 31, 2012 of $25.98 per share.
Potential Payments upon Termination for Cause
If a named executive officer terminates his employment voluntarily, or is terminated for cause, we are only required to pay such named executive officer any accrued unpaid annual base salary through the date of such termination.
Potential Payments upon Termination due to Change-in-Control
The employment agreements with the named executive officers require us to provide compensation in the event of a termination of employment by the Company within one year of a change-in-control (as defined in the employment agreement). There is no change-in-control provision in Mr. Mitchell’s employment agreement. The amount of compensation payable to Messers. Stock, Warner, Copple and Fernandes upon such termination is listed in the table below assuming such triggering event occurred on December 31, 2012.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Salary(1) | | | Bonus(2) | | | Health
Insurance(3) | | | Life and Disability Insurance(3) | | | Assistance (4) | | | Value of Equity
Awards(5) | | | Total | | Lee Roy Mitchell | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Tim Warner | | $ | 1,400,000 | | | $ | 1,602,387 | | | $ | 26,403 | | | $ | 10,605 | | | $ | 828 | | | $ | 7,709,981 | | | $ | 10,750,204 | | Robert Copple | | $ | 1,000,000 | | | $ | 1,296,370 | | | $ | 31,305 | | | $ | 11,245 | | | $ | 828 | | | $ | 6,832,558 | | | $ | 9,172,306 | | Valmir Fernandes | | $ | 728,280 | | | $ | 933,123 | | | $ | 31,305 | | | $ | 12,308 | | | $ | 828 | | | $ | 5,411,010 | | | $ | 7,116,854 | | Michael Cavalier | | $ | 724,550 | | | $ | 873,913 | | | $ | 31,305 | | | $ | 12,298 | | | $ | 828 | | | $ | 5,666,862 | | | $ | 7,309,756 | |
(1) | The amounts reported are calculated as follows: two times the annual base salary in effect as of December 31, 2012 payable in a lump sum within 30 days of such termination.
|
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(2) | The amounts reported are calculated as follows: the sum of the annual cash bonus the named executive officer would have received for the fiscal year ended December 31, 2012 and one and a half times the annual cash bonus received by the named executive officer for the fiscal year ended December 31, 2011 payable in a lump sum within 30 days of such termination.
|
(3) | The amounts reported are calculated as follows: welfare benefit plans and insurance programs for a period of 30 months. Disability insurance includes premiums for long-term disability, individual disability income protection and short-term disability.
|
(4) | Messers. Warner, Copple, Fernandes and Cavalier are entitled to use our office space for a period of three months following the date of termination. The reported amount is based on the use of a 144 square foot office at a rental rate of approximately $23 per square foot per annum.
|
(5) | The amounts reported have been determined based on the following provision in the respective employment agreements: upon termination due to change-in-control,change of control, any outstanding equity award granted to the named executive officerNEO shall be fully vested and exercisable and all restrictions shall lapse. |
| | | | | 63 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
Based on the above provision, the total number of shares of Common Stock subject to the long-term equity incentive awards that would have vested on an accelerated basis for each named executive officerNEO upon termination due to a change-in-controlchange of control on December 31, 20122015 are as follows: Restricted Stock: | | | | Name | | Number of Shares | Lee Roy Mitchell | | - | Tim Warner | | 139,54538,723 | Mark Zoradi | | 2,642 | Robert Copple | | 125,15562,508 | Sean Gamble | | 10,050 | Valmir Fernandes | | 105,432 | Michael Cavalier
| | 106,03248,413 |
Performance awards (inRestricted stock units: As disclosed previously, the form of restricted stock units), based onunits granted in 2012 shall vest at 76.67% of the assumptionmaximum opportunity, and the restricted stock units granted in 2013 and 2014 shall vest at the maximum. We assumed for purposes of this disclosure that the maximum IRR would be achieved overrestricted stock granted in 2015 shall also vest at the performance period:maximum.
| | | | Name | | Number of Shares | Lee Roy Mitchell | | - | Tim Warner | | 157,221123,222 | Mark Zoradi | | - | Robert Copple | | 137,83869,780 | Sean Gamble | | 8,031 | Valmir Fernandes | | 102,844 | Michael Cavalier
| | 112,09249,614 |
The values of the long-term equity incentive awards have been calculated using the closing price of our Common Stock on December 31, 20122015 of $25.98$33.43 per share. Potential Payments upon Termination due to Death or Disability The employment agreements with the named executive officers require us to provide compensation in the event of a termination of employment as a result of the death or disability of such named executive officer. The amount of compensation payable to each named executive officer upon such termination is listed in the table below assuming such triggering event occurred on December 31, 2012.
| | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Salary(1) | | | Bonus(2) | | | Health
Insurance(3) | | | Life and
Disability
Insurance(3) | | | Value of
Equity
Awards(4) | | | Total | | Lee Roy Mitchell | | $ | 851,758 | | | $ | 1,135,409 | | | $ | 6,159 | | | $ | 99,888 | | | $ | - | | | $ | 2,093,214 | | Tim Warner | | $ | 700,000 | | | $ | 933,310 | | | $ | 10,561 | | | $ | 4,242 | | | $ | 991,553 | | | $ | 2,639,666 | | Robert Copple | | $ | 500,000 | | | $ | 666,650 | | | $ | 12,522 | | | $ | 4,498 | | | $ | 911,249 | | | $ | 2,094,919 | | Valmir Fernandes | | $ | 364,140 | | | $ | 364,131 | | | $ | 12,522 | | | $ | 4,923 | | | $ | 754,018 | | | $ | 1,499,734 | | Michael Cavalier | | $ | 362,275 | | | $ | 362,266 | | | $ | 12,522 | | | $ | 4,919 | | | $ | 769,476 | | | $ | 1,511,458 | |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Salary | | Bonus | | Health
Insurance | | Life and
Disability
Insurance | | Assistance | | Value of Equity
Awards | | Total | | Lee Roy Mitchell | | | $ | 912,474 | | | | $ | 1,368,711 | | | | $ | 7,205 | | | | $ | 7,690 | | | | $ | 86,500 | | | | $ | - | | | | $ | 2,382,580 | | Tim Warner | | | $ | 824,000 | | | | $ | 1,236,000 | | | | $ | 12,084 | | | | $ | 30,296 | | | | $ | 828 | | | | $ | 4,423,023 | | | | $ | 6,526,231 | | Mark Zoradi | | | $ | 800,000 | | | | $ | 427,397 | | | | $ | 2,820 | | | | $ | 3,173 | | | | $ | 828 | | | | $ | 48,106 | | | | $ | 1,282,324 | | Robert Copple | | | $ | 618,000 | | | | $ | 927,000 | | | | $ | 15,058 | | | | $ | 18,687 | | | | $ | 828 | | | | $ | 3,592,789 | | | | $ | 5,172,362 | | Sean Gamble | | | $ | 463,500 | | | | $ | 521,438 | | | | $ | 13,430 | | | | $ | 6,875 | | | | $ | 828 | | | | $ | 259,149 | | | | $ | 1,265,220 | | | Valmir Fernandes | | | $ | 484,100 | | | | $ | 617,228 | | | | $ | 15,058 | | | | $ | 13,996 | | | | $ | 828 | | | | $ | 2,717,892 | | | | $ | 3,849,102 | |
| (1) | The amounts reported are the annual base salary of each named executive officer in effect as of December 31, 2012,2015, payable asin a lump sum. |
| (2) | The amounts reported are the annual bonus each named executive officerNEO would have received for the 2015 fiscal year ended December 31, 2012. SeeSummary Compensation Table. payable in a lump sum at the same time as the cash bonus payments are made to other similarly situated active executives pursuant to the terms of the Bonus Plan. Mr. Fernandes’ bonus includes the additional $132,128 payout for the 2015 fiscal year. |
| (3) | The amounts reported are calculated as follows: welfare benefit plans and insurance programs for a period of 12 months. Disability insurance includes premiums for long-term disability, individual disability income protection and short-term disability. |
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| (4) | PursuantThe amounts reported have been determined based on the following provision in the respective employment agreements: any outstanding long-term equity incentive awards shall vest on a pro rata basis. Any long-term equity incentive awards with performance-based vesting provisions shall remain outstanding through the remainder of the applicable performance period and if or to the Restated Incentive Plan, uponextent the performance provisions are attained shall vest without regard to any continued employment requirement on a pro rata basis. The pro rata basis for the long-term equity incentive awards is based on the percentage determined by dividing (i) the number of days from and including the grant date of such equity award through the termination duedate of the NEO’s employment, by (ii) the number of days from the grant date to death or disability, the full vesting date/end of the applicable performance period, as applicable, of such long-term equity incentive awards.
|
| The participant or the participant’s estate or representative shall be entitled to receive any previously vested long-term equity incentive awards. Additionally, pursuant |
| Pursuant to the Restated Incentive Plan,above, the total number of shares of Common Stock subject to the long-term equity incentive awards that would have vested upon death or disability the lesser of (a) an additional twenty percent (20%) of the shares of Common Stock covered by an individual option or restricted award and (b) the remaining amount of unvested shares of Common Stock covered by the option or restricted award shall become vested and exercisable.each NEO would have been as follows: |
Pursuant to the above, the total number of equity awards that would have vested and be exercisable upon death or disability of each named executive officer would be as follows:
Restricted Stock: | | | | | | Name | | Number of Shares | | Lee Roy Mitchell | | | - | | Tim Warner | | 38,166 | 20,067 | | Mark Zoradi | | | 1,439 | | Robert Copple | | 35,075 | 46,682 | | Sean Gamble | | | 4,216 | | Valmir Fernandes | | 29,023 | 37,555 | |
Restricted stock units based on the assumption that the maximum IRR would be achieved over the performance period: | | | | | | Name | | Number of Shares | | Michael CavalierLee Roy Mitchell
| | 29,618 | - | | Tim Warner | | | 107,240 | | Mark Zoradi | | | - | | Robert Copple | | | 60,790 | | Sean Gamble | | | 3,536 | | Valmir Fernandes | | | 43,746 | |
There were no outstanding stock options for any of the named executive officersNEOs as of December 31, 2012.2015. The values of the long-term equity incentive awards have been calculated using the closing price of our Common Stock on December 31, 20122015 of $25.98$33.43 per share. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Each member of the Compensation Committee Interlocksqualifies as an independent, non-employee director and Insider Participation Noneno member of the Compensation Committee has served as an officer or employee of the Company. During the 2015 fiscal year, none of our executive officers served as a member of the board of directors or the compensation committee of any entity that has one or more executive officers serving on our Board or on the Compensation Committee of our Board. Messers. Chereskin and Dombalagian served as the members of our Compensation Committee during the last completed fiscal year.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Beneficial ownership has been determined in accordance with the applicable rules and regulations, promulgated under the Exchange Act. Unless indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable. SharesTo the extent indicated below, shares beneficially owned by a person include shares of our Common Stock subjectwhich the person has the right to options that are currently exercisable or exercisableacquire beneficial ownership within 60 days of the Record Date and are deemed to be outstanding and to be beneficially owned by the person holding the optionsincluded for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Percentage ownership is based on 114,944,880116,172,004 shares of Common Stock outstanding as of the Record Date. As of the Record Date, there were 158446 holders of record of our Common Stock. | | | | | | | | | | Beneficial Ownership | | Names of Beneficial Owner | | Number(1) | | | Percentage | 5% Stockholders | | | | | | | BlackRock, Inc.(2) | | | 7,530,377 | | | 6.5% | FMR LLC(3) | | | 9,255,187 | | | 8.0% | Directors and Named Executive Officers | | | | | | | Lee Roy Mitchell(4) | | | 10,122,845 | | | 8.5% | Tim Warner(5) | | | 158,809 | | | * | Robert Copple(6) | | | 172,761 | | | * | Valmir Fernandes(7) | | | 122,592 | | | * | Michael Cavalier(8) | | | 125,463 | | | * | Benjamin D. Chereskin(9) | | | 53,663 | | | * | Vahe A. Dombalagian(9) | | | 10,993 | | | * | Peter R. Ezersky(9) | | | 20,637 | | | * | Steven P. Rosenberg(10) | | | 36,214 | | | * | Enrique F. Senior(11) | | | 38,744 | | | * | Carlos M. Sepulveda(11) | | | 38,744 | | | * | Roger T. Staubach(11) | | | 38,744 | | | * | Donald G. Soderquist(11) | | | 38,744 | | | * | Raymond W. Syufy | | | - | | | | Executive Officers & Directors as a Group (16 persons)(12) | | | 11,159,321 | | | 9.7% | | | | | * Less than 1%. | | | | | | |
| | | | | | | | | | | | Beneficial Ownership | | | Names of Beneficial Owner | | Number(1) | | | Percentage | | 5% Stockholders | | | | | | | | | BlackRock, Inc.(2) | | | 9,286,248 | | | | 8.0 | % | The Vanguard Group(3) | | | 7,089,036 | | | | 6.1 | % | Directors and NEOs | | | | | | | | | Lee Roy Mitchell(4) | | | 10,122,845 | | | | 8.7 | % | Mark Zoradi(5) | | | 32,434 | | | | * | | Sean Gamble(6) | | | 22,017 | | | | * | | Valmir Fernandes(7) | | | 82,457 | | | | * | | Darcy Antonellis(8) | | | 2,436 | | | | * | | Benjamin D. Chereskin(9) | | | 63,186 | | | | * | | Steven P. Rosenberg(10) | | | 42,156 | | | | * | | Enrique F. Senior(10) | | | 48,267 | | | | * | | Carlos M. Sepulveda(10) | | | 48,267 | | | | * | | Donald G. Soderquist(10) | | | 48,267 | | | | * | | Raymond W. Syufy(10) | | | 9,115 | | | | * | | Nina G. Vaca(10) | | | 4,159 | | | | * | | Executive Officers & Directors as a Group (14 persons)(11) | | | 10,711,862 | | | | 9.2 | % |
| (1) | In computing the number of shares of Common Stock beneficially owned by a person and the percentage ownership of that person, the Company deemed outstanding shares of Common Stock subject to options held by that person that were currently exercisable at, or were exercisable within 60 days of, the Record Date. The Company did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. |
| (2) | Based upon statements in Schedule 13G/A filed by BlackRock, Inc. on January 26, 2016. Black Rock, Inc. may be deemed to beneficially own the reported shares of Common Stock and has filed Schedule 13G as the parent holding company or control person on behalf of its subsidiaries BlackRock Advisors (UK) Limited, BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Asset Management Deutschland AG, BlackRock Asset Management Ireland Limited, BlackRock Fund Advisors, BlackRock Fund Management Ireland Limited, BlackRock Asset Management Schweiz AG, BlackRock Financial Management, Inc., on February 6, 2013.BlackRock Fund Advisors, BlackRock Institutional Trust Company, N.A., BlackRock International Limited, BlackRock Investment Management (Australia) Limited, BlackRock Investment Management (UK) Ltd., BlackRock Investment Management, LLC and BlackRock Life Limited. BlackRock, Inc. reported (i) sole voting power over 8,894,959 shares and (ii) sole dispositive power over 9,286,248 shares. The address of Black Rock Inc. is 4055 East 52nd Street, New York, NY 10022. |
| (3) | Based upon statements in Schedule 13G/A13G filed by FMR LLC,The Vanguard Group on February 14, 2013.11, 2016. The Vanguard Group may be deemed to beneficially own the reported shares of Common Stock and has filed Schedule 13G as the parent holding company or control person on behalf of its wholly-owned subsidiaries Vanguard Fiduciary Trust Company (beneficial owner of 73,663 shares) and Vanguard Investments Australia, Ltd. (beneficial owner of 11,700 shares). The Vanguard Group has (i) sole voting power over 79,963 shares |
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| (ii) shared voting power over 5,400 shares (iii) shared dispositive power over 79,063 shares and (iv) sole dispositive power over 7,009,973 shares. The address of FMR LLCThe Vanguard Group is 82 Devonshire Street, Boston, Massachusetts 02109.100 Vanguard Boulevard, Malvern, PA 19355. |
| (4) | Includes 4,419,095 shares of Common Stock owned by The Mitchell Special Trust. Mr. Mitchell is the co-trustee of The Mitchell Special Trust. Mr. Mitchell expressly disclaims beneficial ownership of all shares held by The Mitchell Special Trust. |
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| (5) | Includes 113,160 shares of restricted stock.
|
| (5) | (6) | Includes 117,52830,434 shares of restricted stock. |
| (6) | (7) | Includes 100,93320,311 shares of restricted stock. |
| (7) | (8) | Includes 98,97953,778 shares of restricted stock. |
| (8) | (9) | Includes 4,3532,436 shares of restricted stock. |
| (9) | (10) | Includes 3,4012,642 shares of restricted stock. stock, 3,568 shares held by LEGATUM Partners, L.P., of which shares Mr. Chereskin is the beneficial owner and 9,736 shares held in a grantor trust of which Mr. Chereskin’s spouse is a trustee. |
| (10) | (11) | Includes 4,3532,642 shares of restricted stock. |
| (11) | (12) | Includes 539,505 shares of restricted stock. There are no shares of Common Stock issuable upon the exercise of options.
The numbers reported do not include 214,425 shares of Common Stock underlying restricted stock units granted to the executive officers that are subject to vesting based on achievement of performance objectives. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who own more than 10% of a registered class of the Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. These insiders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file, including Forms 3, 4 and 5. Based solely on its review of the copies of such reports, the Company believes that each of its directors and executive officers has complied with the applicable reporting requirements for transactions in the Company’s securities during the 2015 fiscal year ended December 31, 2012.year. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS Our Board has adopted a written policy supplementing our Code of Business Conduct and Ethics relating to the review, approval and ratification of transactions between us and “related parties” as generally defined by applicable rules under the Securities Act of 1933, as amended. The policy covers any related party transaction in which the amount involved exceeds $120,000. Our Board has determined that the Audit Committee is best suited to review and approve related party transactions, although in certain circumstances the Board may determine that a particular related party transaction be reviewed and approved by a majority of disinterested directors. In reviewing and approving a related party transaction, the Audit Committee, after satisfying itself that it has received all material information regarding the related party transaction under review, shall approve based upon the determination whether the transaction is fair and in the best interest of the Company. Management recommendspresents any proposed related party transaction to be entered into by the Company at an Audit Committee meeting.meeting for review and approval. If management becomes aware of a proposed or existing related party transaction that has not been presented or pre-approved by the Audit Committee, management shall promptly notify the ChairmanChair of the Audit Committee who shall submit such related party transaction to the full Audit Committee for approval or ratification, if the Audit Committee determines that such transaction is fair to the Company. If management, in consultation with our Chief Executive Officer, Chief Financial OfficerCEO, CFO or General Counsel determines that it is not practicable to wait until the next Audit Committee meeting, the ChairmanChair of the Audit Committee has been delegated the authority during this period to review, consider and approve any such | | | | | 67 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
transaction. In such event, the ChairmanChair of the Audit Committee shall report any related party transaction approved by him or her at the next Audit Committee meeting. The Audit Committee may establish guidelines it determines as necessary and appropriate for management to follow in dealings with related parties and related party transactions. The procedures followed in considering a related party transaction are evidenced in the resolutions and minutes of the meetings of the Audit Committee or Board, as applicable. Certain Agreements Laredo Theatre We manage theatres for Laredo Theatre, Ltd., (“Laredo”). We are the sole general partner and own 75% of the limited partnership interests of Laredo. Lone Star Theatres, Inc. (“Lone Star”) owns the remaining 25% of the limited 67
partnership interests in Laredo and is 100% owned by Mr. David Roberts, Lee Roy Mitchell’s son-in-law.son-in- law. Under the agreement, management fees are paid by Laredo to us at a rate of 5% of annual theatre revenues up to $50 million and 3% of annual theatre revenues in excess of $50 million. We recorded $522,000approximately $0.6 million of management fee revenue from Laredo during the year ended December 31, 2012.2015 fiscal year. As the sole general partner and the majority limited partner of Laredo, we control the affairs of the limited partnership and have the rights to dissolve the partnership or sell the theatres. We also have a license agreement with Laredo permitting Laredo to use the “Cinemark” service mark, name and corresponding logos and insignias in Laredo, Texas. Copper Beech LLC Effective September 2, 2009, Cinemark USA, Inc. (“CUSA”), a wholly-owned subsidiary of the Company, entered into an Aircraft Time Sharing Agreement (the “Aircraft Agreement”), with Copper Beech Capital, LLC, a Texas limited liability company (the “Operator”), for the use of an aircraft and flight crew on a time sharing basis. Lee Roy Mitchell, our Chairman of the Board, and his wife, Tandy Mitchell own the membership interests of the Operator. Prior to the execution of the Aircraft Agreement, the Company had an informal agreement with the Operator to use, on occasion, a private aircraft owned by the Operator. The private aircraft is used by Mr. Mitchell and other executives who accompany Mr. Mitchell to business meetings for the Company. The Aircraft Agreement specifies the maximum amount that the Operator can charge the Company under the applicable regulations of the Federal Aviation Administration for the use of the aircraft and flight crew. The Company pays the Operator the direct costs and expenses related to fuel, pilots, landing fees, storage fees, insurance obtained for the specific flight, flight planning, weather contract services and expenses such as in-flight food and beverage services and passenger ground transportation incurred during a trip. For the twelve months ended December 31, 2012,2015 fiscal year, the aggregate amounts paid to Copper Beech LLC for the use of the aircraft was approximately $82,000.$400,000 . Family Relationships Tandy Mitchell, wife of Mr. Mitchell, is an employee of the Company andCompany. Ms. Mitchell received total compensation of $176,694 from the Company$190,285 for the 20122015 fiscal year. Such amount included annual base salary benefits (health, life and disability insurance) and an annualof $121,797, a cash bonus for the 20122015 fiscal year. Walter Hebert III, Senior Vice President – Purchasingyear of the Company is the brother-in-law of Mr. Mitchell. There is no employment agreement between Mr. Hebert and the Company. Mr. Hebert is a participant to the Restated Incentive Plan and the Bonus Plan. Mr. Hebert’s summary compensation in 2012 was $775,919, which included his salary of $245,232,$45,674, benefits (health, life and disability insurance) of $7,546,$22,330 and annual matching contribution to 401(K) of $13,125, an annual$7,689. There were no long-term equity incentive awards granted to Ms. Mitchell during the 2015 fiscal year.
