ITEM ONE — ELECTIONTABLE OF DIRECTORSCONTENTS
CompositionCORPORATE GOVERNANCEThe majority of
theour Board
Our Board is independent and is currently comprised of 1011 members. The size of the Board may be fixed from time to time exclusively by our Board as provided in our Certificate of Incorporation. Our Certificate of Incorporation also provides that our Board consists of three classes of directors, designated as Class I, Class II and Class III. The members of each class are elected to serve a three-year term, with the termterms of office of each class ending in successive years.
Director Qualifications
The qualifications for Board membership are set forth in our Fourth Amended and Restated Corporate Governance Guidelines (“Corporate Governance Guidelines”). All candidates nominated for election orre-election to In December 2021 the Board should possessexpanded the following qualifications:
high personal and professional ethics, integrity, practical wisdom, and mature judgment;
broad training and experience at the policy-making level in business, government, education, or technology;
expertise that is beneficial to the Company and complementary to the background and experience of other Board members;
willingness to devote the required amount of time to carrying out duties and responsibilities of Board membership;
commitment to serve on the Board over a period of several years to develop knowledge about the Company’s principal operations; and
willingness to represent the best interests of all stockholders and objectively appraise management performance.
The Nominating and Corporate Governance Committee (the “Governance Committee”)size of the Board which is responsible for nominating members to the Board, does not assign specific weight to any particular factor when evaluating candidates for potential Board nominations.by one member effective as of January 1, 2022. The Board, in selecting members, takes into account such factors as it deems appropriate, which may include the current composition of the Board, the range of talents, experiences and skills that would best complement those already represented on the Board and the need for specialized expertise. The Board seeks to achieve a mix of members whose experience and backgrounds are relevant to the Company’s strategic priorities and the scope and complexity of the Company’s business.
Board Diversity
The Board has not adopted a formal diversity policy. Pursuant to the Corporate Governance Guidelines, the Board broadly construes diversity to mean diverse background, education, skills, age and expertise. Our Board is comprised of directors who bring diverse viewpoints and perspectives, exhibit a variety of skills, professional experience and backgrounds, and effectively represent the interests of our stockholders. The directors complement each other in their mix of skillsvacancy was filled by bringing to the Board expertise and experience on the entertainment industry, capital markets, cybersecurity, technology, financial management, strategic planning and corporate governance.
The following chart summarizes the core competencies of each director.
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Skill/Experience Matrix |
Experience
| | Director |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
|
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Financial Literacy
| | ✓ | | ✓ | | ✓ | | | | ✓ | | ✓ | | ✓ | | | | ✓ | | ✓ |
| | | | | | | | | | |
Financial Management
| | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ |
| | | | | | | | | | |
Accounting and Financial Oversight/Enterprise Risk Management
| | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | ✓ |
| | | | | | | | | | |
Corporate Governance
| | | | ✓ | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | |
| | | | | | | | | | |
CEO Positions Held
| | ✓ | | | | | | ✓ | | | | | | ✓ | | ✓ | | ✓ | | ✓ |
| | | | | | | | | | |
Non-CEO Executive Positions
| | | | ✓ | | ✓ | | | | ✓ | | ✓ | | | | | | | | |
| | | | | | | | | | |
Film, Media and Entertainment Industry
| | ✓ | | | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ |
| | | | | | | | | | |
Beverage Industry, Consumer Products
| | | | ✓ | | | | | | ✓ | | ✓ | | | | | | | | |
| | | | | | | | | | |
Corporate Finance
| | | | ✓ | | ✓ | | | | | | ✓ | | | | | | | | |
| | | | | | | | | | |
Mergers and Acquisitions
| | | | ✓ | | ✓ | | | | | | ✓ | | | | | | | | |
| | | | | | | | | | |
Other Public Company Board Service
| | | | ✓ | | | | ✓ | | ✓ | | | | ✓ | | | | ✓ | | |
| | | | | | | | | | |
Leadership
| | ✓ | | ✓ | | | | ✓ | | ✓ | | | | ✓ | | ✓ | | ✓ | | ✓ |
| | | | | | | | | | |
Strategic Planning
| | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ |
| | | | | | | | | | |
Real Estate and Retail Business
| | | | | | | | | | | | | | | | ✓ | | | | |
| | | | | | | | | | |
Information Technology and Cybersecurity
| | ✓ | | | | | | | | | | | | | | | | ✓ | | |
Nominations for Election to the Board
The Governance Committee of our Board receives nominations for Board members which it evaluates based on the standards, qualifications and diversity criteria set forth by the Board in the Corporate Governance Guidelines. The Governance Committee annually evaluates the criteria for the selection of new directors and recommends any proposed changes to the Board. Although the Board retains ultimate responsibility for approving candidates for election, the Governance Committee conducts the initial screening and evaluation. In doing so, the Governance Committee considers candidates recommended by the directors, the CEO and the Company’s stockholders. The Governance Committee also has the authority, to the extent it deems appropriate, to retain one or more search firms to be used to identify director candidates.
While typically the Governance Committee recommends candidates to the full Board, under the director nomination agreement which we entered into on April 9, 2007 with certain of our then current stockholders (the “Director Nomination Agreement”), the Mitchell Investors (as defined in the Director Nomination Agreement) have a right to designate two nominees to the Board. The nominees of the Mitchell Investors however, must fulfil the membership criteria set by the Board under the Corporate Governance Guidelines. Currently, Messrs. Mitchell (Class III) and Sepulveda (Class II) are the nominees of the Mitchell Investors.
To recommend a candidate for election to the Board for the 2020 annual meeting of stockholders, a stockholder must submit the following information to the Company Secretary no later than 90 and no earlier than 120 days in advance of the anniversary date of this Annual Meeting:
the name and address of the stockholder of record and the beneficial owner, if any, on whose behalf the proposal is made;
a representation that the stockholder intends to appear in person or by proxy at the annual meeting;
the number of shares of capital stock of the Company that are owned beneficially and of record by such stockholder and the beneficial owner, if any, on whose behalf the nomination is made;
a description of any arrangements or understandings between the stockholder, the beneficial owner and the nominee or any other person (including their names);
the name, age, business and residential addresses of the stockholder’s nominee for director;
the biographical and other information about the nominee (including the number of shares of capital stock of the Company owned beneficially or of record by the nominee) that would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission (“SEC”); and
the nominee’s consent to be namedappointing Sean Gamble as a nominee and to serve on the Board.
Class III director.Candidates recommended by stockholders will be evaluated on the basis of the same qualifications discussed above as candidates recommended by existing directors and the CEO.
Annual Meeting SlateITEM ONE — ELECTION OF CLASS III DIRECTORS
The terms of the current Class III directors, Messrs. Chereskin, Mitchell,
Syufy and
SyufyGamble expire at the Annual Meeting.
Mr. Mitchell has been nominated by the Mitchell Investors for election at the Annual Meeting. Messrs. Chereskin and SyufyAll nominees have been recommended by the
Nominating and Corporate Governance Committee
(Governance Committee) and nominated by the Board for election at the Annual Meeting.
Each of Messrs. Chereskin, Mitchell,
Syufy and
SyufyGamble has consented to be nominated for
election or re-election, as applicable, to the Board as a Class III director. If elected, they will serve on the Board for a three-year term expiring on the date of our
20222025 annual meeting of stockholders. At this time, we have no reason to believe that
either Messrs. Chereskin, Mitchell or Syufyany nominee will be unable or unwilling to serve if elected. However, should any of them become
unavailableunable or unwilling to serve before the Annual Meeting, your proxy card authorizes us to vote for a replacement nominee if the Board names one.
Information on each of our nominees and continuing directors is given below.
NOMINEES FOR CLASS III DIRECTORS
Term Expiring 2019
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| CLASS III DIRECTOR NOMINEES
TERM EXPIRING 2025 | |
| | Benjamin D. Chereskin,60
Director Since: AprilSince: 2004
Board Committees:Committees: Compensation Committee; Strategic Long-Range Planning Committee (Chair)
Age: 63
Other Public Company Boards:Boards: 1 | | | Skills and Qualifications
• Strategic planning and finance growth opportunities
• Extensive knowledge and experience in corporate finance, mergers and acquisitions
• Executive compensation experience
Other Current Board Experience
• CDW Corporation;Corporation
Previous Board Experience
• Boulder Brands, Inc. (2013-2016) | | | Professional Highlights
Mr. Chereskin is President of Profile Capital Management LLC (Profile Management), an investment management firm, which he founded in October 2009. Prior to founding Profile Management, Mr. Chereskin was a Managing Director and Member of Madison Dearborn Partners, LLC, a private equity firm, from 1993 until October 2009, having co-founded the firm in 1993. | |
Professional Experience: Mr. Chereskin is President of Profile Capital Management LLC (“Profile Management”), an investment management firm, which he founded in 2009. Prior to founding Profile Management, Mr. Chereskin was a Managing Director and Member of Madison Dearborn Partners, LLC, a private equity firm, from 1993 until 2009, havingco-founded the firm in 1993.
Qualifications: Mr. Chereskin’s background in private equity is a valuable resource to us in our efforts to attract capital, which helps us implement our business strategies and finance growth opportunities. His knowledge and experience in corporate finance, mergers and acquisitions, and corporate governance contributes to the Board’s expertise on strategic planning and provides valuable input on executive compensation matters.
| | Lee Roy Mitchell ,82Director Since:
| |
|
Nominee of:of: Mitchell Investors
Board Committees:Committees: None
Age: 85
Other Public Company Boards: 0 | | | Skills and Qualifications
• Depth of experience in the theatrical exhibition industry
• Long-term industry perspective
• Leadership experience, including past memberships on public company boards
Other Current Board Experience
• Not Applicable
Previous Board Experience
• National CineMedia, Inc. | | | Professional Highlights
Mr. Mitchell is the founder of the Company. He has served as Executive Chairman of the Board; New VenturesBoard since March 1996 and as a director since our inception in 1987. Mr. Mitchell has been engaged in the theatrical exhibition business for over 50 years. His depth of experience in the theatrical exhibition industry has been invaluable to the Board. Additionally, Mr. Mitchell brings a long-term industry perspective and leadership experience to the Board. | |
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|
Director Since: 2006
Nominee of: Board
Board Committees: Strategic Planning Committee (Chair)
Age: 59
Other Public Company Boards: National CineMedia,Boards: None | | | Skills and Qualifications
• Deep knowledge of the theatrical exhibition industry
• Strategic planning expertise, particularly with respect to competition from other forms of entertainment
• Operational expertise
• Real estate expertise
Other Current Board Experience
• Not Applicable
Previous Board Experience
• Not Applicable | | | Professional Highlights
Mr. Syufy began working for Century Theatres, Inc. (“NCMI”)(Century Theatres), a regional movie exhibitor, in 1977, and held positions in each of the major departments within Century Theatres. In 1994, Mr. Syufy was named President of Century Theatres and was later appointed CEO and Chairman of the board of directors of Century Theatres. Mr. Syufy resigned as an officer and director of Century Theatres upon the consummation of our acquisition of Century Theatres in 2006. Since then, Mr. Syufy has presided as CEO of Syufy Enterprises, Inc. (Syufy Enterprises) a retail and real estate holding company with operations in California, Nevada, Arizona, Colorado, and Texas. Mr. Syufy is currently the Chairman of NATO CA/NV. | |
Professional Experience: Mr. Mitchell is the founder of the Company. He has served as Chairman of the Board since March 1996 and as a director since our inception in 1987.
Qualifications: Mr. Mitchell has been engaged in the motion picture exhibition business for over 50 years. His depth of experience in the motion picture industry has been invaluable to the Board. Additionally, Mr. Mitchell brings a long-term historic industry perspective and leadership experience to the Board.
| | Raymond W. Syufy,56
Director Since: October 2006Since: 2022
Board Committees: Strategic Long-Range Planning Committee; New Ventures CommitteeCommittees: None
Age: 47
Other Public Company Boards:Boards: None | | | Skills and Qualifications
• Veteran theatrical exhibition industry executive with distribution experience
• Management and executive experience
• Strategic planning experience
Other Current Board Experience
• Not Applicable
Previous Board Experience
• Not Applicable | | | Professional Highlights
Mr. Gamble has served as our President and Chief Executive Officer since January 2022. Mr. Gamble has been our President since July 28, 2021 and our Chief Operating Officer since January 2018. Mr. Gamble was our Executive Vice President and Chief Financial Officer from August 2014 until he became our CEO in 2022. Prior to joining Cinemark, Mr. Gamble worked for the Comcast Corporation as Executive Vice President and Chief Financial Officer of Universal Pictures within NBCUniversal from February 2009 to April 2014. He joined Comcast after 15 years at the General Electric Company where he held multiple senior leadership positions, including CFO of GE Oil & Gas’ equipment business based in Florence, Italy from May 2007 to January 2009. | |
| OUR BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
FOR
ELECTION OF EACH CLASS III NOMINEE | |
Professional Experience: Mr. Syufy began working for Century Theatres, Inc. (“Century Theatres”), a regional movie exhibitor, in 1977, and held positions in each of the major departments within Century Theatres. In 1994, Mr. Syufy was named President of Century Theatres and was later appointed CEO and Chairman of the board of directors of Century Theatres. Mr. Syufy resigned as an officer and director of Century Theatres upon the consummation of our acquisition of Century Theatres in 2006. Since then Mr. Syufy has presided as CEO of Syufy Enterprises, a retail and real estate holding company with operations in California, Nevada, Arizona, Colorado, and Texas.
Qualifications: Mr. Syufy’s experience in managing a successful, family-owned movie theatre business brings to the Board industry insight and operational experience. Mr. Syufy’s background also brings key strategic planning expertise to the Board, particularly with respect to competition from other forms of entertainment.
OUR BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR ELECTIONTABLE OF EACH CLASS III NOMINEECONTENTS
CONTINUING CLASS I DIRECTORS
Term Expiring 2020
| CLASS I DIRECTORS
TERM EXPIRING 2023 | |
| | Nancy Loewe,51
Director Since: JuneSince: 2017
Board Committees:Committees: Audit Committee;Committee (Chair and Financial Expert); Governance Committee
Age: 54
Other Public Company Boards: NoneBoards: 0 | | | Skills and Qualifications
• Accounting and financial management expertise
• Risk oversight experience
• Previous management and oversight experience at large public companies
• Management and executive experience
Other Current Board Experience
• Not Applicable
Previous Board Experience
• Not Applicable | | | Professional Highlights
Ms. Loewe has been the Chief Financial Officer (CFO) of Weyerhaueser Company, one of the world’s largest private owners of timberlands, since February 2021. Prior to that, Ms. Loewe was a Senior Vice President - Finance of Visa, Inc. (Visa), a multinational financial services corporation, since March 2019. Prior to Visa, Ms. Loewe served as the CFO for Kimberly-Clark International and prior to that she was the Chief Strategy Officer and Global Treasurer for Kimberly-Clark Corporation, a multinational personal care corporation. She has also served as Vice President and CFO of Frito Lay North America. Additionally, Ms. Loewe held numerous positions during her 20-year tenure at GE, inside and outside the U.S., including Vice President - Strategic Transactions & Cash, as well as CFO for varying business units, such as Plastics Asia, Healthcare, and Consumer & Industrial. | |
Professional Experience: From 2011 until 2017, Ms. Loewe served in a variety of positions of increasing responsibility with Kimberly-Clark Corporation and its international subsidiary, including serving as the Chief Financial Officer (“CFO”) for Kimberly-Clark International and Chief Strategy Officer and Global Treasurer for Kimberly-Clark Corporation. Additionally, Ms. Loewe has held numerous positions during her20-year tenure at GE, inside and outside the U.S., including Vice President – Strategic Transactions & Cash, as well as CFO for varying business units, such as Plastics Asia, Healthcare, and Consumer & Industrial.
Qualifications: Ms. Loewe’s accounting and financial management expertise has added to the Board’s skillset of strategic planning and financial decision making. Due to her experience in leading large financial teams and financial management including audit, risk and treasury, she provides guidance and direction to the Company on accounting and financial processes and management.
| | Steven P. Rosenberg, 60
Director Since: AprilSince: 2008
Board Committees: Audit Committee;Committees: Governance Committee (Chair) ; Audit Committee
Age: 63
Other Public Company Boards:Boards: 1 | | | Skills and Qualifications
• Risk management, board governance and general management expertise
• Accounting and financial management expertise
• Management experience
Other Current Board Experience
• Texas Capital Bancshares, Inc.;
Previous Board Experience
• PRGX Global, Inc. (2007-2014) | | | Professional Highlights
Mr. Rosenberg is the Manager of SPR Ventures Inc., a private investment firm he founded in 1997. He was the President of SPR Packaging LLC, a manufacturer of flexible packaging, from 2006 to 2018. | |
Professional Experience: From 1997 until 2018, Mr. Rosenberg was the President of SPR Ventures Inc., a private investment firm he founded in 1997. He was also the President of SPR Packaging LLC, a manufacturer of flexible packaging, from 2006 until 2018.
