TABLE OF CONTENTS
Principles of Corporate Governance
The Board has adopted Corporate Governance Guidelines and other corporate governance policies that relate to the composition, structure, interaction and operation of the Board. Copies of our Corporate Governance Guidelines and other governance documents can be found under the “Governance” tab of the “Investors” section of our website at
https://ir.cinemark.com. You should review these documents for a complete understanding of these corporate governance practices, but some of the key elements of our strong governance policies and practices are summarized here:
| • Independent Board
The majority of our Board is independent with 7 out of 11 members deemed to be independent pursuant to the rules of the SEC and the NYSE. All standing committees are fully independent
• Separate Chairman and CEO
The positions of the Chairman and the CEO are separated
• Plurality Voting with Resignation
In uncontested director elections, directors not receiving a majority vote must submit a resignation letter; the Governance Committee will consider the resignation and make a recommendation to the Board
• Annual Assessments
The Governance Committee conducts in person annual Board and committee assessments to ensure that our Board and its committees are performing effectively. The assessments and feedback are coordinated with an independent third party to ensure a robust evaluation process.
• No Term Limits or Mandatory Retirement Age
The Board does not have a term limit or mandatory retirement age. This is to allow directors to develop, over a period of time, greater insight into the Company and its operations. This approach has been particularly beneficial during the ongoing crisis of the COVID-19 pandemic
• Executive Sessions
The Lead Director holds regular executive sessions of non-management and independent directors | | | • Board Meeting Attendance
All directors regularly attend all Board and committee meetings and attended more than 75% of all meetings in 2021
• Equity Grants
To align with stockholder interests, all non-employee directors receive annual restricted stock grants with a fair market value of $115,000
• No Pledging or Hedging in Company Stock
Our Insider Trading Policy prohibits directors, executive officers and certain employees from pledging or hedging Company stock
• Stock Ownership Guidelines
Our directors and certain executive officers are required to hold our Common Stock as follows:
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| Position
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Stock Ownership Requirement
Environmental and Social Practices
Our corporate social responsibility practices are designed to help position Cinemark as an employer of choice to our existing and prospective employees, and a partner of choice in our communities. Though our practices are broad and will evolve over time, we are focused on our people and culture, community outreach and support, and environmental stewardship. Highlights of our current practices in these areas are described below.
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| Non-employee Directors | | 6 | |
5x value of director’s annual cash retainer
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| CEO | | 7 | |
5x annual base salary
2020 Compensation Highlights
Executive compensation for 2020 was set by the Compensation Committee in February 2020, following Cinemark’s outstanding performance in 2019, and prior to the onset of the global COVID-19 pandemic. Given high stockholder approval, at 96%, for the Company’s executive compensation practices in 2019, the Compensation Committee did not make any material changes to the 2020 executive compensation program.
The business environment for our Company drastically changed beginning mid-March, with the start of the pandemic. This resulted in significant impacts on our employee compensation. Some of these effects were management implemented Company-wide base salary reductions for a period of approximately five months, negation of the Company’s short-term and long-term performance-metrics which determine a significant portion of our executive compensation payout, loss of dividend income, and loss of cash value of equity awarded as long-term incentive compensation due to depressed price of our Common Stock. Many members of our management team, including the named executive officers (NEOs), opted for deeper base salary reductions than was mandatory, with Messrs. Mitchell and Zoradi declining any base salary for four and two months, respectively. Our Board members also opted to forego their cash retainers for the second quarter of 2020.
Despite the very challenging business conditions, Cinemark has demonstrated its resilience, innovation and leadership as it has navigated the pandemic. This was possible because of the strategic leadership of our executive management team and incredible hard work and dedication of all our employees. Therefore, to retain, motivate and reward employees for their performance, and to compensate them for their lost pay, the Compensation Committee made certain discretion-based decisions through the year regarding equity awards and vesting. These decisions followed our core compensation objectives and served the best interests of the stockholders by ensuring the Company’s continued operation, innovation, and strategic leadership, while preserving cash and leveraging certain compensation related relief provided by COVID related legislation. The table below tracks the compensation events of 2020, both as part of the annual process as well as those driven by the pandemic.
