| ☐ | Preliminary Proxy Statement |
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| ☒ | Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material Pursuant to §240.14a-12. |
| ☒ | No fee required. |
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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| ☐ | Fee paid previously with preliminary materials. |
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LETTER FROM OUR PRESIDENT AND CEO | |||
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Dear Fellow Stockholders:
We welcome you to join us at our 2023 Annual Meeting of stockholders. This year our meeting will be conducted in person at 3800 Dallas Parkway, Plano, Texas 75093.
The theatrical exhibition industry continues to follow a positive recovery trajectory from the COVID-19 pandemic, driven by sustained consumer enthusiasm for movie-going, the value a theatrical release provides movie studios, and an increasing volume of content returning to the big screen. Over the past 2 years, moviegoer demand for an immersive, larger-than-life, in-theater experience has been validated time and time again as films have performed at levels comparable to, or better than, pre-pandemic expectations across all film genres, audience segments, and seasons of the year. Furthermore, despite the inflationary environment encountered during 2022, consumers upgraded to premium large formats and consumed food and beverage offerings at heightened levels, which demonstrates how our industry is more reliant upon film content than economic cycles. Consumers maintain a considerable appetite to get out of their homes and be entertained, and going to the movies is an affordable, localized, premium out-of-home entertainment option that remains an exceptional value.
As our industry continues to recover, Cinemark is stilluniquely situated to benefit on account of our consistent financial and operating discipline, as well as our ongoing focus on continuous improvement. Our full year 2022 results marked a strong companyseries of important milestones that underscore our company’s resilience, financial stability, and advantaged market position. For the full year, we generated $336 million of Adjusted EBITDA, which was up more than 320% versus 2021, and had an Adjusted EBITDA margin of 13.7%. Compared to 2019, our full year domestic box office recovery surpassed North American industry results by 500 basis points with both our domestic and international market share up more than 100 basis points. We also delivered $25 million of positive free cash flow, even after reimbursing substantially all our pandemic-related deferred rent.
Our out-performing 2022 results are the byproduct of our sustained focus on growing attendance through top-notch guest service, strategic pricing and promotional actions, sophisticated operating with balance, discipline, and consistency, while adaptingskilled execution by our entire global Cinemark team. We also continue to our current circumstances. This past year has only reinforced that Cinemark has tenacitymeaningfully benefit from the strategic perspective, strong industry knowledge, diverse backgrounds and perseverance in addition to an abilityexpertise, and a willingness to think quickly and move nimbly as we evolve in this unpredictable, ever-changing environment.
Cinemark was one of the first theatre chains to reopen and has largely been able to remain open, government restrictions notwithstanding. At the end of the year, approximately 75%sound judgement of our U.S. circuit was reopened, compared to 45% ofBoard. As we move forward, we firmly believe that the North American industry. Similarly, in Latin America, we had approximately 65%strength of our theatresteam, our favorable market position, and our industry-leading operating by year-end. Our theatre teams have been proficient in executingcapabilities will be key drivers of our enhanced cleaningongoing success and safety protocols, named The Cinemark Standard. Since we began reopening in June, we have consistently received 96% guest satisfaction scores on Cinemark protecting their healthshareholder value creation within a dynamic media and safety. Notably, we are continuing to more than cover our incremental variable costs associated with being open and are burning less cash with theatres open than we would if the theatres remained closed.
I am proud of the accomplishments the entire team has made over the past year. While we were well-positioned heading into the crisis, we have adapted the way we operate to become more efficient and navigate the current environment. We are working diligently to remain successful and further solidify our leadership position as theatrical moviegoing resurges, which will ultimately benefit long-term stockholder value.
Lastly, our Board’s active oversight has been integral to our success in helping management navigate the challenges and impacts associated with the COVID-19 pandemic with their diverse viewpoints, financial acumen and deep industry knowledge and expertise.entertainment landscape.
Thank you for your continued support, trust and investment in Cinemark. We look forward to your participation at our Annual Meeting.
YOUR VOTE IS VERY IMPORTANT TO US. Whether or not you plan to attend the Annual Meeting, I urge you to please cast your vote as soon as possible via the Internet,internet, telephone or mail.
| Sincerely, |
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| President and Chief Executive Officer |
* Cinemark has presented supplemental non-GAAP financial measures as part of this Proxy Statement. Definitions of each non-GAAP measure and a reconciliation of each non-GAAP financial measure with the most comparable GAAP measure are set forth in Annex A. The non-GAAP financial measures presented in this Proxy Statement should not be considered as alternative measures for the most directly-comparable GAAP financial measures. The non-GAAP financial measures presented in this Proxy Statement are used by management to monitor the financial performance of the business, inform business decision-making and forecast future results.
CINEMARK HOLDINGS, INC.
3900 Dallas Parkway
Plano, Texas 75093
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
April 2, 2021
Dear Stockholders:
Notice is hereby given that theof Annual Meeting
of the Company will be held on May 20, 2021 at 9:00 a.m. CDT, virtually, for the following purposes:Stockholders
DATE & TIME Thursday, May 18, 2023 9:00 a.m. Central Daylight Time
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Cinemark West Plano and XD Theater 3800 Dallas Parkway Plano, Texas 75093
| RECORD DATE All stockholders of record of the Company’s common stock at the close of business on March 24, 2023 are entitled to
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Voting Matters
Recommendation | Page Reference | |||
| 1 Election of Class I directors, each for a term that expires in 2026. | “FOR” each nominee | Page 3 | ||
2 Advisory vote to approve compensation of named executive officers for 2023. | “FOR” | Page 24 | ||
3 Ratification of the appointment of Deloitte independent registered public accounting firm for | “FOR” | Page 54 | ||
4 Advisory vote on the frequency of vote on our executive compensation program. | “FOR” 1 year | Page 55 | ||
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Only stockholders of record as of the close of business on March 25, 2021, set as the Record Date, will be entitled to notice of, and to vote at, the Annual Meeting.