Walter Hebert III, brother-in-law of Mr. Mitchell, is the Executive Vice President – Purchasing of the Company. Mr. Hebert received total compensation of $772,206 for the 2015 fiscal year. Such amount included base salary of $278,100, a cash bonus for the 20122015 fiscal year of $114,439,$166,860, benefits (health, life and disability insurance) of $26,843, annual matching contribution to 401(K) of $13,912, dividends received during 2012the 2015 fiscal year on unvested restricted stock and vested performance awards (in the form of restricted stock units) | | | | | 68 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
units that vested in March 20122015 of $38,379$31,162 and the grant date fair market values of restricted stock award of $250,043$267,600 and performance awards (in the form of restricted stock units)units of $107,155$151,833 (based on maximum vesting and subject to the Company achieving pre-established performance targets and Mr. Hebert’s continued employment through March 2016)2019). Century Theatres Our subsidiary, Century Theatres, currently leases 1915 theatres and one parking facility from Syufy Enterprises or affiliates of Syufy Enterprises. Raymond Syufy, one of our directors, is an officer of the general partner of Syufy Enterprises. Certain of the leases have fixed minimum annual rent while the other leases have rent based upon a specified percentage of gross sales as defined in the lease with no minimum annual rent. For the 2015 fiscal year, ended December 31, 2012, we paid approximately $19$21 million in rent for these leases. Director Nomination Agreement On April 9, 2007, immediately prior to our initial public offering, we entered into a Director Nomination Agreement with certain of our then current stockholders permitting those certain stockholders to designate persons for appointment or nomination for election to the Board. Pursuant to the Director Nomination 68
Agreement, certain of our then current stockholders, MDCP, had the right to designate five nominees to the Board, the Mitchell Investors (as defined in the Director Nomination Agreement) have the right to designate two nominees to the Board,, Syufy Enterprises, LP had the right to designate one nominee to the Board and the Quadrangle Investors (as defined in the Director Nomination Agreement) had the rightrights to designate one nomineenominees to the Board. Currently, under the Director Nomination Agreement, only the Mitchell Investors have the right to nominate two directors to the Board. ITEM 2 — RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTANT
The Audit Committee has appointed and the Board has ratified the appointment of Deloitte & Touche as the Company’s independent registered public accountant for the fiscal year ending December 31, 2013. As a matter of good corporate governance, we are seeking stockholder ratification of the appointment of Deloitte & Touche. If the stockholders do not ratify the appointment of Deloitte & Touche, the Audit Committee may review its future selection of auditors. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accountant at any time during the year if the Audit Committee believes that such a change would be in the best interests of the Company and its stockholders.
One or more representatives of Deloitte & Touche is expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to answer appropriate questions.
Unless marked to the contrary, proxies received will be voted “FOR” ratification of the appointment of Deloitte & Touche as the independent registered public accountant for the fiscal year ending December 31, 2013.
Recommendation of the Board
Our Board unanimously recommends that stockholders vote “FOR” ratification of the appointment of Deloitte & Touche as our independent registered public accountant for the fiscal year ending December 31, 2013.
ITEM 3 — ADVISORY VOTE ON EXECUTIVE COMPENSATION
As required by Section 14A of the Securities Exchange Act, as amended, the Company is providing stockholders with an advisory (non-binding) vote on our compensation program for our named executive officers and the compensation of our named executive officers for the 2012 fiscal year. Accordingly, you may vote on the following resolution at the 2013 Annual Meeting:
“Resolved, that the stockholders hereby approve the compensation of the Company’s named executive officers as disclosed in the CD&A, the compensation tables and the narrative disclosures that accompany the compensation tables in this proxy statement.”
This vote is nonbinding. The Board and the Compensation Committee will take into account the outcome of the vote when considering executive compensation in the future.
At the 2011 Annual Meeting, the Board recommended, and approximately 89% of the Company’s stockholders who voted at the 2011 Annual Meeting either in person or via proxy supported an annual advisory vote on executive compensation. Therefore, an advisory vote on the Company’s executive compensation program is on the agenda of the Annual Meeting.
The next advisory vote on executive compensation will be at the annual meeting of stockholders next year.
Recommendation of the Board
Our Board unanimously recommends that stockholders vote “FOR” the executive compensation program for our named executive officers.
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ITEM 4 — RE-APPROVAL OF THE MATERIAL TERMS OF THE PERFORMANCE GOALS UNDER THE AMENDED AND RESTATED 2006 LONG TERM INCENTIVE PLAN
We are submitting the material terms of the performance goals under the Restated Incentive Plan for stockholder re-approval to meet the requirements under Section 162(m) of the Code.
In May 2008, together with the Bonus Plan described below, upon recommendation of the Board, the stockholders approved the Restated Incentive Plan. The purposes of the Restated Incentive Plan are to enable us, and any of our subsidiaries, to attract and retain the services of eligible plan participants and to provide incentives for such persons to exert maximum efforts for our long range success.
Section 162(m) of the Code generally disallows a federal income tax deduction to any publicly held corporation for compensation paid in excess of $1 million in any taxable year to the Chief Executive Officer or any of the three other most highly compensated executive officers (other than the Chief Executive Officer and the Chief Financial Officer) who are employed by the corporation on the last day of the taxable year. However, there is an exception to this limit on deductibility for performance-based compensation, the material terms of which are disclosed to and approved by the stockholders.
We have structured and intend to implement and administer the Restated Incentive Plan so that compensation resulting from options and other stock vesting in accordance with specified performance goals can qualify as “performance-based compensation.” The administrator, however, has the discretion to grant awards with terms that will result in the awards not constituting performance-based compensation.
Under Section 162(m) of the Code, we must seek stockholder approval of the material terms of the performance goals applicable to performance awards under the Restated Incentive Plan at five-year intervals to preserve our ability to receive the federal income tax deduction discussed above. Hence, to allow us to qualify awards as “performance-based compensation,” we are seeking stockholder re-approval of the material terms of the performance goals applicable to performance awards under the Restated Incentive Plan.
For purposes of Section 162(m) of the Code, the material terms include the employees eligible under the Restated Incentive Plan, a description of the business criteria on which performance goals applicable to performance awards are based, and the maximum amount of compensation payable under the Restated Incentive Plan to any one employee if the performance goals are attained. Each of these aspects of the Restated Incentive Plan is described below. We are not seeking to make any changes with respect to the material terms of the performance goals or any other terms of the Restated Incentive Plan at this time.
For a discussion of the philosophy behind the various equity incentive awards under the Restated Incentive Plan, please see the discussion in theCompensation Discussion & Analysis section in this proxy statement.
Summary of the Restated Incentive Plan
Following is a summary of our Restated Incentive Plan which is qualified in its entirety by reference to the full text of the Restated Incentive Plan, attached as Appendix A to this proxy statement.
Eligibility. Any employee, director or consultant of our or any of our subsidiaries who is designated by the administrator is eligible to receive an award under the Restated Incentive Plan. Incentive stock options may only be granted to a person employed by us or by one of our subsidiaries. Non-qualified stock options, restricted shares and restricted stock units can be awarded to employees, directors and consultants.
Business Criteria. The performance goals for performance awards under the Restated Incentive Plan are determined by the administrator, in its sole discretion, prior to the time 25% of the performance period has
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elapsed (but not later than 90 days after the beginning of the performance period) and may be based on one or more of the following business criteria as applied to a participant, a business unit or the Company and its affiliates:
earnings before interest, taxes, depreciation and amortization (EBITDA);
Adjusted EBITDA, which is a non-GAAP financial measure used by the Company in the budget and reporting process and is more specifically defined in the Restated Incentive Plan;
funds from operations per share;
pre-tax or after-tax income;
cash available for distribution;
cash available for distribution per share;
improvements in the Company’s attainment of expense levels;
implementing or completion of critical projects;
improvement in cash-flow (before or after tax); or
the occurrence of a Sale of the Company.
Available Shares and Maximum Awards. The maximum aggregate number of shares of Common Stock that may be issued under the Restated Incentive Plan is 19,100,000 shares. As of the Record Date, there were 7,953,512 shares of Common Stock available for future issuance under the Restated Incentive Plan. No employee may be granted options covering more than 1,500,000 shares during any fiscal year, or performance awards that could result in the employee receiving more than 1,000,000 shares of Common Stock for each full or partial fiscal year during the performance period of a particular performance award.
Administration. The Restated Incentive Plan is administered by the administrator who will be the Board, or in the discretion of our Board, by a committee consisting of two or more of our directors. Currently, the Board has delegated administration of the Restated Incentive Plan to the Compensation Committee comprised of two or more directors who qualify as both “outside directors” within the meaning of Section 162(m) of the Code and “non-employee directors” within the meaning of Rule 16b-3 promulgated under Section 16 of the Exchange Act. The administrator has full and final authority to make awards, including the ability to make awards within designated parameters that do not involve “covered employees” within the meaning of Section 162(m) of the Code or “insiders” within the meaning of Section 16 of the Exchange Act, establish the terms thereof, and administer and interpret the Restated Incentive Plan in its sole discretion unless authority is specifically reserved to our Board under the Restated Incentive Plan, our amended and restated certificate of incorporation or bylaws, or applicable law. The Restated Incentive Plan administrator has exclusive authority to determine employees to whom awards will be granted, the timing and manner of the grant of awards, the number of shares to be subject to any award, the purchase price or exercise price and medium of payment, performance or business criteria vesting provisions and repurchase provisions and to specify the provisions of any agreement relating to such grant or sale, the duration and purpose of leaves of absence which may be granted to participants without constituting termination of employment for purposes of the Restated Incentive Plan and all other discretionary determinations necessary or advisable for administration of the Restated Incentive Plan.
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Awards and Terms
Awards under the Restated Incentive Plan may consist of options, including options intended to qualify as incentive stock options under Section 422 of the Code and non-qualified options that are not intended to satisfy the requirements of Section 422 of the Code, restricted stock and restricted stock unit awards, or performance awards.
Terms and Conditions of Options.The exercise price for the shares subject to any option granted under the Restated Incentive Plan may not be less than 100% of the fair market value of the shares of our Common Stock on the date the option is granted. However, the terms of the option agreements entered into under the 2004 Cinemark, Inc. Long Term Equity Incentive Plan (the “2004 Plan”) will continue to govern the options granted under the 2004 Plan. The options will otherwise be subject to the provisions in our Restated Incentive Plan. The purchase price for any shares purchased pursuant to exercise of an option must be paid in full upon exercise of the option in cash or, at the sole discretion of the administrator, upon such terms and conditions as it may approve, by transferring to us for redemption shares of previously acquired Common Stock at the fair market value, by a broker assisted cashless exercise procedure, or by decreasing the number of shares deliverable upon the exercise of an option on a cashless basis by an amount equal to the number of shares having an aggregate fair market value equal to the aggregate exercise price of such option. Under the Restated Incentive Plan, options vest according to the provisions of the applicable option agreement, and terminate as set forth in the applicable option agreement, but no later than the tenth anniversary of the date of grant. Upon the sale of our Company, all outstanding options become fully vested and exercisable. No option is exercisable after the earliest of the following: (1) the expiration of ten years after the date the option is granted; (2) three months after the date the participant’s continuous service as an employee, director or consultant with us and our subsidiaries terminates if termination is for any reason other than permanent disability, death, or cause; (3) the date the participant’s continuous service terminates if termination is for cause; (4) one year after the date the participant’s continuous service terminates if termination is a result of death; or (5) six months after the date the participant’s continuous service terminates if termination is a result of permanent disability.
Incentive Stock Options. Incentive stock options are non-transferable, except as permitted by the administrator in its sole discretion. If an incentive stock option is granted to an employee who owns 10% or more of our Common Stock, the exercise price of that option may not be less than 110% of the fair market value of the Common Stock on the option grant date and the option is not exercisable after the expiration of five years from such option grant date. To the extent the aggregate fair market value (determined as of the time the option is granted) of stock with respect to which incentive stock options are exercisable by any employee for the first time during any calendar year exceeds $100,000, the options or portions thereof will be treated as non-qualified stock options and will not be treated as incentive stock options.
Non-qualified Stock Options. The Restated Incentive Plan also provides for grants of non-qualified stock options to any employees, directors or consultants performing services for us or our subsidiaries. The exercise price for non-qualified stock options granted under the Restated Incentive Plan may not be less than 100% of the fair market value of the Common Stock on the option grant date.
Restricted Share Awards.The administrator may award (or sell at a purchase price determined by the administrator) restricted shares of our Common Stock to our employees, directors and consultants. The restricted stock may not be sold, assigned, transferred or otherwise disposed of for such period as the administrator shall determine. The vesting of an award of restricted stock will be determined by the administrator for each grant. Vesting requirements may be based on the continued service of the participant for a specified time period or may be granted as performance awards based on the attainment of specified business performance goals established by the administrator or both. In the event a recipient’s continuous service to us terminates, we may reacquire the unvested shares acquired in consideration of services and all unvested shares of restricted stock as of the date of termination will be forfeited. If
restricted stock is acquired as consideration other than for prior or future services, the forfeiture will be accomplished by repurchasing the shares at the original purchase price. The administrator, in its sole discretion,
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may impose additional restrictions as well as waive any or all restrictions with respect to restricted shares. The agreement evidencing the award of restricted stock will set forth any such terms and conditions. Upon a change of control of our Company, all outstanding shares of restricted stock become fully vested. Restricted shares will be held by the Company during the period that the shares are subject to vesting and transfer restrictions, but the participant will have voting and dividend rights during this time.
Restricted Stock Units. An award of Restricted Stock Units is an award of hypothetical Common Stock units having a value equal to the fair market value of an identical number of shares of Company Common Stock. Each Restricted Stock Unit represents a right to receive one share of Common Stock from the Company at the payment date set forth in the award agreement. Each Restricted Stock Unit may be subject to such vesting requirements, restrictions on transfer and conditions to payment (the “Restriction Period”) as the Compensation Committee determines are appropriate. Until the Restricted Stock Units awarded shall have vested and become payable on the payment date specified in the award agreement, the Restricted Stock Units and any related securities, cash dividends or other property nominally credited to a Restricted Stock Unit account may not be sold, transferred, or otherwise disposed of and may not be pledged or otherwise hypothecated during the Restriction Period. Vesting requirements may be based on the continued service of the participant for a specified time period or may be granted as Performance Awards based on the attainment of specified business performance goals established by the administrator. Restricted Stock Units may be payable at the end of the Restriction Period or on a deferred settlement date. Payment will be in the form of Company Common Stock. Restricted Stock Units also may be granted with dividend equivalent rights that become payable if and when the Restricted Stock Units become payable. A participant receiving a Restricted Stock Unit award (denominated in hypothetical Common Stock units) shall have the rights of a stockholder only as to shares of Common Stock actually received by the participant under the Restated Incentive Plan and not with respect to shares of Common Stock subject to the award but not actually received by the participant.
Performance Awards. A Performance award is an award entitling the recipient to vest in or acquire shares of Common Stock or hypothetical Common Stock units having a value equal to the Fair Market Value of an identical number of shares of Common Stock that will be settled in the form of shares of Common Stock upon the attainment of specified performance goals. Performance Awards may be granted in the form of Restricted Shares or Restricted Stock Units. The administrator in its sole discretion determines the performance goals applicable to each award and the periods during which the performance is to be measured. Performance goals are based on a pre-established objective formula or standard that specifies the manner of determining the amount of cash or the number of shares under the performance award that will be granted or shall vest if the performance goal is attained. The administrator may establish these performance goals based on one or more of the business criteria listed under “Business Criteria” above. Performance goals shall be objective and, during the period the Company is required to be registered under Section 12 of the Exchange Act, performance goals must meet the requirements of Section 162(m) of the Code.
Effect of the Sale of Our Company.Upon the sale of our Company, all outstanding options become fully vested and exercisable and all outstanding shares of restricted stock become fully vested. At the time of a sale of our Company, the administrator will cancel any or all outstanding options in exchange for a payment to the option holder in an amount equal to the value of the option under the terms of the sale of our Company, minus any required withholding tax. In addition, the administrator will cause our Company to purchase all restricted shares and restricted share units at a price determined according to the terms of the sale of our Company. The payment of the applicable amounts described above may be made in cash or, if the transaction resulting in the sale of our Company includes consideration in the form of securities, in a combination of cash and publicly traded securities, in the administrator’s discretion.
Effect of Mergers, Reorganizations and Consolidations on Awards.In the event of our liquidation or merger, reorganization or consolidation with any other corporation in which we are not the surviving corporation or we become a subsidiary of another corporation, or of a stock split or stock dividend, the maximum number of shares of Common Stock subject to options or awards under the Restated Incentive Plan and the number of
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shares and exercise price per share subject to outstanding options or awards under the Restated Incentive Plan will be appropriately adjusted by the administrator to reflect any increase or decrease in the number of outstanding shares of Common Stock. Any outstanding awards previously granted under the Restated Incentive Plan may either (1) be assumed or replaced by substitute awards by the surviving corporation or (2) continued in accordance with their terms.
Plan Amendments.The Restated Incentive Plan may be terminated or amended by our Board. Without the authorization and approval of the stockholders, however, our Board may not make any amendments which would (1) increase the total number of shares covered by the Restated Incentive Plan, (2) change the class of persons eligible to participate, or (3) extend the term of the Restated Incentive Plan beyond ten years from the date of adoption.
Term of Restated Incentive Plan.Unless earlier terminated by our Board in its sole discretion, the Restated Incentive Plan will expire on September 29, 2018.
Federal Income Tax Consequences
The following discussion is a general summary of the principal federal income tax consequences under current U.S. law relating to awards granted to employees under the Restated Incentive Plan. The summary is not intended to be exhaustive and, among other things, does not describe state, local or foreign income and other tax consequences. Moreover, the federal income tax consequences to any particular participant may differ from those described herein by reason of, among other things, the particular circumstances of such participant. It is intended that the Restated Incentive Plan and any awards granted under the Restated Incentive Plan will comply with the provisions of Section 409A of the Code, so that participants will not be subject to adverse tax consequences under that Section.
Stock Options. A participant generally will not recognize any taxable income upon the grant of a stock option and we will not be entitled to a tax deduction with respect to such grant. Generally, upon exercise of a non-qualified stock option, the excess of the fair market value of our Common Stock on the date of exercise over the exercise price will be taxable as ordinary income to the participant. In general, subject to the possible limitations on deductibility under Section 162(m) or 280G of the Code for compensation paid to certain individuals, we should be entitled to a federal income tax deduction in the same amount and at the same time as such inclusion in the participant’s income. A participant’s subsequent disposition of shares acquired on the exercise of a non-qualified stock option will ordinarily result in long-term or short-term capital gain or loss, depending on the holding period.
On exercise of an incentive stock option, the holder will not recognize any income and we will not be entitled to a deduction. However, the amount by which the fair market value of the shares on the exercise date of an incentive stock option exceeds the purchase price generally will constitute an item of adjustment for alternative minimum tax purposes, and may therefore result in alternative minimum tax liability to the option holder.