Qualifications: Mr. Rosenberg’s background in corporate leadership, private entrepreneurial investment and public company management brings to the Board strategic planning, risk management, board governance and general management skills that are critical to the implementation of our growth strategies and oversight of our enterprise and operational risk management. His experience in accounting and financial management, having served in corporate leadership positions and on audit committees of other public companies, is valuable to the Board with respect to the oversight of our financial reporting.
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| | Enrique F. Senior,75
Director Since: AprilSince: 2004
Board Committees: Committees: Strategic Long-Range Planning Committee; New Ventures Committee
Age: 78
Other Public Company Boards: GrupoBoards: 4 | | | Skills and Qualifications
• Extensive knowledge of film, media and entertainment, and beverage industries
• Strong strategic planning and management expertise
• Executive experience
Other Current Board Experience
• Group Televisa S.A.B.;
• Coca-Cola FEMSA, S.AS.A.
• Femsa S.A. de C.V.
• Univision Communications
Previous Board Experience
• Not Applicable | | | Professional Highlights
Mr. Senior is a Managing Director of Allen & Company LLC, a boutique investment bank, and has been employed by the firm since 1972. He has served as a financial advisor to several corporations including Coca-Cola Company, General Electric, CapCities/ABC, Columbia Pictures Tri-Star Pictures and other entertainment companies. | |
Professional Experience: Mr. Senior is a Managing Director of Allen & Company LLC, a boutique investment bank, and has been employed by the firm since 1972. He has served as a financial advisor to several corporations including Coca-Cola Company, General Electric, CapCities/ABC, Columbia Pictures and QVC Networks.
Qualifications: Mr. Senior’s experience in financial advisory services has given him extensive knowledge of the film, media and entertainment and beverage industries. Mr. Senior’s experience has brought key insight into these two critical components of the Company’s business. He also provides strategic guidance to the Board.
| | Nina G. Vaca (Ximena Humrichouse),47
Director Since: NovemberSince: 2014
Board Committees:Committees: Governance Committee; Compensation Committee (Chair) ;
Age: 50
Other Public Company Boards:Boards: 1 | | | Skills and Qualifications
• Wealth of leadership and business experience particularly with regards to information technology and e-commerce
• Governance and executive compensation knowledge
• Management and executive experience
Other Current Board Experience
• Comerica, Inc.,
Previous Board Experience
• Kohls, Corp. (2010-2019) |
Professional Experience:
| | Professional Highlights
Ms. Vaca is the founder, Chairman and CEO of the Pinnacle Group of companies, including Pinnacle Technical Resources, Inc. (together, Pinnacle) and Vaca Industries, Inc. Founded in 1996, Pinnacle is an information technology services and solutions provider. | | TABLE OF CONTENTS
| CLASS II DIRECTORS
TERM EXPIRING 2024 | |
|
Director Since: 2015
Nominee of: Board
Board Committees: Audit Committee; Strategic Planning Committee (Chair)
Age: 59
Other Public Company Boards: 1 | | | Skills and Qualifications
• Previous CEO and executive experience
• Critical technology and cybersecurity experience
• Accounting and financial management expertise
• Veteran theatrical exhibition industry executive with a background in production and distribution
Other Current Board Experience
• Xperi
Previous Board Experience
• Not Applicable | | | Professional Highlights
Since September 2021, Ms. Antonellis has served as an executive advisor to Amdocs Inc. (NASDAQ: DOX), a leading software, services provider to communications and media companies. From January 2014 to August 2021, Ms. Antonellis was CEO of Vubiquity, Inc., a subsidiary of Amdocs Inc. From June 1998 until December 2013, Ms. Antonellis held numerous positions at Warner Bros. Entertainment Inc., (a Time Warner company) including President of Technical Operations and Chief Technology Officer. | |
| Director Since: 2007
Nominee of: Mitchell Investors
Board Committees: Audit Committee; Compensation Committee; Strategic Planning Committee
Lead Director
Age: 64
Other Public Company Boards: 1 | | | Skills and Qualifications
• Extensive public accounting experience; certified public accountant
• CEO and executive experience
• Strong accounting and financial oversight experience, strategic planning and management expertise
Other Current Board Experience
• Triumph Bancorp, Inc.
Previous Board Experience
• Matador Resources Company | | | Professional Highlights
Since its inception in 2010, Mr. Sepulveda has been the Chairman of the board of directors of Triumph Bancorp, Inc. (Triumph Bancorp, NASDAQ: TBK), a financial holding company offering a diversified line of payments, factoring, and banking services. Prior to Triumph Bancorp, Mr. Sepulveda was the President and CEO of Interstate Battery System International, Inc. (Interstate Batteries), supplying automotive, commercial and industrial batteries, from 2004 until 2013 and its Executive Vice President from 1993 until 2004. Prior to joining Interstate Battery, Mr. Sepulveda was an audit partner with the accounting firm of KPMG LLP in Austin, New York and San Francisco for 11 years. | |
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|
Director Since: 2015
Nominee of: Board
Board Committees: Strategic Planning Committee
Age: 68
Other Public Company Boards: 1 | | | Skills and Qualifications
• Veteran theatrical exhibition industry executive with a background in distribution
• Wealth of knowledge regarding strategic partnerships within the exhibition industry and exhibitor relationships with movie studios
• Management and oversight experience at large public companies within the industry
Other Current Board Experience
• National CineMedia, Inc.
Previous Board Experience
• Not Applicable | | | Professional Highlights
Mr. Zoradi served as our CEO from August 2015 to December 31, 2021. Mr. Zoradi spent 30 years at The Walt Disney Company, a major motion picture studio, including serving as the President of Walt Disney Studios Motion Picture Group. Prior to that, Mr. Zoradi served in a variety of positions of increasing responsibility with The Walt Disney Company, including as the General Manager of Buena Vista Television and President of Buena Vista International with responsibility for the international theatrical and home entertainment marketing and distribution of Disney, Touchstone and Pixar films. Mr. Zoradi also served as the President and Chief Operating Officer (COO) of Dick Cook Studios from January 2011 until July 2014 and the COO of Dreamworks Animation SKG, Inc. from August 2014 until January 2015. | |
NOMINATIONS FOR ELECTION TO THE BOARD Our Governance Committee is responsible for identifying and recommending director candidates to our Board for nomination. Although the Board retains ultimate responsibility for approving candidates for election, the Governance Committee conducts the initial screening and evaluation. The Governance Committee has not established any minimum qualifications that must be met by a director candidate or identified any set of specific qualities or skills that it deems to be mandatory. The Governance Committee’s policy regarding consideration of potential director nominees recognizes that choosing a director is dependent upon a number of subjective and objective criteria many of which are difficult to categorize. The Governance Committee considers candidates recommended by current directors, management, third party search firms engaged by the Governance Committee, and stockholders. Under the director nomination agreement which we entered into on April 9, 2007 with certain of our then current stockholders (Director Nomination Agreement), the Mitchell Investors (as defined in the Director Nomination Agreement) have a right to designate two nominees to the Board. Messrs. Mitchell and Sepulveda are nominees of the
Pinnacle GroupMitchell Investors. All candidates, including candidates recommended by stockholders, are evaluated on the basis of
companies, including Pinnacle Technical Resources, Inc. (together “Pinnacle”). Founded in 1996, Pinnacle is an information technology services and solutions provider.Qualifications: Ms. Vaca isthe same criteria. Stockholders who wish to recommend a successful entrepreneur and bringscandidate to the Board a wealth of leadership and business expertise, especially with regardGovernance Committee or submit nominees for election at the 2023 annual meeting should follow the instructions on page 63.
Lead Independent Director
Mr. Sepulveda serves as the Board’s Lead Independent Director (Lead Director). The Lead Director has the authority to
information technology ande-commerce. Her experience as a director of other public companies adds to the governance skill setpreside at all meetings of the Board
particularly in the area of executive compensation.CONTINUING CLASS II DIRECTORS
Term Expiring 2021
| | |
| | Darcy Antonellis, 56
Director Since: July 2015
Nominee of: Board
Board Committees: Audit Committee
Other Public Company Boards: XPERI Corporation
|
Professional Experience: Since 2014, Ms. Antonellis has been the CEO of Vubiquity, Inc. (“Vubiquity”), the largest global provider of premium content services and technical solutions serving clients in 37 countries and reaching more than 100 million households. Prior to Vubiquity, Ms. Antonellis held numerous positions at Warner Bros. Entertainment Inc., (a Time Warner company) including President of Technical Operations and Chief Technology Officer.
Qualifications: Ms. Antonellis’s background in engineering and experience in technology and cybersecurity is invaluable to the Board. In addition to her management experience in the positions of CEO and senior executive of one of the largest studios, her success in digital media, as well as her strong understanding of our industry helps provide strategic guidance to our Board in the area of digital marketing.
| | |
| | Carlos M. Sepulveda, 61
Director Since: June 2007
Nominee of: Mitchell Investors pursuant to the Director Nomination Agreement
Board Committees: Audit Committee (Chair and financial expert); Compensation Committee; Strategic Long-Range Planning Committee; lead independent director
Other Public Company Boards: Triumph Bancorp Inc.; Matador Resources Company (2013-2017)
|
Professional Experience: Since 2010, Mr. Sepulveda has been the Chairman of the board of directors of Triumph Bancorp, Inc. (“Triumph Bancorp”), a bank holding company with interests in wholesale banking, commercial finance and real estate investments. Prior to Triumph Bancorp, Mr. Sepulveda was the President and CEO of Interstate Battery System International, Inc. (“Interstate Battery”), a seller of automotive and commercial batteries. Prior to joining Interstate Battery, Mr. Sepulveda was an audit partner with the accounting firm of KPMG Peat Marwick in Austin, New York and San Francisco for 11 years.
Qualifications: Mr. Sepulveda’s extensive public accounting background provides the Board critical financial and accounting expertise. As a certified public accountant with proven management and leadership skills and having served as the CEO of a major corporation, Mr. Sepulveda brings to the Board strong accounting and financial oversight skills coupled with experience in strategic planning and enterprise and operational risk management.
| | |
| | Mark Zoradi, 65
Director Since: June 2015
Nominee of: Board
Board Committees: New Ventures Committee
Other Public Company Boards: None
|
Professional Experience: Since 2015, Mr. Zoradi has served as our CEO. Mr. Zoradi spent 30 years at The Walt Disney Company, including serving as the President of Walt Disney Studios Motion Picture Group. Prior to that, Mr. Zoradi served in a variety of positions of increasing responsibility with The Walt Disney Company, including as the General Manager of Buena Vista Television and President of Buena Vista International with responsibility for the international theatrical and home entertainment marketing and distribution of Disney, Touchstone and Pixar films. Mr. Zoradi also served as the President and Chief Operating Officer (“COO”) of Dick Cook Studios from 2011 until 2014 and the Chief Operating Officer of Dreamworks Animation SKG, Inc. from 2014 until 2015.
Qualifications: A veteran motion picture executive with a background in distribution, Mr. Zoradi brings a wealth of knowledge to the Board with regards to strategic partnerships and relationships with the movie studios. Additionally, his experience in operations of large entertainment industry companies brings management expertise to the Board.
CORPORATE GOVERNANCE
The Board oversees our executive management, reviews our long-term strategic plans and exercises oversight over all major decisions.
Board Leadership Structure
We believe that a key factor in a company’s performance is a leadership structure that provides a balance between independent oversight by an engaged Board andday-to-day operations by management to implement the Board’s strategic vision. To achieve this balance, we have split the roles of the Chairman of the Board and the CEO such that the Board is separated from theday-to-day operations of the Company.
In addition to the separation of the positions of the Chairman of the Board and the CEO, the Board has a lead independent director, which role provides leadership and an organizational structure to thenon-management directors. The position of the lead independent director has the following significant authority and responsibilities under our Corporate Governance Guidelines:
to act as a liaison between thenon-management directors and the Company’s management;
to call meetings ofnon-management directors;
chair the executive sessions ofnon-management directors;
chair Board meetings when the Chairman is not present;
present, including executive sessions of the non-management directors and has the authority to call meetings of the non-management directors. The Lead DirectorconsultTABLE OF CONTENTS
serves as principal liaison between the non-management directors and Company management. In consultation with the Chairman and the CEO, and approve the Lead Director approves meeting schedules, agendas and the information provided to the Board for each meeting;
Board. If requested by stockholders and as appropriate, the Lead Director will also be available, as the Board’s liaison, for consultation and communication with stockholders upon request;direct communication.
Separation of Chairman and CEO Roles
provideAlthough the Board does not have a formal policy on separation of the roles of the CEO and Chairman, we have kept these positions separate since 2007. Separating the Chairman and the CEO roles allows us to develop and implement corporate strategy that is consistent with the resultsBoard’s oversight role, while facilitating strong day-to-day executive leadership. Mr. Mitchell provides leadership to the Board by chairing meetings, organizing directors and facilitating Board deliberations.
The Board believes that its leadership structure is appropriate for Cinemark. Through the role of the Lead Director, the independence of the Board’s standing committees, and the regular use of executive sessions of the non-management directors, the Board is able to maintain independent oversight of risks to our business, our long-term strategies, annual performance review.
Board’s Role in Risk Oversight
Responsibility for risk oversight restsoperating plan, and other corporate activities. These features, together with the Board. role and responsibilities of the Lead Director described above, ensure a full and free discussion of issues that are important to Cinemark’s stockholders. At the same time, the Board is able to take advantage of the unique blend of leadership, experience and knowledge of our industry and business that Mr. Mitchell and Mr. Gamble separately bring to the table.
The
majority of our Board is independent with 7 out of 11 directors being independent. Our Board has
oversight responsibilityindependently determined the independence of
the processes established to identify, report and mitigate material risks applicable to the Company, including strategic, competitive, economic, operational, financial, legal, regulatory, compliance, and reputational risks. In addition, Board committees oversee and review risk areas that are particularly relevant to their respective areas of responsibility and oversight. The risk oversight responsibility of the Board and its Committees is supported by our management reporting processes, which are designed to provide visibility to the Board to those Company personnel responsible for risk assessment, and information about management’s identification, assessment and mitigation strategies for critical risks. While the Board considers risk in all its decisions, it also recognizes that appropriate and measured risk-taking may be required for the Company to retain its competitiveness and increase stockholder value.The Board implements its risk oversight function both as a whole and through delegation to certain Board committees. The risk management function of the various committees is as follows:
| | | | |
Board |
Audit | | Compensation | | Governance |
• Assesses financial and accounting risk exposures and management’s risk management procedures to address those risks
• Reviews and assess information technology and cybersecurity risk exposures and the steps taken to monitor and control those exposures
• Reviews risks, identified during the external auditor’ risk assessment procedures.
| | • Oversees risk management related to employee compensation plans and arrangements
• Assesses whether the Company’s compensation plans and practices may incentivize excessive risk-taking. The Compensation Committee has determined that the risks arising from the Company’s compensation plans and policies are not reasonably likely to have a material adverse effect on the Company.
| | • Manages risks associated with governance structure and processes
• Oversees succession planning
|
In order to provide oversight of the risks associated with strategic planning and business development initiatives, the Board has established two additional committees, the Strategic Long-Range Planning Committee and the New Ventures Committee. The Strategic Long- Range Planning Committee assists management in the analysis of alternative strategic options and reviews with management key industry and market issues and external developments impacting the Company. The New Ventures Committee monitors the strategic direction of the Company. It evaluates new development programs or business growth and diversification opportunities within established strategic plan targets and applicable regulatory boundaries.