For the second consecutive year, our Annual Meeting will be conducted exclusively online via live audio webcast. Conducting the meeting virtually will again ensure stockholder access in light of the expected ongoing uncertainty for large gatherings due to the COVID-19 pandemic. Stockholders will be afforded the same rights and opportunities to participate in a virtual-only Annual Meeting as they would at an in-person meeting.
To be admitted to the virtual-only Annual Meeting, stockholders as of the Record Date must use the following link: www.virtualshareholdermeeting.com/CNK2021 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. If a stockholder as of the Record Date has any question pertaining to the business of the Annual Meeting, it must be submitted in advance of the Annual Meeting by visiting www.proxyvote.com. Questions may be submitted until 10:59 p.m. CDT, on Tuesday, May 18, 2021. Stockholders must have their proxy cards or voting instruction forms in hand when accessing the website and follow the instructions. To allow us to respond at the Annual Meeting to the maximum number of stockholders, each stockholder will be limited to one question.
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.
BY ORDER OF THE BOARD OF DIRECTORS,
By order of the Board of Directors,
Michael Cavalier
Executive Vice President-GeneralEVP – General Counsel & Business Affairs,
Secretary
VOTING YOUR VOTE IS IMPORTANT TO US. Whether or notSHARES
Your vote is important! Please act as soon as possible to vote your shares, even if you plan to attend the Annual Meeting it is important thatin person. If you are a beneficial stockholder, your sharesbroker will NOT be represented. Therefore, we urge youable to promptly vote and submit your proxy in advance of the Annual Meeting. You can vote your shares viawith respect to the Internet, by telephone, or by signing, dating,election of directors and returningmost of the other matters presented during the meeting unless you have given your broker specific instructions to do so. Stockholders of record can vote by:
TELEPHONE
1.866.503.2691
INTERNET
www.proxypush.com/cnk
Return the signed proxy card or voting instruction form. To vote via the Internet or telephone, follow the instructions included in the proxy card or the voting instruction form. You can revoke a proxy at any time prior to its exercise at the Annual Meeting by following the instructions in the proxy statement.card.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting.
The proxy statement and the 2020 Form 10-K are available at
http://materials.proxyvote.com/17243V
OVERVIEW OF 2020 EXECUTIVE COMPENSATION SET IN FEBRUARY 2020
This summary highlights information contained elsewhere in this proxy statement and in our annual report on Form 10-K for the year ended December 31, 2020 (2020 Form 10-K) as filed with the Securities and Exchange Commission (SEC) on February 26, 2021 for Cinemark Holdings, Inc. (Company, Cinemark, we or us). You should read the proxy statement and the 2020 Form 10-K before voting.
Table of Contents
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VOTING ROADMAP
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CINEMARK PERFORMANCE DURING 2020
In February 2020, we reported our 2019 performance which was the fifth consecutive yearItem 1: Election of record results for Cinemark, with the North American industry celebrating the second-highest grossing box officeDirectors
We temporarily closed all our theatres in the U.S. and Latin America effective March 17, 2020 and March 18, 2020, respectively, to comply with COVID related government mandates. In conjunction with the temporary closure of our theatres, we implemented various cash preservation plans such as reducing personnel and base salary, limiting non-essential operating and capital expenditures, suspending our quarterly dividend, and negotiating modified timing and/or abatement of contractual payments with landlords and other major suppliers until theatre reopenings. While we had reopened 217 of our domestic theatres and 129 of our international theatres as of December 31, 2020, we continue to work aggressively to navigate through the crisis. The demonstrated leadership of our global management team, led by Chairman and founder Lee Roy Mitchell and Chief Executive Officer (CEO) Mark Zoradi, in steering the Company during the pandemic is a testament to the team’s abilities and effectiveness as faithful stewards of the Company.
Listed below are some of the highlights of our achievements during 2020:
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Item 1: Election of the ways Cinemark provided leadership during 2020 are provided below:Directors
Our strength and resiliency has been tested this past year, but we have demonstrated our ability to operate with discipline and focus. We have a distinguished and consistent track record of performance and outperformance relative to our industry peers. We benchmark our financial performance against AMC Entertainment Holdings, Inc. (AMC) and IMAX Corporation (IMAX), the two other publicly-held companies in our industry with whom we compete for investor capital. The following graph sets forth the cumulative total shareholder return (assuming reinvestment of dividends) to Cinemark’s stockholders during the five-year period ended December 31, 2020, as well as the corresponding returns on an overall stock market index (S&P 500) and in each of AMC and IMAX.
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BOARD LEADERSHIP AND SKILLS
Our board of directors (Board) leadership structure promotes balance between independence, diversity, engaged oversightDirector Skills and extensive industry and operational expertise all of which drive value for Cinemark stockholders.Qualifications.
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:
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Class I Directors Standing for Election
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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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. OurAnnual Board members also opted to forego their cash retainers for the second quarter of 2020.Assessment
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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The following summary provides an overviewIdentification and Consideration of New Nominee
Stockholder Communications with the executive compensation set in February 2020Board
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:
| Name | 2020 Base Salary Approved | Change from 2019 | Actual Base Salary Received Due to | Percentage Loss of Base
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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:
Name |
Target Cash Bonus (Percentage of Base Salary)
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Expected Target Cash |
Actual Cash | |||||||||
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| 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:
| Name | Target Long-term Equity (Percentage of Base Salary)
| Split Between Performance-based and Time-based Awards | ||||||||||||||||||
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| 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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45 | 46 | Potential Payments upon Termination by Company without cause or by Executive for Good Reason 48 | 49 | Potential Payments upon Termination due to Change in Control 49 | Potential Payments upon Termination due to Death or Disability 50 | Security Ownership of Certain Beneficial Owners and Management | 52 | 53 | Item 3: Ratification of Independent Registered Public Accounting Firm 54 | Item 4: Advisory vote on Certain Relationships and Related Party Transactions | 55 | General Information | 56 | Deadline for | 59 | Additional Information | 60 | 60 | 60 | 60 | Availability of
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ATTEND THE ANNUAL MEETING
You may attend the Annual Meeting in person or vote your shares electronically by logging into the website listed below using the control number included in your Notice of Internet Availability of Proxy Materials on your proxy card or on any additional voting instructions accompanying these proxy materials.