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Month | All Executive Vice Presidents | All Employees | | CEO/Other NEOs/Board Members2x annual base salary | | | | |
|
Annual Grant |
February | | • Compensation Committee approves, for the first-time, time-based restricted stock grant with 1-year vest for all corporate employees and certain field employees, who are not typically covered under the annual grant cycle (E20 Grant); annual grant cycle for covered employees, domestic and international | | • Compensation Committee approves 2020 base salary, cash bonus percentage, target incentive compensation for all NEOs as part of the annual grant cycle
• Compensation Committee sets Company targets for performance metrics for 2020
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IMPACT OF COVID-19 ON EMPLOYEE COMPENSATION |
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Base Salary Reductions To |
April
| | • 20% for furloughed employees
• 65% for non-furloughed corporate employees
• 50% for all theatre general managers
• 30% to 60% for international employees, percentage varying by country
• Retention grant of time-based restricted stock for small group of critical employees | | • 50% for all NEOs
• Board members opt to receive no cash retainer for the second quarter
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Further Base Salary Reductions To |
May
| | • 50% for non-furloughed corporate employees
• Annual grant cycle for theatre general managers
| | • 0% for Messrs. Mitchell and Zoradi
• 20% for Messrs. Gamble, Cavalier and Fernandes |
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6 | | | | |
Month | | All Employees | | CEO/Other NEOs/Board Members |
|
Base Salary Reinstatement To |
July
| | • 80% for non-furloughed corporate employees and field employees
| | • 0% for Mr. Mitchell
• 50% for Mr. Zoradi
• 80% for Messrs. Gamble, Cavalier and Fernandes
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|
Retention Equity Grant |
August
| | Compensation Committee approves retention grants of restricted stock for all corporate employees, including NEOs (except Mr. Mitchell), and theatre general managers. The restricted stock will vest 100% in August 2022
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Base Salary Reinstatement To |
September
| | • All corporate employees, including all NEOs, and theatre general managers of theatres reopened, begin receiving 100% of base salary; theatre general managers of theatres closed continue to receive 80% of base salary; international employees begin receiving 80% of base salary
• Board members begin receiving cash retainers
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Bonus Equity Grant and Accelerated Vests |
December
| | • Compensation Committee approves a stock bonus grant to all domestic bonus-eligible employees. The shares of Common Stock vested immediately for all grantees except for the NEOs for whom the shares are restricted with a one-year vest.
• Compensation Committee approves accelerated vest of restricted stock scheduled to vest on or before May 2021, and certified performance shares due to vest in February 2021 for all domestic grantees
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The following summary provides an overview of the executive compensation set in February 2020 and how it was impacted by the compensation decisions described above. For a detailed discussion, see Compensation Discussion and Analysis (CD&A) beginning on page 35.
Base Salary:
As part of the annual compensation review, in February 2020, the Compensation Committee made adjustments to the base salaries of the NEOs on the basis of factors such as market comparables, executive’s evolving role within the Company and retention. The 2020 base salaries that were set in February 2020 including the variances from 2019, and the actual base salaries earned by the NEOs during 2020 with the percentage loss due to the COVID related pay reductions were as follows:
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Name | | 2020 Base Salary Approved | | | Change from 2019 | | Actual Base Salary Received Due to COVID-19 | | | Percentage Loss of Base Salary Due to Base Salary Reductions |
Lee Roy Mitchell | | $ | 1,020,001 | | | Up 2.0% | | $ | 589,394 | | | 42.2% |
Mark Zoradi | | $ | 1,100,000 | | | No change | | $ | 740,632 | | | 32.7% |
Sean Gamble | | $ | 660,000 | | | Up 5.6% | | $ | 521,435 | | | 21.0% |
Michael Cavalier | | $ | 555,012 | | | Up 2.8% | | $ | 440,923 | | | 20.6% |
Valmir Fernandes | | $ | 555,012 | | | Up 2.8% | | $ | 441,633 | | | 20.4% |
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Cash Bonus:
In February 2020, the Compensation Committee set (i) the target cash bonus opportunity as a percentage of base salary for each NEO and (ii) the Adjusted EBITDA target for purposes of determining the annual cash bonus payout for the year.
Mr. Gamble’s target opportunity was raised from 90% for 2019 to 100% for 2020 based on market norms, internal pay equity and his increased role and responsibilities within the Company. The cash bonus target opportunities for Messrs. Mitchell, Zoradi, Cavalier and Fernandes remained the same as 2019.
The Adjusted EBITDA targets for the cash bonus payouts were set at $542 million for domestic, $104 million for international and $646 million for worldwide results. Given the devastating impact of the COVID-19 pandemic on our Company, including circuit-wide closures both in the U.S. as well as in Latin America for a significant part of the year, the Company could not meet the Adjusted EBITDA targets. Consequently, at year-end the Compensation Committee did not approve any cash bonus payouts for 2020. However, the Compensation Committee made discretion-based equity awards equal in value to a certain percentage of the bonus-eligible employee’s cash bonus target (Bonus Equity Grant). See discussion under Discretion-based Incentive Awards Due to the Impact of COVID-19 for details regarding the Bonus Equity Grant.