Director Independence
We comply with7 directors taking into consideration the independence requirements of the New York Stock Exchange (the “NYSE”).(NYSE) listing standards. The NYSE bright-line teststest for independence areunder the NYSE listing standards is whether the director:
| 1. | is, or has been within the last three years, an employee of the Company, or an immediate family member is, or has been within the last three years, an executive officer of the Company;
|
| 2. | 1. is, or has been within the last three years, an employee of the Company, or an immediate family member is, or has been within the last three years, an executive officer of the Company; 2. has received, or has an immediate family member who has received, during any twelve-month period within the last three years, more than $120,000 in direct compensation from the Company (other than director and committee fees and pension or other forms of deferred compensation for prior service, provided such compensation is not contingent in any way on continued service); 3. (a) is a current partner or employee of a firm that is the Company’s internal or external auditor; (b) has an immediate family member who is a current partner of such a firm; (c) has an immediate family member who is a current employee of such firm and personally works on the Company’s audit; or (d) is or an immediate family member was within the last three years a partner or employee of such a firm and personally worked on the Company’s audit within that time; 4. is, or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of the Company’s present executive officers at the same time serves or has served on that company’s compensation committee; or 5. is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues. The Board, in coordination with our Governance Committee, and committee fees and pension or other forms of deferred compensation for prior service, provided such compensation is not contingent in any way on continued service); |
| 3. | (a) is a current partner or employee that is the Company’s internal or external auditor; (b) has an immediate family member who is a current partner of such a firm; (c) has an immediate family member who is a current employee of such firm and personally works on the Company’s audit; or (d) is or an immediate family member was within the last three years a partner or employee of such a firm and personally worked on the Company’s audit within that time;
|
| 4. | is, or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of the Company’s present executive officers at the same time serves or has served on that company’s compensation committee; or
|
| 5. | is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues.
|
With the assistance of the Company’s legalgeneral counsel, evaluated the Governance CommitteeNYSE bright-line tests and considered the transactions reported under the Certain Relationships and Related Party Transactions and other relevant factors to determine the independence of the Board reviews the NYSE Standards for Board and committee member independence.members. On the basis of this review, the Board has affirmatively determined, in its business judgment, that (a) the majority of the Board was, and continues to be, independent, (b) each of Mmes. Antonellis, Loewe and Vaca and Messrs. Chereskin, Rosenberg, Senior and Sepulveda are independent, (c) Mr.Messrs. Mitchell and Syufy isare not independent due to him being a current employee of Syufy Enterprises that receives payment fromtheir transactions with the Company exceeding the greater of $1 million or 2% of it’s consolidated gross revenues,$120,000 annually, (d) Messrs. Mitchell, Zoradi and ZoradiGamble are not independent because they
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are
employees or former employees of the Company, (e) each of Mmes. Antonellis and Loewe and Messrs. Rosenberg and Sepulveda meet all applicable requirements for membership in the Audit Committee, (f)
Ms. Loewe and Mr. Sepulveda
is anqualify as “audit committee financial expert” as such term is defined in Item 407(d)(5)(ii) of Regulation
S-K promulgated by the SEC and
satisfiessatisfy the NYSE’s financial experience requirements, and (g) each of Ms. Vaca and Messrs. Chereskin and Sepulveda meet all applicable requirements for membership in the Compensation Committee.
Meeting AttendanceCERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONSOur 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 regardless of the amount involved as required by the NYSE listing standards. 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 presents any proposed related party transaction at an Audit Committee 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 Chair 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 CEO, CFO or General Counsel determines that it is not practicable to wait until the next Audit Committee meeting, the Chair of the Audit Committee has been delegated the authority to review, consider and approve any such transaction. In such event, the Chair of the Audit Committee shall report any related party transaction approved by the Chair of the Audit Committee 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.
The Company has the following related party transactions with Mr. Mitchell and Mr. Syufy.
Laredo Theatre
We manage one theatre owned by 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 partnership interests in Laredo and is 100% owned by Mr. David Roberts, Lee Roy Mitchell’s 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 approximately $0.4 million of management fee revenue from Laredo during 2021. 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, close or sell the theatre. 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 (Aircraft Agreement) with Copper Beech Capital, LLC, a Texas limited liability company (Operator), for the use of an aircraft and flight crew on a time sharing basis. Lee Roy Mitchell, our Executive Chairman of the Board, and his wife, Tandy Mitchell own the membership interests of 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
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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 2021, the aggregate amounts paid to the Operator for the use of the aircraft was approximately $23,000.
FE Concepts, LLC
The Company, through its wholly-owned indirect subsidiary CNMK Texas Properties, LLC, formed a joint venture, FE Concepts, LLC (FE Concepts), with AWSR Investments, LLC (AWSR), an entity owned by Lee Roy Mitchell and Tandy Mitchell. FE Concepts operates a family entertainment center that offers bowling, gaming, movies and other amenities. The Company and AWSR each invested approximately $20.0 million and each have a 50% voting interest in FE Concepts. The Company has a theatre services agreement with FE Concepts under which the Company receives fees for providing film booking and equipment monitoring services for the facility. The Company recorded $0.1 million of service fees during the year ended December 31, 2021.
Family Relationships
Walter Hebert III, brother-in-law of Mr. Mitchell, was the Executive Vice President – Purchasing of the Company through July 2021. Mr. Hebert received a total compensation of $202,342.75 for 2021. Such amount included base salary of $176,931, fair market value of annual restricted stock grant of $123,597, a prorated portion of his bonus of $67,048, and all other compensation of $25,412. Mr. Hebert and the Company entered into a one-year Consultant Agreement commencing August 1, 2021 to ensure an orderly transition. Under the Consulting Agreement, Mr. Hebert received an additional $122,081 during 2021.
Century Theatres
Our subsidiary, Century Theatres, currently leases 13 theatres from Syufy Enterprises or affiliates of Syufy Enterprises, Inc. Raymond Syufy, one of our directors, is an officer of the general partner of Syufy Enterprises, Inc. All of the leases except one have fixed minimum annual rent. The remaining lease has rent based upon a specified percentage of gross sales as defined in the lease with no minimum annual rent. For 2021, we paid approximately $23.3 million in rent for these leases. Since 2019, we began providing digital equipment support to drive-in theatres owned by Syufy Enterprises, Inc. We recorded $0.1 million of fees related to these services during 2021.
Director Nomination Agreement
Under the Director Nomination Agreement dated on April 9, 2007, the Mitchell Investors (as defined in the Director Nomination Agreement) have a right to designate two nominees to the Board. Messrs. Mitchell (Class III) and Sepulveda (Class II) are its current nominees. Mr. Sepulveda was re-elected at the 2021 Annual Meeting. Mr. Mitchell has been recommended for re-election at the 2022 Annual Meeting.
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BOARD DIVERSITY AND DIRECTOR QUALIFICATIONS Our Corporate Governance Guidelines contain Board membership criteria which are set as broad tenets rather than as specific weighted criteria. Our Board focuses on its leadership structure, and the character, integrity, and qualifications of its members. The following matrix provides information regarding the members of our Board, including certain types of skills, experience and attributes possessed by our directors which our Board believes are relevant to our business. The matrix does not encompass all of the skills or experience of our directors.
Our Board construes diversity to mean diversity of tenure, backgrounds, experience, qualifications, skills, age and expertise, among other factors, which when taken together best serve the interests of the company and our stockholders. The following graphics illustrates director diversity, balanced tenure and range of ages.
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Throughout 2021, governance and risk management played a critical role in our response to the challenges faced by our company and our industry due to the COVID-19 pandemic. The Board played a pivotal oversight role in our business continuity planning and execution in the face of the pandemic and oversaw the executive team’s management of risks related to continuing business operations, industry developments, financial controls, liquidity profile, employee retention, health and safety protocols and information technology operations.
Our Board believes that risk management is an important part of establishing, updating and executing Cinemark’s business strategy. The Board, as a whole and at the committee level, has oversight responsibility relating to risks that could affect the corporate strategy, business objectives, compliance, operations, financial condition, performance and environmental, social and governance responsibilities. The Board focuses its oversight on the most significant risks facing the Company and on the processes that management has established to identify, prioritize, assess, manage and mitigate those risks.
The Board reviews and considers Cinemark’s long-term strategic plan and its annual financial and operating plan. The Board and its committees also receive regular reports from members of senior management on areas of material risk to the Company, including strategic, operational, financial, legal and regulatory risks. While the Board has an oversight role, management is principally tasked with direct responsibility for assessing and managing the risks and implementing processes and controls to mitigate their effects on the Company.
The Board’s leadership structure, with a Lead Director, separate Chairman and CEO, independent standing committees of the Board, the active participation of committees in the oversight of risk, and open communication with management support the risk oversight function of the Board. Each committee has risk oversight responsibilities and provides regular reports to the Board. Our risk governance structure is shown below:
| BOARD OF DIRECTORS
Oversight of risk management program | |
| | |
| AUDIT COMMITTEE
Oversees risks related to financial
reporting, internal controls, technology and
cybersecurity, ethics and compliance | | | COMPENSATION COMMITTEE
Oversees risks related to compensation policies, practices and incentive plans | | | GOVERNANCE COMMITTEE
Oversees risks associated with
governance structures, policies
and processes; succession planning | |
| | |
| STRATEGIC PLANNING COMMITTEE
Oversees and advises on risks related to marco-business risks
and external developments | | | MANAGEMENT
Responsible for identification, assessment and
mitigation of enterprise-wide risks | |
During
2018,2021, the Board held
four (4)five meetings and took action by written consent on six
(6) occasions. All directors attended at least seventy-five percent (75%) of all meetings held by the Board and all meetings held by committees of the Board on which such director served.
All directors are strongly encouraged to attend the Annual Meeting, but we do not have a formal attendance requirement. All directors
except Mr. Senior, attended
the annual meeting held in May 2018.our virtual 2021 Annual Meeting.
Executive SessionsEXECUTIVE SESSIONS
Pursuant to our Corporate Governance Guidelines and the rules of the NYSE, ournon-management directors meet periodically in executive sessions with no Company personnel present. Our Corporate Governance Guidelines require separate sessions of thenon-management directors at least twice a year and a separate session of the independent directors at least once a year.
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The presiding director of the executive sessions is currently our
lead independent director,Lead Director, Mr. Sepulveda. During
2018,2021, our
non-management directors met
twicefive times and our independent directors met once in executive sessions.
Stockholder CommunicationsSUCCESSION PLANNING AND TALENT DEVELOPMENTSuccession planning and talent development are important at all levels in our Company. The board oversees management’s succession plan for key positions at the senior officer level, and most importantly for the Chief Executive Officer position. The board routinely reviews succession plans for senior management and the Chief Executive Officer, including both long-term and emergency succession planning. The board’s succession planning activities are ongoing and strategic. In addition, the Chief Executive Officer regularly provides the board an assessment of the Company’s senior leaders and their potential to succeed at key senior management positions. The board also regularly evaluates succession plans in the context of the Company’s overall business strategy with a focus on risk management. Potential leaders interact with the
BoardAs stated inboard through formal presentations and during informal events. More broadly, the board is regularly updated on key talent indicators for the overall workforce, including diversity and development programs.
This year’s appointment of Sean Gamble as our Corporate Governance Guidelines, any Company stockholder or other interested party who wishesChief Executive Officer following Mark Zoradi’s retirement is indicative of our strategic succession planning and development initiatives. In 2019, the board engaged a recognized executive search firm to communicatecompare potential external candidates with internal candidates. The board ultimately deciding on Sean Gamble as Mr. Zoradi’s successor. Mr. Zoradi worked closely with thenon-management directors Board, preparing for his retirement for more than a year which was intended to take place at the end of 2020. However, Mr. Zoradi delayed his retirement to the end of 2021 to guide the company through the global pandemic and allow additional time for the transition. Over the course of a two-year timeframe, Mr. Zoradi worked hand-in-hand with Mr. Gamble to ensure a seamless transition. Mr. Gamble’s time as Cinemark’s Chief Financial Officer and Chief Operating Officer and his background as the Chief Financial Officer of Universal Studios, as well as his significant tenure at the General Electric Company, underscored his proven track record of strategic thinking, vision setting, leading change, improving processes, and driving efficiencies, making him the logical successor as Chief Executive Officer.
We value the input and insights of our stockholders and are committed to continued engagement with our investors. As part of our proactive stockholder engagement program to ensure management and the Board understand and consider the issues that matter the most to our stockholders, we offered meetings to our top institutional investors, representing nearly 70% of our institutional stockholder base. We met with all that accepted our request, totaling approximately 35% of the total shares outstanding held by institutional stockholders. We also met with representatives from Glass Lewis and Institutional Shareholder Services. Key themes discussed included the impact of COVID-19 on our industry and the Company, succession planning for the Board, executive compensation and corporate social responsibility, sustainability, and talent management. We place great emphasis on the feedback we receive from our stockholders and have instituted practices and disclosures as a
group may direct
such communications by writing to the:Company Secretary
Cinemark Holdings, Inc.
3900 Dallas Parkway, Suite 500
Plano, TX 75093
The communication must be clearly addressed to the Board or to a specific director. If a response is desired, the individual should also provide contact information such as name, address and telephone number.
All such communications will be reviewed initially by the Company Secretary. The Company Secretary will forward to the appropriate director(s) all correspondence, except for itemsresult of the following nature:
advertising;
meetings conducted including:promotionsexpanded language throughout the proxy for clarity on governance;
included more diversity disclosure regarding gender and racial composition of a product or service;
patently offensive material; and
our Board;matters completely unrelated to the Board’s functions, Company performance, Company policies or that could not reasonably be expected to affect the Company’s public perception.
The Company Secretary will prepare a periodic summary report of all such communications for the Board. Correspondence not forwarded to the Board will be retained by the Companyincluded commentary regarding succession planning and will beexecutive transition; and
elaborated on compensation changes made
available to any director upon request.in 2021 and 2022.
Corporate Governance Policies and ChartersCORPORATE GOVERNANCE POLICIES AND CHARTERS
The following documents make up our corporate governance framework:
Fifth Amended and Restated Corporate Governance Guidelines;
Second Amended and Restated Charter of the Audit Committee (the “Audit(Audit Committee Charter”)Charter);
Second Amended and Restated Charter of the Governance Committee (the “Governance(Governance Committee Charter”)Charter); and
First Amendment toSecond Amended and Restated Compensation Committee Charter (the “Compensation(Compensation Committee Charter”).Charter); and
Strategic Planning Committee Charter.
Current copies of the above policies and guidelines are available publicly on
the Company’sour website at
http:https://investors.cinemark.comir.cinemark.com/ under the
“Corporate Governance”“Governance” tab.
Code of Business Conduct and EthicsCODE OF BUSINESS CONDUCT AND ETHICS
The Company has also adopted a Code of Business Conduct and Ethics, which applies to directors, executive officers and employees. The Code of Business Conduct and Ethics sets forth the Company’s policies on critical issues such as conflicts of interest, insider trading, protection of our property, business opportunities and proprietary information. We will post on our website any amendment to, or a waiver from, a provision of the Code of Business Conduct and Ethics for executive officers and directors that have been approved by our Board or any Board committee. During 2021 there were no amendments to, or waiver from, any provision of the Code of Business Conduct and Ethics for any executive officer or director. The Code of Business Conduct and Ethics is available on our website athttp:https://investors.cinemark.comir.cinemark.com/ under the “Corporate Governance”“Governance” tab.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD As stated in our Corporate Governance Guidelines, any Company stockholder or other interested party who wishes to communicate with the non-management directors as a group may direct such communications by writing to the:
Company Secretary
Cinemark Holdings, Inc.
3900 Dallas Parkway
Plano, TX 75093
The communication must be clearly addressed to the Board or to a specific director. If a response is desired, the individual should also provide contact information such as name, address and telephone number. All such communications will be reviewed initially by the Company Secretary. The Company Secretary will forward to the appropriate director(s) all correspondence, except for items of the following nature:
advertising;
promotions of a product or service;
patently offensive material; and
matters completely unrelated to the Board’s functions, Company performance, Company policies or that could not reasonably be expected to affect the Company’s public perception.
The Company Secretary will prepare a periodic summary report of all such communications for the Board. Correspondence not forwarded to the Board will be retained by the Company and will be made available to any director upon request.