It is anticipated that the Notice will first be sent to stockholders and that this proxy statement and the form of proxy relating to our 2023 Annual Meeting will first be made available to stockholders on or about April 6, 2023. In accordance with SEC rules, the website www.proxydocs.com/cnk provides complete anonymity with respect to stockholders accessing the website.
LOGISTICS
| n | The Annual Meeting will begin at approximately 9:00 a.m. Central Daylight Time, with registration opening at 8:45 a.m., on Thursday, May 18, 2023. |
UNABLE TO ATTEND THE ANNUAL MEETING?
| n | A replay of the Annual Meeting will be available on our Investor Relations website at http://ir.cinemark.com |
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2022 Performance Highlights
Cinemark once again delivered financial and operating results in 2022 that out-performed our industry and peers. As a result of disciplined capital management, a sharp focus on revenue and margin generation, overall operating excellence, and an aggressive pursuit of process improvements, we materially advanced our financial strength and market position during the year, which remain strategic differentiators for our company.
Some of our significant accomplishments during the year include:
Effectively Navigated the Ongoing Impact of Pandemic
Successfully overcame significant content, supply chain, inflation, and labor pressures during the year
Materially advanced financial recovery achieving $336 million of Adjusted EBITDA, with a 13.7% Adjusted EBITDA margin, and $25 million of positive free cash flow
Strengthened balance sheet by repaying over $20 million of international debt and substantially all of our remaining pandemic-related deferred rent obligations
Maintained employee morale, receiving multiple accolades including Forbes’ “World’s Best Employers”
Reignited Theatrical Moviegoing
Advanced and utilized sophisticated marketing capabilities to attract audiences …expanded outreach across new channels, grew addressable consumer base and secured meaningful earned media
Increased new content sources, including music concerts, multi-cultural titles and faith-based films
Reverted Movie Club back to growth, reaching 1.1 million members, an increase of over 15% vs. 2019
Grew our XD premium large format percentage of box office by 350 basis points vs. 2019, and box office mix from DBOX motion seats increased 100 basis points
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Delivered all-time high worldwide concession per cap of $5.43, an increase of over 30% vs. 2019
Further Evolved Cinemark for the Future
Invested more than $110 million of capital expenditures to further enhance Cinemark circuit
Expanded premium amenities, adding 10 new XD screens, 28 DBOX auditoriums, 6 ScreenX tests, and 228 Cinionic laser projectors, maintaining Cinemark’s industry-leading position in technology
Enriched food and beverage offerings with new expanded options, Snacks-In-A-Tap online ordering enhancements, a roll-out of branded popcorn in select retail outlets, and a new Uber Eats partnership
Derived meaningful revenue and productivity benefits through new ecommerce strategies, show time scheduling tools, labor management improvements, varied cost initiatives, and portfolio optimization
Launched first phase of new Cinemark brand strategy
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Proxy Summary
This summary highlights information contained elsewhere in this proxy statement. You should read this entire proxy statement and our Annual Report on Form 10-K before voting.
| ITEM | Election of Directors | |||
| 1 | The Board recommends a vote FOR each director nominee. | See page 7 |
| Name and Principal Occupation | Independent | Age | Director Since | Committee Membership | ||||||||||||||
| AC | CC | NGC | SPC | |||||||||||||||
NOMINEES FOR CLASS I DIRECTOR 3-YEAR TERM |  | Nancy Loewe CFO CelLink |
✓ |
55 |
2017 | Chair
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 | Steven Rosenberg Manager SPR Ventures, Inc. |
✓ |
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2008 |
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 | Enrique Senior Managing Director Allen & Company LLC |
✓ |
79 |
2004 |
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| Nina Vaca Founder, Chairman and CEO The Pinnacle Group |
✓ |
51 |
2014 | Chair
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AC = Audit Committee CC = Compensation Committee NGC = Nominating & Corporate Governance Committee SPC = Strategic Planning Committee
ITEM 2 | Advisory Vote to Approve Compensation of Named Executive Officers | |||
| The Board recommends a vote FOR this proposal. | See page 25 |
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 strong near-term results. 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 long-term value by directly linking pay to Company and individual performance.
The mix of pay elements is designed to motivate our executives to drive the Company to develop and evolve by offering both short-term and long-term performance-based incentive awards that are both time and performance-based, each of which aligns the interests of our executives with our stockholders and encourages focus on longer-term growth. As illustrated above, a considerable portion of the compensation payable to our named executive officers is “pay-at-risk.”
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ITEM 3 | Ratification of Independent Registered Public Accounting Firm | |||
| The Board | See page 56 |
The Audit Committee evaluates the independence of Deloitte & Touche LLP and its fees annually. The Board believes the continued retention of Deloitte & Touche LLP is in the best interests of the Company and its stockholders.
This item affords stockholders the opportunity to cast an advisory vote on the frequency of which we should include a vote in our proxy materials for approval of our compensation program for the NEOs.
CORPORATE GOVERNANCE
Our Board is currently comprised of 11 members, and the majority is independent. 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 term of each class ending in successive years.
The term of the current Class I directors, Mmes. Loewe and Vaca and Messrs. Rosenberg and Senior, 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.