The individual targets (as a percentage of base salary) for 2020 and 2019, expected target cash bonus for the year as set in February 2020 for each NEO, and the actual cash bonus earned for 2020 by each NEO was as follows:
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Name | | Target Cash Bonus (Percentage of Base Salary) | | Expected Target Cash Bonus for 2020 | | | Actual Cash Bonus Received | |
| 2020 | | 2019 |
Lee Roy Mitchell | | 100% | | 100% | | $ | 1,020,001 | | | $ | 0 | |
Mark Zoradi | | 125% | | 125% | | $ | 1,375,000 | | | $ | 0 | |
Sean Gamble | | 100% | | 90% | | $ | 660,000 | | | $ | 0 | |
Michael Cavalier | | 90% | | 90% | | $ | 499,511 | | | $ | 0 | |
Valmir Fernandes | | 90% | | 90% | | $ | 499,511 | | | $ | 0 | |
Long-term Incentive Compensation:
Consistent with our compensation philosophy of driving performance, in February 2020, the Compensation Committee raised the target values of the long-term equity incentive compensation for Messrs. Zoradi and Gamble. These calibrations were deemed appropriate based on market comparables and the roles of these executives as the principal architects and drivers of the Company’s strategic growth.
The split between performance-based and time-based awards remained the same as in 2019 for all NEOs.
The target values of the long-term equity compensation for each of the NEOs for 2020 as compared to 2019 and the split between the performance-based and time-based awards were as follows:
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Name | | Target Long-term Equity (Percentage of Base Salary) | | Split Between Performance-based and Time-based Awards |
| 2020 | | 2019 | | | | |
Lee Roy Mitchell | | N/A | | N/A | | | | N/A | | | | | N/A | |
Mark Zoradi | | 400% | | 275% | | | | 75% | | | | | 25% | |
Sean Gamble | | 180% | | 175% | | | | 60% | | | | | 40% | |
Michael Cavalier | | 150% | | 150% | | | | 60% | | | | | 40% | |
Valmir Fernandes | | 125% | | 125% | | | | 60% | | | | | 40% | |
Discretion-based Incentive Awards Due to the Impact of COVID-19:
The Company’s business performance metrics for 2020 were severely impacted, beyond predictability or control, by the COVID-19 pandemic. However, the Company demonstrated its resilience and leadership through exceptional organization, strategic planning and execution of operational efficiencies and business innovations that allowed it to
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evolve and persevere in an unpredictable, ever-changing environment. To ensure the Company’s continued performance and recovery during uncertain and challenging business conditions, the Compensation Committee made certain discretion-based equity related decisions for purposes of employee retention, motivation and reward for performance, dedication and their hard work during the pandemic. These discretion-based decisions allowed the Company to appropriately address the above needs while preserving cash and leveraging certain compensation related relief provided by COVID related legislation. None of the discretion-based decisions were exclusive to the NEOs but were applicable to larger groups of employees based on the nature of the grant.
The discretion-based compensation decisions were as follows:
Retention Equity Grant: In April, the Compensation Committee approved time-based restricted stock grants to a small group of critical employees who management believed were essential to manage the sudden business crisis brought about by the pandemic. The NEOs did not receive any retention grant in April.
In August, the Compensation Committee again reviewed employee retention concerns with management in light of significant loss of cash compensation due to salary reductions over approximately five months, potential loss of cash bonus payout for the year for bonus-eligible employees, reduction in the value of our Common Stock due to depressed stock price and the loss of dividend income. To address concerns regarding the prolonged and continued impact of COVID-19 on the industry and the Company, the Compensation Committee deemed it to be in the Company’s best interest to review certain options to address the base salary loss of all employees without impacting the Company’s cash reserves. Based on this review, the Compensation Committee determined that it would be prudent to utilize time-based restricted stock as an effective retention tool (Retention Equity Grant). All corporate employees, including the NEOs, and theatre general managers received Retention Equity Grants. The values of the Retention Equity Grants were calculated using base pay multipliers corresponding to the pay grades of the employees. Mr. Mitchell did not receive any Retention Equity Grant.
The Retention Equity Grants will vest 100% in August 2022. The respective loss in pay and the estimated fair market value of the Retention Equity Grant for each NEO was as follows:
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Name | | Loss in Pay Amount | | Fair Market Value of Restricted Shares @Grant Date |
| | |
Lee Roy Mitchell | | N/A | | N/A |
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Mark Zoradi | | $ 359,368 | | $ 329,997 |
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Sean Gamble | | $ 138,565 | | $ 138,596 |
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Michael Cavalier | | $ 114,089 | | $ 116,549 |
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Valmir Fernandes | | $ 113,379 | | $ 116,549 |
See Grants of Plan-Based Awards in 2020 table on page 57 for the number of shares granted to the NEOs as Retention Equity Grant.
Bonus Equity Grant: In December, the Compensation Committee determined there would be no cash bonus payouts for 2020, but it also recognized the Company’s achievements, employee performance and strong management leadership in an exceptionally difficult business environment. Therefore, to compensate employees for their performance while preserving liquidity, the Compensation Committee made the discretion-based decision to award equity. The Compensation Committee believes the Bonus Equity Grant appropriately serves the long-term interests of the stockholders in terms of rewarding employees for performance and motivating and retaining them for continued value creation. Under the Bonus Equity Grant program, all bonus-eligible employees received immediately vested shares of Common Stock, the value of which was based, depending on the employee’s performance, within a range of 75% to 90% of the individual’s target cash bonus. The shares awarded under the Bonus Equity Grant vested immediately for all grantees, except for the NEOs for whom the award was time-based restricted stock grants with a vest period of one year from the date of grant. The NEOs (including Mr. Mitchell) received a stock grant with a fair market value of 75% of each of their respective target cash bonus opportunity. The Bonus Equity Grants for the NEOs will vest in December 2021.