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Our Board currently has
fivefour standing committees – Audit Committee, Compensation Committee, Governance Committee
Strategic Long-Range Planning Committee and the
New VenturesStrategic Planning Committee. The current composition of each of the committees is set forth below:
| | | | | | | | | | |
Name of Director | | Audit | | Compensation | | Governance | | Strategic
Planning | | New Ventures |
Darcy Antonellis
| | Member | | | | | | | | |
Benjamin Chereskin
| | | | Member | | | | Chair | | |
Nancy Loewe
| | Member | | | | Member | | | | |
Lee Roy Mitchell
| | | | | | | | | | Chair |
Steven Rosenberg
| | Member | | | | Chair | | | | |
Enrique Senior
| | | | | | | | Member | | Member |
Carlos Sepulveda
| | Chair | | Member | | | | Member | | |
Raymond Syufy
| | | | | | | | Member | | Member |
Nina Vaca
| | | | Chair | | Member | | | | |
Mark Zoradi
| | - | | - | | - | | - | | - |
| Darcy Antonellis | | | Member | | | | | | | | | Chair | |
| Benjamin Chereskin | | | | | | Member | | | | | | Member | |
| Nancy Loewe | | | Chair | | | | | | Member | | | | |
| Lee Roy Mitchell | | | | | | | | | | | | | |
| Steven Rosenberg | | | Member | | | | | | Chair | | | | |
| Enrique Senior | | | | | | | | | | | | Member | |
| Carlos Sepulveda | | | Member | | | Member | | | | | | Member | |
| Raymond Syufy | | | | | | | | | | | | Member | |
| Nina Vaca | | | | | | Chair | | | Member | | | | |
| Mark Zoradi | | | | | | | | | | | | Member | |
| Sean Gamble | | | | | | | | | | | | | |
| Number of Committee Meetings Held
During 2021 | | | 4 | | | 4 | | | 4 | | | 4 | |
| Number of Decisions by Consent
During 2021 | | | 1 | | | 4 | | | 1 | | | 0 | |
| | |
Audit Committee | | Number of Meetings Held During 2018: 4
Number of Decisions by Consent During 2018: 1
|
AUDIT COMMITTEE
Effective February 11, 2021, the Governance Committee recommended, and the Board approved, Nancy Loewe as the Chair of the Audit Committee. Both Mr. Sepulveda, the past Chair, and Ms. Loewe qualify as “audit committee financial experts” within the meaning of Item 407(d)(5)(ii) of Regulation S-K promulgated by the SEC. See Ms. Loewe and Mr. Sepulveda’s biographies on page 11 and page 13 respectively, for further information regarding their qualifications to be an “audit committee financial expert”. Each of the Audit Committee members satisfies the standards for independence of the NYSE and the SEC as they relate to audit committees.
Our Board has determined that each member of the Audit Committee is financially literate and that Mr. Sepulveda, a licensed certified public accountant with extensive public company accounting experience, qualifies as an “audit committee financial expert” within the meaning of Item 407(d)(5)(ii) of RegulationS-K promulgated by the SEC. See Mr. Sepulveda’s biography on page 18 for further information regarding his qualifications to be an “audit committee financial expert”. The Audit Committee is governed by the Audit Committee Charter which sets forth the purpose and responsibilities of this committee.
The functions of the Audit Committee include the following:
assisting the Board in its oversight responsibilities regarding (1) the integrity of our financial statements, (2) our risk management complianceprogram with respect to legal and regulatory requirements, (3) our systems of internal control (4) our implementation and (4)effectiveness of the ethics and compliance program and (5) our accounting, auditing and financial reporting processes generally, including the qualifications, independence and performance of the independent registered public accountants;
approving the report required by the SEC for inclusion in our annual proxy or information statement;
appointing, retaining, compensating, evaluating and replacing our independent registered public accountants;
approving audit andnon-audit services to be performed by the independent registered public accountants;
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establishing procedures for the receipt, retention and resolution of complaints regarding accounting, internal control or auditing matters submitted confidentially and anonymously by employees through the whistleblower hotline;
overseeing the implementation and effectiveness of our ethics and compliance program; and
performing such other functions as the Board may from time to time assign to the Audit Committee.
The Audit Committee meets on a quarterly basis with Company management and Deloitte
& Touche, to discuss, among other items,
the Company’s financial statements for the applicable period to be filed with the SEC, any changes in significant accounting policies and its impact on the Company’s financial statements and the earnings press release related to the quarter and the year (as applicable)
, the Company’s financial statements for the applicable period and any changes in significant accounting policies and its impact on the Company’s financial statements.. The Audit Committee also meets, on a periodic basis, with Deloitte
& Touche in executive sessions without
the presence of members of
management.As part of the Board’s duty of risk oversight, themanagement present.
The Board has delegated authority of cybersecurity oversight to the Audit Committee.
To monitor and evaluate the cybersecurity threats and the effectiveness of the Company’s controls to address those risks, theThe Audit Committee is updated by Company management twice a
year.year to monitor and evaluate cybersecurity trends and risks and the effectiveness of the Company’s controls to mitigate known risks. The Audit Committee also oversees and monitors the enterprise level risks related to ethics and compliance with the Company’s code of business conduct. Company management provides to the Audit Committee, at every quarterly meeting, the top claims (as determined by management) reported through the anonymous whistleblower hotline, and provides an annual summary of claims, for both domestic and international, with a comparison to previous years.
The Board has also delegated
its authority to approvethe approval of related party transactions to the Audit Committee. The Company’s written policy regarding approval of related party transactions provides that management must present to the Audit Committee all potential related party transactions including the nature of the transaction
and material terms
andregardless of the
maximum dollar value of the transaction. The Audit Committee approves
based upon the determination whethersuch related party transaction if it determines that the transaction is fair and in the best interest of the Company. See
Certain Relationships and Related Party Transactions on page
5716 for further details on
the approval of related party transactions.
Approval of Audit andNon-Audit Services:
The Audit Committee approves all audit and permissiblenon-audit services above a de-minimis threshold (including the fees and terms of the services) performed for the Company by its independent registered public accounting firmDeloitte & Touche prior to the time that those services are commenced. The Audit Committee may, when it deems appropriate, form and delegate this authority to asub-committee consisting of one or more Audit Committee members, including the
authority to grantpre-approvals of audit and permittednon-audit services. The decision of suchsub-committee is presented to the full Audit Committee at its next meeting. The Audit Committeepre-approved all fees for 20182021 noted in the table below.
Fees Paid to Independent Registered Public Accounting Firm:
We paid the following fees (in thousands) to Deloitte
& Touche and its affiliates for professional services rendered by them during
20182021 and
2017,2020, respectively:
| | | | | | | | |
Fees | | 2018 | | | 2017 | |
Audit | | $ | 1,837.2 | | | $ | 1,781.0 | |
Audit Related | | $ | 10.4 | | | $ | 10.4 | |
Tax(1) | | $ | 66.4 | | | $ | 145.5 | |
Other | | $ | - | | | $ | - | |
Total | | $ | 1,914.0 | | | $ | 1,936.9 | |
| Audit | | | $ 2160.3 | | | $ 2,158.5 | |
| Audit Related | | | $ - | | | $179.7 | |
| Tax(1) | | | $81.6 | | | $86.8 | |
| Other | | | $3.3 | | | $- | |
| Total | | | $2,245.2 | | | $2,425.0 | |
(1)Fees primarily include transfer pricing studies and tax compliance services. Audit Committee Report
Our committee
The Audit Committee has reviewed and discussed with management the Company’s audited financial statements for 2018.2021. We have discussed with Deloitte & Touche the matters required to be discussed by the Statement on Auditing Standard No. 1301, Communications with Audit Committees,applicable requirements of the Public Company Accounting Oversight Board (PCAOB) and Related and Transitional Amendments to PCAOB Standards.the SEC. We have received the written disclosures and the letter from Deloitte & Touche as required by the applicable requirements of the Public Company Accounting Oversight BoardPCAOB regarding the independent
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accountant’s communications with the Audit Committee concerning independence and have discussed with Deloitte
& Touche its independence. Based on the
above review and discussions,
referred to above, we recommended to the Board that the audited financial statements for the Company be included in the Company’s
20182021 Annual Report on Form
10-K for filing with the SEC.
Nancy Loewe (Chair)
Darcy Antonellis
Steven Rosenberg
Carlos Sepulveda
(Chair)Steven Rosenberg
Darcy Antonellis
Nancy Loewe
| | |
Compensation Committee | | Number of Meetings Held During 2018: 3
Number of Decisions by Consent During 2018: 4
|
Each member of the Compensation Committee satisfies the standards for independence of the NYSE as they relate to compensation committees
and qualify as
“outside“non-employee directors” within the meaning of
Section 162(m) of the Internal Revenue Code (the “Code”) and“non-employee directors” within the meaning of Rule
16b-3 promulgated under Section 16 of the
Securities Exchange
Act of 1934, as amended (the “Exchange Act”).Act. The Compensation Committee is governed by the Compensation Committee Charter, which sets forth the purpose and responsibilities of this committee.
The functions of the Compensation Committee include,
among other things, the following:
making recommendations to the Board on the Company’s general compensation philosophy and objectives and strategy and on all matters of policy and procedures relating to executive compensation;
reviewing and approving corporate goals and objectives relevant to the CEO’s compensation, and determining and approving the CEO’s compensation level;
determining and approving the compensation of the non-CEO NEOs and reviewing the compensation of certain other executive officers;
administering (to the extent such authority is delegated to the Compensation Committee by the Board) the incentive compensation and equity-based plans, setting performance targets and thresholds and recommending to the Board any modifications of such plans;
validating and approving the achievement of performance levelstargets and thresholds under the Company’s incentive compensation plans;
andreviewing, recommending, and discussing with management the Compensation Discussion and Analysis (the “CD&A”)CD&A section included in the Company’s annual proxy statement; and
statement.developing a succession planning program for the CEO and senior management.
GOVERNANCE COMMITTEE | | |
Governance Committee | | Number of Meetings Held During 2018: 5
Number of Decisions by Consent During 2018: 1
|
The Governance Committee is composed solely of directors who satisfy all criteria for independence under the rules of the NYSE. The Governance Committee is governed by the Governance Committee Charter setting forth the purpose and responsibilities of this committee.
The functions of the Governance Committee include,
among other things, the following:
identifying individuals qualified to become Board members and evaluate candidates for Board membership, including those recommended by stockholders in compliance with the Company’sby-laws;
recommending to the Board the director nominees for election or to fill any vacancies and newly created directorships on the Board;
identifying and recommending to the Board members qualified to fill any vacancies on a committee of the Board;
reviewing the succession planning program for the CEO and senior management;
developing and recommending to the Board a set of corporate governance guidelines and reviewing and reassessing the adequacy of such guidelines at least annually;
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overseeing the Board’s annual self-evaluation process and the Board’s evaluation of management;
periodically reviewing the criteria for the selection of new directors to serve on the Board and recommending any proposed changes to the Board for approval;
periodically reviewing and making recommendations regarding the composition and size of the Board;
periodically reviewing and making recommendations regarding the composition, size, purpose, structure, operations and charter of each of the Board’s committees, including the creation of additional committees or elimination of existing committees;
annually recommending to the Board the chairpersons and members of each of the Board’s committees; and
reviewing and reassessing the adequacy of the Governance Committee Charter on an annual basis and recommend any proposed changes to the Board for approval.
approval;
overseeing corporate social responsibilities and public interest issues of significance that affect our investors and other key stakeholders; and
overseeing environmental, health and safety issues.
STRATEGIC PLANNING COMMITTEE The Strategic Planning Committee is governed by the Strategic Planning Committee Charter setting forth the purpose and responsibilities of this committee.
Functions
The functions of the Strategic Planning Committee include, among other things, the following:
reviewing the key industry and market issues and external developments impacting the Company's strategy and core competencies;
assisting management in analysis of alternative strategic options;
reviewing and evaluating material mergers and acquisitions, material capital investments, material financing activities and making recommendations to the Board regarding the same;
identifying and assessing risks facing the Company and establishing a risk management infrastructure to address those risks;
overseeing the division of risk-related responsibilities to each applicable Board committee;
reviewing and evaluating the Company’s policies and practices with respect to risk assessment and risk management; and
reviewing and assessing the effectiveness of the Company’s enterprise-wide risk assessment processes and recommending improvements where appropriate.
Our director compensation program is designed to attract and to fairly compensate highly qualified, non-employee directors to represent our stockholders on the Board and to act in the stockholders’ best interests. The Company believes that compensation for non-employee directors should be competitive and should encourage increased ownership of the Company’s Common Stock through the payment of a portion of director compensation in Company equity. In accordance with the Compensation Committee Charter, the Compensation Committee sets the compensation of our Board members. Pearl Meyer, the Compensation Committee’s independent compensation consultant periodically reviews and reports to the Compensation Committee as to how the Company’s director compensation practices compare with those of other similarly situated companies. The Board makes changes in its director compensation practices only upon the recommendation of the Compensation Committee, and following discussion and unanimous concurrence by the full Board.
The compensation of theour non-employee directors for 2018 was governed byis subject to our Third Amended and RestatedNon-Employee Director Compensation Policy (the “Director(Director Compensation Policy”) adopted byPolicy). Under the Board in February 2017. ADirector Compensation Policy, a non-employee director is one who is not (i) an employee of the Company or any of our subsidiaries, or (ii) an employee of any of the Company’s stockholders which has contractual rights to
nominate directors. Therefore, as Company employees, Messrs. Mitchell Zoradi and Zoradi doGamble did not receive any compensation for their services on the Board or any of its committees. Seecommittees for 2021.
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The compensation of the
compensation tables beginning on page 42 for the compensation paiddirectors pursuant to
Messrs. Mitchell and Zoradi.Eachnon-employee director received the following annual cash retainers,our Non-Employee Director Compensation Policy is as applicable, for services as a Board member during 2018:
follows: (a)
| (a) | a base director retainer of $60,000; |
(b)
| (b) | additional retainer of $35,000 for thenon-employee director who serves as the lead independent director; |
(c)
| (c) | additional cash retainer for services on the committees as follows: |
| | | | | | | | |
| | |
Committee | | Chairperson | | | Member | |
| | |
Audit | | $ | 20,000 | | | $ | 10,000 | |
| | |
Compensation | | $ | 15,000 | | | $ | 10,000 | |
| | |
Governance | | $ | 10,000 | | | $ | 7,500 | |
| | |
Strategic Long-Range Planning | | $ | 10,000 | | | $ | 5,000 | |
| | |
New Ventures | | $ | 10,000 | | | $ | 5,000 | |
| Audit | | | $ 20,000 | | | $ 10,000 | |
| Compensation | | | $15,000 | | | $10,000 | |
| Governance | | | $10,000 | | | $7,500 | |
| Strategic Planning | | | $10,000 | | | $5,000 | |
Annual cash retainers are paid in four equal quarterly installments at the end of each quarter for services rendered during the quarter. All directors are reimbursed for travel related expenses incurred for each Board meeting they attend.
In addition to the annual cash retainers,
theeach non-employee directors receive director receives an annual grant of restricted stock valued at $115,000. The number of shares of restricted stock
granted is determined by dividing $115,000 by the closing price of Common Stock on the grant date, rounded down to the nearest whole share. The
grant date is typically on or around June 15. The annual awards
fully vest on the first anniversary of the grant date subject to continued service to the Company through the vest date.
The directors are also subject to a stock ownership guideline and are required to retain Common Stock ownership five times the value of their base retainer. Our Amended and Restated 2017 Omnibus Incentive Plan (the “2017 Plan”) imposes a $1,000,000 limit on the compensation that can be awarded to a non-employee director in any given fiscal year, including the sum of (i) cash compensation and (ii) the grant date fair value of equity compensation under the 2017 Plan.
The following table sets forth summary information regarding the compensation of our
non-employee directors for
2018. | | | | | | | | | | | | | | | | |
| | | | |
Name | | Fees Earned or Paid in Cash(1) | | | Stock Awards(2) | | | All Other Compensation(3) | | | Total | |
| | | | |
Darcy Antonellis | | $ | 70,000 | | | $ | 114,986 | | | $ | 3,861 | | | $ | 188,847 | |
| | | | |
Benjamin Chereskin | | $ | 80,000 | | | $ | 114,986 | | | $ | 3,861 | | | $ | 198,847 | |
| | | | |
Nancy Loewe | | $ | 77,500 | | | $ | 114,986 | | | $ | 3,861 | | | $ | 196,347 | |
| | | | |
Steven Rosenberg | | $ | 80,000 | | | $ | 114,986 | | | $ | 3,861 | | | $ | 198,847 | |
| | | | |
Enrique Senior | | $ | 70,000 | | | $ | 114,986 | | | $ | 3,861 | | | $ | 188,847 | |
| | | | |
Carlos Sepulveda | | $ | 130,000 | | | $ | 114,986 | | | $ | 3,861 | | | $ | 248,847 | |
| | | | |
Raymond Syufy | | $ | 70,000 | | | $ | 114,986 | | | $ | 3,861 | | | $ | 188,847 | |
| | | | |
Nina Vaca | | $ | 82,500 | | | $ | 114,986 | | | $ | 3,861 | | | $ | 201,347 | |
2021. See the compensation tables beginning on page 41 for the compensation paid to Messrs. Mitchell, Zoradi and Gamble. | Darcy Antonellis | | | $ 75,000 | | | $ 114,986 | | | $ 189,986 | |
| Benjamin Chereskin | | | $80,000 | | | $114,986 | | | $194,986 | |
| Nancy Loewe | | | $87,500 | | | $114,986 | | | $202,486 | |
| Steven Rosenberg | | | $80,000 | | | $114,986 | | | $194,986 | |
| Enrique Senior | | | $65,000 | | | $114,986 | | | $179,986 | |
| Carlos Sepulveda | | | $120,000 | | | $114,986 | | | $234,986 | |
| Raymond Syufy | | | $65,000 | | | $114,986 | | | $179,986 | |
| Nina Vaca | | | $82,500 | | | $114,986 | | | $197,486 | |
(1)
| (1) | Includes all annual cash retainers, as applicable.
|
| (2) | The grant date fair values were calculated based upon the closing price of Common Stock on June 15, 20182021 of $35.81$22.10 per share. This calculation is in accordance with FASB ASC Topic 718. |
See Note 17 to the Company’s 2021 Annual Report on Form 10-K, for discussion of the assumptions used in determining the grant date fair values of these share based awards, including forfeiture assumptions and the period over which the Company will recognize compensation expense for such awards.