Mmes. Loewe and Vaca and Messrs. Rosenberg and Senior have consented to be nominated for re-election to the Board as a Class I director. If elected, they will serve on the Board for a three-year term expiring on the date of our 2026 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 unable or unwilling to serve if elected. However, should any of them become unavailable or unwilling to serve before the Annual Meeting, your proxy card authorizes us to vote for a replacement nominee if the Board names one.
 | The Board recommends a vote FOR each director nominee. |
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Kevin Mitchell | ||||
Director Since: 2023 Nominee of: Mitchell Investors Board Committees: None Age: 54 Other Public Company Boards: 0 | Skills and Qualifications • Previous CEO experience • Depth of experience in the motion picture industry • Real estate expertise Other Current Board Experience • Not Applicable Previous Board Experience • Not Applicable | Professional Highlights In 2007, Mr. Mitchell founded and served as CEO of ShowBiz Cinemas, a bowling, movies and family entertainment concept which he sold in December 2021. Mr. Mitchell has over 30 years of experience in the motion picture theater industry. Mr. Mitchell has also served as an advisory board member for the National Association of Theatre Owners and has
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Ray Syufy | ||||
Director Since: 2006 Nominee of: Board Board Committees: Strategic Planning Committee Age: 60 Other Public Company Boards: None | Skills and Qualifications • CEO • Deep knowledge of the motion picture 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. (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. Mr. Syufy resigned as an officer and director of Century Theatres upon the consummation of our acquisition 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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Sean Gamble | ||||
Director Since: 2022 Nominee of: Board Board Committees: None Age: 48 Other Public Company Boards: None | Skills and Qualifications • Veteran motion picture executive with distribution and exhibition 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. | ||
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Director Nomination Process
Annual Board Assessment
Members of the Governance Committee review and evaluate policies and practices with respect to the size, composition and functions of the Board annually. Our directors evaluate the Board’s and its standing committees’ performance annually to continually improve the Board’s effectiveness. The Governance Committee also oversees an evaluation process, which is an anonymous questionnaire that elicits information used to improve Board and committee effectiveness and assess the size and composition of the Board and its committees. The questionnaire and feedback is coordinated through an independent third-party to ensure a robust evaluation process. Feedback received from Board evaluations is discussed during Board and committee meetings.
Director Nomination Agreement
On May 19, 2022, Lee Roy Mitchell, our Founder, stepped down from his position as Executive Chairman of the Board, and his employment agreement was terminated. Mr. Mitchell continued as a member of our Board of Directors until February 15, 2023. Under the Director Nomination Agreement, which we entered into on April 9, 2007 with certain of our then stockholders, the Mitchell Investors (as defined in the Director Nomination Agreement) have a right to designate two nominees to the Board. Mr. Mitchell, as the representative of the Mitchell Investors, nominated his son, Kevin Mitchell, to fill the vacancy created by his resignation in accordance with the terms of the Director Nomination Agreement. Kevin Mitchell was appointed to fill this vacancy at the February 2023 Board meeting. Messrs. Mitchell and Sepulveda are nominees of the Mitchell Investors.
Identification and Consideration of New Nominees
The Governance Committee has not established any minimum qualifications that must be met by a director candidate or identified any set of specific quality or skills that it deems to be mandatory. The Governance Committee 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 will consider director candidates properly submitted by our stockholders. For more |
| ∎ | The Governance Committee will take steps necessary to evaluate a prospective nominee, including, if warranted, interviews of the prospective nominee by one or more Governance Committee or Board |
| ∎ | After completing this evaluation and |
| ∎ | The Board |
Board and Committee Structure
Independent Non-Executive Chairman
When Lee Roy Mitchell resigned as Executive Chairman of the Board, the Board unanimously appointed Carlos Sepulveda as the non-executive Chairman of the Board (“Chairman”). The Chairman has the authority to preside at all Board meetings, including executive sessions of the non-management directors and has the authority to call meetings of the directors. The Chairman serves as principal liaison between the non-management directors and Company management. In consultation with the CEO, the Chairman approves meeting schedules, agendas and the information provided to the Board. If requested by stockholders, and as appropriate, the Chairman is also available for consultation and direct communication as the Board’s liaison.
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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.
The Board believes that its leadership structure is appropriate for Cinemark. The independence of the Board’s standing committees and the regular use of executive sessions of the non-management directors allows the Board to maintain independent oversight of risks to our business, our long-term strategies, annual operating plan, and other corporate activities.
Board Independence
The majority of our Board is independent, with 7 of the 11 directors being independent. Our Board has determined the independence of these 7 directors by applying the New York Stock Exchange (NYSE) listing standards’ independence test, which evaluates whether the director:
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The Board, in coordination with our Governance Committee and the Company’s general counsel, evaluated the NYSE bright-line tests and considered the transactions between the Company and certain Board members, reported under the heading 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) Mr. Syufy is not independent due to his transactions with the Company exceeding $120,000 annually, and Mr. Mitchell is not independent due to his relationship with our founder and former Chairman, Lee Roy Mitchell, (d) Messrs. Zoradi and Gamble are not independent because they 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.
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The Board in coordination with our Governance Committee, and assistance of the Company’s general counsel, followed the NYSE bright-line tests and considered the transactions reported under the Certain Relationships and Related Party Transactions 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 and Zoradi are not independent because they are 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 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 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 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.
The Company has the following related party transactions with Mr. Mitchell and Mr. Syufy.
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’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 million of management fee revenue from Laredo during 2020. 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.
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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 Chairman of the Board, and his wife, Tandy Mitchell own the membership interests of the Operator. Prior to the execution of the Aircraft Agreement, the Company had an informal agreement with the Operator to use, on occasion, a private aircraft owned by the Operator. The private aircraft is used by Mr. Mitchell and other executives who accompany Mr. Mitchell to business meetings for the Company. The Aircraft Agreement specifies the maximum amount that the Operator can charge the Company under the applicable regulations of the Federal Aviation Administration for the use of the aircraft and flight crew. The Company pays the Operator the direct costs and expenses related to fuel, pilots, landing fees, storage fees, insurance obtained for the specific flight, flight planning, weather contract services and expenses such as in-flight food and beverage services and passenger ground transportation incurred during a trip. For 2020, the aggregate amounts paid to Copper Beech LLC for the use of the aircraft was approximately $10,000.