The disposition of shares acquired on exercise of an incentive stock option will ordinarily result in capital gain or loss. However, if the holder disposes of shares acquired on exercise of an incentive stock option within two years after the date of grant or one year after the date of exercise (a “disqualifying disposition”), the holder generally will recognize ordinary income in the amount of the excess of the fair market value of the shares on the date the option was exercised over the option exercise price. Any excess of the amount realized by the holder on the disqualifying disposition over the fair market value of the shares on the date of exercise of the option generally will be capital gain. In the event of a disqualifying disposition, we should be entitled to a deduction equal to the amount treated as taxable compensation to the participant, but such deduction may be limited under Section 162(m) or 280G of the Code for compensation paid to certain individuals.
If an option is exercised through the use of shares previously owned by the holder, such exercise generally will not be considered a taxable disposition of the previously owned shares and thus no gain or loss will
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be recognized with respect to such shares on such exercise. However, if the option is an incentive stock option and the previously owned shares were acquired on the exercise of an incentive stock option or other statutory stock option and the holding period requirement for those shares is not satisfied at the time they are used to exercise the option, such use will be a disqualifying disposition of the previously owned shares resulting in the recognition of ordinary income in the amount described above.
Restricted Stock and Performance Shares. A participant generally will not recognize taxable income upon the grant of restricted stock that is subject to a substantial risk of forfeiture, including performance shares, and the recognition of any income will be postponed until the earlier of the time such shares become transferable or are no longer subject to a substantial risk of forfeiture. When the restrictions lapse, the participant generally will recognize ordinary income equal to the excess of the fair market value of the restricted stock at the time that such restrictions lapse over the amount paid by the participant for such shares, if any. However, a participant may elect to be taxed at the time of the grant of restricted stock by making an election under Section 83(b) of the Code, in which case the participant will recognize ordinary income equal to the excess of the fair market value of the shares of restricted stock at the time of grant over the amount paid by the participant for such shares, if any. We should be entitled to a federal income tax deduction in the same amount and at the same time as the participant recognizes ordinary income, but such deduction may be limited under Section 162(m) or 280G of the Code for compensation paid to certain individuals.
Restricted Stock Units and Performance Awards. A participant will not recognize income upon the grant of a restricted stock unit award, including a performance award, until such award becomes payable and the participant receives shares of Common Stock. Rather, upon delivery of shares of Common Stock pursuant to a restricted stock unit award, the participant will have taxable compensation equal to the fair market value of the number of shares of Common Stock that the participant receives with respect to the award, or, if the participant receives restricted shares, the participant will have taxable compensation income equal to the fair market value at the earlier of the date the stock becomes transferable or is no longer subject to a substantial risk of forfeiture, in the same manner as Restricted Stock. Upon disposition of the stock, the participant will recognize a capital gain or loss equal to the difference between the selling price and the sum of the amount paid for the stock (if any) plus any amount recognized as ordinary income upon issuance of the Common Stock in settlement of the restricted stock unit award. The gain or loss will be long- or short-term depending on how long the participant held the stock. We should be entitled to a federal income tax deduction in the same amount and at the same time as the participant recognizes ordinary income, but such deduction may be limited under Section 162(m) or 280G of the Code for compensation paid to certain individuals.
Section 162(m) of the Code. In general, Section 162(m) of the Code denies a publicly held corporation a deduction for U.S. federal income tax purposes for compensation in excess of $1 million per year per person to its principal executive officer and the three other officers (other than the principal executive officer and principal financial officer) whose compensation is disclosed in its proxy statement as a result of their total compensation, subject to certain exceptions. The Restated Incentive Plan is intended to satisfy an exception with respect to grants of options to covered employees. In addition, the Restated Incentive Plan is designed to permit certain awards of restricted stock and restricted stock units to be awarded as performance awards intended to qualify under the “performance-based compensation” exception to Section 162(m) of the Code. However, the Company reserves the right to determine whether or not awards under the Restated Incentive Plan will comply with the conditions to qualify as “performance-based” compensation under Section 162(m) of the Code. In addition, there may be ambiguities regarding how the conditions to qualify as “performance-based” compensation will be interpreted and administered under the income tax regulations, so that awards intended or expected to qualify as deductible may not so qualify. Accordingly, there is no certainty that all awards granted under the Restated Incentive Plan will in fact be deductible. We have not requested a ruling from the Internal Revenue Service or an opinion of counsel regarding this issue.
Section 280G of the Code. Under certain circumstances, the granting or enhancement of awards, the accelerated vesting or exercise of options or the accelerated lapse of restrictions with respect to other awards in connection with a change in control might be deemed an “excess parachute payment” for purposes of the golden parachute tax provisions of Sections 280G and 4999 of the Code. To the extent it is so considered, the participant may be subject to a 20% excise tax and we may be denied a federal income tax deduction.
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New Plan Benefits
Since awards granted and earned under the Restated Incentive Plan are based on continuing future employment and the future achievement of performance goals by the Company as established by the Compensation Committee, the Company cannot determine the amounts that will be earned in the future under the Restated Incentive Plan. Thus, the table below shows the awards granted under the Restated Incentive Plan in 2012 to the individuals and groups indicated. These awards are not necessarily indicative of awards that may be granted in the future.
Recommendation of the Board
Our Board unanimously recommends that stockholders vote “FOR” approval of the material terms of the performance goals applicable to performance awards under the Amended and Restated Cinemark Holdings, Inc. 2006 Long Term Incentive Plan.
ITEM 5 — APPROVAL OF AN AMENDMENT TO AND RE-APPROVAL OF THE MATERIAL TERMS OF THE PERFORMANCE GOALS UNDER THE CINEMARK HOLDINGS, INC. PERFORMANCE BONUS PLAN
We are submitting for stockholder approval (1) an amendment to the Bonus Plan that was adopted, subject to stockholder approval, by the Compensation Committee on March 22, 2013, and (2) the material terms of the performance goals under the Bonus Plan for stockholder re-approval to meet the requirements under Section 162(m) of the Code.
In May 2008, upon recommendation of the Compensation Committee and the Board, the stockholders approved the Bonus Plan as described below. The Bonus Plan is intended to enable the Company to provide an incentive to executive officers and other selected employees of the Company to contribute to the growth, profitability and increased value of the Company by providing incentive compensation that qualifies as “performance-based compensation” for purposes of Section 162(m) of the Code.
Under Section 162(m) of the Code we must seek stockholder approval of the material terms of the performance goals under the Bonus Plan at five-year intervals to preserve the Company’s ability to permit the Compensation Committee to establish annual targets and receive the federal income tax deduction discussed above. The material terms include the employees eligible under the Bonus Plan, a description of the business criteria on which performance goals are based, and the maximum amount of compensation payable under the Bonus Plan to any one employee if the performance goals are attained. Each of these aspects of the Bonus Plan is described below.
The amendment to the Bonus Plan adds an additional limit on the maximum bonus amount that may be paid to any employee if the performance goals are attained of $3 million, even if that is less than the current limit. We are not seeking to make any other changes with respect to the material terms of the performance goals or any other terms of the Bonus Plan at this time. If stockholders fail to approve the proposal, no cash incentive compensation will be paid under the Bonus Plan beginning in 2014.
The bonus process for the named executive officers under the Bonus Plan is discussed underCompensation Discussion & Analysis.
Summary of our Bonus Plan
Following is a summary of our Bonus Plan which is qualified in its entirety by reference to the full text of the Bonus Plan, as amended by the Compensation Committee and subject to stockholder approval as described in this Item 5, attached as Appendix B to this proxy statement.
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Eligibility. Our executive officers and selected employees and those of our subsidiaries who are designated by the Administrator are eligible to receive awards under the Bonus Plan. Currently, approximately 105 employees, including executive officers, are eligible to receive awards under the Bonus Plan.
Awards. The Bonus Plan provides for awards of incentive compensation that are contingent on the attainment of specific performance targets. The Administrator will establish the performance criteria and performance targets for each award and the performance period during which the performance is to be measured, which will generally be our fiscal year. Performance targets may include a minimum level of performance below which no payment will be made, levels of performance at which specified percentages of the award will be paid, and a maximum level of performance above which no additional award will be paid. The Administrator must adopt the performance targets and criteria for awards granted to executive officers subject to the limits of Section 162(m) of the Code, whom we refer to as “Covered Employees,” no later than the earlier of:
90 days after the beginning of the performance period, or
the time when 25% of the performance period has elapsed.
Maximum Individual Bonus. The amendment to the Bonus Plan provides that award amounts to be paid to any employee for any one year may not exceed 200% of such participant’s annual base salary in effect at the time the award is determined, up to a maximum dollar amount of $3 million.
Performance Factors. Performance targets for each award will be based on pre-established performance factors, which may include any or all of the following, individually or in combination:
Adjusted EBITDA, which is a non-GAAP financial measure used by the Company in the budget and reporting process and is more specifically defined in the Bonus Plan;
Adjusted EBITDA Margin (Adjusted EBITDA divided by total revenues);
working capital and components thereof;
return on equity or average stockholders’ equity;
net or gross sales measured by product line, territory, one or more customer, or other category;
earnings from continuing operations;
levels of expense, cost or liability by category, operating unit, or any other delineation;
any increase or decrease of one or more of the foregoing over a specified period; or
implementation or completion of critical projects.
These performance factors may relate to the performance of the Company or the performance of a business unit, product line, territory, or any combination of these. Performance targets for employees who are not executive officers may also be based on other additional objective or subjective performance criteria established by the Administrator.
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Required Adjustments. Awards based on revenue, net sales, operating income, EBIT, EBITA, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, cash flow, return on equity or average stockholders’ equity, return on assets, net or gross sales, earnings per share, earnings from continuing operations, levels of expense cost or liability are subject to required adjustment to eliminate the effects of:
changes in accounting principles;
extraordinary items that are unusual in nature or infrequent in occurrence;
unbudgeted dispositions of any business, theatre or theatres;
unbudgeted cessation of operations of any business, theatre or theatres resulting from a natural disaster; or
changes in the Company’s capitalization.
In addition, the Administrator may provide at the time any performance targets are established that adjustments will apply during the performance period to eliminate the effect of:
specified claims or litigation;
restructuring activities or reductions in force; or
investments or acquisitions.
Limitation on Discretion. The Administrator may at any time establish additional conditions and terms of payment of awards, including additional financial, strategic or individual goals, which may be objective or subjective. The Administrator may not adjust upwards the amount payable pursuant to any award to a Covered Employee, nor may it waive the achievement of the performance target requirement for any Covered Employee, except in the case of the death or disability of the participant or a change in control of the Company.
Payment of Awards. Unless the Administrator determines otherwise, all payments in respect of awards granted under the Bonus Plan will be made in cash, and will be paid within a reasonable period after the end of the performance period. In the case of awards designed not to be subject to Code Section 409A as deferred compensation, payments will be made not later than the latest date at which such awards will still qualify for the Section 409A exemption for short-term deferrals. Unless the Administrator provides otherwise, a participant must be employed by us on the date that awards are paid to receive an award payment, except in the case of death or disability. If a participant dies or becomes disabled during a performance period, the participant (or the participant’s beneficiary) will receive a prorated award payment at the same time all other awards are paid for the performance period.
Certification of Performance. Before payment of any award to a Covered Employee our Compensation Committee must certify in writing that the performance target requirement for such award was met.
Term. The Administrator may at any time terminate the Bonus Plan in whole or in part.
Amendment of the Bonus Plan. The Administrator may at any time amend the Bonus Plan, subject to approval by our stockholders to the extent stockholder approval is necessary to continue to qualify as “performance-based compensation” under Section 162(m) of the Code. The Administrator has not made any amendment to the Bonus Plan since its approval by the stockholders in 2008.
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Administration of the Bonus Plan. Our Board has delegated its authority to administer the Bonus Plan to the Company’s Compensation Committee, to whom we refer as the “Administrator.” The Compensation Committee is expected to consist solely of at least two “outside directors” within the meaning of Section 162(m) of the Code. The Administrator has the authority to administer the Bonus Plan and to exercise all the powers and authorities either specifically granted to it under the Bonus Plan or necessary or advisable in the administration of the Bonus Plan, including (but not limited to) the following:
to interpret the Bonus Plan and any award;
to prescribe rules relating to the Bonus Plan;
to determine the persons to receive awards;
to determine the terms, conditions, restrictions and performance criteria, including performance factors and performance targets, relating to any award;
to accelerate an award that is designed not to be deferred compensation subject to Code Section 409A (after the attainment of the applicable performance target or targets);
to adjust performance targets in recognition of unusual or non recurring events affecting us or our financial statements, or in response to changes in applicable laws, regulations, or accounting principles;
to waive restrictive conditions for an award (but not performance targets); and
to make any other determinations that may be necessary or advisable for administration of the Bonus Plan.
Stockholder Approval. If our stockholders do not approve the material terms of the performance goals under the Bonus Plan, no award will be paid under the Bonus Plan beginning in 2014. If our stockholders do approve the material terms of the performance goals under the Bonus Plan, we must submit the material terms of the performance goals to our stockholders for re-approval on or before the first stockholder meeting that occurs in the fifth year following this current approval of the material terms of the performance goals under the Bonus Plan.
New Plan Benefits
Awards under the Bonus Plan are based on actual future performance. As a result, the amounts that will be paid under the Bonus Plan in future are not currently determinable. In no event, however, may any Covered Employee receive award amounts for any one year that exceed the lesser of 200% of such participant’s annual base salary in effect at the time the award is determined, or $3 million.
Recommendation of the Board
Our Board unanimously recommends that stockholders vote “FOR” re-approval of the material terms of the performance goals under the Cinemark Holdings, Inc. Performance Bonus Plan.
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Securities Authorized for Issuance under Equity Compensation Plans
The following table provides information about the securities authorized for issuance under the Company’s equity compensation plans as of December 31, 2012:
| | | | | | | | | | | | | | Plan Category | | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights(1) | | | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights(2) | | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities
Reflected in the First Column) | | Equity compensation plans approved by security holders | | | 1,016,693 | | | $ | 7.63 | | | | 8,422,431 | | Equity compensation plans not approved by security holders | | | - | | | | - | | | | - | | Total | | | 1,016,693 | | | | | | | | 8,422,431 | |
(1) | Represents 22,022 shares underlying unexercised options and 994,671 unearned shares (based on the achievement of maximum performance goals) underlying performance awards.
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(2) | Reflects the weighted average exercise price of only outstanding stock options and excludes the shares that may be issued if the performance awards vest.
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ADDITIONAL INFORMATION Stockholders Sharing a Common Address If you and other residents at your mailing address own Common Stock in street name, your broker or bank may have sent you a notice that your household will receive only one proxy statement for each company in which you hold stock through that broker or bank. Nevertheless, each stockholder will receive a separate proxy card. This practice, known as “householding,” is designed to reduce the Company’s printing and postage costs. If you did not respond that you did not want to participate in householding, the broker or bank will assume that you have consented, and will send one copy of our proxy statement to your address. You may revoke your consent to householding by contacting your broker or bank, if you hold Common Stock in street name, or the Company’s Secretary, if you are the registered holder of the Common Stock. The revocation of your consent to householding will be effective 30 days following its receipt. Upon written or oral request to the Company’s Secretary at the address or telephone number provided above, the Company will deliver promptly a separate copy of this proxy statement to a stockholder at a shared address to which a single copy of this proxy statement was delivered. By written or oral request to the same address (i) a stockholder may direct a notification to the Company that the stockholder wishes to receive a separate annual report or proxy statement in the future or (ii) stockholders who are sharing an address and who are receiving delivery of multiple copies of the Company’s annual reports or proxy statements can request delivery of only a single copy of these documents to their shared address. Incorporation by Reference The material under the headings “Compensation Committee Report,” “Audit Committee Report” and the disclosure regarding independence of the members of the Audit Committee shall not be deemed to be “filed” with the SEC nor deemed incorporated into any future filing with the SEC, except to the extent that we specifically incorporate it by reference into the filing. | | | | | 69 | | CINEMARK HOLDINGS, INC. | | 2016 Proxy Statement |
OTHER MATTERS The Board knows of no other business that will be presented at the Annual Meeting. If any other business is properly brought before the Annual Meeting, proxies received will be voted in respect thereof in accordance with the recommendation of the Board. Discretionary authority with respect to such other matters is granted by the execution of the enclosed proxy. AVAILABILITY OF REPORT ON FORM 10-K The Company’s audited consolidated financial statements are included in the 2012 Form 10-K filed with the SEC. Upon your written request, we will provide to you a complimentary copy of our 20122015 Form 10-K (without exhibits) as filed with the SEC. Your request should be mailed to the Company’s offices, addressed as follows: Cinemark Holdings, Inc., Attention: Company Secretary, 3900 Dallas Parkway, Suite 500, Plano, Texas 75093. A free copy of the 2015 Form 10-K may also be obtained at the Web sitewebsite maintained by the SEC atwww.sec.govor by visiting our Web sitewebsite atwww.cinemark.comhttp://investors.cinemark.comand clicking on “About/Investor Relations”the “Financials” tab and then on “SEC Filings.”
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QUESTIONS If you have questions or need more information about the Annual Meeting, write to: Cinemark Holdings, Inc. 3900 Dallas Parkway, Suite 500 Plano, Texas 75093 Attention: Michael Cavalier, Secretary | By Order of the Board of Directors, | |  | Michael Cavalier | Senior Vice President – General
| Counsel and Secretary
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April 11, 2013
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Appendix A
AMENDED AND RESTATED
CINEMARK HOLDINGS, INC. 2006
LONG TERM INCENTIVE PLAN
ARTICLE I.
GENERAL
1.1Purposes of Plan. The purposes of the Amended and Restated Cinemark Holdings, Inc. 2006 Long Term Incentive Plan (the “Plan”) are to (i) advance the interests of Cinemark Holdings, Inc. (the “Company”) and its stockholders by providing significant incentives to selected Employees, Directors and Consultants (as defined herein) of the Company and its Subsidiaries (as defined herein), (ii) enhance the interest of such persons in the success and progress of the Company and its Subsidiaries by providing them with an opportunity to become stockholders of the Company, (iii) enhance the ability of the Company and its Subsidiaries to attract and retain qualified management and other personnel necessary for the success and progress of the Company and its Subsidiaries. The Plan provides for grants of Restricted Shares, Restricted Stock Units, Performance Awards, Incentive Options and Nonqualified Options. The Plan is intended to be a “compensatory benefit plan” within the meaning of such term under Rule 701 of the Securities Act of 1933, as amended. The Plan is an amendment and restatement of the Cinemark Holdings, Inc. 2006 Long Term Incentive Plan, as amended to the date hereof.
1.2Assumption of Obligations under Cinemark, Inc. 2004 Long Term Incentive Plan. The assumption and substitution of options to acquire Cinemark Holdings, Inc. stock for options to acquire common stock of Cinemark, Inc. granted under the Cinemark, Inc. 2004 Long Term Incentive Plan (collectively, the “Substituted Options”) was made in connection with the share exchange agreement, dated August 7, 2006 and consummated on October 5, 2006 among the then current stockholders of Cinemark, Inc., by which the stockholders exchanged their shares of Class A common stock of Cinemark, Inc. for an equal number of shares of Class A common stock of Company. The number of shares subject to each option, the exercise price per share, the option terms, and the vesting provisions of any Substituted Options did not change as a result of this substitution. The Substituted Options will otherwise be subject to the provisions in the present Plan as though this Plan constituted an amendment and restatement of the Cinemark, Inc. 2004 Long Term Incentive Plan. This assumption and substitution is intended not to constitute a modification of the Substituted Options for purposes of Code § 409A and shall be implemented and administered consistent with such intent.
ARTICLE II.
DEFINITIONS
2.1Definitions. Certain terms used herein shall have the meaning below stated.
(a) “Adjusted EBITDA” means for any period, without duplication, consolidated net income for such periodplus, to the extent reflected as a charge in the statement of such consolidated net income for such period, the sum of:
(i) expenses for taxes based on income or capital, including franchise and similar taxes;
(ii) consolidated interest expense, amortization or write-off of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with indebtedness;
(iii) depreciation and amortization expense, including changes in deferred lease expense and amortization of long-term prepaid rent;
(iv) amortization of intangibles and organization costs;
(v) any extraordinary, unusual or non-recurring gains, losses, income or expense reported by the Company in its public filings with respect to the performance period that are extraordinary or unusual in
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nature or infrequent in occurrence (including, without limitation, expenses for severance, non-recurring retention bonuses, payments to employees of acquired entities under stock option plans or similar incentive plans such as long term incentive plans, relocation and restructuring costs related to acquisitions or losses);
(vi) the impact of impairment of tangible or intangible assets;
(vii) net losses on sales of assets outside of the ordinary course of business;
(viii) losses or costs arising from lease dispositions;
(ix) any call premium (or original issue discount) expenses associated with the repurchase or repayment of indebtedness;
(x) any other non-cash charges (including stock option, restricted stock and other noncash compensation or foreign exchange losses);
(xi) any reasonable expense related to any equity offering, acquisition, recapitalization, asset sale or indebtedness (whether or not successful);
(xii) andminus (1) any extraordinary, unusual or non-recurring income or gains, (2) any other non-cash income or gains (including foreign exchange gains) (other than the amortization of prepaid cash income) and (3) any dividends received from any publicly traded Affiliate the equity value of which has been added to Implied Equity Value. Adjusted EBITDA may include such additional measures of performance and liquidity as the Administrator determines are appropriate to determine value and service debt. Adjusted EBITDA is a non-GAAP financial measure used by the Company in the budget and reporting process.