OUR ENVIRONMENTAL PRACTICES We have an ongoing commitment to promote environmental sustainability in our communities, including reducing our carbon footprint through energy efficient measures and reducing waste through co-mingled recycling programs.
26 | | See Note 15 to the Company’s 2018 Form10-K, for discussion of the assumptions used in determining the grant date fair values of these share based awards, including forfeiture assumptions and the period over which the Company will recognize compensation expense for such awards. | |
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Recycling: We recycle at all eligible locations with approximately 25% of our domestic waste diverted from landfills in 2018 and 2019. Since 2012, we have recycled over 60,000 tons of waste. In select locations, we compost certain waste material. Data from 2020 and 2021 is not applicable due to closures or limited operations during the COVID-19 pandemic. Data is for locations for which the Company controls waste management.
Renewable Energy: Since 2019, through virtual power purchase agreements and renewable energy credits earned in deregulated markets, we have offset approximately 31% of our annual domestic electricity usage. We have 5 locations with approximately 1.5 megawatts of battery storage to reduce power demand during peak demand, thermal storage in select locations in California and Massachusetts and over 100 free electric vehicle charging stations at select locations throughout the country.
Energy Efficiency: We have incorporated LED lighting in whole or in part in most theatres and parking lots. We also have energy management systems in place for automated lighting and HVAC controls to ensure energy efficiency. We also engineer our HVAC units to minimize energy waste and to reduce power consumption. As of December 31, 2021, we have three LEED certified theatres.
Awards: We have been recognized and awarded for our sustainability efforts and are currently listed on the EPA Green Power Partner National Top 100 list.
TALENT MANAGEMENT AND HUMAN CAPITAL One of our Core Values is Passion for People, including our employees, guests and the communities in which we operate.
Diversity, Equity and Inclusion: Our employees form the core of our Cinemark Values. We seek to be an equitable, diverse and inclusive company. We are committed to diverse representation across all levels of our workforce to reflect the vibrant and thriving diversity of the communities in which we live and work. As part of our ongoing commitment to a diverse and inclusive workforce, we have organized conscious inclusion training and hosted external speakers on the topic. In July 2021, we established a Diversity, Equity and Inclusion and Corporate Social Responsibility Department. We then hired a Director-level employee with a March 2022 start date to focus on developing diversity, equity and inclusion and corporate social responsibility initiatives within the company. We also support employee-driven support groups (ERGs) which help foster inclusion among all teammates, build awareness, recruit and retain a diverse workforce necessary for the Company to successfully operate in a global, multicultural, and evolving business environment. We support the continuous development of professional, technical and leadership skills of our employees by offering tuition assistance, skills development courses through partnerships with leading educational institutions, and leadership development and training both generally and as part of our diversity and inclusion initiatives. Engagement: We believe that continuous engagement with our employees is vital to driving successful, meaningful outcomes. To foster a corporate culture of transparency and collaboration, senior management conducts regular “town-hall” style meetings with employees to share, among other matters, Company performance, business conditions and market challenges, and respond to employee concerns through question-and-answer sessions. These meetings were particularly important during 2020 and 2021 to keep our employees informed of the impact of the pandemic on our Company and our business, status of the industry and theatre re-openings. They also provided support and motivation and boosted morale. We also conduct employee satisfaction surveys that provide actionable feedback from employees to management. The survey responses are anonymous, measure employee satisfaction, and solicit honest feedback, and we follow through with projects to improve areas of opportunity. Performance reviews are conducted annually with bi-annual check-ins for all full-time employees, during which employees and managers address goals, developmental opportunities, strengths, and weaknesses. These reviews facilitate productive conversations across the organization and foster an open feedback culture. Cinemark Cares: In recognition and gratitude for our moviegoing communities, we strongly encourage team members to give back to the community. For the past several years, we have held annual service days for team members. We are a proud long-term corporate partner with charities such as Variety the Children’s Charity, Will Rogers Motion Pictures Pioneers Foundation and St. Jude Children’s Research Hospital and host an annual golf tournament to raise funds for these and other selected charities. | | At December 31, 2018, each of the directors owned 3,211 shares of restricted stock. SeeSecurity Ownership of Certain Beneficial Owners and Management table on page 55 for total stock ownership of each of the directors. | 27
|
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Employee Benefits: All full-time employees in the United States are eligible to participate in our group benefits plans on the first of the month following 30 days of employment. The benefits offered include medical, vision, dental, company-paid life and accidental death and dismemberment, supplemental life and accidental death and death and dismemberment, short- and long-term disability insurance, health savings accounts (a portion of which is funded by the Company), flexible spending accounts (a portion of which is funded by the Company) and an employee assistance program. 401(k) Savings Plan: We maintain a 401(k) Savings Plan for all U.S. based employees as a source of retirement savings. Generally, our employees who have attained the age of 21 are eligible to participate in the plan after 3 months of service. Our employees have the option to contribute to both a 401(k) pre-tax plan and/or a Roth 401(k) plan. We match 100% of an employee’s elective deferral up to 6% of such employee’s compensation, which contributions vest immediately. Our named executive officers receive contribution matches on the same terms and conditions as our other U.S. employees. We believe that offering our employees this additional investment vehicle for generating savings in a tax-deferred manner provides a valuable benefit and helps us retain top talent. 28 | (3) | The amounts reported are dividends paid during 2018 on the shares of unvested restricted stock granted in 2017 and 2018. | |
ITEM TWO — RATIFICATION OF THE APPOINTMENT OF DELOITTE
& TOUCHE, LLP AS
OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2019
2022
The Audit Committee has appointed and the Board has ratified the appointment of Deloitte
& Touche as the Company’s independent registered public accounting firm for
2019.2022. As a matter of good corporate governance, we are seeking stockholder ratification of the appointment of
Deloitte.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 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
& Touche 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. Please refer to page
2423 for the fees paid to Deloitte
& Touche in
20182021 and
2017.2020.
Unless marked to the contrary, proxies received will be voted “
FOR” ratification of the appointment of Deloitte
& Touche as the independent registered public accounting firm for
2019.OUR BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTEFOR RATIFICATION OF THE APPOINTMENT OF DELOITTE AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2019.
2022.
| OUR BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
FOR
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2022 | |
ITEM THREE —
NON-BINDING, ANNUAL ADVISORY VOTE ON
OUR EXECUTIVE COMPENSATION
Executive Summary
Our Board believes that we have created a compensation program that is tied to performance, aligns with stockholder interests and merits stockholder approval. Accordingly, we are seeking approval PROGRAM
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 paid toof our NEOs(“say-on-pay”) for 2018 as disclosed in this proxy statement, the CD&A, the compensation tables, and the narrative discussion, followingand related footnotes included in this proxy statement.
While the compensation tables. Our executive compensation program has consistently received high stockholder approval. Atvote is advisory, and therefore non-binding on the 2018 annual meeting, approximately 95%Company, the Compensation Committee values the opinions of our stockholders presentand will take into account the outcome of the vote when considering future executive compensation decisions.
As discussed in person or represented by proxy and entitled to vote atmore detail in the annual meeting, approvedCD&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 performance.
Accordingly, the Board recommends that you vote in favor of the following resolution:
“RESOLVED, that the compensation paid to
ourthe Company’s NEOs,
for 2017.as disclosed pursuant to Item 402 of Regulation S-K, including the CD&A, compensation tables and narrative discussion is hereby APPROVED.” | OUR BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
FOR
THE ADVISORY VOTE ON OUR NAMED EXECUTIVE OFFICER COMPENSATION FOR 2021 | |
How did we perform?
| | ✓Fourth consecutive year ofall-time highs, including records in all revenue categories
✓Total worldwide revenues exceeding $3 billion for the first time
✓Domestic box office over-indexing North American box office by 80 basis points
✓Increasing domestic food and beverage revenue by more than $100 million, the highestone-year growth in our history and achieving 12 consecutive years of domestic per cap growth
✓Outperforming industry for nine out of the past ten years
|
How do we determine pay?
| | ✓Design pay programs to reward for Company performance and business unit results
✓Set pay levels commensurate with performance and the need to attract and retain talent
✓Focus on key drivers of sustainable performance
✓View value creation over multiple overlapping timeframes
✓Consider total compensation as one package rather than viewing each component independently
✓Balance stockholder expectations by motivating executives to drive the right behaviors and discouraging undue risk-taking |
| | |
What did we change from 2017? | | ✓ Increased base salaries between 1.7% and 5.3% for all NEOs except Mr. Gamble for whom the increase was 14.3% to reflect his appointment as COO and to align with market
✓ Introduced individual performance payout multiplier to provide “clear line of sight” between individual and Company performance
✓ Raised performance hurdle for cash bonus maximum payout fornon-CEO NEOs to 110% from 108%; Mr. Zoradi’s maximum payout target has been 110% since 2017
✓ Raised target cash bonus opportunity for Messrs. Gamble and Cavalier to 90% of their respective base salary given their evolving roles within the Company and to better align with industry peers
✓ Shifted split of performance-based and time-based equity awards fornon-CEO NEOs to 60%/40% in favor of performance-based from 50%/50%; Mr. Zoradi’s mix had been 75%/25% since 2017
✓ Increased target value of long-term equity incentive compensation for Messrs. Zoradi, Gamble and Cavalier to 250%, 175% and 150% of their base salary respectively, to increase emphasis on long-term value creation
|
How did we pay our NEOs?
| | ✓ Payouts aligned with 2018 performance
✓ Base salaries align with each NEOs role, responsibility and experience and market median
✓ Due to higher hurdle for maximum payout, cash bonus payout for NEOs was at 106.3% of individual target opportunity
✓ Equity to vest over the long-term - time-based awards vesting 50% on second anniversary and 50% on fourth anniversary of grant date; performance-based awards earned based on IRR overtwo-year performance period and vesting after additional two years of employment
✓ No excessive perks for any of our NEOs
|
How do we address risk and governance?
| | ✓ Provide appropriate balance of short-term and long-term compensation
✓ Follow practices that promote good governance with maximum payout caps for incentive compensation
✓ Policies on anti-pledging, anti-hedging, stock ownership guidelines and insider trading
✓ Annualsay-on-pay stockholder vote
|
Why stockholders should approve thesay-on-pay proposal
| | ✓ 2018 Company financial performance continues to drive value for stockholders
✓ 2018 payouts align with performance
✓ Performance bars raised for NEOs compared tonon-NEOs under the cash bonus and long-term equity incentive award programs
✓ Robust corporate governance following industry best practices
29
|
Our NEOs covered by theTABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS To assist our stockholders in locating important information regarding our executive compensation program,
for 2018 were the
following executives:CD&A is organized as follows: Name | | Age | | Position
| |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
The following Compensation Discussion and Analysis (“CD&A”) provides a description of the material elements of our executive compensation program, as well as perspective and context for decisions made regarding the compensation of our CEO, CFO and our four other most highly compensated executive officers for the year ended December 31, 2021. These executive officers are listed below:
| | 82 | 85 | | | Executive Chairman of the Board |
| | 65 | 68 | | | Chief Executive Officer; Director |
| | 44 | 47 | | | President and Chief Operating Officer; Chief Financial Officer |
| | 52 | 55 | | | Executive Vice President-General Counsel and SecretaryBusiness Affairs |
| | 58 | 61 | | | President-Cinemark International |
Melissa Thomas(3) | | | 42 | | | Executive Vice President-Chief Financial Officer |
(1)
| Mr. Zoradi retired effective December 31, 2021. |
(2)
| Mr. Gamble was Executive Vice President--Chief Financial Officer until November 8, 2021. Effective January 1, 2022, Mr. Gamble serves as the President and Chief Executive Officer. |
(3)
| Ms. Thomas was appointed Executive Vice President--Chief Financial Officer effective November 8, 2021. |
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Lee Roy Mitchell
is the founder of the Company. He has served as our Executive Chairman of the Board since March 1996 and as a director since our inception in 1987. Mr. Mitchell has been engaged in the motion picturetheatrical exhibition business for over 50 years. Mr. Mitchell is the husband of Tandy Mitchell, an employee of the Company, and thebrother-in-law of Walter Hebert III, the former Executive Vice President–Purchasing, of the Company. Mr. Mitchell currently servesserved on the board of directors of NCMI.National CineMedia, Inc. from 2007 until 2021.
Mark Zoradi has served as our director since June 2015 and our CEO sincefrom August 2015.2015 until his retirement effective December 31, 2021. Mr. Zoradi spent 30 years at The Walt Disney Company, including serving as the President of Walt Disney Studios Motion Picture Group. Prior to that, Mr. Zoradi served in a variety of positions of increasing responsibility withwithin The Walt Disney Company, including as the General Manager of Buena Vista Television and President of Buena Vista International with responsibility for the international theatrical and home entertainment marketing and distribution of Disney, Touchstone and Pixar films. Mr. Zoradi also served as the President and COO of Dick Cook Studios from January 2011 until July 2014 and the COO of Dreamworks Animation SKG, Inc. from August 2014 until January 2015. Mr. Zoradi currently serves on the board of directors of National CineMedia, Inc.
Sean Gamblehas served as our President since July 28, 2021, our COO and CFO since January 2018 and as our Executive Vice President and CFO since August 2014. Beginning January 1, 2022, Mr. Gamble now serves as our President and CEO. Prior to joining Cinemark, from February 2009 until April 2014, Mr. Gamble worked for the Comcast Corporationserved as Executive Vice President and CFO of Universal pictures within NBCUniversal, one of the world’s leading media and entertainment companies. NBCUniversal was a wholly-owned subsidiary of the General Electric Company until January 2011, then subsequently acquired by the Comcast Corporation. He joined Comcast after 15 years at the General Electric Company where, in addition to his time with NBCUniversal, he held multiple senior leadership positions, including CFO of GE Oil & GasGas’ Equipment business based in Florence, Italy from May 2007 until January 2009.
Michael Cavalier
has served as our Executive Vice President-General Counsel and Business Affairs since July 2021, our Executive Vice President-General Counsel and Secretary since February 2014, and as our Senior Vice President-General Counsel and Secretary since January 2006.2006, our General Counsel since 1997 and our Associate General Counsel from 1993 to 1997. He has been with Cinemark for 25more than 28 years.
Valmir Fernandes
has served as our President of Cinemark International, L.L.C. since March 2007, was the General Manager of Cinemark Brasil, S.A from 1996 to March 2007 and has been with Cinemark for more than 2025 years.
Melissa Thomas has served as our Executive Vice President-Chief Financial Officer since November 2021. Prior to joining Cinemark, from February 2020 to October 2021 Ms. Thomas served as Groupon Inc.’s Chief Financial Officer and served as Groupon’s Interim Chief Financial Officer from August 2019 to her appointment as Chief Financial Officer, its Chief Accounting Officer and Treasurer from November 2018 until her appointment as Interim Chief Financial Officer and its Vice President of Commercial Finance from May 2017 until her appointment to Chief Accounting Officer and Treasurer. Prior to joining Groupon, Ms. Thomas served as Vice President of Finance at Surgical Care Affiliates from June 2016 to May 2017. From August 2007 to May 2016, Ms. Thomas served in a variety of finance and accounting leadership roles at Orbitz Worldwide (NYSE: OWW), including Vice President of Finance. Prior to her employment at Orbitz, Ms. Thomas held accounting positions at Equity Office Properties and began her career at PricewaterhouseCoopers.
We provide stockholders with the opportunity to cast an annual advisory vote on the compensation of our NEOs. At the 2021 Annual Meeting, approximately 82% of the stockholder votes cast on say-on-pay were voted in favor of the proposal. Although the percentage of favorable votes is down from the 96% favorable votes received at the 2020 Annual Meeting the Compensation Committee believes that this substantial majority of votes in favor affirms stockholders’ support for our approach to executive compensation during the COVID-19 pandemic. Every year we endeavor to have discussions with some of our institutional investors in order to better understand their views on our compensation practices. The Compensation Committee carefully considers this feedback in designing the key components of our executive compensation program.