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 management fees for providing film booking and equipment monitoring services for the facility. The Company recorded $0.34 million of management service fees during the year ended December 31, 2020.
Family Relationships
Walter Hebert III, brother-in-law of Mr. Mitchell, is the Executive Vice President – Purchasing of the Company. Mr. Hebert received a total compensation of $519,860 for 2020. Such amount included base salary of $244,624, fair market value of annual restricted stock grant of $114,980, cash value of retention grant of $43,122, cash value of bonus equity of $86,240, and all other compensation of $30,894.
Tandy Mitchell, wife of Mr. Mitchell, participated in the voluntary workforce reduction program and is no longer an employee of the Company. Ms. Mitchell’s compensation for 2020 was $145,875.
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 2020, we paid approximately $24 million in rent for these leases. Since 2019, we began providing digital equipment support to drive-in theatres owned by Syufy Enterprises. We recorded $0 of management fees related to these services during 2020.
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.
Board Committees
The Board has four standing committees: Audit Committee, Compensation Committee, Governance Committee and Strategic Planning Committee. The Board may from time to time establish additional committees for specific purposes.
Each member of our Audit Committee, Compensation Committee and Governance Committee meets the requirements for independence under the listing standards of the NYSE, regulations promulgated by the U.S. Securities and Exchange Commission (“SEC”) and the Company’s Corporate Governance Guidelines, as applicable. The charters for these committees are available on the Investor Relations portion of our website (http://ir.cinemark.com).
Audit Committee
2022 Meetings: 4
2022 Consents: 1
Each member of the Audit Committee satisfies the standards for independence of the NYSE and SEC as they relate to audit committees.
Members: Nancy Loewe (Chair), Darcy Antonellis, Steven Rosenberg, Carlos Sepulveda
Roles and Responsibilities:
Ms. Loewe serves 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’s and Mr. Sepulveda’s biographies on page 6 and page 8 respectively, for further information regarding their qualifications to be an “audit committee financial expert.”
Primary committee functions include:
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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, our Board is keenly focused on its leadership structure, and the character, integrity, and qualifications of its members. Our directors have a proven record of accomplishment and an ability to exercise sound and independent judgment in a collegial manner.
Our Board does not have a formal diversity policy. It broadly construes diversity to mean diversity of backgrounds, experience, qualifications, skills, age and expertise, among other factors, which when taken together best serve our Company and our stockholders. The following presentation highlights some of the diversity metrics of our Board.
In selecting board members, the Board takes into account, in addition to the core attributes, the 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.
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High personal and professional ethics and integrity |
The following chart summarizes the core competencies of each director.
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Throughout 2020, governance and risk management played a critical role in our response to the COVID-19 pandemic. As we confronted the challenges to our industry, we implemented operational teams to oversee daily decision-making to ensure our actions remained consistent with our priorities and in compliance with government mandates. 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 team of risks related to continuing business operations, industry, financial controls, liquidity, employee retention, health and safety and IT 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 and performance of the Company. The Board focuses its oversight on the most significant risks facing the Company and on the processes that the Board has established to identify, prioritize, assess, manage and mitigate those risks.
Annually, and if needed more frequently, 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 managing and assessing 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, 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:
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During 2020, the Board held six (6) meetings and took action by written consent on four (4) 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. Eight directors attended our virtual 2020 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.
The presiding director of the executive sessions is currently our Lead Director, Mr. Sepulveda. During 2020, our non-management directors met four times and our independent directors met once in executive sessions.
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% of our stockholder base. We held meetings with all that accepted our request, totaling more than 20% of the total shares outstanding. 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 and sustainability. Our corporate governance profile reflects the input of stockholders 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 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.
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 of our annual electricity usage through renewable options. We also recycle at all eligible locations and 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 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, 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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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:
Corporate Governance Guidelines;
Amended and Restated Charter of the Audit Committee (Audit Committee Charter);
Charter of the Governance Committee (Governance Committee Charter); and
First Amendment to Amended and Restated Compensation Committee Charter (Compensation 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. The Code of Business Conduct and Ethics is available on our website at https://ir.cinemark.com/ under the “Governance” tab.
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Our Board currently has three standing committees – Audit Committee, Compensation 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
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| Compensation
| Governance
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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 |
Effective February 11, 2021, the Governance Committee recommended, and the Board approved Nancy Loewe as the Chairman 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 18 and page 14 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.
Functions:
The functions of the Audit Committee include the following:
assisting the Board in its oversight responsibilities regarding (1)(i) the integrity of our financial statements, (2)(ii) our risk management complianceprogram with respect to legal and regulatory requirements, (3)(iii) our systems of internal controlcontrols over financial reporting (iv) our implementation and (4)effectiveness of an ethics and compliance program and (v) 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; |
| ∎ | establishing procedures for the receipt, retention and resolution of complaints regarding accounting, internal control or auditing matters submitted confidentially and anonymously by employees through |
| ∎ | 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 management and Deloitte & Touche to discuss, among other items, the Company’s financial statements to be filed with the SEC, any change 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 Audit Committee also meets, on a periodic basis, with Deloitte & Touche in executive sessions without members of management present.
The Board has delegated authority of cybersecurity oversight to the Audit Committee. The Audit Committee is updated by management twice a year on cybersecurity trends, risks and the effectiveness of the Company’s program and tools 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. 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 operations, with a comparison to previous years.
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The Board has also delegated the 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 regardless of the dollar value of the transaction. The Audit Committee approves such 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 55 for further details on related party transactions.
Governance Committee
2022 Meetings: 5
2022 Consents: 0
Each of the Governance Committee members satisfies the standards for independence of the NYSE.