(b) “Administrator” means the Board or Committee designated to administer the Plan in accordance with Section 7.1.
(c) “Affiliate” or “Affiliates” means any Person that directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified. For purposes of this definition, control of a Person means the power, direct or indirect, to direct or cause the direction of the management and polices of such Person, whether by Contract or otherwise and, in any event and without limitation of the previous sentence, any Person owning ten percent (10%) or more of the voting securities of another Person shall be deemed to control that Person.
(d) “Award” means a Restricted Share, a Restricted Stock Unit, a Performance Award, an Incentive Option or a Nonqualified Option granted under the Plan.
(e) “Award Agreement” means an agreement between the Company and a Participant containing the terms of an Award under this Plan.
(f) “Board” or “Board of Directors” means the Board of Directors of the Company.
(g) “Cause” means “Cause” as defined in any written Service Agreement in effect between the applicable Participant and the Company or a Subsidiary, or if such Participant is not a party to a written Service Agreement in which Cause is defined, then Cause means (i) the abuse of illegal drugs, alcohol or other controlled substances or the intoxication of such Participant during working hours, (ii) the arrest for, or conviction of, a felony, (iii) the commission of fraud, embezzlement or theft by such Participant (iv) the unexcused absence by such Participant from such Participant’s regular job location for more than five consecutive days or for more than the aggregate number of days permitted to the Participant under Company vacation and sick leave policies applicable to the Participant or (v) any conduct or activity of such Participant deemed injurious to the Company in the reasonable discretion of the Company or the Board of Directors.
(h) “Code” means the Internal Revenue Code of 1986, as amended.
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(i) “Committee” means the committee of directors appointed by the Board to administer the Plan pursuant to ARTICLE VII hereof.
(j) “Common Stock” means (i) the authorized Common Stock of the Company, par value $.001 per share, as constituted on the date the Plan becomes effective or (ii) the shares resulting from a change in the Common Stock as presently constituted which is limited to a change of all of its authorized shares with par value into the same number of shares without par value or as a change in the par value.
(k) “Company” means Cinemark Holdings, Inc., a Delaware corporation, or any successor corporation.
(l) “Consultant” means a consultant or advisor who is a natural person and who provides bona fide services to the Company or a Subsidiary, provided such services are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities.
(m) “Corporate Event” shall have the meaning ascribed to such term in Section 6.5.
(n) “Covered Employee” means the chief executive officer and the four other highest compensated officers of the Company for whom total compensation is or would be required to be reported to stockholders under the Exchange Act, as determined for purposes of Section 162(m) of the Code.
(o) “Date of Grant” means, provided the key terms and conditions of the Award are communicated to the Participant within a reasonable period of time following the Administrator’s action, the date on which the Administrator adopts a resolution, or takes other appropriate action, expressly granting an Award to a Participant that specifies the key terms and conditions of the Award and from which the Participant begins to benefit from or be adversely affected by subsequent changes in the Fair Market Value of the Company Common Stock or, if a subsequent date is set forth in such resolution or determined by the Administrator as the Date of Grant, then such date as is set forth in such resolution. In any situation where the terms of the Award are subject to negotiation with the Participant, the Date of Grant shall not be earlier than the date the key terms and conditions of the Award are communicated to the Participant.
(p) “Designee” means a party designated by the Company as having the Repurchase Right described in Section 9.3 including, without limitation, the stockholders of the Company on a pro rata basis.
(q) “Director” means a member of the Board or a member of the board of directors of a Subsidiary.
(r) “Disability” means “Disability” as defined in any written Service Agreement in effect between the applicable Participant and the Company or a Subsidiary, or if such Participant is not a party to a written Service Agreement in which Disability is defined, then “Disability” means a physical or mental impairment that (a) renders Participant unable to perform the essential functions of Participant’s Service to the Company or its Subsidiaries, even with reasonable accommodation that does not impose an undue hardship on the Company or its Subsidiaries, (b) has existed for at least sixty (60) consecutive days, and (c) in the opinion of a physician selected by the Company will last for a duration of at least one hundred eight (180) consecutive days. Participant’s Disability shall be determined by the Company, in good faith, based upon information supplied by Participant and a physician selected by the Company. For purposes of determining the rules relating to an Incentive Option, the term “Disability” shall have the meaning ascribed to it under Code Section 22(e)(3). Participant shall submit to physical exams and diagnostic tests reasonably recommended by such physician.
(s) “Employee” means an officer or other employee of the Company or a Subsidiary.
(t) “Fair Market Value” of each share of Common Stock on the date for which Fair Market Value is to be determined will be determined using a method consistent with the definition of fair market value found in
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Code § 409A and any regulations promulgated thereunder and in effect as of such date, and, where possible, will be determined using a method that is a presumptively reasonable valuation method under the Code and/or the regulations. As of the date of this Agreement, such methods include:
(i) If the Common Stock is readily tradable on an established securities market, the Fair Market Value may be determined based upon the last sale before or the first sale after the grant, the closing price on the trading day before or the trading day of the grant, or may be based upon an average selling price during a specified period that is within 30 days before or 30 days after the grant, provided that the commitment to grant the stock rights based on such valuation method must be irrevocable before the beginning of the specified period, and such valuation method must be used consistently for grants of stock rights under the same and substantially similar programs.
(ii) If at any time the Common Stock is not listed on any securities exchange or readily tradable on a recognized securities market, the Fair Market Value shall be determined in good faith by the Administrator through the reasonable application of a reasonable valuation method based on the facts and circumstances as of the valuation date, including by an independent appraisal that meets the requirements of Code § 401(a)(28)(C) and the regulations promulgated thereunder as of a date that is no more than 12 months before the relevant transaction to which the valuation is applied (for example, the grant date of a stock option) and such determination shall be conclusive and binding on all persons.
(u) “Immediate Family” has the meaning given to such term in Section 5.4(c).
(v)“Implied Equity Value” means the creation of equity value based on the annual internal rate of return (“IRR”) of all equity returns per share, including dividends paid to stockholders during the period between the inception of the performance measurement period and the end of the performance measurement period. This value is not intended to track and may be different from changes in the stock price over the same period. IRR is calculated by reference to enterprise value. Enterprise value is determined by multiplying Adjusted EBITDA for the trailing 12 month period ending on the most recent preceding fiscal quarter by a multiple factor designated by the Administrator. The enterprise value so determined is adjusted by subtracting net debt and the book value of consolidated minority interests as reflected on the balance sheet of the Company and adding the fair market value of the equity holdings of any nonconsolidated entity held by the Company. The Administrator may, in its discretion, exclude the fair market value of the equity holdings of any nonpublic nonconsolidated entity from the calculation of Implied Equity Value if such exclusion results in a reduction in the IRR, but may not exercise such discretion if it results in an increase in the IRR. If the Administrator does not designate a multiple factor, the multiple factor will be 10.
(w) “Incentive Option” means an Option intended to qualify as an incentive stock option under Section 422 of the Code.
(x) “Incentive Option Agreement” has the meaning given to such term in Section 5.2.
(y)“Listing Date” means the first date upon which any security of the Company is listed (or approved for listing) upon notice of issuance on any securities exchange or designated (or approved for designation) upon notice of issuance as a national market security on an interdealer quotation system.
(z) “Non-Employee Director” means a Director who is a “non-employee director” within the meaning of Rule 16b-3.
(aa) “Nonqualified Option” means an Option that is not intended to qualify as an Incentive Option.
(bb) “Nonqualified Option Agreement” has the meaning given to such term in Section 5.3.
(cc) “Option” means an option to purchase Common Stock granted by the Administrator to a Participant pursuant to ARTICLE V hereof.
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(dd) “Option Agreement” means an Incentive Option Agreement and/or a Nonqualified Option Agreement, as applicable.
(ee) “Option Shares” means shares of Common Stock purchased as a result of the exercise by an Option holder of an Option, as well as any securities received by the holder in respect of such Option Shares.
(ff) “Optionholder” means a Participant to whom an Option has been granted under the Plan.
(gg) “Outside Director” means a Director who is an “outside director” within the meaning of Section 162(m) of the Code and Treasury Regulations § 1.162-27(e)(3).
(hh) “Participant” means an Employee, Director or Consultant to whom Awards have been granted or awarded under the Plan.
(ii)“Performance Award” means an Award granted pursuant to Section 5.7.
(jj) “Permitted Transferee” has the meaning given to such term in Section 5.4(c).
(kk) “Person” means a natural person, partnership (whether general or limited), limited liability company, trust, estate, association, corporation, custodian, nominee or any other individual or entity in its own or any representative capacity.
(ll) “Plan” means the Amended and Restated Cinemark Holdings, Inc. 2006 Long Term Incentive Plan, as set forth herein and as from time to time amended.
(mm) “Publicly Traded” means corporate stock that is listed on any national securities exchange or traded in any recognized securities market system.
(nn) “Requisite Holders” means the holders of the Company’s capital stock constituting more than 50% of the Company’s voting power of all classes of Common Stock of the Company then outstanding.
(oo) “Restricted Award” means an Award of either Restricted Shares or Restricted Stock Units, which may include a Performance Award.
(pp) “Restricted Shares” means the shares of Common Stock that are awarded to a Participant pursuant to Section 5.5 which on the date of award are both nontransferable and subject to a substantial risk of forfeiture.
(qq)“Restricted Stock Unit”means a hypothetical Common Stock unit awarded to a Participant pursuant to Section 5.6.
(rr) “Restriction Period” means the period during which Restricted Shares or Restricted Stock Units remain nontransferable and subject to the substantial risk of forfeiture.
(ss) “Sale of the Company” means the “Sale of the Company” as defined in any written Service Agreement in effect between the applicable Participant and the Company or a Subsidiary, or if such Participant is not a party to a written Service Agreement in which “Sale of the Company” is defined, the “Sale of the Company” means the sale of the Company to a Person or Persons, pursuant to which such Person or Persons directly or indirectly acquire (i) capital stock of the Company possessing the voting power under normal circumstances to elect a majority of the Company’s board of directors or entitling such Person or Persons to exercise more than fifty percent (50%) of the total voting power of the outstanding shares of capital stock entitled
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to vote of the Company or of the surviving entity (whether by merger, consolidation or sale or transfer of the Company’s capital stock) or (ii) all or substantially all of the Company’s assets determined on a consolidated basis.
(tt) “Service” means service provided to the Company or a Subsidiary as an Employee, Director or Consultant.
(uu) “Service Agreement” means any written agreement between a Participant and the Company or any of its Subsidiaries regarding the provision of Service to the Company or any of its Subsidiaries by such Participant.
(vv) “Securities Laws” means the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended.
(ww) “Subsidiary” or “Subsidiaries” means, as to any Person, any other Person (i) of which such Person or any other Subsidiary of such Person is a general partner, (ii) of which such Person, any one or more of its other subsidiaries of such Person, or such Person and any one or more of its other Subsidiaries, directly or indirectly owns or controls securities or other equity interests representing more than fifty percent (50%) of the aggregate voting power, or (iii) of which such Person, any one or more of its other Subsidiaries of such Person, or such Person and any one or more of its other Subsidiaries, possesses he right to elect more than fifty percent (50%) of the board of directors or Persons holding similar positions; provided, however, with respect to determining rules relating to Incentive Options, the term “Subsidiary” or “Subsidiaries” means a subsidiary of the Company within the meaning of Section 424(f) of the Code.
ARTICLE III.
STOCKHOLDER APPROVAL; RESERVATION OF SHARES
3.1Stockholder Approval. The Plan shall become effective only if, within 12 months from the date the Plan is adopted by the Board, the Plan is approved by the affirmative vote of the Requisite Holders, or by written consent of such Requisite Holders, in accordance with the applicable provisions of the Certificate of Incorporation and Bylaws of the Company and applicable state law. The Board may, in its sole discretion, submit any other amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations thereunder regarding the exclusion of performance-based compensation from the limit on corporate deductibility of compensation paid to certain executive officers, or amendments to satisfy Section 409A of the Code and the regulations thereunder regarding requirements for deferred compensation plans.
3.2Shares Reserved Under Plan. The aggregate number of shares of Common Stock which may be issued, whether upon the exercise of Options granted under the Plan or as Restricted Shares granted under the Plan, shall not exceed 19,100,000 shares (as such shares may be adjusted pursuant to Section 9.4 of the Plan). When the exercise price for an Option granted under this Plan is paid with previously outstanding shares of Common Stock or with shares of Common Stock as to which the Option is being exercised, as permitted in Section 5.4(f), the total number of shares of Common Stock for which Options granted under this Plan may thereafter be exercised shall be irrevocably reduced by the total number of shares for which such Option is thus exercised. Shares of Common Stock subject to Awards granted under the Plan may consist of either authorized but unissued shares or shares which have been issued and which shall have been heretofore or shall be hereafter reacquired by the Company. The total number of shares of Common Stock authorized under the Plan shall be subject to increase or decrease in order to give effect to the provisions of Section 9.4 hereof and to give effect to any amendment adopted pursuant to ARTICLE VIII. If any Option granted under the Plan shall expire, terminate or be cancelled for any reason without having been exercised in full, the number of shares as to which such Option was not exercised shall again be available for purposes of the Plan. If any Restricted Shares granted under the Plan are terminated, cancelled or forfeited for any reason, such Restricted Shares shall again be available for purposes of the Plan. If any other Award granted under the Plan is terminated, cancelled or forfeited for any
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reason, the shares of Common Stock not acquired under such Award shall again be available for purposes of the Plan. The Company shall at all times while the Plan is in effect reserve such number of shares of Common Stock, subject to this Section 3.2, as will be sufficient to satisfy the requirements of the Plan.
ARTICLE IV.
PARTICIPATION IN PLAN
4.1Eligibility. Awards under the Plan may be granted to any Employee, Director or Consultant of the Company or a Subsidiary. The Administrator shall determine those Employees, Directors and Consultants to whom Awards shall be granted, and, subject to Section 3.1 hereof, the number of shares of Common Stock subject to each such Award. The grant of an Award under the Plan to a Participant shall not be deemed either to entitle such Participant to, or disqualify such Participant from, participation in any other grant of Awards under the Plan.
4.2Participation Not Guarantee of Service. Subject to the terms of any Service Agreement with a Participant, nothing in this Plan or in any Award Agreement shall in any manner be construed to limit in any way the right of the Company or any Subsidiary to terminate a Participant’s Service at any time, without regard to the effect of such termination on any rights such Participant would otherwise have under this Plan or any Award Agreement, or to give any right to a Participant to remain employed or retained by the Company or a Subsidiary thereof in any particular position or at any particular rate of compensation.
4.3Section 162(m) Limitation. Subject to the provisions of Section 9.4 relating to adjustments upon changes in the shares of Common Stock, no Employee will be eligible to be granted Options covering more than 1,500,000 shares during any fiscal year, or Performance Awards (including Restricted Shares and Restricted Stock Units) that could result in such Employee receiving more than 1,000,000 shares of Common Stock for each full or partial fiscal year of the Company contained in the performance period of a particular Performance Award. This Section 4.2 does not apply prior to the Listing Date and, following the Listing Date, this Section 4.2 does not apply until (a) the earliest of (i) the first material modification of the Plan (including any increase in the number of shares of Common Stock reserved for issuance under the Plan in accordance with Section 3.2), (ii) the issuance of all of the shares of Common Stock reserved for issuance under the Plan, (iii) the expiration of the Plan, or (iv) the first meeting of stockholders at which Directors are to be elected that occurs after the close of the third calendar year following the calendar year in which occurred the first registration of an equity security under Section 12 of the Exchange Act; or (b) such other date as is required by Section 162(m) of the Code and the rules and regulations promulgated thereunder.
4.4Effect of Plan. Neither the adoption of the Plan nor any action of the Board, the Committee or the Administrator shall be deemed to give any Employee, Director or Consultant any right to be granted an Award or any other rights, except as may be evidenced by an Award Agreement, or any amendment thereto, duly authorized by the Administrator and executed on behalf of the Company, and then only to the extent and on the terms and conditions expressly set forth in such Award Agreement. The existence of the Plan and the Awards granted hereunder shall not affect in any way the right of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of bonds, debentures, or shares of preferred stock ahead of or affecting the Common Stock or the rights thereof, the dissolution or liquidation of the Company or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding.
ARTICLE V.
GRANT AND EXERCISE OF OPTIONS; GRANT OF RESTRICTED SHARES AND
RESTRICTED STOCK UNITS; GRANT OF PERFORMANCE AWARDS
5.1Grant of Options. The Administrator may from time to time in its discretion grant Options, which may be Incentive Options or Nonqualified Options, to Employees, Directors or Consultants. All Options under the Plan shall be granted within ten years from the date the Plan is adopted by the Board or the date the Plan is approved by the Requisite Holders, whichever is earlier.
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5.2Incentive Options. The Administrator may authorize the grant of Incentive Options subject to the terms and conditions set forth herein. The grant of an Incentive Option shall be evidenced by a written agreement between the Company and the Optionholder setting forth the number of shares of Common Stock subject to the Incentive Option evidenced thereby and the terms, conditions and restrictions applicable thereto (an “Incentive Option Agreement”). The aggregate Fair Market Value of the Common Stock with respect to which Incentive Options granted under all incentive stock option plans of the Company and its Subsidiaries are exercisable for the first time by the Optionholder during any calendar year shall not exceed $100,000 or such other threshold in accordance with applicable law. Incentive Options may only be granted to Employees.
5.3Nonqualified Options. The Administrator may authorize the grant of Nonqualified Options subject to the terms and conditions set forth herein. The grant of a Nonqualified Option shall be evidenced by a written agreement between the Company and the Optionholder setting forth the number of shares of Common Stock subject to the Nonqualified Option evidenced thereby and the terms, conditions and restrictions applicable thereto (a “Nonqualified Option Agreement”).
5.4Option Terms. Options granted under the Plan shall be subject to the following requirements:
(a)Option Price. The exercise price of each Incentive Option granted under the Plan shall not be less than the greater of (i) the aggregate par value of the underlying shares of Common Stock and (ii) 100% of the Fair Market Value of the underlying shares of Common Stock on the date the Option is granted. The exercise price of any Nonqualified Options granted under the Plan shall not be less than the Fair Market Value of the underlying shares of Common Stock on the Date of Grant. The exercise price of an Option may be subject to adjustment pursuant to Section 9.4 hereof.
(b)Term of Option. The term during which an Option is exercisable shall be that period determined by the Administrator as set forth in the applicable Option Agreement, provided that no Option shall have a term that exceeds a period of ten years from the date of its grant. Notwithstanding anything herein to the contrary, no portion of an Option may be exercised after the end of the term of such Option.
(c)Nontransferability of Options. Any Option granted under the Plan shall not be transferable by the Optionholder other than by will or the laws of descent and distribution, and each such Option shall be exercisable during the Optionholder’s lifetime only by him or her. No transfer of an Option by an Optionholder by will or by the laws of descent and distribution shall be effective to bind the Company unless the Company shall have been furnished with written notice thereof and a copy of the will and/or such other evidence as the Administrator may determine necessary to establish the validity of the transfer. Notwithstanding the foregoing, the Administrator, in its sole discretion, may permit the transfer of a Nonqualified Option as follows: (i) by gift to a member of the Optionholder’s immediate family or (ii) by transfer by instrument to a trust providing that the Option is to be passed to beneficiaries upon death of the trustor (the recipient of the Nonqualified Option under either or both of (i) or (ii) immediately above is referred to herein as a “Permitted Transferee”). For purposes of this Section 5.4(c) “immediate family” shall mean the Optionholder’s spouse (but shall not include a former spouse), child, stepchild, grandchild, child-in-law, parent, stepparent, grandparent, parent-in-law, sibling, and sibling-in-law and shall include adoptive relationships. A transfer of a Nonqualified Option permitted under this Section 5.4(c) may be made only upon written notice to and approval thereof by the Administrator. A Permitted Transferee may not further assign, sell or transfer the transferred Option, in whole or in part, other than by will or by operation of the laws of descent and distribution provided that the Company shall have been furnished with written notice thereof and a copy of the will and/or such other evidence as the Administrator may determine necessary to establish the validity of the transfer. In addition, following the transfer, the Nonqualified Option shall continue to be subject to the terms of this Plan and the Option Agreement evidencing the Nonqualified Option; provided, however, that where appropriate, the term “Optionholder” shall be deemed to apply to the Permitted Transferee. Upon the termination of Service of the Optionholder, the provisions of this Plan or the Option Agreement pursuant to which the Option was granted will apply to the Permitted Transferee as if such Permitted Transferee was substituted for the Optionholder in such provisions.