Following the 2021 advisory vote and discussions with institutional investors in 2021 and 2022, the Compensation Committee decided to return to a more traditional performance based structure for our annual bonus program and a portion of our long term incentive compensation program. See Decisions in Response to the COVID-19 Pandemic – Cash
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Bonus and Impact of COVID-19 on Long Term Incentive Compensation. The Compensation Committee believes the actions it took in 2021 were appropriate to attract, retain and incentivize management as the Company continues to navigate through a difficult business environment. We believe our programs are effectively designed and are aligned with the interests of our stockholders.
EXECUTIVE COMPENSATION
DISCUSSION AND ANALYSISBEST PRACTICES
The Compensation Committee monitors emerging best practices in executive compensation to incorporate them into our compensation program and enhance value for our stockholders. The chart below lists some of our compensation “best practices” implemented by the Compensation Committee and also provides the compensation practices we do not follow:
| ✔ | | | Provide competitive, market-driven base salary | | | × | | | Reward imprudent risk-taking | |
| ✔ | | | Utilize formula-driven, quantitative performance targets for a significant portion of total compensation | | | × | | | Provide “single trigger” provisions in our employment agreements for change in control | |
| ✔ | | | Overlap performance periods and capped incentive opportunities | | | × | | | Provide excise tax gross ups for change in control payments | |
| ✔ | | | Balance mix of pay components | | | × | | | Offer deferred compensation | |
| ✔ | | | Align management and stockholder interests through stock ownership guidelines | | | × | | | Agree to golden parachutes | |
| ✔ | | | Unconditionally prohibit executives from engaging in hedging transactions or pledging Cinemark stock | | | × | | | Offer pension benefits | |
| ✔ | | | Provide double trigger for change in control | | | × | | | Provide excessive perks | |
Compensation PhilosophyOUR COMPENSATION PHILOSOPHY
Our executive compensation program is structured to attract, motivate, reward, and retain high caliber talent who will lead the Company to increase our competitive advantage and deliver sustainable profitability. This includes building a solid foundation for long-term growth while consistently achieving near-term results. While formulating an effective pay strategy, theThe Compensation Committee takes a holistic view of pay and performance and ensures that there is appropriate alignment with Company performance, overall business strategy and culture. We hire high caliber individuals who can determine our strategy to execute our long-term vision while continuing to deliver our mission of making the movie-going experience memorable by engaging with our customers and providing world class facilities and services. To ensure that our key executives are incentivized appropriately to deliver our mission and vision, the Compensation Committee has designed an executive compensation program that strongly aligns with the interests of stockholders in creating sustainable long-term stockholder value by directly linking pay to Company and individual performance. Each of the measures in our performance-based plan is designed to align with, and support, our business strategy – create an extraordinary guest experience, deepen customer loyalty, and pursue growth opportunities.
DESIGN OF OUR EXECUTIVE COMPENSATION PROGRAM Our executive compensation program is designed to achieve the following key objectives:
attract and retain top talent;
pay-for-performance; and
strike balance between performance and risk-taking
To ensure that the compensation program serves the above objectives, the Compensation Committee takes into consideration the following:
key drivers of sustainable performance
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viewing value creation over multiple overlapping timeframes
considering total compensation as one package rather than viewing each component independently
balancing stockholder expectations by discouraging undue risk-taking and motivating executives to drive the right behaviors
industry comparables
The
three principal tenetshighlights of our executive compensation program
are: Retention, Performance and Balance.We have built our compensation program using traditional compensation elements of base salary, cash bonus and long-term equity awards. The chart below identifies the hallmarks of our executive compensation program:
are as follows:Characteristics | | Description
|
| | | Base salary is aligned with industry medianmarket competitive to attract and retain valued employees | |
| Balanced Mix of Pay Components Over Short and Long Term | | The target
| Target compensation mix is not overly weighted towards long-term equity-based incentives rather than short-term cash bonus but is balanced with long-term equity-based compensation vesting over four yearsincentives | |
| Balanced Approach to Performance-based Awards | | | Performance targets are tied to multiple financial metrics of the Company as well as individual performance |
Overlap of Performance Periods and Vesting Schedules
| | TheCompany; performance periods for long-term equity incentive awards overlap and, therefore, reduce the motivation to maximize performance in any one period period. For 2021 only, the Compensation Committee used discretion and established short-term objectives for the annual bonus target and due to the COVID-19 pandemic long-term equity awards incorporated a four year cliff vest to drive retention rather than a performance metric. | |
| Individual Performance Modifies Bonus Payout | | | Non-CEO NEO bonus payout can be modified up to +/-15% based on achievement of individual goals set against Company strategic objectives for the year; CEO evaluated against Company performance and execution of strategic goals for the Company | |
| Stock Ownership Guidelines | | | CEO required to own, directly or indirectly, Company equity five times base salary; other NEOsexecutive officers required to own two times the respectivetheir base salary | |
Hedging in
| Hedge or PledgingPledge of Common Stock Prohibited; No Margin Account Allowed | | NEOs
| Directors and executives (including NEOs) who are subject to the Supplemental Insider Trading Policy, are prohibited to tradefrom trading in puts, calls or other derivative securities with respect to Company securities and short sales of Company securities. They may notare also holdprohibited from holding Company securities in a margin account and may not, without prior approval, pledgefrom pledging Company securities as collateral for any other loan | |
2018 BUSINESS PERFORMANCE HIGHLIGHTSDECISIONS IN RESPONSE TO THE COVID-19 PANDEMIC
The Company has delivered record results forCompensation Committee designed the stockholders over the past few years. This has been possible due to disciplined execution of our strategic initiatives led by our executive leadership. We have tailored ourtraditional executive compensation program such that our executives continue to be motivated to performalign pay with performance and deliver stellar performance without having to undertake undue risks that wouldthe majority of target compensation was comprised of performance-based incentive awards. In February 2021, the Compensation Committee re-evaluated the continuing impact long-term stockholder value. The discussion below tracks our financial performance over the pastone- and five- years and also our performance as compared to our peers.
Company Performance Over the1-Year Period
In 2018, the North American industry box office grew by 6.9% to reach anall-time high of $11.9 billion, bolstered by sizeable increase in year-over-year attendance. Cinemark’s domestic box office over-indexed the North American industry box office by 80 basis points, growing 7.7%, for the full-year 2018. This follows our industry outperformance of 90, 100 and 200 basis points respectively for the prior three years and nine out of the past ten yearsCOVID-19 pandemic on our Company and industry and found it necessary to temporarily modify for 2021 the historical performance metrics that drove the compensation structure for our annual cash bonus and performance awards under our long-term equity incentive grants. The Committee concluded that these temporary modifications were needed because of industry outperformance. We also reported the fourth consecutive year ofall-time highs, including records in allcontinued uncertainty regarding the timing of our revenue categories, that collectively delivered total worldwide revenues of more than $3.2 billion, exceedingindustry’s recovery, the $3 billion mark for the first time.
As compared to 2017, our performance in 2018 in these key financial metrics were as follows:
| | | | | | |
Worldwide (in millions) | | 2018 (in millions) | | 2017 (in millions) | | % Change |
Attendance | | 282.1 | | 277.0 | | 1.8% |
Revenue | | | | | | |
Admissions | | $ 1,834.2 | | $ 1,795.0 | | 2.2% |
Concessions | | $ 1,108.8 | | $ 1,038.8 | | 6.7% |
Total | | $ 3,221.8 | | $ 2,991.6 | | 7.7% |
Net Income* | | $ 213.8 | | $ 264.2 | | (19%) |
Adjusted EBITDA** | | $ 781.5 | | $ 723.8 | | 8.0% |
*Net income for 2018 included $19.2 million ofnon-cash tax expense associated withtrue-ups to 2017’s provisional tax reform calculations, as well as recently issued tax guidance that modified the treatment of foreign tax credit utilizationchanging business environment and resulted in an increased valuation allowance for the Company. Additionally, net income for 2017 included a $45 million tax benefit driven by a reduction of net deferred income tax liabilitiesconsumer behavior as a result of the 2017 tax reform legislationpandemic and the
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uncertain long-term impact of streaming initiatives launched by major studios. The Compensation Committee found that
went into effect during December 2017.**Adjusted EBITDA is anon-GAAP financial measure. Thisnon-GAAP financial measure should be considered in addition to, but not as a substitute for, the information provided in accordance with GAAP. A reconciliation of Net Income to Adjusted EBITDA is provided in footnote 19modifications to the Company’s 2018 Form10-K.
executive compensation structure were necessary to properly compensate, reward and retain our executives during these unprecedented times. See Executive Compensation Components – Cash Bonus and Impact of COVID-19 on Long-Term Incentive Compensation.
Company Performance Over the5-Year PeriodThe following tabular and graphical presentations below demonstrate our growth in certain key performance metrics over the past five years.
| | | | | | | | | | | | |
Year | | Revenue | | | Net Income Attributable to Cinemark Holdings, Inc. | | | Adjusted EBITDA | |
2014 | | $ | 2,627.0 | | | $ | 192.6 | | | $ | 615.7 | |
2015 | | $ | 2,852.6 | | | $ | 216.9 | | | $ | 682.8 | |
2016 | | $ | 2,918.8 | | | $ | 255.1 | | | $ | 706.1 | |
2017 | | $ | 2,991.6 | | | $ | 264.2 | | | $ | 723.8 | |
2018 | | $ | 3,221.8 | | | $ | 213.8 | | | $ | 781.5 | |
Our Performance As Compared to Our Peers
We also compare our performance to our direct competitors that were publicly-held during the fiscal year (“Theatre Peers”) in terms of Total Stockholder Return (“TSR”). Our Theatre Peers for 2018 included the
two currently publicly-held companies in our industry, namely, AMC Entertainment Holdings, Inc. (AMC) and IMAX Corporation (IMAX). For purposes of evaluating our fiscal performance over five years as of FYE 2018, we believe that this peer group is an appropriate benchmark since we directly competed with these companies for business and investor capital. While we do also compete with Regal Cinemas (“Regal”), we do not have comparable TSR metrics for Regal given its acquisition by Cineworld, a privately-held company, as of December 2017.
As compared to our Theatre Peers, our TSR (with dividends reinvested) for theone-year and cumulative three-year and cumulative five-year periods as of FYE 2018 has been as follows:
| | | | | | | | | | | | |
| | | 1 Yr. TSR | | | | 3 Yr. TSR | | | | 5 Yr. TSR | |
Cinemark | | | 6.5% | | | | 17.6% | | | | 24.0% | |
AMC | | | (4.4%) | | | | (33.2%) | | | | (15.2%) | |
IMAX | | | (18.7%) | | | | (47.1%) | | | | (36.2%) | |
S&P 500 | | | (4.4%) | | | | 30.4% | | | | 50.3% | |
Theatre Peers | | | (13.1%) | | | | (41.5%) | | | | (27.6%) | |
Our cumulative total return between FYE 2013 and FYE 2018 as compared to our Theatre Peers and S&P 500 is presented below:
DESIGN OF OUR EXECUTIVE COMPENSATION PROGRAM
COMPONENTS
The design of our executive compensation program is consistent with the compensation structure used in our industry:
performance-based cash bonus;
bonuslong-term equity incentive awards;
Base salary and benefits are the only fixed components of our compensation program. Cash bonus and long-term equity incentive awards are the variable/performance-based components of our compensation. We believe the allocation between fixed and variable/performance-based components offers a competitive compensation program while appropriately mitigating risk.
The following chart summarizes the components and associated objectives of our executive compensation program:
| | | | | | | | |
Pay Element | | Objective | | Performance Metric and
Payment |
Fixed
| | Annual | | Base Salary | | Retain executive talent and recognize individual’s role and responsibilities
| | Individual performance and market competitiveness |
Variable
| | Annual | | Cash Bonus | | Achieve annual goals measured in terms of Company and individual performance | | Adjusted EBITDA
@Threshold, Target, Maximum
Pro rata payment
|
| Long-Term
| | Restricted Stock | | Retain executive talent and align with long-term interest of stockholders | | Increase in value of Common Stock
Time-based; 4 year vesting
|
| Restricted Stock Units | | Validate Company’s investment decisions and ensure alignment with long-term value creation | | Based on achievement of IRR hurdles
Pro rata payment based on 2 year Company performance + 2 year service
|
ANALYSIS OF THE DESIGN OF OUR EXECUTIVE COMPENSATION PROGRAM
Tenet 1 - Retention
standard benefits
limited perks
Base salary
is the fixed component of our
compensation program is designed to attract and retain key talent. Base salaries are determined byexecutive’s annual cash compensation. In determining base salary, the Compensation Committee
based on a varietytakes into consideration the scope and nature of
factors including:Nature and responsibilityjob responsibilities of the position;
Expertise of the executive and competitionNEO, market competitiveness relative to executives in the market for the executive’s services;
Potential for driving the Company’s success in the future;
Peer Group compensation data;
Performance reviews andsimilar positions at comparable group companies, merit increase recommendations of the CEO based on performance reviews (except in the case of his own compensation);, and
Other judgmental other objective factors deemed relevant by the Compensation Committee
Committee. The Compensation Committee has not adopted any formula with specific weightings assigned to any of the factors above. The Company has employment agreements with each NEO according to which the Compensation Committee annually reviews the base salaries, which can be increased but not decreased.
In February 2018,2021, as part of the annual compensation review process, the Compensation Committee considered factors relevantapproved a grant of restricted stock, in lieu of a cash base salary increase for each of Messrs. Gamble, Cavalier and Fernandes, equal to determining an executive’s compensation such2.75% of their 2021 base salary. The grants were made in March 2021 with a one-year vest period. Messrs. Mitchell and Zoradi each elected to forgo any increase to their base salary.
On July 28, 2021, Mark Zoradi announced that he would retire as
Chief Executive Officer. In connection with this announcement, we announced that the
NEO’s role in Company management, performance in prior years, leadership in implementing Company’s strategic goalsBoard had appointed Sean Gamble as President and
initiativesChief Operating Officer and
contribution to the Company’s overall business. In addition, our compensation consultant, Pearl Meyer, provided to the Compensation Committee the appropriate market data for comparison. Based on such review, the Compensation Committee adjusted the base salaries of the NEOs for 2018 to better align with market and to address the evolving role of certain executives in Company management.that he would continue as Chief Financial Officer until his replacement was identified. Other executive promotions were also made. Mr. Gamble’s base salary
had a higher adjustment thanwas increased from $660,000 to $750,000 which was prorated for the
other NEOsperiod of time in 2021 Mr. Gamble served as President. Michael Cavalier was appointed as Executive Vice President General Counsel and Business Affairs. Mr. Cavalier’s salary was also increased from $555,012 to
reflect his additional responsibilities upon appointment as our COO in January 2018. The base salaries$575,000 which was also prorated for
2018 and the
changes from 2017 were as follows: | | | | | | |
Name | | Base Salary | | | Change from 2017 |
Lee Roy Mitchell
| | $ | 975,000 | | | Up by 1.7% |
Mark Zoradi
| | $ | 1,000,000 | | | Up by 5.3% |
Sean Gamble
| | $ | 600,000 | | | Up by 14.3% |
Michael Cavalier
| | $ | 525,000 | | | Up by 5.0% |
Valmir Fernandes
| | $ | 525,000 | | | Up by 3.3% |
Tenet 2: Performance
remainder of 2021.