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The projected cash bonus target set in February 2020 and the fair market value of the Bonus Equity Grant for each NEO was as follows:
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Name | | Projected Target Cash Bonus as Set In February 2020 | | Fair Market Value of Bonus Equity Grant @75% of Individual Target |
| | |
Lee Roy Mitchell | | $ 1,020,001 | | $ 764,998 |
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Mark Zoradi | | $ 1,375,000 | | $ 1,031,239 |
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Sean Gamble | | $ 660,000 | | $ 494,990 |
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Michael Cavalier | | $ 499,511 | | $ 374,618 |
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Valmir Fernandes | | $ 499,511 | | $ 374,618 |
See Grants of Plan-Based Awards in 2020 table on page 57 for the number of shares granted to the NEOs as Bonus Equity Grant.
Accelerated Vests: In December, in addition to the Bonus Equity Grant, the Compensation Committee decided to accelerate the vests of certain equity awards granted in 2017 and 2019. These accelerated vests were deemed to be in the best interest of the Company as they provided employees with an additional source of compensation at year-end which helped motivate and reward employees for their performance while conserving cash and allowing the Company to leverage certain compensation related relief provided by COVID related legislation. The accelerated vests were as follows:
| A. | All time-based restricted shares that were due to vest on or before May 2021, were accelerated to vest in December 2020. This decision impacted all employees, included those who received restricted shares for the first time in February 2020. See table on page 8. For the NEOs, these restricted shares were (i) the remaining 50% of the restricted shares granted in February 2017 and (ii) 50% of the restricted shares granted in February 2019.
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| B. | Performance-based restricted stock units granted in 2017 (2017 RSU) to all NEOs and certain other key employees, were also accelerated to vest in December 2020. The 2017 RSUs were certified by the Compensation Committee in February 2019 to vest at 96% of target and were due to vest in February 2021 after the satisfaction of the additional two-year service period.
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See Stock Option Exercises and Stock Vested in 2020 table on page 60 for number of shares of Common Stock realized upon vesting of all long-term incentive compensation during 2020. See Beneficial Ownership Table on page 68 for the total ownership numbers as of December 31, 2020.
Certification of the 2019 and 2020 performance-based awards: In February 2021, the Compensation Committee evaluated the impact of the pandemic on the Internal Rate of Return (IRR), the metric used to determine the vest of the performance-based equity compensation granted in February 2019 and 2020 (2019 and 2020 RSU Grants). Given the projected continuation of the macroeconomic conditions through 2021 and beyond, and the uncertain timing as to the recovery of our industry to a pre-COVID state, the Compensation Committee made a discretion-based decision to certify the vest of the 2019 and 2020 RSU Grants at target. See page 50 for a summary of other 2021 compensation related decisions.
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The Board is soliciting proxies in connection with the Annual Meeting (and any adjournment thereof) to be held
in person and virtually on May
20, 2021 19, 2022 at 9 a.m. CDT. The approximate date on which this proxy statement and the enclosed proxy are first being sent to stockholders is April 2, 2021.6, 2022.
SHARES OUTSTANDING AND VOTING RIGHTS
As of the Record Date, 119,539,989121,178,172 shares of common stock, par value $0.001 per share (Common Stock) of the Company were outstanding. The Common Stock constitutes the only class of voting securities of the Company. Only stockholders of record as of the Record Date are entitled to receive notice of, and to vote at, the Annual Meeting. Holders of Common Stock are entitled to one vote for each share so held.
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The majority of 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 terms of office of each class ending in successive years.
In December 2021 the Board expanded the size of the Board by one member effective as of January 1, 2022. The vacancy was filled by appointing Sean Gamble as a Class III director.
ITEM ONE — ELECTION OF
THREE CLASS
IIIII DIRECTORS
The terms of the current Class
IIIII directors,
Mme. AntonellisMessrs. Chereskin, Mitchell, Syufy and
Messrs. Sepulveda and ZoradiGamble expire at the Annual Meeting. All 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
Mme. AntonellisMessrs. Chereskin, Mitchell, Syufy and
Messrs. Sepulveda and ZoradiGamble has consented to be nominated for
election or re-election, as applicable, to the Board as a Class
IIIII director. If elected, they will serve on the Board for a three-year term expiring on the date of our
20242025 annual meeting of stockholders. At this time, we have no reason to believe that any 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.