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(d)Time and Amount Exercisable. Each Option shall be exercisable in accordance with the provisions of the Option Agreement pursuant to which it is granted in whole or in part, from time to time, subject to any limitations with respect to the number of shares of Common Stock for which the Option may be exercised at a particular time and to such other conditions as the Administrator, in its discretion, may specify in the applicable Option Agreement. Any portion of an Option which has become exercisable shall remain exercisable until it is exercised in full or it terminates or expires pursuant to the terms of the Plan or the applicable Option Agreement. The Administrator may provide that an Option may be immediately exercisable and provide that upon exercise of the Option, the Optionholder shall receive Restricted Shares subject to any remaining vesting restrictions on such Option.
(e)Terms of Incentive Options Granted to Ten Percent Stockholders. Notwithstanding the foregoing, no Incentive Option shall be granted to any Employee who owns, directly or indirectly within the meaning of Section 424(d) of the Code, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any Subsidiary, unless at the time the Incentive Option is granted, the exercise price of the Incentive Option is at least 110% of the Fair Market Value of the Common Stock subject to such Incentive Option and such Incentive Option, by its terms, is not exercisable after the expiration of five years from the date such Incentive Option is granted. For the purpose of clarification the limitations contained in this Section 5.4(e) shall not apply to the grant of Nonqualified Options.
(f)Payment of Exercise Price and Delivery of Shares; Tax Withholding.
(i) The entire exercise price of shares of Common Stock purchased upon exercise of Options shall, at the time of purchase, be paid for in full (the “Exercise Price��). To the extent that the right to purchase shares has become exercisable in accordance with the terms of the Plan and the applicable Option Agreement, Options may be exercised from time to time by written notice to the Administrator, stating the full number of shares with respect to which the Option is being exercised and the proposed time of delivery thereof (which shall be at least five (5) days after the giving of such notice, unless an earlier date shall have been mutually agreed upon by the Optionholder (or other person entitled to exercise the Option) and the Administrator), accompanied by payment to the Company of the Exercise Price in full. Such payment shall be effected (i) by certified or official bank check, (ii) if so permitted by the Administrator, by the delivery of a number of shares of Common Stock owned by the Participant duly endorsed for transfer to the Company (plus cash if necessary) having a Fair Market Value equal to the amount of such Exercise Price, (iii) if so permitted by the Administrator, by payment with financial assistance from the Company in accordance with the provisions of Section 7.4 hereof, (iv) during any period for which the Common Stock is readily tradable on an established securities market (i.e., the Common Stock is listed on any national securities exchange or traded in any recognized securities market system), by a copy of instructions to a broker directing such broker to sell the Common Stock for which such Option is exercised, and to remit to the Company the aggregate Exercise Price of such Options (a “Cashless Exercise”); or (v) subject to the discretion of the Administrator, upon such terms as the Administrator shall approve, by notice of exercise including a statement directing the Company to retain such number of shares of Common Stock from any transfer to the Optionholder (“Stock Withholding”) that otherwise would have been delivered by the Company upon exercise of the Option having a Fair Market Value equal to all or part of the Exercise Price of such Option exercise. In the event the Exercise Price requires retention of a fractional share, the number of shares subject to Stock Withholding shall be rounded down and the Optionholder shall be required to pay the remainder of the Exercise Price by certified or official bank check. Any shares retained for the purpose of satisfying the Stock Withholding shall not again be available for issuance under the Plan. Unless otherwise provided in the terms of an Option Agreement, payment of the exercise price by a Participant who is an officer, director or other “insider” subject to Section 16(b) of the Exchange Act in the form of a Stock for Stock Exchange is subject to pre-approval by the Administrator, in its sole discretion. Any such pre-approval shall be documented in a manner that complies with the specificity requirements of Rule 16b-3, including the name of the Participant involved in the transaction, the nature of the transaction, the number of shares to be acquired or disposed of by the Participant and the material terms of the Award involved in the transaction.
(ii) In addition to payment of the Exercise Price, the Optionholder shall be required to include payment of the amount of all federal, state, local and other income, excise or employment taxes subject
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to withholding (if any) by the Company or a Subsidiary as a result of the exercise of an Option. The Optionholder may pay all or a portion of the tax withholding by cash or check payable to the Company, or, at the discretion of the Administrator, upon such terms as the Administrator shall approve, by (i) certified or official bank check (ii) Cashless Exercise, if the Stock is readily tradable on an established securities market; (iii) tendering Common Stock owned by the Optionholder, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal to the withholding due for the number of shares being exercised or purchased; (iv) by paying all or a portion of the tax withholding for the number of shares being purchased by withholding shares from any transfer or payment to the Optionholder (“Stock Withholding”); or (v) a combination of one or more of the foregoing payment methods. Any shares issued pursuant to the exercise of an Option and transferred by the Optionholder to the Company for the purpose of satisfying any withholding obligation shall not again be available for issuance under the Plan.The Administrator will, as soon as reasonably possible, notify the Optionholder (or such Optionholder’s representative) of the amount of employment tax and other withholding tax that must be paid under federal, state and local law due to the exercise of the Option. At the time of delivery, the Company shall, without transfer or issue tax to the Optionholder (or other person entitled to exercise the Option), deliver to the Optionholder (or to such other person) at the principal office of the Company, or such other place as shall be mutually agreed upon, a certificate or certificates for the Option Shares after the Exercise Price and all federal, state, local or other income, excise or employment taxes subject to withholding have been paid; provided, however, that the time of delivery may be postponed by the Administrator for such period as may be required for it with reasonable diligence to comply with any requirements of law. Unless otherwise provided in the terms of an Option Agreement, payment of the tax withholding by a Participant who is an officer, director or other “insider” subject to Section 16(b) of the Exchange Act by delivering previously owned and unencumbered shares of Common Stock of the Company or in the form of share withholding is subject to pre-approval by the Administrator, in its sole discretion. Any such pre-approval shall be documented in a manner that complies with the specificity requirements of Rule 16b-3, including the name of the Participant involved in the transaction, the nature of the transaction, the number of shares to be acquired or disposed of by the Participant and the material terms of the Award involved in the transaction.
(iii) Notwithstanding the foregoing, during any period for which the Common Stock is Publicly Traded, payment of the Exercise Price or tax withholding with a promissory note or other transaction by a Director or executive officer that involves or may involve a direct or indirect extension of credit or arrangement of an extension of credit by the Company or an Affiliate in violation of Section 402(a) of the Sarbanes-Oxley Act (codified as Section 13(k) of the Exchange Act) is prohibited with respect to any Award under this Plan.
(g)Rights of Optionholder in Common Stock. Neither any Optionholder nor the legal representatives, heirs, legatees, distributees or Permitted Transferees of any Optionholder shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any Option Shares unless and until such shares of Common Stock are issued to such Person and such Person has received a certificate or certificates therefor. Upon the issuance and receipt of such certificate or certificates, such Option holder shall have absolute ownership of the shares of Common Stock evidenced thereby, including the right to vote such shares, to the same extent as any other owner of shares of Common Stock, and to receive dividends thereon, subject, however, to the terms, conditions and restrictions of the Plan and any other undertakings of such holder of Common Stock.
5.5Restricted Shares.
(a)General. The Administrator, in its sole discretion, may from time to time authorize the grant of Restricted Shares to Employees, Directors or Consultants. The Administrator may determine the basis on which the restrictions imposed on the Restricted Shares may lapse. A certificate or certificates representing the number of Restricted Shares granted shall be registered in the name of the Participant. Until the expiration of the Restriction Period or the lapse of restrictions in the manner provided in Section 5.5(c) or ARTICLE VI, the certificate or certificates shall be held by the Company for the account of the Participant, and the Participant shall have beneficial ownership of the Restricted Shares, subject to the provisions of paragraph 5.5(b).
(b)Restrictions. Until the expiration of the Restriction Period or the lapse of restrictions in the manner provided in paragraph 5.5(c) or ARTICLE VI and the Participant’s satisfaction of applicable tax
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withholding obligations attributable to the Award, Restricted Shares shall be subject to the following restrictions and any additional restrictions that the Administrator, in its sole discretion, may from time to time deem desirable in furtherance of the objectives of the Plan:
(i) The Participant shall not be entitled to receive the certificate or certificates representing the Restricted Shares;
(ii) The Restricted Shares may not be sold, transferred, assigned, pledged, conveyed, hypothecated, or otherwise disposed of;
(iii) The Restricted Shares will be forfeited immediately upon termination of Participant’s employment with the Company or one of its Subsidiaries, unless otherwise expressly provided herein or in the Award Agreement pursuant to such Restricted Shares were granted; and
(iv) The holder of Restricted Shares shall be entitled to receive dividends thereon and to vote such Restricted Shares.
(c)Waiver of Restrictions. The Administrator, in its sole discretion, may waive any or all restrictions with respect to Restricted Shares.
(d)Distribution of Restricted Shares. If a Participant to whom Restricted Shares have been granted continues to provide Services to the Company or a Subsidiary during the Restriction Period set forth in the Award Agreement, and all other applicable provisions of this Plan have been complied with (including, without limitation, the Participant’s satisfaction of applicable tax withholding obligations attributable to the Award), then upon the expiration of the Restriction Period all restrictions applicable to the Restricted Shares shall lapse, and the certificate or certificates representing the shares of Common Stock that were granted to the Participant in the form of Restricted Shares shall be delivered to the Participant.
(e)Agreement. An award of Restricted Shares hereunder shall be evidenced by an Award Agreement containing such terms and provisions as are approved by the Administrator, but not inconsistent with the Plan. The Company shall execute such Award Agreements upon instructions from the Administrator.
(f)Section 83(b) Election. Within thirty days after date a Participant is awarded Restricted Shares hereunder, the Participant may file a Code Section 83(b) election with the Internal Revenue Service with respect to all or a portion of the Restricted Shares. The Code Section 83(b) election, if any, shall be filed in compliance with the Treasury regulations promulgated pursuant to Code Section 83(b) of the Code.
5.6Restricted Stock Units.
(a)Nature of Restricted Stock Units. A Restricted Stock Unit is an Award of hypothetical Common Stock units having a value equal to the Fair Market Value of an identical number of shares of Common Stock. Each Restricted Stock Unit represents a right to receive one share of Common Stock from the Company at the payment date set forth in the Award Agreement. Until the Restricted Stock Units awarded shall have vested and become payable on the payment date specified in the Award Agreement, the Restricted Stock Units and any related securities, cash dividends or other property nominally credited to a Restricted Stock Unit account may not be sold, transferred, or otherwise disposed of and may not be pledged or otherwise hypothecated during such period (the “Restriction Period”) as the Administrator shall determine. Each Award of Restricted Stock Units will be in such form and shall contain such terms, conditions and Restriction Periods as the Administrator shall deem appropriate. The Administrator in its discretion may provide for an acceleration of the end of the Restriction Period in the terms of any Restricted Stock Unit Award, at any time, including the occurrence of a Sale of the Company. The terms and conditions of the Restricted Stock Units may be changed from time to time,
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and the terms and conditions of separate Restricted Stock Unit Awards need not be identical, but each Restricted Stock Unit Award shall include (through incorporation of provisions hereof by reference in the Award Agreement or otherwise) the substance of each of the following provisions:
(b)Vesting. Shares of Common Stock acquired under the Restricted Stock Units may, but need not, be subject to an additional Restriction Period that specifies a Right of Repurchase in favor of the Company in accordance with a vesting schedule to be determined by the Administrator, or forfeiture in the event the consideration was in the form of services. The Administrator in its discretion may provide for an acceleration of vesting in the terms of any Restricted Stock Units or any Restricted Shares received as settlement of a Restricted Stock Unit, at any time, including in the event of a Sale of the Company.
(c)Termination of Participant’s Service. Unless otherwise provided in an Award Agreement or in an employment agreement the terms of which have been approved by the Administrator, if a Participant’s Service terminates for any reason, the Participant shall forfeit the unvested Restricted Stock Units acquired in consideration of prior or future services, and any or all of the shares of Common Stock held by the Participant which have not vested as of the date of termination under the terms of the Award Agreement shall be forfeited and the Participant shall have no rights with respect to the Award.
(d)Transferability. Rights to acquire shares of Common Stock under the Restricted Stock Units may be transferable by the Participant only upon such terms and conditions as are set forth in the Award Agreement, as the Administrator shall determine in its discretion, as long as Common Stock awarded under the Restricted Award remains subject to the terms of the Award Agreement.
(e)Lapse of Restrictions. Upon the expiration or termination of the Restriction Period and the satisfaction of any other conditions prescribed by the Administrator (including, without limitation, the Participant’s satisfaction of applicable tax withholding obligations attributable to the Award), the restrictions applicable to the Restricted Stock Units shall lapse and a stock certificate for the number of shares of Common Stock with respect to which the restrictions have lapsed shall be delivered, free of any restrictions except those that may be imposed by law, the terms of the Plan or the terms of a Restricted Stock Unit Award, to the Participant or the Participant’s beneficiary or estate, as the case may be. The Company shall not deliver any fractional share of Common Stock but shall pay, in lieu thereof, the Fair Market Value of such fractional share in cash to the Participant or the Participant’s beneficiary or estate, as the case may be. The Common Stock certificate shall be issued and delivered and the Participant will be entitled to the beneficial ownership rights of such Common Stock not later than (i) the date that is 2-1/2 months after the end of the Participant’s taxable year for which the Restriction Period ends and the Participant has a legally binding right to such amounts; (ii) the date that is 2-1/2 months after the end of the Company’s taxable year for which the Restriction Period ends and the Participant has a legally binding right to such amounts, whichever is later; or (iii) such earlier date as may be necessary to avoid application of Code Section 409A to such Award.
5.7Performance Awards.
(a)Nature of Performance Awards. A Performance Award is an Award entitling the recipient to vest in or acquire shares of Common Stock or hypothetical Common Stock units having a value equal to the Fair Market Value of an identical number of shares of Common Stock that will be settled in the form of shares of Common Stock upon the attainment of specified performance goals. The Administrator may make Performance Awards independent of or in connection with the granting of any other Award under the Plan. Performance Awards may be granted under the Plan to any Participant, including those who qualify for awards under other performance plans of the Company. The Administrator in its sole discretion shall determine whether and to whom Performance Awards shall be made, the performance goals applicable under each Award, the periods during which performance is to be measured, and all other limitations and conditions applicable to the awarded shares; provided, however, that the Administrator may rely on the performance goals and other standards applicable to other performance plans of the Company in setting the standards for Performance Awards under the Plan. Performance goals shall be based on a pre-established objective formula or standard that specifies the manner of determining the number of shares of Common Stock under the Performance Award that will be
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granted or will vest if the performance goal is attained. Performance goals shall be determined by the Administrator prior to the time 25% of the service period has elapsed, but not later than 90 days after the commencement of the period of service to which the performance goal relates, and may be based on one or more business criteria that apply to a Participant, a business unit or the Company and its Affiliates. Such business criteria may include revenue, sales, earnings before interest, taxes, depreciation and amortization (EBITDA), Adjusted EBITDA, funds from operations, funds from operations per share, operating income, pre-tax or after-tax income, cash available for distribution, cash available for distribution per share, net earnings, earnings per share, return on equity, return on assets, return on capital, Implied Equity Value or other formula measure of enterprise value or economic value added, share price performance, improvements in the Company’s attainment of expense levels, implementing or completion of critical projects, improvement in cash-flow (before or after tax) or the occurrence of a Sale of the Company. A performance goal may be measured over a performance period on a periodic, annual, cumulative or average basis and may be established on a corporate-wide basis or established with respect to one or more operating units, divisions, subsidiaries, acquired businesses, minority investments, partnerships or joint ventures. More than one performance goal may be incorporated in a performance objective, in which case achievement with respect to each performance goal may be assessed individually or in combination with each other. The Administrator may, in connection with the establishment of performance goals for a performance period, establish a matrix setting forth the relationship between performance on two or more performance goals and the amount of the Performance Award payable for that performance period. The level or levels of performance specified with respect to a performance goal may be established in absolute terms, as objectives relative to performance in prior periods, as an objective compared to the performance of one or more comparable companies or an index covering multiple companies, or otherwise as the Administrator may determine. Performance goals shall be objective and, if the Company is required to be registered under Section 12 of the Exchange Act, shall otherwise meet the requirements of Section 162(m) of the Code. Performance goals may differ for Performance Awards granted to any one Participant or to different Participants. A Performance Award to a Participant who is a Covered Employee shall (unless the Administrator determines otherwise) provide that in the event of the Participant’s termination of Continuous Service prior to the end of the performance period for any reason, such Award will be payable only (i) if the applicable performance objectives are achieved and (ii) to the extent, if any, the Administrator shall determine. Such objective performance goals are not required to be based on increases in a specific business criterion, but may be based on maintaining the status quo or limiting economic losses.
(b)Restrictions on Transfer. Performance Awards and all rights with respect to such Performance Awards may not be sold, assigned, transferred, pledged or otherwise encumbered.
(c)Rights as a Stockholder. A Participant receiving a Performance Award that is denominated in shares of Common Stock or hypothetical Common Stock units shall have the rights of a stockholder only as to shares actually received by the Participant under the Plan and not with respect to shares subject to the Award but not actually received by the Participant. A Participant shall be entitled to receive a stock certificate evidencing the acquisition of shares of Common Stock under a Performance Award only upon satisfaction of all conditions specified in the written instrument evidencing the Performance Award (or in a performance plan adopted by the Administrator), including, without limitation, the Participant’s satisfaction of applicable tax withholding obligations attributable to the Award. The Common Stock certificate shall be issued and delivered and the Participant shall be entitled to the beneficial ownership rights of such Common Stock not later than (i) the date that is 2-1/2 months after the end of the Participant’s taxable year for which the Administrator certifies that the Performance Award conditions have been satisfied and the Participant has a legally binding right to such amounts; (ii) the date that is 2-1/2 months after the end of the Company’s taxable year for which the Administrator certifies that the Performance Award conditions have been satisfied and the Participant has a legally binding right to such amounts, whichever is later; or (iii) such other date as may be necessary to avoid application of Section 409A to such Awards.
(d)Termination. Except as may otherwise be provided by the Administrator at any time, a Participant’s rights in all Performance Awards shall automatically terminate upon the Participant’s termination of Service with the Company and its Affiliates for any reason.
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(e)Acceleration, Waiver, Etc. Until such date as the Company Stock is required to be registered under Section 12 of the Exchange Act, or after such date with respect to Participants who are not Covered Employees, at any time prior to the Participant’s termination of employment (or other business relationship) by the Company and its Affiliates, the Administrator may in its sole discretion accelerate, waive or, subject to Section 8.1, amend any or all of the goals, restrictions or conditions imposed under any Performance Award. The Administrator in its discretion may provide for an acceleration of vesting in the terms of any Performance Award at any time, including the occurrence of a Sale of the Company. However, with respect to a Covered Employee after the Listing Date, no amendment or waiver of the performance goal will be permitted and no acceleration will be permitted unless the performance goal has been attained and the award is discounted to reasonably reflect the time value of money attributable to such acceleration.
(f)Certification. Following the completion of each performance period, the Administrator shall certify in writing, in accordance with the requirements of Section 162(m) of the Code, whether the performance objectives and other material terms of a Performance Award have been achieved or met. Unless the Administrator determines otherwise, Performance Awards shall not be settled until the Administrator has made the certification specified under this Section 5.7(f).
5.8General Provisions Applicable to Restricted Awards.
(a)Purchase Price. The purchase price of Restricted Awards (including Performance Awards that may be settled in Common Stock), if any, and the sufficiency thereof shall be determined by the Administrator, and may be stated as cash, property, prior or future services. Shares of Common Stock acquired in connection with any Restricted Award may be issued for such consideration, having a value not less than the par value thereof, as determined from time to time by the Administrator.
(b)Consideration. The consideration for Common Stock acquired pursuant to the Restricted Award shall be paid either: (i) in cash at the time of purchase; or (ii) in any other form of legal consideration that may be acceptable to the Administrator in its discretion including, without limitation, a recourse promissory note, property or a Stock for Stock Exchange, or prior or future services that the Administrator determines have a value at least equal to the par value of such Common Stock.
ARTICLE VI.
TERMINATION OF SERVICE; SALE OF THE COMPANY;
CORPORATE EVENT; DISSOLUTION OR LIQUIDATION
6.1Termination of Service for Cause. In the event that a Participant’s Service with the Company or a Subsidiary shall terminate for Cause, immediately upon such termination of Service all outstanding Awards granted to the Participant pursuant to this Plan shall be forfeited, such Awards shall terminate, the Company shall cancel any outstanding Restricted Shares, and such Awards (including any Restricted Shares) shall be of no further force or effect.