Our cash bonus structure is designed to motivate and reward bonus eligible employees for the successful completion of our annual performance goals. Typically, Company performance is measured against a pre-established target for the year. During 2021, the COVID-19 pandemic continued to have a significant adverse impact on the Company’s performance, making it impracticable for the Compensation Committee to effectively establish a purely financial performance metric for the annual cash bonus. The Compensation Committee determined that annual cash bonuses would be awarded based upon its discretion relying upon alternative performance objectives, which fell into the following general categories:
financials/operations
performance relative to competitors
strategic initiatives
talent management
The participants toin our cash bonus program an opportunity to earn aare rewarded based on individual targets expressed as percentages of base salary. For the NEOs, the target cash bonus tied to annual Company performance, measured againstpre-established performance metricsopportunities for 2021 were set for the year by 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 achievement of the Company’s goals. As discussed later, beginning 2018, payout is also subject to an upward or downward adjustment based on the individual’s ABO rating which ties individual contribution to Company performance. The cash bonus related goals are established in writing by the Compensation Committee withby taking into consideration a variety of factors including peer group data, CEO’s recommendation (except for his own) and the expectation that attainment of these
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. To the extent indicated below, shares beneficially owned by a person include shares of which the person has the right to acquire beneficial ownership within 60 days of the Record Date and are included 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
117,019,540121,178,172 shares of Common Stock outstanding as of the Record Date. As of the Record Date, there were
499963 holders of record of our Common Stock.
| | | | | | | | |
| | Beneficial Ownership | |
Names of Beneficial Owner | | Number(1) | | | Percentage | |
5% Stockholders | | | | | | | | |
FMR LLC(2) | | | 8,689,108 | | | | 7.4% | |
BlackRock, Inc.(3) | | | 12,314,087 | | | | 10.5% | |
The Vanguard Group(4) | | | 9,776,961 | | | | 8.4% | |
Victory Capital Management Inc.(5) | | | 6,299,802 | | | | 5.4% | |
Directors and NEOs | | | | | | | | |
Lee Roy Mitchell(6) | | | 9,822,845 | | | | 8.4% | |
Mark Zoradi(7) | | | 172,730 | | | | * | |
Sean Gamble(8) | | | 70,839 | | | | * | |
Michael Cavalier(9) | | | 151,141 | | | | * | |
Valmir Fernandes(10) | | | 82,066 | | | | * | |
Darcy Antonellis(11) | | | 11,707 | | | | * | |
Benjamin Chereskin(12) | | | 72,457 | | | | * | |
Nancy Loewe(13) | | | 6,033 | | | | * | |
Steven Rosenberg(13) | | | 51,427 | | | | * | |
Enrique Senior(13) | | | 57,538 | | | | * | |
Carlos Sepulveda(13) | | | 38,433 | | | | * | |
Raymond Syufy(13) | | | 18,386 | | | | * | |
Nina Vaca(13) | | | 13,430 | | | | * | |
Executive Officers & Directors as a Group (14 persons)(14) | | | 10,569,032 | | | | 9.0% | |
| 5% Stockholders | | | | | | | |
| BlackRock, Inc.(2) | | | 18,383,465 | | | 15% | |
| The Vanguard Group(3) | | | 12,262,651 | | | 10% | |
| Wellington Management Group LLP(4) | | | 10,617,030 | | | 9% | |
| Directors and NEOs | | | | | | | |
| Lee Roy Mitchell(5) | | | 10,176,031 | | | 8 % | |
| Sean Gamble(6) | | | 307,109 | | | * | |
| Michael Cavalier(7) | | | 264,688 | | | * | |
| Valmir Fernandes(8) | | | 152,707 | | | * | |
| Melissa Thomas (9) | | | 187,548 | | | * | |
| Darcy Antonellis(10) | | | 27,426 | | | * | |
| Benjamin Chereskin(11) | | | 88,176 | | | * | |
| Nancy Loewe(12) | | | 21,752 | | | * | |
| Steven Rosenberg(12) | | | 67,146 | | | * | |
| Enrique Senior(12) | | | 73,257 | | | * | |
| Carlos Sepulveda(12) | | | 54,152 | | | * | |
| Raymond Syufy(12) | | | 34,105 | | | * | |
| Nina Vaca(12) | | | 29,149 | | | * | |
| Mark Zoradi | | | 505,564 | | | * | |
| Executive Officers & Directors as a Group (15 persons)(13) | | | 12,011,793 | | | 10 % | |
(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 FMR LLC on February 13, 2019. FMR LLC may be deemed to beneficially own the reported shares of Common Stock and has filed Schedule 13G/A as the parent holding company or control person on behalf of its subsidiaries FIAM LLC, Fidelity Institutional Asset Management Trust Company, FIDELITY MANAGEMENT & RESEARCH COMPANY, FMR CO., INC (beneficially owns 5% or greater of the reported shares. FMR LLC has (i) sole voting power over 1,046,039 shares and (ii) sole dispositive power over 8,689,108 shares.
|
Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC. Neither FMR LLC nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act (“Fidelity Funds”) advised by Fidelity Management & Research Company (“FMR Co”), a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds’ Boards of Trustees. Fidelity Management & Research Company carries out the voting of the shares under written guidelines established by the Fidelity Funds’ Boards of Trustees. The address of FMR LLC is 245 Summer Street, Boston, MA 02210.
(3) | Based upon statements in Schedule 13G/A filed by BlackRock, Inc. on January 24, 2019.27, 2022, Black Rock, Inc. may be deemed to beneficially own the reported shares of Common Stock and has filed Schedule 13G/A as the parent holding company or control person on behalf of its subsidiaries BlackRock Life Limited, BlackRock International Limited, BlackRock Advisors, LLC, Aperio Group, LLC, BlackRock (Netherlands) B.V., BlackRock Fund Advisors (beneficially owns 5% or greater of the reported shares), BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Japan Co., Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock Asset Management Deutschland AG, BlackRock (Luxembourg) S.A., BlackRock Investment Management (Australia) Limited, and BlackRock Advisors (UK) Limited and BlackRock Fund Managers Ltd. BlackRock, Inc. reported (i) sole voting power over 11,682,479 shares and (ii) sole dispositive power over 12,314,087 shares. The address of Black Rock Inc. is 55 East 52nd Street, New York, NY 10055. |
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BlackRock Investment Management (Australia) Limited and BlackRock Fund Managers Ltd. The reporting entity has the sole power to vote or direct the vote of 17,901,784 shares and sole power to dispose or direct the disposition of 18,383,465 shares. The address of Black Rock, Inc. is 55 East 52nd Street, New York, NY 10055.
(3)
| Based upon statements in Schedule 13G/A filed by The Vanguard Group on February 11, 2019. TheMarch 9, 2022, the Vanguard Group may be deemed to beneficially own the reported shares of Common Stock and has filed Schedule 13G/A as the parent holding company or control person on behalf of its wholly-owned subsidiaries Vanguard Fiduciary Trust Company (beneficial owner of 40,674 shares) and Vanguard Investments Australia, Ltd. (beneficial owner of 24,456 shares).an investment advisor. The Vanguard Group has (i) sole voting power over 52,405 shares (ii) shared voting power over 12,725184,726 shares (iii)(ii) shared dispositive power over 53,399276,949 shares, and (iv)(iii) sole dispositive power over 9,723,56211,985,702 shares. The address of The Vanguard Group is 100 Vanguard Boulevard, Malvern, PA 19355. |
(5)(4)
| Based upon statements in Schedule 13G13G/A filed by Victory CapitalWellington Management Inc.Group LLP Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP and Wellington Management Company LLP (collectively the Welling Entities) on February 1, 2019. Victory Capital4, 2022. Each of Wellington Management Inc.Group, Wellington Group, as investment advisers, has (i) soleshared voting power over 6,005,046with respect to 10,617,030 shares. Wellington Management Company LLP, as a parent holding company or control person, has shared voting power with respect to 8,955,539 shares and (ii) soleshared dispositive power over 6,299,802with respect to 10,258,063 shares. The address of Victory CapitalWellington Entities is c/o Wellington Management Inc. is 4900 Tiedeman Road, 4th Floor, Brooklyn, OH 44144.Company LLP, 280 Congress Street Boston, MA 02210. |
(6)(5)
| Includes 4,419,095 shares of Common Stock owned by The Mitchell Special Trust. Mr. Mitchell is theco-trustee of The Mitchell Special Trust. Mr. Mitchell expressly disclaims beneficial ownership of all shares held by The Mitchell Special Trust. |
(7)(6)
| Includes 185,687, shares of restricted stock and 40,481 certified performance-based awards. shares. |
(8)(7)
| Includes 88,901 shares of restricted stock and 28,777 certified performance-based awards. shares. |
(9)(8)
| Includes 72,015 shares of restricted stock and 23,979 certified performance-based awards. shares. |
(10)(9)
| Includes 187,548 shares of restricted stock and certified performance-based awards. stock. |
(11)(10)
| Includes 3,2115,203 shares of restricted stock. |
(12)(11)
| Includes 3,2115,203 shares of restricted 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. |
(13)(12)
| Includes 3,2115,203 shares of restricted stock. |
(14)(13)
| The numbers reported do not include 512,356415,262 shares of Common Stock underlying performance awards granted to the NEOs. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCETABLE OF CONTENTS
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 2018.
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 presents any proposed related party transaction at an Audit Committee meeting for review and approval. If management becomes aware of a proposed or existing related party transaction that has not been presented orpre-approved by the Audit Committee, management shall promptly notify the Chair of the Audit Committee who shall submit such related party transaction to the full Audit Committee for approval or ratification. If management, in consultation with our CEO, CFO or General Counsel determines that it is not practicable to wait until the next Audit Committee meeting, the Chair of the Audit Committee has been delegated the authority to review, consider and approve any such transaction. In such event, the Chair 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 partnership interests in Laredo and is 100% owned by Mr. David Roberts, Lee Roy Mitchell’sson-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 approximately $0.65 million of management fee revenue from Laredo during 2018. 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 Capital 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 asin-flight food and beverage services and passenger ground transportation incurred during a trip. For 2018, the aggregate amounts paid to the Operator for the use of the aircraft was approximately $0.068 million.
Pinstack
We hold events for our employees and their families at Pinstack, an entertainment facility, at various times throughout the year. Pinstack is majority-owned by Mr. Mitchell and his wife, Tandy Mitchell. During 2018, the Company paid Pinstack approximately $0.005 million for various employee events.
FE Concepts, LLC
During April 2018, the Company, through its wholly-owned indirect subsidiary CNMK Texas Properties, LLC, formed a joint venture, FE Concepts, LLC (“FE Concepts”), with AWSR Investments, LLC (“AWSR”), an entity owned by Lee Roy Mitchell and Tandy Mitchell. FE Concepts will develop and operate a family entertainment center that offers bowling, gaming, movies and other amenities. The Company and AWSR each invested approximately $20.0 million and each have a 50% voting interest in FE Concepts.
Family Relationships
Tandy Mitchell, wife of Mr. Mitchell, is an employee of the Company. Ms. Mitchell received total compensation of $193,972 for 2018. Such amount included base salary of $132,000, cash bonus of $38,379 and all other compensation of $23,593.
Walter Hebert III,brother-in-law of Mr. Mitchell, is the Executive Vice President – Purchasing of the Company. Mr. Hebert received total compensation of $558,709 for 2018. Such amount included base salary of $275,000, cash bonus of $127,930, grant date fair market value of restricted stock of $100,000 and all other compensation of $55,779.
Century Theatres
Our subsidiary, Century Theatres, currently leases 14 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. All of the leases except one have fixed minimum annual rent. The remaining lease has rent based upon a specified percentage of gross sales as defined in the lease with no minimum annual rent. For 2018, we paid approximately $23.5 million in rent for these leases.
Director Nomination Agreement
Under the Director Nomination Agreement which we entered into on April 9, 2007 with certain of our then current stockholders, the Mitchell Investors (as defined in the Director Nomination Agreement) have a right to designate two nominees to the Board and Messrs. Mitchell (Class III) and Sepulveda (Class II) are its current nominees.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
How do I attend the Company’s Annual Meeting?
The in-person meeting will be held at 3800 Dallas Parkway, Plano, Texas 75093. To be admitted to the virtual Annual Meeting, stockholders as of the Record Date must use the following link: www.virtualshareholdermeeting.com/CNK2022 and enter the 16-digit control number found on the proxy card or the voting instruction form. By logging into the website, stockholders as of the Record Date will be able to vote shares electronically on all items to be considered at the Annual Meeting. Those without a 16-digit control number will be admitted to the virtual-only Annual Meeting as guests, but guests will not have the ability to vote or otherwise participate.
What different methods can I use to vote?
If you are a stockholder of record, you may vote:
via the Internet – Visit www.proxyvote.com. Follow the instructions shown on your proxy card. Votes submitted via the internet must be received by 10:59 p.m. CDT, on May 18, 2022;
by telephone — Follow the instructions shown on your proxy card. Votes submitted by telephone must be received by 10:59 p.m. CDT, on May 18, 2022;
by mail — Complete, sign, date and return the proxy card in the postage paid envelope provided so that it is received before the Annual Meeting;
by attending the virtual Annual Meeting — Follow the instructions on the Annual Meeting Website. You will need the control number printed on your proxy card. Submitting your proxy, whether via the Internet, by telephone, or by mail will not affect your right to vote at the virtual Annual Meeting should you decide to attend the Annual Meeting; or
in person by attending the Annual Meeting
If you are a beneficial holder, you may vote:
by instructing your bank or broker — You should receive a voting instruction form from your bank or broker which you must return with your voting instructions to have your shares voted. If you have not received a voting instruction form from your bank or broker, you may contact it directly to provide instructions on how you wish to vote. Voting instructions submitted by beneficial owners to brokers or banks via the Internet or by telephone must be received by 10:59 p.m. CDT, on May 18, 2022; or
by attending the virtual Annual Meeting — If you wish to vote at the Annual Meeting, you will need to obtain a voting instruction form from your broker or bank that holds your shares of record. You will need the control number printed on your voting instruction form in order to vote at the Annual Meeting.
How can I submit questions for the Annual Meeting?
If you have questions pertaining to the business of the Annual Meeting, you must submit it in advance of the Annual Meeting. Questions may be submitted by visiting www.proxyvote.com beginning approximately two (2) weeks prior to the Annual Meeting and until 10:59 p.m. CDT, on Tuesday, May 17, 2022. You should have a proxy card or voting instruction form in hand when you access the website and follow the instructions. In order to allow us to answer questions from as many stockholders as possible during the Annual Meeting, each stockholder will be limited to one (1) question. Questions pertinent to the business of the Annual Meeting will be read aloud and answered during the Annual Meeting, subject to time constraints. Appropriate questions received that are not addressed at the Annual Meeting due to time constraints will be posted, along with our responses, in the Investor Relations section of our website as soon as practical after the conclusion of the Annual Meeting.
If there are matters of individual concern to a stockholder and not of general concern to all stockholders, or questions that are not directly related to the business of the Annual Meeting, you can contact us separately after the Annual Meeting through our Investor Relations website at https://ir.cinemark.com.
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What can I do if I need technical assistance during the Annual Meeting?
If you encounter any difficulties accessing or participating in the virtual Annual Meeting, please call the technical support number that will be posted on the Annual Meeting website log-in page.
Will the list of stockholders as of the Record Date be available during the Annual Meeting?
During the Annual Meeting, the list of our stockholders of record entitled to vote at the Annual Meeting will be available for viewing at www.virtualshareholdermeeting.com/CNK2022. Stockholders requesting access to the list will be asked to provide the 16-digit control number found on their proxy card or voting instruction form previously mailed or made available to stockholders entitled to vote at the Annual Meeting.
What is the purpose of holding the Annual Meeting? We are holding the Annual Meeting to elect three Class III directors, to ratify the selection of Deloitte & Touche as our independent registered public accounting firm for 20192022 and to hold anon-binding, advisory vote on our 2018
2021 executive compensation. Our Governance Committee has recommended the nominees to our Board and our Board has nominated the nominees. Our Audit Committee has appointed Deloitte & Touche as our independent registered public accounting firm for 20192022 and our Board has ratified the appointment. Our Compensation Committee has approved our executive compensation program and the Board has recommended that the stockholders vote to approve our executive compensation program and the compensation paid to our NEOs for 2018.2021. If any other matters requiring a stockholder vote properly come before the Annual Meeting, those stockholders present at the Annual Meeting and the proxies who have been appointed by our stockholders will vote as they deem appropriate.
How many shares must be present to hold the Annual Meeting?
A majority of our outstanding Common Stock as of the Record Date must be present at the Annual Meeting in order to hold the Annual Meeting and conduct business. This is called a “quorum.” Unless a quorum is present at the Annual Meeting, no action may be taken at the Annual Meeting except the adjournment thereof until a later time. Shares are counted as present at the Annual Meeting if you are present and vote in person at the Annual Meeting, if you vote via the Internet, by telephone, by mail or if you are represented by proxy. Abstentions and “brokernon-votes” are counted as present for the purpose of determining the presence of a quorum.
Who can vote at the Annual Meeting?
Only stockholders as of the Record Date can vote at the Annual Meeting.
What is the Record Date and what does it mean? The Record Date for the Annual Meeting is March 28, 2019.25, 2022. The Record Date is established by the Board as required by Delaware law. Owners of record of Common Stock at the close of business on the Record Date are entitled to:
(a)
| (a) | receive notice of the Annual Meeting, and |
(b)
| (b) | vote at the Annual Meeting and any adjournments or postponements of the Annual Meeting. |
What is the difference between a stockholder of record and a stockholder who holds stock in street name? (a)
Stockholder of record: If your shares are registered in your name with our transfer agent, EQ, you are a stockholder of record with respect to those shares. As a stockholder of record, you have the right to grant your proxy directly to us or to a third party, or to vote
in person at the Annual Meeting.