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| CLASS III DIRECTOR NOMINEES
TERM EXPIRING 2025 | |
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CLASS II DIRECTOR NOMINEES
TERM EXPIRING 2024
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Darcy Antonellis
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Director Since: 2015 2004
Board Committees: Audit Compensation Committee; Strategic Long-Range Planning Committee
Other Public Company Boards: 1 | | | Skills and Qualifications • Current CEO and previous executive experience
• Critical technology and cybersecurity experience
• Accounting and financial management expertise
Other Current Board Experience
• Xperi
Previous Board Experience
• Not Applicable
| | Professional Highlights
Since January 2014, Ms. Antonellis has been the CEO of Vubiquity, Inc., a subsidiary of Amdocs Inc. (NASDAQ: DOX), a leading software, services provider to communications and media companies. 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.
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Carlos Sepulveda
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Director Since: 2007
Nominee of: Mitchell Investors
Board Committees: Audit Committee; Compensation Committee; Strategic Long-Range Planning Committee
Lead Director
Age: 63
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 May 2010, Mr. Sepulveda has been the Chairman of the board of directors of Triumph Bancorp, Inc. (Triumph Bancorp, NASDAQ: TBK), financial services company providing community banking, national lending and commercial finance. 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, from March 2004 until April 2013 and its Executive Vice President from 1993 until March 2004. 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.
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Mark Zoradi
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Director Since: 2015
Nominee of: Board
Board Committees: None
Age: 67
Other Public Company Boards: 1
| | Skills and Qualifications
• Veteran motion picture 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
Since August 2015, Mr. Zoradi has served as our CEO. 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.
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OUR BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
FOR
ELECTION OF EACH CLASS II NOMINEE
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| | CLASS III DIRECTORS
TERM EXPIRING 2022
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Benjamin Chereskin
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Director Since: 2004
Nominee of: Board
Board Committees: Compensation Committee; Strategic Long-Range Planning Committee (Chair)
Age: 62
Other Public Company 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 CorporationPrevious Board Experience
| | |
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. | |
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Nominee of: Mitchell Investors
Other Public Company Boards: 0 | | | Skills and Qualifications
• Depth of experience in the motion picturetheatrical exhibition industry • Long-term historic industry perspective • Leadership experience, including past memberships on public company boards Other Current Board Experience
• Not ApplicablePrevious Board Experience
• National CineMedia, Inc. | | |
Mr. Mitchell is the founder of the Company. He has served as 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. His depth of experience in the motion picturetheatrical exhibition industry has been invaluable to the Board. Additionally, Mr. Mitchell brings a long-term historic industry perspective and leadership experience to the Board. | |
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Ray Syufy
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Board Committees: Strategic Long-Range Planning Committee
Other Public Company Boards: None | | | Skills and Qualifications
• Deep knowledge of the motion picturetheatrical exhibition industry • Strategic planning expertise, particularly with respect to competition from other forms of entertainment • Real estate expertise
Other Current Board Experience
• Not ApplicablePrevious Board Experience
• Not Applicable | | |
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, 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. | |
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Director Since: 2022
Nominee of: Board
Board Committees: None
Age: 47
Other Public Company Boards: None | | 17 | 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 | |
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Nancy Loewe
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Board Committees: Audit Committee (Chair and Financial Expert); Governance Committee
Other Public Company Boards: 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 ApplicablePrevious Board Experience
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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-PresidentVice 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. | |
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Steven Rosenberg
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Board Committees: Governance Committee (Chair) ; Audit Committee
Other Public Company Boards: 1 | | | Skills and Qualifications
• Risk management, board governance and general management expertise • Accounting and financial management expertise Other Current Board Experience
• Texas Capital Bancshares, Inc. Previous Board Experience
• Not ApplicablePRGX Global, Inc. | | |
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. | |
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Enrique Senior
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Board Committees: Strategic Long-Range Planning Committee
Other Public Company Boards: 2 4 | | | Skills and Qualifications
• Extensive knowledge of film, media and entertainment, and beverage industries • Strong strategic planning and management expertise Other Current Board Experience
• Group Televisa S.A.B.;
• Femsa S.A. de C.V.
• Univision Communications
Previous Board Experience
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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 QVC Networks.other entertainment companies. | |
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Nina Vaca
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Board Committees: Governance Committee; Compensation Committee (Chair);
Other Public Company 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
Previous Board Experience
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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. | |
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| CLASS II DIRECTORS
TERM EXPIRING 2024 | |
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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.
This is an ongoing process through which the Board has added three new directors – Mmes. Antonellis and Loewe and Mr. Zoradi - since 2015. These directors have not only added to the Board’s portfolio of skills in finance, accounting, leadership experience and industry knowledge but have also particularly supplemented the experience in the information technology and cybersecurity areas.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. Based on the director qualifications discussed under Board Diversity and Director Qualifications, the Governance Committee’s goal is to maintain a mix of different viewpoints such that the Company benefits from the fresh perspectives brought by new directors and the institutional knowledge and industry insights of directors having longer experience on our Board. The Governance Committee’s policy regarding consideration of potential director nominees acknowledgesrecognizes 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. Mr.Messrs. Mitchell and Sepulveda is a nomineeare nominees of the Mitchell Investors. All candidates, including candidates recommended by stockholders, are evaluated on the basis of the same criteria. Stockholders who wish to recommend a candidate to the Governance Committee or submit nominees for election at the 20222023 annual meeting should follow the instructions on page 74.