6.2Death or Disability.
(a) In the event that a Participant’s Service to the Company or a Subsidiary is terminated because of Participant’s death or Disability, the Participant or his estate or legal representative, as applicable, shall have the right to:
(i) exercise any Options granted hereunder at any time within one year after the date of termination of the Participant’s Service due to death or six months after the date of termination of the Participant’s Service due to Disability unless a longer period is otherwise required by the Code (but in no event later than the date on which the Option otherwise would have expired by its terms) only to the extent the Participant was entitled to exercise his Option immediately prior to such date of termination; provided that, in
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addition to the Options held by such Participant that have already vested as of such date of termination, the lesser of (A) an additional twenty percent (20%) of the number of shares of Common Stock covered by the Option and (B) the remaining amount of unvested shares of Common Stock covered by the Option shall become vested and exercisable on the date of termination due to death or Disability; and
(ii) receive certificates for (x) all Restricted Shares on which the restrictions have lapsed in accordance with the Plan and the applicable Award Agreement and for which certificates have not previously been delivered by the Company as of the date of termination, and (y) thelesser of (A) an additional twenty percent (20%) of the number of Restricted Shares covered by the applicable Award Agreement measured as of the date of termination and (B) the remaining Restricted Shares covered by the applicable Award Agreement on which the restrictions have not lapsed as of the date of termination. The Company shall as promptly as practical deliver the certificates required to be delivered under this Section 6.2(a)(ii) to the Participant, his estate, or legal representative, as applicable.
(b) If a Participant dies during the three-month period after the termination of his Service to the Company or a Subsidiary and at the time of his death the Participant was entitled to exercise an Option theretofore granted to him, the Option shall, unless the applicable Option Agreement provides otherwise, expire one year after the date on which his position as an Employee, Director or Consultant of the Company or a Subsidiary terminated, but in no event later than the date on which the Option would have expired if the Participant had lived. Until the expiration of such period the Option may be exercised by the Participant’s executor or administrator or by any person or persons who shall have acquired the Option directly from the Participant by will or in accordance with the laws of descent and distribution, upon delivery of written notice thereof, a copy of the will, or such other evidence as the Administrator may determine necessary to establish the validity of the Transfer, but only to the extent that the Participant was entitled to exercise the Option at the date of his death and, to the extent the Option is not so exercised, it shall expire at the end of such period.
6.3Other Terminations. In the event that a Participant’s Service to the Company or a Subsidiary terminates other than for Cause or due to a Participant’s death or Disability pursuant to Sections 6.1 or 6.2 above, as applicable, the Participant shall have the right to (i) exercise any unexercised Options at any time within three months after such termination to the extent such Participant was entitled to exercise the same immediately prior to such termination and (ii) receive certificates for all Restricted Shares on which the restrictions have lapsed in accordance with this Plan and the applicable Award Agreement and for which certificates have not previously been delivered by the Company as of the date of termination. To the extent that restrictions on any Restricted Shares have not lapsed as of such termination date, the Company shall purchase any such Restricted Shares on which the restrictions have not lapsed at the cost paid by the Participant and the Company shall cancel such Restricted Shares as of such date and such Restricted Shares shall be of no further force or effect. To the extent that any Option is not exercised in accordance with this Section 6.3, such Option shall expire at the end of the three-month period beginning on the termination date.
6.4Sale of the Company. With respect to Options, upon a Sale of the Company, all outstanding Options shall become fully vested and exercisable without regard to the limitations on exercisability contained in Section 5.4 or the applicable Option Agreement immediately prior to such transaction. With respect to Restricted Awards, upon a Sale of the Company, all restrictions shall lapse automatically and the Administrator shall deliver certificates representing such shares of Common Stock to the Participant as promptly as practical prior to the consummation of such Sale of the Company. Upon the Sale of the Company, the Committee shall (i) cancel any or all outstanding Options and Restricted Stock Units under the Plan in consideration for payment to the Participants thereof of an amount equal to the portion of the consideration that would have been payable to such Participants pursuant to such transaction giving effect to the accelerated vesting and as if such Options and Restricted Stock Units had been fully vested immediately prior to such transaction, less the aggregate exercise price that would have been payable therefore and any required withholding tax and (ii) cause all RestrictedShares to be purchased for an equivalent consideration payable in such transaction. Payment of any amount payable pursuant to the preceding sentence may be made in cash or, in the event that the consideration to bereceived in such transaction includes securities or other property, in cash and/or publicly tradable securities in the Committee’s discretion.
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6.5Corporate Event. In the event of any corporate separation or division, including, but not limited to, a split-up, a split-off or a spin-off of the assets of the Company; a merger, consolidation or exchange in which the Company is not the surviving entity; or a reverse merger or other exchange in which the Company is the surviving entity, but the shares of Company Common Stock outstanding immediately preceding the merger are converted by virtue of the merger or exchange into other property, whether in the form of securities, cash or otherwise that does not constitute a Sale of the Company (collectively, a “Corporate Event”), then, the Company, to the extent permitted by applicable law, but otherwise in its sole discretion may provide for: (i) the continuation of outstanding Awards by the Company (if the Company is the surviving entity); (ii) the assumption of the Plan and such outstanding Awards by the surviving entity or its parent; or (iii) the substitution by the surviving entity or its parent of Awards with substantially the same terms for such outstanding Awards.
6.6Dissolution or Liquidation of the Company. In the event of the proposed dissolution or liquidation of the Company that does not constitute a Sale of the Company, outstanding Awards granted hereunder shall terminate as of a date to be fixed by the Administrator; provided that not less than fifteen days’ prior written notice of the date so fixed shall be given to each Participant, and each Participant shall have the right, (i) to exercise his or her Options to the extent they are vested and exercisable and purchase or receive the full number of shares of Common Stock not previously exercised under such Options as applicable, if (and only if) such Options have not at the time expired or been terminated and (ii) to receive certificates for Common Stock under all of Participant’s Restricted Awards on which all restrictions have lapsed in accordance with the Plan and the applicable Award Agreement and for which certificates have not already been delivered prior to such termination date. Failing such exercise, any unexercised portion of all Options granted hereunder and all Restricted Awards on which restrictions have not lapsed as of the termination date shall be forfeited and deemed cancelled as of the effective date of such liquidation or dissolution. The Company shall deliver the certificates required to be delivered by clause (ii) of the immediately preceding sentence no later than 3 days prior to the termination date.
6.7Subject to Repurchase. At any time as the Common Stock ceases to be Publicly Traded, all shares of Common Stock purchased by an Optionholder or his or her Permitted Transferee or issued pursuant to Restricted Stock Units granted hereunder and all Restricted Shares granted hereunder (regardless of whether or not the restrictions have lapsed) shall be subject to repurchase pursuant to Section 9.3 of this Plan.
6.8Alternative Provisions. The provisions of this ARTICLE VI shall apply to all Awards granted under the Plan except to the extent expressly provided otherwise in any Award Agreement.
ARTICLE VII.
ADMINISTRATION OF PLAN
7.1Administration. The Plan shall be administered by the Board of Directors or a Committee of the Board of Directors, in accordance with the terms of this ARTICLE VII (the “Administrator”). Any such committee appointed by the Board, or the Board itself during such periods as no such properly constituted
Michael Cavalier Executive Vice President – General Counsel and appointed committee exists, is herein referred to as the “Committee.” At such time as the Common Stock is required to be registered under Section 12 of the Exchange Act, the Committee shall consist of not less than two Directors appointed to the Committee by the Board, each of whom shall be a member of the Board and each of whom shall qualify as (i) a Non-Employee Director and (ii) an Outside Director. However, the Board shall have discretion to determine whether or not it intends to comply with the exemption requirements of Rule 16b-3 and/or Section 162(m) of the Code. If the Board intends to satisfy such exemption requirements, with respect to Awards to any Covered Employee and with respect to any insider subject to Section 16 of the Exchange Act, the Committee shall be a compensation committee of the Board that at all times consists solely of two or more Non-Employee Directors who are also Outside Directors. Within the scope of such authority, the Board or the Committee may (i) delegate to a committee of one or more members of the Board who are not Outside Directors the authority to grant Awards to eligible persons who are either (A) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of income resulting from such Award or (B) not persons with respect to whom the Company wishes to comply with Section 162(m) of the Code, or (ii) delegate to a committee of one or more members of the Board who are not Non-Employee Directors the authority to grantSecretary April 11, 2016 A-16
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Awards to eligible persons who are not then subject to Section 16 of the Exchange Act. Nothing herein shall create an inference that an Option is not validly granted under the Plan in the event Awards are granted under the Plan by a compensation committee of the Board that does not at all times consist solely of two or more Non-Employee Directors who are also Outside Directors. A majority of the Committee shall constitute a quorum thereof and the actions of a majority of the Committee approved at a meeting at which a quorum is present, or actions unanimously approved in writing by all members of the Committee, shall be the actions of the Committee. Vacancies occurring on the Committee shall be filled by the Board. The Board shall have full and final authority (i) to interpret the Plan and each of the Option Agreements and other Award Agreements evidencing Restricted Shares, Restricted Stock Units and Performance Awards, (ii) to prescribe, amend and rescind rules and regulations, if any, relating to the Plan, (iii) to make all determinations necessary or advisable for the administration of the Plan, (iv) to correct any defect, supply any omission and reconcile any inconsistency in the Plan and any Option Agreements or other Award Agreements, and (v) to amend any outstanding Option Agreements and other Award Agreements (collectively “Rights”) for the purpose of modifying the time or manner of vesting, the Purchase Price or Exercise Price, as the case may be, subject to applicable legal restrictions; provided, however, that if any such amendment impairs a Participant’s Rights or increases a Participant’s obligations under such Participant’s Right, such amendment shall also be subject to the Participant’s consent. For the purposes of clarity, a purchase of a Participant’s Rights in accordance with this Plan or the applicable Award in which the Participant receives consideration for such Right shall in no event be deemed an impairment of the Participant’s Rights that requires consent from such Participant. The determination by the Board in all matters referred to herein shall be conclusive and binding for all purposes and upon all persons, including, without limitation, the Company, the stockholders of the Company, the Administrator, and each of the members thereof, and the Optionholders and the Participants and their respective successors in interest. The Board may delegate such authority to the Committee (if the Board is not the Administrator) with respect to this Plan as it deems to be in the Company’s best interests in its sole discretion, pursuant to a resolution of the Board granting such authority. However, the Board will retain ultimate authority in all matters related to this Plan or any Awards granted hereunder.
7.2Liability. No member of the Board or any Committee shall be liable for anything done or omitted to be done by him or by any other member of the Board or any Committee in connection with the Plan, except for his own willful misconduct or gross negligence (unless the Company’s Certificate of Incorporation or Bylaws, or any indemnification agreement between the Company and such person, in each case in accordance with applicable law, provides otherwise). The Board and any Committee shall have power to engage outside consultants, auditors or other professional help to assist in the fulfillment of the duties of the Board or any Committee under the Plan at the Company’s expense.
7.3Determinations. In making its determinations concerning the Participants who shall receive Options and Restricted Awards, as well as the number of shares of Common Stock to be covered thereby and the time or times at which they shall be granted, the Administrator shall take into account the nature of the Service rendered by such Participants, their past, present and potential contribution to the Company’s success and such factors as the Administrator may deem relevant. The Administrator shall determine the form of Award Agreements evidencing Awards under the Plan and the terms and conditions to be included therein; provided such terms and conditions are not inconsistent with the terms of the Plan, the Company’s Certificate of Incorporation or Bylaws. The Administrator may waive any provisions of any Award Agreement, provided such waiver is not inconsistent with the terms of the Plan, the Company’s Certificate of Incorporation or Bylaws. The determinations of the Administrator under the Plan need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Options or Restricted Awards under the Plan, whether or not such persons are similarly situated. All powers exercised by the Administrator hereunder shall be subject to the ultimate authority of the Board.
7.4Financial Assistance. Subject to any prohibitions, restrictions or other requirements contained in the Securities Laws and any other applicable law, and prior to the Company becoming a registrant or an issuer under the Securities Laws, the Company is vested with authority under this Plan to assist any Participant to whom an Option is granted hereunder in the payment of the Exercise Price payable on exercise of that Option by lending
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the amount of such Exercise Price to such Participant pursuant to a full recourse promissory note on such terms and at such rates of interest and upon such security (or unsecured) as shall have been authorized by or under authority of the Administrator. Notwithstanding the foregoing, in the event there is a stated par value of the Common Stock and applicable law requires, the par value of the Common Stock, if newly issued, shall be paid in cash or cash equivalents. The interest rate payable under the terms of the promissory note shall not be less than the minimum rate (if any) required to avoid the imputation of additional interest under the Code. Unless the Board determines otherwise, shares of Common Stock having a Fair Market Value at least equal to the principal amount of the loan shall be pledged by the holder to the Company as security for payment of the unpaid balance of the loan and such pledge shall be evidenced by a pledge agreement, the terms of which shall be determined by the Board, in its discretion; provided, however, that each loan shall comply with all applicable laws, regulations and rules of the Board of Governors of the Federal Reserve System and any other governmental agency having jurisdiction. Notwithstanding the foregoing, all financial assistance provided by the Company to a Participant pursuant to this Section 7.4 shall be repaid in full no later than immediately prior to the Company becoming a registrant or an issuer under the Securities Laws.
7.5Withholding. The Administrator may establish such rules and procedures as it considers desirable in order to satisfy any obligation of the Company or its Subsidiaries to withhold Federal, state or local income tax or other employment taxes with respect to any Awards granted, exercised or surrendered under the Plan and may impose such requirements as a condition to the transfer or release of Common Stock to any Participant.
ARTICLE VIII.
AMENDMENT AND TERMINATION OF PLAN
8.1Amendment of Plan. The Plan may be amended at any time and from time to time by the Board, but no amendment which (i) increases the aggregate number of shares of Common Stock which may be issued pursuant to Awards granted under the Plan or (ii) changes the class of individuals eligible to be granted Awards, shall be effective unless and until the same is approved by the Requisite Holders or the written consent of such Requisite Holders. Notwithstanding the foregoing and subject to the provisions of Section 8.4, no amendment to the Plan that has a material, adverse affect on a Participant with regard to outstanding Awards shall be effective, without the consent of such Participant.
8.2Other Award Provisions. Options, Restricted Awards and other Performance Awards granted under this Plan shall contain such other terms and provisions which are not inconsistent with this Plan or other undertakings of the Participant in his/her capacity as such or as a holder of Common Stock or Restricted Shares, as the Board or Committee may authorize, including but not limited to (a) vesting schedules governing the exercisability of such Options and other Awards, (b) provisions for acceleration of such vesting schedules in certain events, (c) arrangements whereby the Company may fulfill any tax withholding obligations it may have in connection with the exercise of such Options, Restricted Awards and Performance Awards, (d) provisions imposing restrictions upon the transferability of Common Stock acquired on exercise of such Options, Restricted Awards or Performance Awards, whether required by this Plan, Securities Laws or imposed for other reasons, and (e) provisions regarding the termination or survival of any such Options, Restricted Awards or Performance Awards, upon the Participant’s death, Disability, retirement or other termination of Service and the extent, if any, to which any such Options may be exercised or the restrictions on any Restricted Award or Performance Award may be caused to lapse after such event. Incentive Options shall contain the terms and provisions required of them under the Code.
8.3Termination. The Board may, at any time, terminate the Plan as of any date specified in a resolution adopted by the Board. If not earlier terminated, the Plan shall terminate on March 26, 2018, the day prior to the tenth anniversary of the Restatement Effective Date. No Awards may be granted or awarded after the Plan has terminated, but the Administrator shall continue to supervise the administration of Awards previously granted or awarded.
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8.4Tax Status of Options. To the extent applicable, the Plan is intended to permit the issuance of Incentive Options to Employees in accordance with the provisions of Section 422 of the Code. Subject to the provision of Sections 7.4 and 8.1 of the Plan, the Plan and Option Agreements may be modified or amended at any time, both prospectively and retroactively, and in a manner that may affect Options previously granted, if such amendment or modification is necessary for the Plan and Options granted hereunder to qualify under said provision of the Code. It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide eligible Participants with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options or to the nonqualified deferred compensation provisions of Section 409A of the Code and/or to bring the Plan and/or Awards granted under it into compliance therewith. For the avoidance of doubt, the Company shall have no liability to any Participant or any other person if an Option designated as an Incentive Stock Option fails to qualify as such at any time or if an Option is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code and the terms of such Option do not satisfy the additional conditions applicable to nonqualified deferred compensation under Section 409A of the Code. The Option Agreement shall specify whether the Option is an Incentive Option or Nonqualified Option. To the extent that any portion of the Options granted under the Plan does not meet the requirements of Section 422 of the Code or the Option is not specified as an Incentive Option in the Option Agreement, such Options or portion thereof shall be deemed to be Nonqualified Options. Nothing in the Plan shall be deemed to prohibit the issuance of Nonqualified Options to Employees, Directors and Consultants under the Plan.
ARTICLE IX.
MISCELLANEOUS PROVISIONS
9.1Restrictions Upon Grant of Awards. If the listing upon any stock exchange or the registration or qualification under any federal or state law of any shares of Common Stock to be issued pursuant to an Award granted under the Plan (whether to permit the grant of Awards, the issuance of shares of Common Stock to any Permitted Transferee or the resale or other disposition of any such shares of Common Stock by or on behalf of the Participants receiving such shares) should be or become required or desirable for the Company, the Board in its sole discretion may determine that delivery of the certificates for such shares of Common Stock shall not be made until such listing, registration or qualification shall have been completed. The Company agrees that it will use its reasonable efforts to effect any such listing, registration or qualification; provided, however, that the Company shall not be required to use its reasonable efforts to effect such registration under the Securities Act of 1933 other than on Form S-8 or such other forms as may be in effect from time to time calling for information comparable to that presently required to be furnished under Form S-8. The previous sentence does not grant a Participant registration rights with respect to Common Stock. In no event shall the Company be required to register shares of Common Stock for issuance to a Permitted Transferee and any requested exercise of Options by a Permitted Transferee shall be subject to any applicable prior registration of the shares of Common Stock issuable upon such exercise. Any Award granted to a Participant who is a resident of California shall comply with the additional requirements specified in Addendum A attached hereto and forming part of this Plan.
9.2Restrictions Upon Resale of Unregistered Stock. Each Participant shall, if the Company deems it advisable, represent and agree in writing (i) that any shares of Common Stock acquired by such Participant pursuant to this Plan will not be sold except pursuant to an effective registration statement under the Securities Act of 1933 or pursuant to an exemption from registration under said Act, (ii) that such Participant is acquiring such shares of Common Stock for his or her own account and not with a view to the distribution thereof and (iii) to such other customary matters as the Company may request. In such case, no shares of Common Stock shall be issued to such Participant unless such Participant provides such representations and agreements and the Company is reasonably satisfied that such representations and agreements are correct.
9.3Repurchase by the Company and/or its Designee; Restriction on Transfer; Right of First Refusal.
(a) At any time the Common Stock ceases to be Publicly Traded, the Company and its Designee shall have the right (the “Repurchase Right”), to repurchase any shares of Common Stock that were acquired
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pursuant to the exercise or vesting of an Award under this Plan (“Award Shares”) (or securities into which such Award Shares have been converted) at the Repurchase Price (as hereinafter defined) upon termination of a Participant’s Service with the Company or its Subsidiaries. To the extent that a Participant holds exercisable Options at the time of such termination of Service, the Company or its Designee, as applicable, may elect to purchase such exercisable Options in the same manner as the Option Shares at a price equal to the Repurchase Price less the Exercise Price of such exercisable Options. Notwithstanding the foregoing, the Company’s and its Designee’s right to repurchase Award Shares under this Section 9.3 shall not apply during any period the Company’s Common Stock is Publicly Traded.
(b) The Repurchase Price to be paid by the Company or a Designee if the Participant’s Service terminates or is terminated for any reason shall be the Fair Market Value of the Common Stock underlying the vested Award Shares.
(c) To the extent that the Company or its Designee has the right to repurchase Award Shares, the Company or its Designee may exercise such right by delivery of written notice to the Participant (or such other holder of Award Shares) stating the full number of Award Shares that the Company or its Designee has elected to repurchase, the Repurchase Price per Award Share, and the time of repurchase (which time shall not be earlier than 5 days from the date of notice). The Repurchase Right may be exercised until the later of (i) fifteen (15) days after the expiration of the Award, (ii) two hundred (200) days after (A) the latest purchase by, vesting or transfer from the Company of Award Shares to the Participant or (B) the latest receipt by Participant of certificates representing Award Shares on which the restrictions have lapsed and for which certificates have not been delivered by the Company and (iii) sixty (60) days after the date of Participant’s termination of Service to the Company or a Subsidiary. At the time of repurchase, the Participant shall deliver the certificate or certificates representing his Award Shares to the Company or its Designee, as applicable, at its offices and shall execute any stock powers or other instruments as may be necessary to transfer full ownership of the Option Shares or Restricted Shares to the Company or its Designee. At the time of repurchase, the Company or its Designee shall issue their own check within ten (10) days to the Participant in an amount equal to the aggregate Repurchase Price for the Award Shares for which the Company or its Designee has exercised its right to repurchase, less any amounts required to be withheld under applicable laws. In the event of Participant’s death or Disability, the Company’s or its Designee’s right to purchase and the manner of purchase shall apply with regard to the Participant’s estate, beneficiary, administrator or personal representative.