Members: Steven Rosenberg (Chair), Nancy Loewe, Nina Vaca
Roles and Responsibilities:
Primary committee functions include:
| ∎ | evaluating candidates for Board membership, including those recommended by stockholders in compliance with the Company’s |
| ∎ |
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| ∎ | identifying and recommending to the Board members qualified to fill any vacancies on a committee of the Board; |
| ∎ | advising management on succession planning for the |
| ∎ | developing and recommending to the |
| ∎ | overseeing the Board’s annual self-evaluation process and the Board’s evaluation of management; |
| ∎ | periodically reviewing the criteria for |
| ∎ | 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; |
| ∎ | reassessing the adequacy of the Governance Committee Charter on an annual basis and recommending any proposed changes for Board approval; |
| ∎ | overseeing corporate social responsibilities and public interest issues that affect our investors and other key stakeholders; and |
| ∎ | overseeing environmental, health and safety issues. |
Compensation Committee
2022 Meetings: 5
2022 Consents: 1
Each member of the Compensation Committee satisfies the standards for independence of the NYSE as they relate to compensation committees and qualify as “non-employee directors” within the meaning of Rule 16b-3 promulgated under Section 16 of the Exchange Act.
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Respectfully submitted,
Nancy Loewe (Chair)
Steven Rosenberg
Darcy Antonellis
Carlos Sepulveda (Past Chair)
Each member of the Compensation Committee satisfies the standards for independence of the NYSE as they relate to compensation committees and qualify as “non-employee directors” within the meaning of Rule 16b-3 promulgated under Section 16 of the Exchange Act. The Compensation Committee is governed by the Compensation Committee Charter, which sets forth the purpose and responsibilities of this committee.
Functions
The functions of the Compensation Committee include the following:
Members: Nina Vaca (Chair), Benjamin Chereskin, Carlos Sepulveda
Roles and Responsibilities:
Primary committee functions include:
| ∎ | making recommendations to the Board on the Company’s general compensation philosophy and |
| ∎ | determining and approving the CEO’s |
| ∎ | 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 and recommending to the Board any modifications of such plans; |
| ∎ | setting performance metrics and targets; |
| ∎ | validating and approving the achievement of performance |
| ∎ | reviewing, recommending and discussing with management the CD&A section included in the Company’s annual proxy |
Strategic Planning Committee
2022 Meetings: 2
2022 Consents: 0
The Strategic Planning Committee is governed by the Strategic Planning Committee Charter setting forth the purpose and responsibilities of this committee.
Members: Darcy Antonellis (Chair), Benjamin Chereskin, Carlos Sepulveda, Enrique Senior, Ray Syufy, Mark Zoradi
Roles and Responsibilities:
Primary committee functions include:
| ∎ | reviewing the key industry and market issues and external developments impacting the Company’s strategies and core competencies; |
| ∎ |
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| ∎ | 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. |
Compensation Committee Interlocks and Insider Participation
The Compensation Committee currently consists of Ms. Vaca and Messrs. Chereskin and Sepulveda. Ms. Vaca and Messrs. Chereskin and Sepulveda have never been an officer or employee of ours or any of our subsidiaries. None of our executive officers serves or has served as a member of the board of directors, compensation committee or other board committee performing equivalent functions of any entity that has one or more executive officers serving as one of our directors or on our Compensation Committee.
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Meetings and Attendance
During 2022, the Board met four times and acted by unanimous consent three times. Each director attended either in-person or via teleconference or video application at least 75% of the aggregate of all Board and applicable committee meetings during 2022.
Our non-management directors meet at least twice a year in executive sessions with no Company personnel present. A separate executive session of only independent directors is held at least once a year. Carlos Sepulveda presides over the executive sessions. During 2022, our non-management directors met four times and our independent directors met one time in executive sessions.
The Board strongly encourages its continuing members to attend the Annual Meeting of Stockholders. All but one of the then-current members of the Board were in attendance at the 2022 Annual Meeting of Stockholders, which was held in-person and virtually.
Director Development and Engagement
| Continuing Director Education | We provide each Director with a membership to the National Association of Corporate Directors (NACD), which provides access to educational programs relevant to their board responsibilities or interests. Upon request, we may also cover the cost for any Director who wishes to attend programs and seminars outside of their NACD membership on topics relevant to their service as Directors. From time to time, members of management also present to the Board or its committees on new developments in areas relevant to the Company. |
Key Areas of Board Oversight
Strategic Oversight
Throughout 2022, governance and risk management played a critical role in our response to the continuing challenges faced by our Company and our industry due to the external headwinds resulting from the COVID-19 pandemic. The Board played a pivotal oversight role in our business continuity planning and execution in the face of these challenges and oversaw the executive team’s management of risks related to continuing business operations, industry developments, financial controls, liquidity, employee retention, health and safety protocols and information technology operations.
The Board actively oversees the Company’s long-term business strategy to ensure that we are positioned to continue our recovery from the effects of the pandemic, to increase our competitive advantage and deliver sustainable growth and profitability. The Board is continuously engaged with senior management on critical business matters relevant to the Company’s long-term strategy.
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Risk Oversight
ESG Oversight
Many of our ESG efforts are managed by a cross-functional team that shapes and drives ESG strategy, tracks key performance indicators and manages the Company’s ESG initiatives. Management presents topics to the Governance Committee and our Board during the course of the year. The Governance Committee serves as the primary committee assisting the Board in oversight of the Company’s ESG efforts. See pages 22 and 23 for a description of select ESG initiatives.
Succession Planning and Talent Development
Succession planning and talent development are important at all levels in our Company. The Governance Committee oversees management’s succession plan for key positions at the senior officer level, and most importantly for the Chief Executive Officer position. The Governance Committee reviews and advises management on succession plans for senior management and the Chief Executive Officer, including both long-term and emergency succession planning. In addition, the Chief Executive Officer provides the Governance Committee an assessment of the Company’s senior leaders and their potential to succeed at key senior management positions. Senior executives interact with our Board through formal presentations and during informal events. More broadly, the Board is updated on key initiatives for the overall workforce, including diversity and development programs.