63.
Lead Independent Director
Mr. Sepulveda serves as the Board’s Lead Independent Director (Lead Director). The Lead Director has the authority to preside at all meetings of the Board at which the Chairman is not present, including executive sessions of the
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non-management directors and has the authority to call meetings of the non-management directors. The Lead Director
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serves as principal liaison between the
non-management directors and Company management. In consultation with the Chairman and the CEO, the Lead Director approves meeting schedules,
and agendas and the information provided to the Board. If requested by stockholders and as appropriate, the Lead Director will also be available, as the Board’s liaison, for consultation and direct communication.
Separation of Chairman and CEO Roles
Although 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 CEO roles allows us to develop and implement corporate strategy that is consistent with the Board’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.
His in-depth knowledge of the motion picture industry for more than five decades and his long-standing relationships within the industry provide the Board an invaluable resource and leadership particularly in the area of strategic initiatives, including evaluating new diversification and growth opportunities.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 operating plan, and other corporate activities. These features, together with the 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.
ZoradiGamble separately bring to the table.
The majority of our Board is independent with 7 out of
1011 directors being independent.
We comply withOur Board has independently determined the independence of 7 directors taking into consideration the independence requirements of the New York Stock Exchange (NYSE) listing standards. The test for independence under the NYSE listing standards is whether the
directordirector:
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.
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The Board, in coordination with our Governance Committee, and assistance of the Company’s general counsel, followedevaluated the NYSE 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 members. On the basis of this review, the Board 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) Messrs. Mitchell and Syufy are not independent due to their transactions with the Company exceeding $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 qualify 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 satisfy 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.
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 whichregardless of the amount involved
exceeds $120,000.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
him or herthe 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.
We manage
theatres forone 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
$0.15$0.4 million of management fee revenue from Laredo during
2020.2021. 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
theatres.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.
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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. 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
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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
2020,2021, the aggregate amounts paid to
Copper Beech LLCthe Operator for the use of the aircraft was approximately
$10,000.$23,000.
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
management fees for providing film booking and equipment monitoring services for the facility. The Company recorded
$0.34$0.1 million of
management service fees during the year ended December 31,
2020.2021.
Walter Hebert III,
brother-in-law of Mr. Mitchell,
iswas the Executive Vice President – Purchasing of the
Company.Company through July 2021. Mr. Hebert received a total compensation of
$519,860$202,342.75 for
2020.2021. Such amount included base salary of
$244,624,$176,931, fair market value of annual restricted stock grant of
$114,980, cash value$123,597, a prorated portion of
retention granthis bonus of
$43,122, cash value of bonus equity of $86,240,$67,048, and all other compensation of
$30,894.Tandy Mitchell, wife of$25,412. Mr. Mitchell, participated inHebert and the voluntary workforce reduction program and is no longerCompany entered into a one-year Consultant Agreement commencing August 1, 2021 to ensure an employee oforderly transition. Under the Company. Ms. Mitchell’s compensation for 2020 was $145,875.
Consulting Agreement, Mr. Hebert received an additional $122,081 during 2021.
Our subsidiary, Century Theatres, currently leases
1413 theatres
and one parking facility from Syufy Enterprises or affiliates of Syufy
Enterprises.Enterprises, Inc. Raymond Syufy, one of our directors, is an officer of the general partner of Syufy
Enterprises.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
2020,2021, we paid approximately
$24$23.3 million in rent for these leases. Since 2019, we began providing digital equipment support to
drive-in theatres owned by Syufy
Enterprises.Enterprises, Inc. We recorded
$0$0.1 million of
management fees related to these services during
2020.2021.
Director Nomination Agreement
Under the Director Nomination Agreement
which we entered intodated 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 andBoard. 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.
To carry out its responsibilities and set the appropriate tone at the top, ourOur Board
is keenly focusedfocuses on its leadership structure, and the character, integrity, and qualifications of its members.
OurThe following matrix provides information regarding the members of our Board, including certain types of skills, experience and attributes possessed by our directors
have a proven record of accomplishment and an abilitywhich our Board believes are relevant to
exercise sound and independent judgment in a collegial manner.Our Boardour business. The matrix does not have a formal diversity policy. It broadlyencompass 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
our Companythe interests of the company and our stockholders. The following
presentation highlights some of thegraphics illustrates director diversity,
metrics of our Board.
In selecting board members, the Board takes into account, in addition to the core attributes, thebalanced tenure and range of talents, experience and expertise that are needed and would complement those that are currently represented on the Board. 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 our business.
ages.