(d) If the Company’s Common Stock is not Publicly Traded, then during the period a Participant is employed by the Company or a Subsidiary, and for six months after such Participant’s Service to the Company or a Subsidiary is terminated, such Participant shall not, except as provided in this Plan with respect to a Sale of the Company or a Corporate Event, transfer, pledge, mortgage or otherwise encumber or make any disposition of Option Shares or Restricted Shares whatsoever, whether voluntary or involuntary without the Company’s prior written consent (collectively, a “Disposition”), other than to the Company or a Designee. Any purported or attempted Disposition of shares of Common Stock made in violation of this Section 9.3(d) shall be void and of no force and effect.
(e) If (i) the Company or a Designee does not exercise its Repurchase Right as described in this Section 9.3, (ii) the Participant is not otherwise prohibited from making a Disposition of shares of Common Stock pursuant to this Plan and (iii) the Company’s Common Stock is not Publicly Traded, then if a Participant receives a written offer from any bona fide third party purchaser(s) to acquire some or all of the Option Shares of the Participant (the “Offered Shares”), and the Participant intends to accept such offer, the Participant shall first make an irrevocable offer (the “Offer”) to sell the Offered Shares to the Company. The Offer shall be written and either actually delivered or sent by certified or registered mail, return receipt requested, to the Company and shall identify the Offered Shares, the name and address of the prospective purchaser and the terms of the Offer by said prospective purchaser to purchase the Offered Shares. The date of the Offer shall be the date on which a notice containing the Offer has been actually delivered or sent to the Company. The Company or a Designee shall have the irrevocable right and option (the “Right of First Refusal”), for 60 days following the date such notice has been actually delivered or sent, to purchase the Offered Shares at the price stipulated in the Offer and, in the sole discretion of the Company or the Designee, either for cash or on the same credit terms as those contained in the
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Offer. If the stated price set forth in the Offer includes any property other than cash, such stated price shall be deemed to be the amount of any cash included in the stated price plus the value, as determined by the Company, of such other property included in such price. The Company or the Designee shall exercise its Right of First Refusal to purchase the Offered Shares hereunder by actual delivery to the Participant of a written notice of intent to purchase such Offered Shares or by sending such notice by certified or registered mail, return receipt requested, properly stamped and addressed to the address of the Participant. The sale and purchase shall be closed at the offices of the Company or the Designee or its counsel on such date within 30 days thereafter as the Company or the Designee shall determine. Upon the exercise of the Right of First Refusal, the Company or the Designee shall be obligated at the closing to make payment as provided above and the Participant shall be obligated at the closing to duly endorse and deliver to the Company or the Designee the certificate(s) evidencing the Offered Shares. Certificates representing the Offered Shares purchased shall be delivered by the Participant at the closing against payment. Each such certificate shall be endorsed in blank or have attached a duly executed stock power, in each case in proper form for transfer. By delivering the certificates at the closing, the Participant shall be deemed to represent (and so shall certify if requested by the Company or the Designee) that the sale of the Common Stock has been duly authorized, the certificates evidencing the Common Stock have been duly and validly endorsed and delivered for transfer to the purchaser and that the Company will receive good title to such shares, free and clear of all liens, security interests, pledges, charges, encumbrances, stockholders’ agreements, voting trusts, and preemptive rights.
9.4Adjustments. The number of shares of Common Stock authorized for issuance under the Plan, as well as the price to be paid and the number of shares issued upon exercise of outstanding Options, shall be adjusted by the Company to reflect any stock split, reverse stock split, stock dividend, recapitalization, combination, reclassification, dissolution or liquidation of the Company, any corporate separation or division (including, but not limited to, a split-up, a split-off or a spin-off), a merger, consolidation or exchange, a reverse merger or similar transaction which does not constitute a Sale of the Company. All adjustments permitted by this Plan shall be made by the Administrator in a manner that is intended to provide an appropriate adjustment that neither increases or decreases the value of such Award as in effect immediately prior to such corporate change, and the Administrator’s determination as to what adjustments shall be made and the extent thereof shall be final, binding and conclusive for all purposes of the Plan and of each Option Agreement or other Award Agreement; provided, however, that each Incentive Option granted pursuant to the Plan shall not be adjusted in a manner that causes such Incentive Option to fail to continue to qualify as an Incentive Option without the prior consent of the Optionholder thereof.
9.5Use of Proceeds. The proceeds from the sale of Common Stock pursuant to Options and Restricted Shares granted under the Plan shall constitute general funds of the Company and may be used for such corporate purposes as the Company may determine.
9.6Substitution of Options.
(a) The Administrator may, without the consent of the holder of any Option granted under the Plan, cancel such Option and grant a new Option in substitution therefor, provided that the new Option as so substituted shall satisfy all of the requirements of the Plan as of the date such new Option is granted.
(b) Options may be granted under the Plan in substitution for options held by individuals who are employees, directors or consultants of another corporation and who become Employees, Directors or Consultants of the Company or any Subsidiary of the Company eligible to receive Options pursuant to the Plan as a result of a merger, consolidation, exchange, reorganization or similar event described in ARTICLE VI. The terms and conditions of any Options so granted may vary from those set forth in the Plan to the extent deemed appropriate by the Administrator in order to conform the provisions of Options granted pursuant to the Plan to the provisions of the options in substitution for which they are granted.
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9.7Restrictive Legends.
(a) Certificates representing shares of Common Stock delivered pursuant to the exercise of Options and Restricted Stock Units and certificates representing Restricted Shares shall bear an appropriate legend referring to the terms, conditions and restrictions described in this Plan. Any attempt to dispose of any such shares of Common Stock or Restricted Shares in contravention of the terms, conditions and restrictions described in the Plan shall be ineffective, null and void, and the Company shall not effect any such transfer on its books.
(b) Any shares of Common Stock of the Company received by a Participant (or his or her heirs, legatees, distributees or legal representative) or any Restricted Shares received as a stock dividend on, or as a result of a stock split, combination, exchange of shares, reorganization, merger, consolidation or otherwise with respect to, shares of Common Stock received pursuant to the exercise or grant of Awards, shall be subject to the terms and conditions of the Plan and bear the same legend as the shares received pursuant to the exercise or the grant of Awards.
9.8Market Stand-Off. Each Option Agreement and Award Agreement shall provide that in connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act of 1933, as amended, including the Company’s initial public offering, the Participant shall agree not to sell, make any short sale of, loan, hypothecate, pledge, grant any option for the repurchase of, transfer the economic consequences of ownership or otherwise dispose or transfer for value or otherwise agree to engage in any of the foregoing transactions with respect to any Common Stock acquired pursuant to this Plan without the prior written consent of the Company or its underwriters, for such period of time from and after the effective date of such registration statement as may be requested by the Company or such underwriters (the “Market Stand-Off”). In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Common Stock acquired under this Plan until the end of the applicable stand-off period. If there is any change in the number of outstanding shares of Common Stock by reason of a stock split, reverse stock split, stock dividend, recapitalization, combination, reclassification, dissolution or liquidation of the Company, any corporate separation or division (including, but not limited to, a split-up, a split-off or a spin-off), a merger or consolidation; a reverse merger or similar transaction, then any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Common Stock subject to the Market Stand-Off, or into which such Common Stock thereby become convertible, shall immediately be subject to the Market Stand-Off.
9.9Notices. Any notice required or permitted hereunder shall be sufficiently given only if delivered personally, sent by registered or certified mail, return receipt requested, postage prepaid, addressed to the Company at its principal place of business or sent by a nationally recognized overnight delivery service, and to the Participant at the address on file with the Company at the time of grant hereunder, or to such other address as either party may hereafter designate in writing by notice similarly given by one party to the other.
9.10Prior Option Agreements. Each Option Agreement entered into prior to the Restatement Effective Date (as hereinafter defined) is hereby amended to conform to the exercise provisions of Section 5.4 of the Plan.
9.11Restatement Effective Date. The Board has determined that it is in the best interest of the Company to amend and restate the Cinemark Holdings, Inc. 2006 Long Term Incentive Plan, as amended to the date hereof, as provided herein. This amendment and restatement of the Cinemark Holdings, Inc. Long Term Incentive Plan is effective as of March 27, 2008 (the “Restatement Effective Date”) and applies to all Awards heretofore granted under (i) the Cinemark, Inc. 2004 Long Term Incentive Plan, (ii) the Cinemark Holdings, Inc. 2006 Long Term Incentive Plan, as amended, and (iii) all Awards that may hereafter be made under the Plan. The grant of any Award hereunder shall be contingent upon stockholder approval of the Plan being obtained within 12 months after the Board approves the Plan.
[Signature page follows]
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IN WITNESS WHEREOF, upon authorization of the Board of Directors, the undersigned has caused this Amended and Restated Cinemark Holdings, Inc. 2006 Long Term Incentive Plan, to be executed on the date specified below effective as of the 27th day of March, 2008.
| | | | | | |  | | Shareowner Services | | | | | | P.O. Box 64945 | | | | | | St. Paul, MN 55164-0945 | | | | | | | | | | | |
| | | | | | | | | | | CINEMARK HOLDINGS, INC. | | | | | Dated: April 4, 2008 | | | | By: | | /s/ Alan Stock
| | | | | Name: | | Alan W. Stock | | | | | Title: | | Chief Executive Officer |
Signature Page to Cinemark Holdings, Inc. 2006 LTIP
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Addendum A
ADDENDUM A TO
AMENDED AND RESTATED CINEMARK HOLDINGS, INC.
2006 LONG TERM INCENTIVE PLAN
FOR GRANTS MADE TO CALIFORNIA RESIDENTS
Securities sold and options granted in California prior to the Listing Date to employees, directors, managers or consultants of Cinemark Holdings, Inc. or any of its Affiliates shall be subject to the following additional provisions, which shall be part of the Amended and Restated Cinemark Holdings, Inc. 2006 Long Term Incentive Plan. This Addendum A shall not apply to any Awards granted on or after the Listing Date.
ARTICLE I.
EXERCISE AND PURCHASE PRICE
1.1 | Exercise Price Restrictions Applicable to Non-Qualified Stock Options. |
| (a) | In the case of Non-Qualified Stock Options, the Exercise Price shall be determined in the sole discretion of the Administrator; provided, however, that the Exercise Price shall be no less than 100% of the Fair Market Value of the shares of Stock on the Date of Grant of the Non-Qualified Stock Option. |
| (b) | A Ten Percent Shareholder shall not be eligible for designation as an Optionholder, unless (i) the Exercise Price of a Non-Qualified Stock Option is at least 110% of the Fair Market Value of a Share on the Date of Grant. |
1.2 | Purchase Price Restrictions Applicable to Restricted Shares. |
| (a) | Each Award Agreement for Restricted Shares shall state the price at which the Stock subject to such Restricted Share Agreement may be purchased (the “Purchase Price”), which, with respect to Restricted Shares, shall be determined in the sole discretion of the Administrator; provided, however, that the Purchase Price shall be no less than 85% of the Fair Market Value of the shares of Common Stock on the Award date of the Restricted Stock subject to the Award Agreement. |
| (b) | A Ten Percent Shareholder shall not be eligible for An Award Agreement for Restricted Shares unless the Purchase Price (if any) is at least 100% of the Fair Market Value of a share of Common Stock. |
| (c) | At the discretion of the Administrator, Restricted Shares may be awarded under the Plan in consideration of services rendered to the Company, a parent or a Subsidiary prior to the Award. |
1.3 | Non-Applicability. The Exercise Price restrictions applicable to Non-Qualified Stock Options required by Section 1.1 hereof and the Purchase Price restrictions applicable to Restricted Shares required by Section 1.2 hereof shall be inoperative if (a) the shares of Stock to be issued upon payment of the Purchase Price have been registered under a then currently effective registration statement under applicable federal securities laws and the Company (i) is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or becomes an investment company registered or required to be registered under the Investment Company Act of 1940, and (ii) the Company’s Stock is listed or approved for listing upon notice of issuance on a national securities exchange or on the National Market System of the Nasdaq Stock Market (or any successor to that entity), if the exchange or Nasdaq Stock Market (or its successor) has been certified by rule or order of the California Commissioner of Corporations; or (b) a determination is made by counsel for the Company that such Exercise Price restrictions are not required in the circumstances under applicable federal or state securities laws. |
Addendum A
ARTICLE II.
EXERCISABILITY AND VESTING
2.1 | Options. Each Stock Option Agreement shall specify the date when all or any installment of the Option becomes exercisable. Unless a determination is made by counsel for the Company that Section 25102(o) of the California Corporations Code no longer requires and another exemption from qualification under the California Corporations Code applies which does not require, an Option granted to an Optionholder who is not an officer of the Company, a Director or a Consultant shall become exercisable at least as rapidly as 20% per year over the five-year period commencing on the Date of Grant. Subject to the preceding sentence, the exercise provisions of any Stock Option Agreement shall be determined by the Administrator, in its sole discretion. |
2.2 | Restricted Shares. The Restricted Shares will be forfeited immediately upon termination of Participant’s employment with the Company or one of its Subsidiaries, unless otherwise expressly provided herein or in the Award Agreement pursuant to such Restricted Shares were granted. Unless a determination is made by counsel for the Company that Section 25102(o) of the California Corporations Code no longer requires and another exemption from qualification under the California Corporations Code applies which does not require, an Award of Restricted Shares granted to an employee who is not an officer of the Company, a Director, a manager or a Consultant shall provide that the risk of forfeiture and any right to repurchase unvested stock at less than Fair Market Value shall lapse at a rate of at least 20% per year over five years from the date the Award Agreement for Restricted Shares is granted. Subject to the preceding sentence, the vesting and forfeiture provisions of any Restricted Share Award Agreement shall be determined by the Administrator, in its sole discretion. |
ARTICLE III.
TERM
3.1 | Term of Option. Unless Optionholder’s Service with the Company, a parent, or Subsidiaries is terminated for Cause, in no event may the right to exercise any Option in the event of termination of Service (to the extent that the Optionholder is entitled to exercise on the date of termination of Service) be (i) less than six months from the date of termination if termination was caused by death or Disability and (ii) less than 30 days from the date of termination if termination was caused by other than death, Disability or Cause. |
3.2 | Limits on Post Termination Exercise. The provisions of Section 3.1 may not (i) allow any Option to be exercised after the expiration of ten years after the date the Option is granted or (ii) preclude a Ten Percent Shareholder from receiving an ISO satisfying the requirements of Section 422(c)(5) of the Code, including without limitation, that such ISO by its terms not be exercisable after the expiration of five years from the Date of Grant. |
ARTICLE IV.
REPURCHASE RIGHTS
4.1 | Lapse of Repurchase Rights. For purposes of the Repurchase Right under Section 9.3 of the Plan upon termination of Service, the Repurchase Price shall be presumptively reasonable if: |
| (a) | In the case of vested Common Stock, it is not less than the Fair Market Value of the Common Stock to be repurchased on the date of termination of Service, and the Repurchase Right must be exercised for cash or cancellation of purchase money indebtedness for the Common Stock within 90 days of termination of Service (or in the case of Common Stock issued upon exercise of Options after the date of termination, within 90 days after the date of exercise), and the Repurchase Right terminates when the Company’s securities become Publicly Traded. |
| (b) | In the case of unvested Common Stock, it is at the lesser of the original purchase price or Fair Market Value, provided the Repurchase Right at the original purchase price lapses at the rate of at
|
Addendum A
| least 20% per year over five years from the date the Option Agreement or Award Agreement for Restricted Shares is granted (without respect to the date the Option or Award Agreement was exercised or became exercisable) and the Repurchase Right must be exercised for cash or cancellation of purchase money indebtedness for the Common Stock within 90 days of termination of Service (or in the case of Common Stock issued upon exercise of Options after the date of termination, within 90 days after the date of exercise). |
4.2 | Additional Restrictions Permitted. In addition to the restrictions set forth in clauses (a) and (b) of Section 4.1, the Common Stock held by an officer, a Director, a manager or a Consultant of the Company or an Affiliate may be subject to additional or greater restrictions. |
ARTICLE V.
ADDITIONAL COMPLIANCE PROVISIONS
5.1 | Voting Rights. Notwithstanding anything to the contrary in the Plan, Common Stock issued pursuant to the Plan shall carry equal voting rights on all matters where such vote is required by applicable law. |
5.2 | Financial Information. To the extent necessary to comply with California law, the Company each year shall furnish to Participants its balance sheet and income statement, unless such Participants are limited to key Employees whose duties with the Company assure them access to equivalent information. |
Appendix B
CINEMARK HOLDINGS, INC.
PERFORMANCE BONUS PLAN
(As amended by the Compensation Committee on March 22, 2013, subject to stockholder approval)
The purpose of Cinemark Holdings, Inc. Performance Bonus Plan is to provide an incentive to executive officers and other selected employees of the Company to contribute to the growth, profitability and increased value of the Company by providing incentive compensation that qualifies as “performance based compensation” within the meaning of Section 162(m) of the Code.
Except as otherwise expressly provided or the context otherwise requires, financial and accounting terms are used as defined for purposes of , and shall be determined in accordance with, generally accepted accounting principles, as from time to time in effect, as applied and included in the consolidated financial statements of the Company, prepared in the ordinary course of business. The following terms, as used herein, have the following meanings:
(a)“Adjusted EBITDA” means for any period, without duplication, consolidated net income for such periodplus, to the extent reflected as a charge in the statement of such consolidated net income for such period, the sum of:
(i) expenses for taxes based on income or capital, including franchise and similar taxes;
(ii) consolidated interest expense, amortization or write-off of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with indebtedness;
(iii) depreciation and amortization expense, including changes in deferred lease expense and amortization of long-term prepaid rent;
(iv) amortization of intangibles and organization costs;
(v) any extraordinary, unusual or non-recurring gains, losses, income or expense reported by the Company in its public filings with respect to the performance period that are extraordinary or unusual in nature or infrequent in occurrence (including, without limitation, expenses for severance, non-recurring retention bonuses, payments to employees of acquired entities under stock option plans or similar incentive plans such as long term incentive plans, relocation and restructuring costs related to acquisitions or losses);
(vi) the impact of impairment of tangible or intangible assets;
(vii) net losses on sales of assets outside of the ordinary course of business;
(viii) losses or costs arising from lease dispositions;
(ix) any call premium (or original issue discount) expenses associated with the repurchase or repayment of indebtedness;
(x) any other non-cash charges (including stock option, restricted stock and other noncash compensation or foreign exchange losses);
(xi) any reasonable expense related to any equity offering, acquisition, recapitalization, asset sale or indebtedness (whether or not successful);
andminus (1) any extraordinary, unusual or non-recurring income or gains and (2) any other non-cash income or gains (including foreign exchange gains) (other than the amortization of prepaid cash income). Adjusted EBITDA may include such additional measures of performance and liquidity as the Administrator determines are appropriate to determine value and service debt. Adjusted EBITDA is a non-GAAP financial measure used by the Company in the budget and reporting process.
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(b)“Adjusted EBITDA Margin” means Adjusted EBITDA divided by total revenues.
(c)“Administrator” means the Board or a committee thereof to which the Board has delegated authority to administer the Plan in accordance with Section 3.
(d)“Award” means an incentive compensation award, granted pursuant to the Plan, which is contingent upon the attainment of specific Performance Targets during the Performance Period with respect to a preestablished Performance Factor.
(e)“Board” means the Board of Directors of the Company.
(f)“Code” means the Internal Revenue Code of 1986, as amended.
(g)“Company” means, collectively, Cinemark Holdings, Inc. and its subsidiaries and their respective successors.
(h)“Covered Employee” has the meaning set forth in Section 162(m)(3) of the Code.
(i)“Exchange Act” means the Securities Exchange Act of 1934, as amended.
(j)“Executive Officer” means an officer of the Company who is an “executive officer” within the meaning of Rule 3b-7 promulgated under the Exchange Act.
(k)“Participant” means an officer or employee of the Company who is, pursuant to Section 4 of the Plan, selected to participate herein.