(b)
Stockholder who holds stock in street name: If your shares are held by a broker or by a bank, you are considered to be a beneficial owner of shares held in “street name.” As the beneficial owner, you have the right to direct your broker or bank on how to vote and you are also invited to attend the Annual Meeting. Your broker or bank, as the record holder of your shares, may exercise discretionary authority to vote on “routine” items but may not vote on
“non-routine” “non-routine” items without your instructions.
Your broker or bank has enclosed or provided voting instructions for you to use in directing the broker or bank on how to vote your shares. Since a beneficial owner in street name is not the stockholder of record, you may not vote these shares in person at the Annual Meeting unless you obtain a “legal proxy”voting instruction form from the broker or bank that holds your shares, giving you the right to vote the shares at the Annual Meeting.
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How many shares must be present to hold the Annual Meeting?
A majority of our outstanding Common Stock as of the Record Date must be present at the Annual Meeting in order to hold the Annual Meeting and conduct business. This is called a “quorum.” Unless a quorum is present at the Annual Meeting, no action may be taken at the Annual Meeting except the adjournment thereof until a later time. Shares are counted as present at the Annual Meeting if you are present and vote at the Annual Meeting, if you vote via the Internet, by telephone, by mail or if you are represented by proxy. Abstentions and “broker non-votes” are counted as present for the purpose of determining the presence of a quorum.
What is a proxy and how does the proxy process operate? A proxy is your legal designation of another person to vote the stock you own. The person(s) that you designate to vote your shares are called proxies. Sean GambleMelissa Thomas and Michael Cavalier of the Company have been designated as proxies for the Annual Meeting. The term “proxy” also refers to the written document or “proxy card” that you sign to authorize those persons to vote your shares.
By executing the proxy card, you authorize the above-named individuals to act as your proxies to vote your shares in the manner that you specify. The proxy voting mechanism is vitally important to us. In order for us to obtain the necessary stockholder approval of items, a quorum of stockholders must be present or represented at the Annual Meeting in person or by proxy. Since few stockholders can spend the time or money to attend stockholder meetings in person, voting by proxy is necessary to obtain a quorum and complete the stockholder vote.Meeting. It is important that you attend the Annual Meeting in person or grant a proxy to vote your shares to assure a quorum is obtained so corporate business can be transacted. If a quorum is not obtained, we must postpone the Annual Meeting and solicit additional proxies, which is an expensive and time-consuming process.
What different methods can I use to vote?
If you are a stockholder of record, you may vote:
| • | | via the Internet or by telephone — Follow the instructions shown on your proxy card. Votes submitted via the Internet or by telephone must be received by 10:59 p.m. CST, on May 22, 2019;
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| • | | by mail — Complete, sign, date and return the proxy card in the postage paid envelope provided so that it is received before the Annual Meeting; or
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| • | | in person — We will pass out written ballots at the Annual Meeting and you may deliver your completed and signed proxy card in person. Submitting your proxy or voting instructions, whether via the Internet, by telephone, or by mail will not affect your right to vote in person should you decide to attend the Annual Meeting.
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If you are a beneficial holder, you may vote:
| • | | by instructing your bank or broker — You should receive a voting instruction form from your bank or broker which you must return with your voting instructions to have your shares voted. If you have not received a voting instruction form from your bank or broker, you may contact it directly to provide instructions on how you wish to vote. Voting instructions submitted by beneficial owners to brokers or banks via the Internet or by telephone must be received by 10:59 p.m. CST, on May 22, 2019; or
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| • | | in person — If you wish to vote in person at the Annual Meeting, you will need to obtain a “legal proxy” form from your broker or bank that holds your shares of record and you must bring that document to the Annual Meeting.
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What happens if I do not give specific voting instructions?
If you are a stockholder of record and you do not:
indicate when voting on the Internet or by telephone that you wish to vote as recommended by the Board; or
sign and return a proxy card without specific voting instructions.
instructionsthen the proxy holders will vote your shares in the manner recommended by the Board on all matters presented in this proxy statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the Annual Meeting.
If you own shares through a broker or bank and do not provide voting instructions to the broker or bank holding your shares, your broker or bank may represent your shares at the Annual Meeting for purposes of obtaining a quorum. Your broker or bank may vote your shares in its discretion on some “routine matters”. However, with respect to“non-routine “non-routine matters”, your broker or bank may not vote your shares for you. With respect to these“non-routine “non-routine matters”, the aggregate number of unvoted shares is reported as “brokernon-votes”.
Which ballot measures are called “routine” or“non-routine” “non-routine”?
Under the broker voting rules of the NYSE, the ratification of the appointment of Deloitte & Touche as the Company’s independent registered public accounting firm for 20192022 (Item 2) is considered a “routine” matter, and the election of directors (Item 1) and thenon-binding, annual advisory vote on executive compensation (Item 3) are considered“non-routine” “non-routine” matters.
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What are brokernon-votes? If you are the beneficial owner of shares and hold stock in street name, then the broker or bank, as the stockholder of record of the shares, may exercise discretionary authority to vote your shares with respect to “routine” matters but will not be permitted to vote the shares with respect to
“non-routine” “non-routine” matters. A broker
non-vote occurs when you do not provide the broker with voting instructions on
“non-routine” “non-routine” matters for shares owned by you but held in the name of the broker. For such matters, the broker cannot vote and reports the number of such shares as “broker
non-votes.”
How are brokernon-votes and abstentions treated? Broker
non-votes and abstentions are counted for purposes of determining a quorum. However, see below with regards to the effect of broker
non-votes and abstentions on approval of specific agenda items.
What is the voting requirement for each of the items?
Approval of Item 1: Directors are elected by a plurality voting standard. The nominees who receive the highest number of affirmative votes cast by the stockholders present in personat the Annual Meeting or represented by proxy at the meeting and entitled to vote thereon will be elected. However, pursuant to the Corporate Governance Guidelines, in an uncontested election, any director nominee who receives a greater number of votes “withheld” from his or her election than votes “for” such election shall promptly tender his or her resignation from the Board and all committees of the Board following certification of the results of the Annual Meeting by the Inspector of Elections. The Governance Committee (excluding the nominee in question if applicable) would then consider the resignation offer and make a recommendation to the Board as to whether to accept or reject the resignation. Within 90 days following certification of the results of the annual meeting of stockholders, the Board will make a final determination as to whether to accept the director’s resignation. The Board’s explanation of its decision would then be promptly disclosed in a Form8-K filed with the SEC. If a director’s resignation is rejected by the Board, the director will continue to serve for the remainder of the term for which he or she was elected and until his or her successor is duly elected, except in the event of his or her earlier death, resignation or removal. The Board believes that this voting policy promotes stability in governance by ensuring that a full slate of carefully chosen and nominated members is elected at each annual meeting of stockholders. Under the plurality voting standard, votes marked “For” will be counted in favor of the director nominee and broker
non-votes and votes withheld shall have no effect on the election of a director. However, a withheld vote could affect whether such director would be required to submit a resignation as discussed above.
Approval of Item 2: The ratification of the appointment of Deloitte & Touche requires the affirmative vote of a majority of the votes cast by stockholders present in personat the Annual Meeting or represented by proxy at the Annual Meeting and entitled to vote thereon. Since this proposalitem is considered a “routine” matter, brokernon-votes do not arise as brokers and banks may exercise discretionary authority to vote your shares. Abstentions will have no effect on this item.
Approval of Item 3: The advisory vote on executive compensation requires the affirmative vote of a majority of the votes cast by stockholders present in personat the Annual Meeting or represented by proxy at the Annual Meeting and entitled to vote thereon.
How does the Board recommend I vote?
The Board recommends that you vote:
FOR each of the nominees for director;
FORthe ratification of the appointment of Deloitte & Touche as our independent registered public accounting firm for 2019;2022; and
FOR thenon-binding, advisory vote to approve our executive compensation.
Can I revoke or change my proxy? If so, how? You may revoke your proxy and change your vote at any time before the proxy has been exercised at the Annual Meeting.
If you are a stockholder of record, your proxy can be revoked in several ways:
by timely delivery of a written revocation to the Company Secretary;
by submitting another valid proxy bearing a later date; or
by attending the Annual Meeting in person and giving the inspector of election notice that you intend to votevoting your shares in person.
shares.If your shares are held in street name, you must contact your broker or bank in order to revoke your proxy. Generally, you may change your vote by submitting new voting instructions to your broker or bank, or, by attending the Annual Meeting and voting
in person if you have obtained a
“legal proxy”voting instruction form from your broker or bank giving you the right to vote your shares.
The Company has retained a representative of Broadridge Financial Solutions to serve as an independent tabulator to receive and tabulate the proxies and as an independent inspector of election to certify the results.
Who pays for this proxy solicitation? The Company pays for this proxy solicitation. We use Broadridge Financial Solutions, its agents, and brokers to distribute all proxy materials to our stockholders. We will pay them a fee and reimburse any expenses they incur in making the distribution. Proxies will be solicited on behalf of the Board by mail, telephone, other electronic means or in person. We have retained D.F. King & Co., Inc., 48 Wall Street, 22nd Floor, New York, NY 10005, to assist with the solicitation for a fee of $7,500 plus reasonable
out-of-pocket expenses.
How can I obtain copies of the Company’s annual reports and other available information about the Company?Company?
Stockholders may receive a copy of the Company’s
20182021 Annual Report Form
10-K at no charge by sending a written request to Michael Cavalier, Company Secretary at Cinemark Holdings, Inc., 3900 Dallas Parkway,
Suite 500, Plano, Texas 75093.
You can also visit our Website at
http:https://investors.cinemark.comir.cinemark.com/ for free access to our corporate governance documents and our filings with the SEC, including our annual reports on Form10-K, quarterly reports on Form10-Q, current reports on Form8-K, and all amendments to these reports. The SEC also maintains a Website that contains reports, proxy and information statements and other information regarding registrants. The address of the Website iswww.sec.govwww.sec.gov.
DEADLINE FOR STOCKHOLDER PROPOSALS FOR THE
20202023 ANNUAL MEETING
For inclusion in the proxy statement: Stockholder proposals requested to be included in our proxy statement and form of proxy for our 20202023 annual meeting must be in writing and received by the end of business on December 10, 20197, 2022 at our principal executive offices at 3900 Dallas Parkway, Suite 500, Plano, Texas 75093, Attention: Michael Cavalier, Company Secretary.
Director nomination or proposal for annual meeting: Stockholders who wish to nominate a director or introduce a proposal not included in the proxy statement at the 20202023 annual meeting may do so in accordance with ourby-laws. These procedures provide that stockholders who wish to bring a proper subject of business before the 20202023 annual meeting must do so by a written notice in proper written form to the Company Secretary received not less than 90 and not more than120than 120 days before the anniversary date of the Annual Meeting and must be accompanied by certainthe information about the stockholder making the proposal, in accordance with ourby-laws.listed below. As a result, any notice given by or on behalf of a stockholder pursuant to these provisions of ourby-laws (and not pursuant to the SEC’s Rule14a-8(e)) must be received no earlier than January 24, 2020,19, 2023, and no later than February 23, 202018, 2023, at our principal executive offices at 3900 Dallas Parkway, Suite 500, Plano, Texas 75093, Attention: Michael Cavalier, Company Secretary.
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To recommend a candidate for election to the Board for the 2023 annual meeting of stockholders, a stockholder must submit the following information to the Company Secretary:
the name and address of the stockholder of record and the beneficial owner, if any, on whose behalf the proposal is made;
a representation that the stockholder intends to appear in person or by proxy at the annual meeting;
the number of shares of capital stock of the Company that are owned beneficially and of record by such stockholder and the beneficial owner, if any, on whose behalf the nomination is made;
a description of any arrangements or understandings between the stockholder, the beneficial owner and the nominee or any other person (including their names);
the name, age, business and residential addresses of the stockholder’s nominee for director;
the biographical and other information about the nominee (including the number of shares of capital stock of the Company owned beneficially or of record by the nominee) that would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission; and
the nominee’s consent to be named as a nominee and to serve on the Board.
A copy of our
by-laws is available from the Company Secretary upon written request.
ADDITIONAL INFORMATION
Stockholders Sharing a Common Address
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
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.
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.
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AVAILABILITY OF REPORT ON FORM
10-KUpon your written request, we will provide to you a complimentary copy of our 20182021 Annual Report Form10-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 20182021 Annual Report Form10-K may also be obtained at the website maintained by the SEC atwww.sec.govor by visiting our website at http: https://investors.cinemark.comir.cinemark.com/ and clicking on the “Financials” tab and then on “SEC Filings.”
If you have questions or need more information about the Annual Meeting, write to:
3900 Dallas Parkway
Suite 500
Attention: Michael Cavalier, Secretary
By Order of the Board of Directors,
Michael Cavalier
Executive Vice President – General Counsel &
Business Affairs
April 6, 2022
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ANNEX A: SUPPLEMENTAL FINANCIAL INFORMATION NON-GAAP MEASURES
Reconciliation of Adjusted EBITDA
(unaudited, in thousands)
| Net income | | | $ 6,482 | | | $ (422,215) | |
| Add (deduct): | | | | | | | |
| Income taxes | | | (1,233) | | | (16,802) | |
| Interest expense | | | 38,122 | | | 149,702 | |
| Loss on extinguishment of debt | | | — | | | 6,527 | |
| Other expense, net (a) | | | 8,163 | | | 43,532 | |
| Cash distributions from other equity investees(b) | | | — | | | 156 | |
| Depreciation and amortization | | | 63,075 | | | 265,363 | |
| Impairment of long-lived assets | | | 13,365 | | | 20,845 | |
| Restructuring costs | | | 287 | | | (1,001) | |
| (Gain) loss on disposal of assets and other | | | 142 | | | 8,025 | |
| Non-cash rent | | | (1,648) | | | (3,451) | |
| Share based awards compensation expense(c) | | | 12,682 | | | 29,271 | |
| Adjusted EBITDA | | | $139,437 | | | $79,952 | |
By Order(a)
| Includes interest income, foreign currency exchange loss, equity in loss of affiliates and interest expense - NCM and excludes distributions from NCM and distributions from DCIP. |
(b)
| Includes cash distributions received from equity investees, other than those from DCIP noted above, that were recorded as a reduction of the Board of Directors,respective investment balances. These distributions are reported entirely within the U.S. operating segment. |
(c)
|
Michael Cavalier
|
Executive Vice President – General CounselNon-cash expense included in general and Secretaryadministrative expenses. |
April 8, 2019
66 | | |
CINEMARK HOLDINGS, INC.
3900 Dallas Parkway, Suite 500
Plano, Texas 75093 | | VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ET on 05/22/2019. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET on 05/22/2019. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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| | KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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| | | | | | | For
| | | | Withhold
| | | | For All
| | | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.
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| | | | The Board of Directors recommends you vote FOR the following:
| | | | | All | | | | All | | | | Except | | | | | | | | | | | | | |
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| | | 1. | | Election of Class III Directors: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Nominees
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| | | 01) | | Benjamin Chereskin 02) Lee Roy Mitchell 03) Raymond Syufy | | | | | | | | | | | | |
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| | | The Board of Directors recommends you vote FOR proposals 2 and 3.
| | | | For | | Against | | | Abstain | | | |
| | | 2. | | Ratification of the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for 2019. | | | | ☐ | | ☐ | | | ☐ | | | |
| | | 3. | | Non-binding, annual advisory vote on executive compensation. | | | | ☐
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| | | NOTE:Transact such other business as may properly come before the meeting or any adjournment thereof.
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| | | For address change/comments, mark here.
(see reverse for instructions)
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| | | Please sign exactly as your name(s) appears on Proxy. If held in joint tenancy, all persons should sign. Trustees, administrator, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy.
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| | | | Signature [PLEASE SIGN WITHIN BOX] | | Date | | | | | | | | | | | | | | Signature (Joint Owners) | | Date | | | | | | | | | | |
Thursday, May 23, 2019TABLE OF CONTENTS
9:00 a.m. CDT
3800 Dallas Parkway
Plano, Texas 75093
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Form 10-K, Notice & Proxy Statement is/are available atwww.proxyvote.com
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| | CINEMARK HOLDINGS, INC.
ANNUAL MEETING OF STOCKHOLDERS
Thursday, May 23, 2019
9:00 a.m. CDT
Cinemark Holdings, Inc.
3800 Dallas Parkway,
Plano, Texas 75093
This proxy is solicited by the Board of Directors for use at the Annual Meeting on May 23, 2019
The shares of stock you hold in your account as of the Record Date will be voted as you specify on the reverse side.
If no choice is specified, the proxy will be voted “FOR” all Items.
By signing the proxy, you revoke all prior proxies and appoint 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.
Address change/comments:
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| (If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.) |
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| | See reverse for voting instructions.
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