18 | | |
| | Our directors complement each other in their mix of skills by bringing to the Board expertise and experience on the entertainment industry, capital markets, financial management, real estate, cybersecurity, technology, strategic planning and corporate governance. Additionally, in selecting Board members, our Governance Committee follows applicable regulations to ensure that our Board includes members who are independent, possess financial literacy and expertise, an understanding of risk management principles, policies, and practices, and can appropriately oversee and guide management.
|
Core Director Attributes
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High personal and professional ethics and integrity
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Strong business judgment
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Experience beneficial to the Company
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Proven leadership and management skills
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Broad training and experience at the policy-making level
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Dedicated—able to devote necessary time to oversight duties and represent stockholders’ interests
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Commitment to serve for a period of several years to develop knowledge about the Company
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The following chart summarizes the core competencies of each director.
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Skill/Experience Matrix |
Experience
| | Director |
| | | | | | | | | | |
| |
| | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | |
Financial Literacy
| | ✓ | | ✓ | | ✓ | | | | ✓ | | ✓ | | ✓ | | | | ✓ | | ✓ |
| | | | | | | | | | |
Financial Management/Corporate Finance
| | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ |
| | | | | | | | | | |
Accounting and Financial Oversight/Enterprise Risk Management
| | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | | | ✓ |
| | | | | | | | | | |
Corporate Governance
| | | | ✓ | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | |
| | | | | | | | | | |
CEO Experience
| | ✓ | | | | | | ✓ | | | | | | ✓ | | ✓ | | ✓ | | ✓ |
| | | | | | | | | | |
Non-CEO Executive Experience
| | | | ✓ | | ✓ | | | | ✓ | | ✓ | | | | | | | | ✓ |
| | | | | | | | | | |
Industry Knowledge
| | ✓ | | | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ |
| | | | | | | | | | |
Mergers and Acquisitions
| | | | ✓ | | ✓ | | ✓ | | | | ✓ | | | | | | | | |
| | | | | | | | | | |
Other Public Company Board Service
| | ✓ | | ✓ | | | | ✓ | | ✓ | | ✓ | | ✓ | | | | ✓ | | ✓ |
| | | | | | | | | | |
Leadership
| | ✓ | | ✓ | | | | ✓ | | ✓ | | | | ✓ | | ✓ | | ✓ | | ✓ |
| | | | | | | | | | |
Strategic Vision and Planning
| | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ |
| | | | | | | | | | |
Information Technology and Cybersecurity
| | ✓ | | | | | | | | | | | | | | | | ✓ | | |
BOARD
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Throughout
2020,2021, governance and risk management played a critical role in our response to the
COVID-19 pandemic. As we confronted the challenges
tofaced by our company and our industry
we implemented operational teamsdue to
oversee daily decision-making to ensure our actions remained consistent with our priorities and in compliance with government mandates.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
management by our executive
teamteam’s management of risks related to continuing business operations, industry
developments, financial controls, liquidity
profile, employee retention, health and safety
protocols and
ITinformation 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,
and the financial condition,
performance and
performance of the Company.environmental, social and governance responsibilities. The Board focuses its oversight on the most significant risks facing the Company and on the processes that
the Boardmanagement has established to identify, prioritize, assess, manage and mitigate those risks.
Annually, and if needed more frequently, the
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
managingassessing and
assessingmanaging the risks and implementing processes and controls to mitigate their effects on the Company.
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The Board’s leadership structure, with a Lead Director, separate Chairman and CEO, independent Board 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 as follows:
shown below: | | | | | | | | |
| | |
| |
Oversight of overall risks. Oversight of the Company’s risk management and risk
mitigation processes.program | | |
| | |
|
Oversees risks related to financial controls and
reporting, internal controls, ITtechnology and
cybersecurity, ethics and compliance | | |
Oversees risks related to compensation policies, practices incentive-related risksand succession planningincentive plans | | | GOVERNANCE COMMITTEEManages
Oversees risks associated with
governance structures, policies
and processes |
processes; succession planning | | |
| | |
| STRATEGIC PLANNING COMMITTEE
Oversees and advises on risks related to alternativemarco-business risks
strategic options and external developments | | |
Responsible for identification, assessment and
mitigation of enterprise-wide risks | |
During
2020,2021, the Board held
six (6)five meetings and took action by written consent on
four (4)six 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.
EightAll directors attended our virtual
20202021 Annual Meeting.
Pursuant to our Corporate Governance Guidelines and the rules of the NYSE, our non-management directors meet periodically in executive sessions with no Company personnel present. Our Corporate Governance Guidelines require separate sessions of the non-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 Director, Mr. Sepulveda. During
2020,2021, our
non-management directors met
fourfive times and our independent directors met once in executive sessions.
SUCCESSION PLANNING AND TALENT DEVELOPMENT Succession 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 board 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 Chief 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 compare potential external candidates with internal candidates. The board ultimately deciding on Sean Gamble as Mr. Zoradi’s successor. Mr. Zoradi worked closely with the 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
60%70% of our
institutional stockholder base. We
held meetingsmet with all that accepted our request, totaling
more than 20%approximately 35% of the total shares
outstanding.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
sustainability. Our corporate governance profile reflectstalent management. We place great emphasis on the
input of stockholdersfeedback we receive from our
outreach efforts. | | | | |
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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 directorsstockholders 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
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:promotions of a product or service;
expanded language throughout the proxy for clarity on governance;patently offensive material;included more diversity disclosure regarding gender 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.