(l)“Performance Factors” means the criteria and objectives, determined by the Administrator, used to measure the Performance Targets which must be met during the applicable Performance Period as a condition of the Participant’s receipt of payment with respect to an Award. Performance Factors may include any or all of the following: revenue; net sales; operating income; earnings before all or any of interest, taxes, depreciation and/or amortization (“EBIT”, “EBITA” or “EBITDA”); Adjusted EBITDA; Adjusted EBITDA Margin; cash flow; working capital and components thereof; return on equity or average stockholders’ equity; return on assets; market share; sales (net or gross) measured by product line, territory, customer(s), or other category; stock price; earnings per share; earnings from continuing operations; net worth; credit rating; levels of expense, cost or liability by category, operating unit or any other delineation; any increase or decrease of one or more of the foregoing over a specified period; or implementation or completion of critical projects. Such Performance Factors may relate to the performance of the Company, a business unit, product line, territory, or any combination thereof. With respect to Participants who are not Executive Officers, Performance Factors may also include such objective or subjective performance goals as the Administrator may, from time to time, establish. Subject to Section 5(b) and Section 6(e) hereof, the Administrator shall have the sole discretion to determine whether, or to what extent, Performance Factors are achieved.
(m)“Performance Period” means the Company’s fiscal year or such other period as may be specified by the Administrator.
(n)“Performance Target” means the specific performance goals applicable to any Performance Factor specified by the Administrator that are established to determine the amount payable to a Participant as a condition of the Participant’s receipt of payment with respect to an Award. Such performance goals may be established in absolute terms, as objectives relative to performance in prior periods, as an objective compared to the performance of one or more comparable company or an index covering multiple companies, or otherwise as the Administrator may determine. A Performance Target may be measured over a Performance Period on a periodic, annual, cumulative or average basis and may be established on a corporate-wide basis or established with respect to one or more operating units, divisions, subsidiaries, acquired businesses, minority investments,
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partnerships or joint ventures. More than one Performance Factor may be incorporated in a Performance Target, in which case achievement with respect to each Performance Factor may be assessed individually or in combination with each other. The Administrator may, in connection with the establishment of Performance Targets for a Performance Period, establish a matrix setting forth the relationship between performance on two or more performance goals and the amount of the Performance Award payable for that Performance Period.
(o)“Plan” means the Cinemark Holdings, Inc. Performance Bonus Plan.
(p)“Publicly Held Corporation” means a corporation issuing any class of equity securities required to be registered under Section 12 of the Exchange Act and shall have the meaning set forth in Section 162(m)(2) of the Code.
(a)In General. The Plan shall be administered by the Administrator. The Administrator has the authority in its sole discretion, subject to and not inconsistent with the express provisions of the Plan, to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or advisable in the administration of the Plan, including, without limitation, the authority to grant Awards; to determine the persons to whom and the time or times at which Awards shall be granted; to determine the terms, conditions, restrictions and performance criteria, including Performance Factors and Performance Targets, relating to any Award; to determine whether, to what extent, and under what circumstances an Award may be settled, canceled, forfeited, or surrendered; to make adjustments in the Performance Targets in recognition of unusual or non-recurring events affecting the Company or the financial statements of the Company, or in response to changes in applicable laws, regulations, or accounting principles; to construe and interpret the Plan and any Award; to prescribe, amend and rescind rules and regulations relating to the Plan; to determine the terms and provisions of Awards; and to make all other determinations deemed necessary or advisable for the administration of the Plan.
(b)Delegation to Committee. During any period that the Company is a Publicly Held Corporation, the Board shall delegate its authority to administer the Plan to a compensation committee. If the Board delegates its responsibility with respect to the administration of the Plan to a compensation committee thereof, the Administrator shall consist of two or more persons each of whom shall be an “outside director” within the meaning of Section 162(m) of the Code. All decisions, determinations and interpretations of the Administrator shall be final and binding on all persons, including the Company and the Participant (or any person claiming any rights under the Plan from or through any Participant).
(c)Reliance and Indemnification. The Administrator and any members thereof shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her by any officer or employee of the Company, the Company’s independent certified public accountants, consultants or any other agent assisting in the administration of the Plan. The Administrator, any members of the compensation committee and any officer or employee of the Company acting at the direction or on behalf of the Administrator shall not be personally liable for any action or determination taken or made in good faith with respect to the Plan, and shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action or determination.
Awards may be granted to Participants in the sole discretion of the Administrator. In determining the persons to whom Awards are granted, the Performance Factors and Performance Targets relating to each Award, the Administrator may take into account such factors as the Administrator deems relevant in connection with accomplishing the purposes of the Plan. The Administrator may establish different levels or classifications of Participants who are eligible to receive Awards under the Plan.
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Awards granted pursuant to the Plan will be communicated to Participants in such form as the Administrator may from time to time approve and the terms and conditions of such Awards will be set forth therein.
(a)In General. The Administrator will specify with respect to a Performance Period the Performance Factors and the Performance Targets applicable to each Award. Performance Targets may include a level of performance below which no payment will be made and levels of performance at which specified percentages of the Award will be paid as well as a maximum level of performance above which no additional Award will be paid.
(b)Time and Form of Payment. Unless otherwise determined by the Administrator, all payments in respect of Awards granted under this Plan will be made, in cash, within a reasonable period after the end of the Performance Period, but in the case of Awards designed not to be deferred compensation within the meaning of Section 409A of the Code, not later than the latest date at which such Awards will still qualify for the exemption from Section 409A applicable to short-term deferrals. In the case of Participants who are Covered Employees, unless otherwise determined by the Administrator, such payments will be made only in accordance with the requirements of Section 6 after achievement of the Performance Targets has been certified by the Administrator.
6. | Awards to Covered Employees. |
(a)Additional Conditions. If the Administrator determines at the time an Award is established for a Participant that the Company is a Publicly Held Corporation and such Participant is, or may be as of the end of the tax year for which the Company would claim a tax deduction in connection with such Award, a Covered Employee, then this Section 6 is applicable to such Award under such terms as the Administrator determines.
(b)Establishment of Performance Criteria and Performance Targets. If an Award is subject to this Section 6, then the payment of cash pursuant thereto is subject to the Company achieving the applicable Performance Target for the applicable Performance Period set by the Administrator within the time prescribed by Section 162(m) of the Code or the regulations thereunder in order for the level to be considered “pre-established.” Performance Factors and Performance Targets will be considered pre-established if they are adopted by the Administrator not later than the earlier of (i) 90 days after the commencement of the Performance Period and (ii) the time when 25 percent of the Performance Period has elapsed.
(c)Required Adjustments. To preserve the intended incentives and benefits of an Award based on revenue, net sales, operating income, EBIT, EBITA, EBITDA or Adjusted EBITDA, Adjusted EBITDA Margin, cash flow, return on equity or average stockholders’ equity, return on assets, sales (net or gross), earnings per share, earnings from continuing operations, levels of expense, cost or liability, the Administrator shall apply the objective formula or standard with respect to the applicable Performance Target in a manner that shall eliminate the effects of the following:
(i) the gain, loss, income or expense resulting from changes in accounting principles that become effective during the Performance Period;
(ii) the gain, loss, income or expense reported by the Company in its public filings with respect to the performance period that are extraordinary or unusual in nature or infrequent in occurrence,
(iii) the gains or losses resulting from, and the direct expenses incurred in connection with, any business, theatre or theatres disposed of by the Company or any of its subsidiaries during the Performance Period to the extent that such dispositions were not included in the operating budget for the Performance Period for which the Performance Target was established;
(iv) the Performance Target and the actual results shall be reduced by the pro forma gain, loss, income or expense of any business or theatre or theatres disposed of by the Company or any of its subsidiaries during the Performance Period to the extent that such dispositions were not included in the operating budget for the Performance Period for which the Performance Target was established; and
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(v) the Performance Target shall be reduced in the event of a the cessation of operations of any business, theatre or theatres as a result of natural disaster by an amount equal to the lost pro forma gain, loss, income or expense attributable to such business, theatre or theatres during such period of ceased operations based upon the operating budget for the Performance Period for which the Performance Target was established.
The Administrator may, however, provide at the time the Performance Targets are established that one or more of the foregoing adjustments will not be made as to a specific Award. In addition, the Administrator may determine at the time the Performance Targets are established that other adjustments shall apply to the objective formula or standard with respect to the applicable Performance Target to take into account, in whole or in part, in any manner specified by the Administrator, any one or more of the following with respect to the Performance Period: (1) gain or loss from all or certain claims and/or litigation and all or certain insurance recoveries relating to claims or litigation, (2) the impact of impairment of tangible or intangible assets, (3) the impact of restructuring activities, including but not limited to reductions in force, that are reported in the Company’s public filings covering the Performance Period and (4) the impact of investments or acquisitions made during the year or, to the extent provided by the Administrator, any prior year. Each of the adjustments described in this Section 6(c) may relate to the Company as a whole or any part of the Company’s business or operations, as determined by the Administrator at the time the Performance Targets are established. The adjustments are to be determined in accordance with generally accepted accounting principles and standards, unless another objective method of measurement is designated by the Administrator. In addition to the foregoing, the Administrator shall adjust any Performance Factors, Performance Targets or other features of an Award that relate to or are wholly or partially based on the number of, or the value of, any shares, to reflect a change in the Company’s capitalization, such as a stock split or dividend, or a corporate transaction, such as a merger, consolidation, separation (including a spin-off or other distribution of stock or property), or a reorganization of the Company.
(d)Discretionary Adjustments. The Administrator may, in its discretion, at any time establish (and, once established, rescind, waive or amend) additional conditions and terms of payment of Awards (including but not limited to the achievement of other financial, strategic or individual goals, which may be objective or subjective) as it may deem desirable in carrying out the purposes of the Plan and may take into account such other factors as it deems appropriate in administering any aspect of the Plan, including to reduce the amount of such an Award at any time prior to payment based on such criteria as it shall determine, including but not limited to individual merit and the attainment of specified levels of one or any combination of the Performance Factors. Notwithstanding any contrary provision of this Plan, the Administrator may not adjust upwards the amount payable pursuant to any Award subject to this Section 6, nor may it waive the achievement of the Performance Target requirement contained in Section 6(b), except in the case of the death or disability of the Participant or a change in control of the Company.
(e)Certification. Prior to the payment of any Award subject to this Section 6, the Administrator must certify in writing that the Performance Target requirement applicable to such Award was satisfied or attained.
(f)Additional Restrictions. The Administrator has the power to impose such other restrictions on Awards subject to this Section 6 as it deems necessary or appropriate to ensure that such Awards satisfy all requirements for “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code, the regulations promulgated thereunder, and any successors thereto.
(g)Maximum Individual Bonus. Notwithstanding any other provision in the Plan, no employee may receive a payment attributable to an Award under the Plan for any one year in excess of the lesser of (i) 200 percent of the Participant’s base salary at the time the Award is established or (ii) $3 million. The foregoing limit is subject to adjustments consistent with Section 6(h) in the event of acceleration or deferral.
(h)Express Authority (and Limitations on Authority) to Change Terms and Conditions of Awards; Acceleration or Deferral of Payment. Without limiting the Administrator’s authority under other provisions of the Plan, but subject to any express limitations of the Plan and compliance with Section 162(m), the
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Administrator has the authority to accelerate an Award that is designed not to be deferred compensation within the meaning of Section 409A of the Code (after the attainment of the applicable Performance Target(s)) and to waive restrictive conditions for an Award (including any forfeiture conditions, but not Performance Target(s)), in such circumstances as the Administrator deems appropriate. In the case of any acceleration of an Award after the attainment of the applicable Performance Target(s), the amount payable shall be discounted to its present value using an interest rate equal to Moody’s Average Corporate Bond Yield for the month preceding the month in which such acceleration occurs (or such other rate of interest that is deemed to constitute a “reasonable rate of interest” for purposes of Section 162(m)). In addition, and notwithstanding anything elsewhere in the Plan to the contrary, the Administrator has the authority to provide under the terms of an Award that payment or vesting may be accelerated upon the death or disability of a Participant, a change in control of the Company, or, after the attainment of the applicable Performance Target(s) upon termination of the Participant’s employment without cause or as a constructive termination, as and in the manner provided by the Administrator, and subject to such provision not causing the Award or the Plan to fail to satisfy the requirements for performance-based compensation under Section 162(m) generally.
(a)Compliance with Legal Requirements. The Plan and the granting and payment of Awards, and the other obligations of the Company under the Plan, are subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency as may be required.
(b)Stockholder Approval. No Award may be paid under this Plan prior to the date that stockholders of the Company receive disclosure of and approve the material terms of the Performance Factors under the Plan. As and to the extent provided under Section 162(m) of the Code, the material terms of the Performance Factors under the Plan must be disclosed to and reapproved by the Company’s stockholders no later than the first stockholder meeting that occurs in the fifth year following the year in which the stockholders previously approved the Performance Factors under the Plan.
(c)Nontransferability. Awards are not transferable by a Participant except upon the Participant’s death following the end of the Performance Period but prior to the date payment is made, in which case the Award shall be payable to the Participant’s designated beneficiary or, if no beneficiary has been designated, transferable by will or the laws of descent and distribution.
(d)No Right to Continued Employment. Nothing in the Plan or in any Award granted pursuant hereto confers upon any Participant the right to continue in the employ of the Company or to be entitled to any remuneration or benefits not set forth in the Plan or to interfere with or limit in any way the right of the Company to terminate such Participant’s employment.
(e)Withholding Taxes. Where a Participant or other person is entitled to receive a payment pursuant to an Award hereunder, the Company has the right to withhold or otherwise require the Participant or such other person to pay to the Company the amount of any taxes that the Company may be required to withhold before delivery to such Participant or other person of such payment.
(f)Amendment, Termination and Duration of the Plan. The Administrator may at any time and from time to time alter, amend, suspend, or terminate the Plan in whole or in part; provided that, no amendment that requires stockholder approval in order for the Plan to continue to comply with Code Section 162(m) shall be effective unless the same shall be approved by the requisite vote of the stockholders of the Company.
(g)Participant Rights. No Participant has any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment for Participants.
(h)Termination of Employment. Unless otherwise provided by the Administrator in connection with specified terminations of employment, if a Participant’s employment terminates for any reason prior to the end of a Performance Period prior to the payment of any Award for any reason other than death or disability, no Award
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is payable to such Participant for that Performance Period. A Participant whose termination is due to his or her death or disability shall be entitled to receive a pro rated Award based on the number of days he or she was employed by the Company during the applicable Performance Period, such Award to be paid to such Participant (or such Participant’s beneficiary, in the case of such Participant’s death) at the same time such Award would have been paid if such Participant remained employed. Solely to the extent provided in any employment agreement entered into between the Company or any of its subsidiaries and a Participant, which agreement has been approved or authorized by the Administrator, upon termination of the Participant’s employment without cause or as a constructive termination, after the attainment of the applicable Performance Target(s) such Participant shall be entitled to receive a pro rated Award based on the number of days he or she was employed by the Company during the applicable Performance Period. Such Award will be paid to such Participant (or such Participant’s beneficiary, in the case of such Participant’s death) at the same time such Award would have been paid if such Participant remained employed.
(i)Unfunded Status of Awards. The Plan is intended to constitute an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award gives any such Participant any rights that are greater than those of a general creditor of the Company.
(j)Governing Law. The Plan and all determinations made and actions taken pursuant hereto are governed by the laws of the State of Delaware without giving effect to the conflict of laws principles thereof.
(k)Effective Date. The Plan will take effect upon its adoption by the Board for the fiscal year performance period beginning January 1, 2008; provided, however, that prior to the payment of any amount pursuant to any Award, the Plan is subject to the requisite approval of the stockholders of the Company in order to comply with Section 162(m) of the Code. In the absence of such approval, the Plan (and any Awards made pursuant to the Plan prior to the date of such approval) are null and void.
(l)Beneficiary. A Participant may file with the Administrator a written designation of a beneficiary on such form as may be prescribed by the Administrator and may, from time to time, amend or revoke such designation. If no designated beneficiary survives the Participant and an Award is payable to the Participant’s beneficiary, the executor or administrator of the Participant’s estate is deemed to be the grantee’s beneficiary.
(m)Interpretation. The Plan is designed and intended to comply, to the extent applicable, with Section 162(m) of the Code, and all provisions hereof shall be construed in a manner to so comply. Notwithstanding anything to the contrary in the Plan, the provisions of the Plan may at any time be bifurcated by the Administrator in any manner so that certain provisions of the Plan or any Award intended (or required in order) to satisfy the applicable requirements of Section 162(m) are only applicable to Covered Employees whose compensation is subject to Section 162(m).
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| | | | | | | | | | | | | | |  | | | | | | | | | | | | | | | | | | | | | COMPANY #
| | | | | | | | | | | Vote by Internet, Telephone or Mail 24 Hours a Day, 7 Days a Week | | | | | | | | | | | | | | Your phone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. | | | | | | | | | | | | | | |   | | INTERNET– www.eproxy.com/www.proxypush.com/cnk Use the Internet to vote your proxy until 12:00 p.m. (CT) on May 22, 2013.25, 2016. | | | | | | | | | | | | | | |  
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PHONE–1-800-560-1965 1-866-883-3382 Use a touch-tone telephone to vote your proxy until 12:00 p.m. (CT) on May 22, 2013.25, 2016. | | | | | | | | | | |  | | | |  | | MAIL– Mark, sign and date your proxy card and return it in the postage-paid envelope provided. | | | | | | | | | | | | | | If you vote your proxy by Internet or by Telephone, you do NOT need to mail back your Proxy Card. |
TO VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS BELOW, SIMPLY SIGN, DATE, AND RETURN THIS PROXY CARD.  Please detach here
| | | | | | | | | TO VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS BELOW,
SIMPLY SIGN, DATE, AND RETURN THIS PROXY CARD.
 Please detach here
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | The Board of Directors Recommends a VoteFOR Items 1, 2 3, 4 and 5.3. | | | | | | | | | | | | | | | | | | | 1. | | Election of directors: Class III Directors:
| | | | 01 Benjamin D. Chereskin 02 Lee Roy Mitchell | | 03 Raymond W. Syufy | | | | | | ¨ For all nominees (except as marked) | | ¨ | | Vote FOR all nominees
(except as marked)
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| | Vote WITHHELDWithheld from
from all nominees
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (Instructions: To withhold authority to vote for any indicated nominee, write the number(s) of the nominee(s) in the box provided to the right.) | | | | | | | | | | | | | | | | | | | | | | | | | 2. | | Approval and ratificationRatification of the appointment of Deloitte & Touche LLP as the independent registered public accountantaccounting firm for the 2016 fiscal year ending December 31, 2013.year. | | | | ¨ For | | ¨ Against | | | | ¨ Abstain | | | | | | | | | | | | | | | | | 3. | | Approval of the non-binding, advisory resolution on executive compensation. | | | | ¨ For | | ¨ Against | | | | ¨ Abstain | | | | | | | | | | | | | | | | | 4. | | Re-approval of the material terms of the performance goals under the Amended and Restated Cinemark Holdings, Inc. 2006 Long Term Incentive Plan. | | | | ¨ For | | ¨ Against | | | | ¨ Abstain | | | | | | | | | | | | | | | | | 5. | | Approval of an amendment to and re-approval of the material terms of the performance goals under the Cinemark Holdings, Inc. Performance Bonus Plan. | | | | ¨ For | | ¨ Against | | | | ¨ Abstain | | | | | | | | | | | | 3. | | Approval of the non-binding, annual advisory vote on executive compensation. | | 6.¨ For ¨ Against ¨ Abstain | | | | | | | | | | | 4. | | To transact such other business as may properly come before the Annual Meeting or any adjournment thereof. | | | | | | | | | | | | THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED AS THE BOARD OF DIRECTORS RECOMMENDS. | | | | | | | | | | Address Change? Mark box, sign, and indicate changes below: ¨ | | | | Date | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Signature(s) in Box | | | | | | | | | | | | | | Please sign exactly as your name(s) appears on Proxy. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy. | | | | | | | | | | | | |
CINEMARK HOLDINGS, INC. ANNUAL MEETING OF STOCKHOLDERS Thursday, May 23, 201326, 2016 9:00 a.m. CDT 3800 Dallas Parkway Plano, Texas 75093 | | | | |   | | Cinemark Holdings, Inc. 3900 Dallas Parkway, Suite 500 Plano, Texas 75093 | | proxy | | | | |
This proxy is solicited by the Board of Directors for use at the Annual Meeting on May 23, 2013.26, 2016. The shares of stock you hold in your account will be voted as you specify on the reverse side. If no choice is specified, the proxy will be voted “FOR” Items 1, 2 3, 4 and 5.3. By signing the proxy, you revoke all prior proxies and appoint Tim Warner, Robert Copple,Sean Gamble and Michael Cavalier, and each of them with full power of substitution, to vote your shares on the matters shown on the reverse side and any other matters which may come before the Annual Meeting and all adjournments. See reverse for voting instructions. |