OUR ENVIRONMENTAL AND SOCIAL PRACTICES
Sustainability Initiatives:
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. We have been recognized and awarded for our sustainability efforts and are currently listed on the EPA Green Power Partner National Top 100 list. Since 2019, through Virtual Power Purchase Agreements and Renewable Energy Credits earned via contracts in deregulated markets, we have been able to offset some racial composition of our annual electricity usage through renewable options. We also recycle at all eligible locationsBoard;
included commentary regarding succession planning and executive transition; and
elaborated on compensation changes made in
2019 diverted approximately 27% of our waste from landfills. Since 2012, we have recycled 60,000 tons of waste. In select locations, we also compost certain waste material. We have incorporated LED lighting in whole or in part in most theatres2021 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, 2020, we have three LEED certified theatres.Our Passion for People:
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 sessions for our leadership teams, theatre general managers and our employees at the Service Centre. To facilitate discussions regarding diversity and inclusion, we have arranged for external speakers to speak at our town halls. 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.
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2022.
The Company understands that continuous engagement with its 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 to keep our employees informed of the impact of the pandemic on our Company and our business, status of the industry and that of the theatre reopenings. It also promoted 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. We also conduct annual performance reviews 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 an open feedback culture.
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 selected charities.
CORPORATE 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 (Audit Committee Charter);
Second Amended and Restated Charter of the Governance Committee (Governance Committee Charter); and
First Amendment toSecond Amended and Restated Compensation Committee Charter (Compensation Committee Charter).; and
Strategic Planning Committee Charter.
Current copies of the above policies and guidelines are available publicly on our website at
https://ir.cinemark.com/ under the “Governance” tab.
CODE 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 at
https://ir.cinemark.com/ under the “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
threefour standing committees – Audit Committee, Compensation Committee,
Governance Committee and the
Governance Committee. In addition, the Board has the Strategic
Long-Range Planning Committee.
The Board has temporarily disbanded its New Ventures Committee given its focus on strategic planning. The current composition of each of the committees is set forth below:
| | | | | | | | |
Name | | Audit | | Compensation | | Governance | | Strategic Planning |
Darcy Antonellis | | Member | | | | | | Member |
Benjamin Chereskin | | | | Member | | | | Chair |
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 | | - | | - | | - | | - |
Number of Committee Meetings Held During 2020 | | 4 | | 6 | | 1 | | 3 |
Number of Decisions by Consent During 2020 | | 1 | | 2 | | 0 | | 0 |
| 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 | |
Effective February 11, 2021, the Governance Committee recommended, and the Board approved, Nancy Loewe as the
ChairmanChair 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
1811 and page
1413 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.
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 and non-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.
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The Audit Committee meets on a quarterly basis with Company management and Deloitte and& 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 and& 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. The Audit Committee is updated by Company management twice a year to monitor and evaluate
the cybersecurity
threatstrends and risks and the effectiveness of the Company’s controls to
address thosemitigate 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
ethicsanonymous whistleblower hotline, and
provides an annual summary
reports for various categories 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 of 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
2216 for further details on
the approval of related party transactions.
Approval of Audit and Non-Audit Services:
The Audit Committee approves all audit and permissible
non-audit services above a de-minimis threshold (including the fees and terms of the services) performed for the Company by Deloitte
and& Touche prior to the time that those services are commenced. The Audit Committee may, when it deems appropriate, form and delegate this authority to a
sub-committee consisting of one or more Audit Committee members, including the authority to grant
pre-approvals of audit and permitted
non-audit services. The decision of such
sub-committee is presented to the full Audit Committee at its next meeting. The Audit Committee
pre-approved all fees for
20202021 noted in the table below.
Fees Paid to Independent Registered Public Accounting Firm:
We paid the following fees (in thousands) to Deloitte
and& Touche and its affiliates for professional services rendered by them during
2021 and 2020,
respectively: | 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 2019, respectively: | | | | | | | | |
Fees | | 2020 | | | 2019 | |
Audit | | $ | 2,158.5 | | | $ | 2,056.9 | |
Audit Related | | $ | 179.7 | | | $ | 154.0 | |
Tax(1) | | $ | 86.8 | | | $ | 60.8 | |
Other | | $ | - | | | $ | - | |
Total | | $ | 2,425.0 | | | $ | 2,271.7 | |
(1) Fees primarily include transfer pricing studies and tax compliance services. | |
tax compliance services.
The Audit Committee has reviewed and discussed with management the Company’s audited financial statements for 2020.2021. We have discussed with Deloitte and& Touche the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (PCAOB) and the SEC. We have received the written disclosures and the letter from Deloitte and& Touche as required by the applicable requirements of the PCAOB regarding the independent