Sean Gamble’s appointment as our Chief Executive Officer in January 2022, following Mark Zoradi’s retirement, is indicative of our succession planning and development process. Mr. Zoradi worked closely with the Board, preparing for his retirement for more than a year. 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 the prior two-year timeframe, Mr. Zoradi worked hand-in-hand with Mr. Gamble to ensure a seamless transition. Mr. Gamble’s background as our Chief Financial Officer and Chief Operating Officer, 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 made him the logical successor as Chief Executive Officer.
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Investor Outreach
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 and as a follow-up to our strong 2022 Say-On-Pay (84% in favor) vote, we have offered meetings to our top institutional investors in each of the past five years, representing approximately 70% of our institutional stockholder base. In addition, we offer meetings to representatives of Glass Lewis and Institutional Shareholder Services. We met with all that accepted our request, totaling nearly 40% of the total shares outstanding held by institutional stockholders, in addition to representatives from Institutional Shareholder Services. Key themes discussed included our industry and Company’s recovery from COVID-19, 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 the following practices and disclosures as a direct result of the meetings conducted:
| n | expanded language throughout the proxy for clarity on governance; |
| n | included more diversity disclosure regarding gender and racial composition of our Board; |
| n | included commentary regarding succession planning |
| n | elaborated on compensation changes made in 2020, 2021 and 2022 given the profound impact of COVID-19 on our business; |
| n | incorporated separate performance metrics for |
| n |
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Corporate Governance Policies and Charters
The following documents make up our corporate governance framework:
| n | Fifth Amended and Restated Corporate Governance |
| n | Third Amended and Restated Charter of the |
| n | Second Amended and
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| n |
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| n | 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’s Code of Business Conduct and Ethics applies to directors, executive officers and all of our employees and sets forth our 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 directors and executive officers that have been approved by our Board or any Board committee. During 2022, there were no amendments to, or waivers from, any provision of the Code of Business Conduct and Ethics for any director or executive officer. 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 may direct such communications by writing to the:
Company Secretary
Cinemark Holdings, Inc.
3900 Dallas Parkway
Plano, TX 75093
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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, who will forward to the appropriate director(s) all correspondence, except for items of the following nature:
| ∎ | advertising; |
| ∎ | promotions of |
| ∎ | patently offensive material; and |
| ∎ | matters completely unrelated to the
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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.
DIRECTOR COMPENSATION
2022 Director Compensation Table
accordance with FASB ASC Topic 718. See Note | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In accordance with the Compensation Committee Charter, the Compensation Committee, in consultation with the Governance 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 our non-employee directors is subject to our Third Amended and Restated Non-Employee Director Compensation Policy (“Director Compensation Policy”). Under the Director 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, Mr. Gamble did not receive any compensation for his services on the Board or any of its committees for 2022, and Lee Roy Mitchell did not receive any compensation for his service on the Board until his employment with the Company ended in May 2022.
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The compensation of the directors during 2022 pursuant to our Non-Employee Director Compensation Policy is as follows:
| (a) | a base director retainer of $75,000; |
| (b) | additional retainer of $55,000 for the non-employee director who serves as the lead independent director or the non-executive Chairman of the |
| (c) | additional cash retainer for services on the committees as follows: |
| Committee | Chair ($) | Member ($) | ||||||
Audit | 25,000 | 10,000 | ||||||
Compensation | 20,000 | 10,000 | ||||||
Governance | 15,000 | 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, each non-employee director receives an annual grant of restricted stock valued at $125,000. The number of shares of restricted stock granted is determined by dividing $125,000 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 stock awards 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 our stock ownership guidelines 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.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
 | Environmental Responsibility | ∎ We demonstrated our commitment to promoting environmental sustainability in our communities by, among other things: ∎ Offsetting 66% of ∎ Diverting 30% of ∎ Generating approximately 7 million kilowatt-hours per year by solar installations at 24 locations ∎ Providing more than 160 free EV charging stations for guests ∎ Transitioning to LED lighting ∎ Continuing on-going efforts to conserve water through fixture and | ||
 | Engagement | ∎ We conduct an annual engagement survey through an independent third party. Satisfaction scores remain positive. ∎ Employees complete performance management conversations at set points throughout the year focusing on ∎ We conduct quarterly town hall meetings. ∎ We have an employee anniversary and recognition program through Awardco. | ||
Base Salary The Compensation Committee sets base salaries for named executive officers after examining market data provided by Pearl Meyer (our independent executive compensation advisor) and comparing against peers to align salaries with market conditions, also taking into account the scope and nature of the individual’s job responsibilities, performance, experience and other objective factors deemed relevant by the Compensation Committee. The Compensation Committee considers salary adjustments at its regularly scheduled February meeting with those adjustments becoming effective in March each year. The base salary for each named executive officer for 2022, as well as the percent change over 2021, is illustrated in the chart below:
Short-Term Performance-Based Incentive Awards Introduction Our short-term incentive program (“STIP”) is an annual cash-based performance incentive award program, typically measured based on metrics established in our annual operating budget and which requires the achievement of a threshold level of financial performance for any payout. The participants in our STIP are rewarded for achieving short-term financial and operational goals based upon individual targets expressed as a percentage of base salaries. For the named executive officers, the target STIP opportunities are set by the Compensation Committee taking into account a variety of factors, including peer group data, CEO’s recommendation (except for his own) and the individuals current and anticipated contribution to the strategic goals of the Company. Each participant in our STIP is entitled to receive a ratable portion of his/her target payment based upon the Company’s level of achievement, within the range of threshold and maximum percentages, of the target metric set by the Compensation Committee. As part of the year-end performance review process, the manager for each participant in the STIP (other than the CEO) evaluates such individual’s performance against his/her annual business objectives and goals. Based upon this review a discretionary modifier up to a maximum +/- 15% may be applied to adjust the individual’s STIP payout calculation (“ABO Modifier”). Each STIP payout is calculated by applying the following formula:
STIP payments are paid for the most recently completed fiscal year (assuming performance levels have been met) as soon as administratively practical after the amounts are determined and certified by the Compensation Committee during the first quarter after the performance year. 2022 STIP Award Opportunities
2022 STIP Performance Goals and Results The Compensation Committee sets performance goals for the STIP in February of each year, and has historically established threshold, target, and maximum payout goals based on Adjusted EBITDA, which is regarded as a key performance metric in our industry. For 2022, the Compensation Committee used worldwide Adjusted EBITDA to establish the STIP targets, which was based on the annual operating budget approved by our Board of Directors. The cash bonus achievement under the STIP is determined using the Company’s reported Adjusted EBITDA with certain add-backs and adjustments for cash bonus accruals, certain severance payments, if any, unusual expenses such as those related to accounting changes, a +/-5% collar for foreign exchange fluctuation, the industry box office adjustment discussed below and other adjustments the Compensation Committee deems appropriate, including, but not limited to, factors such as extraordinary, unusual and non-recurring events that were not included in the approved annual operating budget (the “STIP Adjusted EBITDA”). Our performance is highly dependent upon timing, popularity and quantity of films released by the distributors, which requires a significant number of assumptions and projections in setting the budgeted Adjusted EBITDA target. In recognition of the uncertainty around planning assumptions, the Compensation Committee determined that the STIP Adjusted EBITDA target may be adjusted, upward or downward, at the end of each performance year, to eliminate any variance between the actual North American and Latin American
industry box office for the fiscal year and the industry forecasts used to set the STIP target for the year. North American industry box office performance and relevant Latin American attendance assumptions meaningfully impacts our Adjusted EBITDA due to its effect on attendance-driven revenue and costs but is largely outside of the Company’s control. The industry box office adjustment is intended to modify the STIP Adjusted EBITDA target to eliminate the negative or positive impacts of these non-controllable factors. The STIP Adjusted EBITDA target is adjusted upward or downward by $10 million for every 1% change in the North American industry box office assumptions used for setting the annual operating budget and upwards or downwards by $2 million for every 1% change in associated Latin America industry attendance assumptions used for setting the annual operating budgets. Results between the percentages are interpolated. The worldwide Adjusted EBITDA targets for 2022 were as follows:
2022 STIP Payouts The 2022 North American industry box office was down 12% from the $8.5 billion North American industry box office used for the approved annual operating budget, and associated industry attendance in relevant Latin America territories was down 15% from the associated Latin American industry attendance assumed for the approved annual operating budget. As a result, the STIP Adjusted EBITDA target was adjusted downward to $211 million. In February 2023, the Compensation Committee certified the STIP Adjusted EBITDA calculation for the STIP and approved the STIP amounts to be paid for the 2022 performance period. The Company attained world-wide Adjusted EBITDA of $336 million (calculated as set forth on Appendix A) for the year ended December 31, 2022. As a result, the Compensation Committee determined that, after giving effect to the adjustments discussed above, the performance attained was 159% of the STIP Adjusted EBITDA target, as adjusted for industry results, equating to a payment of 150% of the individual target for each of the NEOs. Melissa Thomas, Michael Cavalier and Wanda Gierhart also received an ABO adjustment of 7.5% following a review of each of their individual performances, and Valmir Fernandes received an ABO adjustment of 15% following a review of his performance and based upon the out performance of our international operations during 2022. The 2022 STIP payments for our NEOs are illustrated in the table below.
Annual Equity Incentive Awards Introduction Long-term equity compensation is a key element of our executive compensation program. It is used to (i) attract, motivate, reward and retain key talent and (ii) align our executive’s interest with stockholders’ interests to maximize long-term stockholder value. Equity compensation also reinforces an ownership mentality among our executives. Annual equity awards are made to our named executive officers in amounts that take into consideration Company and individual performance, level of responsibility, an individual’s ability to influence our long-term growth, performance and strategy, among other factors. In 2022, the Compensation Committee used two forms of equity compensation.
Our equity awards are subject to forfeiture if the recipient fails to remain employed through the vesting period. Holders of unvested restricted stock are entitled to vote the underlying shares and receive dividends. Holders of unvested performance share units have dividend rights that accrue and are delivered on the vesting date to the extent the holder remains employed by the Company. Special grants of equity awards may also be authorized by the Compensation Committee for, among other things, new hires and promotions, exceptional performance or retention purposes. 2022 Annual Equity Incentive Awards The Compensation Committee determined the annual equity grant for each of our NEOs at its regularly scheduled February 2022 meeting. For the NEOs, the equity grant was split with approximately 40% of the total grant value consisting of restricted stock awards (“RSA”) and the remaining 60% awarded in performance share unit awards (“PSU”). Due to the difficulty of making long-term box office assumptions and continued uncertainty surrounding the recovery from the COVID-19 pandemic, the Compensation Committee determined that a one-year performance period was appropriate for the 2022 performance share unit awards. The targets for the performance share units were established by the Compensation Committee at the time of grant and related to the Company’s total revenue and cash flow for 2022 as both are relevant for achieving the Company’s strategic goals of continuing to re-ignite movie-going and rebuilding the Company’s balance sheet.
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The targets for the performance share unit awards were established at the time of grant and relate to the Company’s 2022 revenue and cash flow, each with equal weighting. Furthermore, performance share units may be earned only if the Company’s revenue and cash flow is greater than the threshold amount established for each. Similar to the STIP, industry box office performance meaningfully impacts revenues and cash flows. Accordingly, the industry box office adjuster are used to adjust the STIP Adjusted EBITDA target is used to adjust the revenue and cash flow targets for performance share units.
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Each of the named executive officers received an annual equity grant at their target levels. The table below shows the grant date value of the restricted stock awards and performance share units.
| Name | Target Equity % of Base | Target RSA ($)1 | Target PSU ($)1 | Total Award ($) | ||||
Sean Gamble | 448 | 1,449,749 | 2,178,686 | 3,628,435 | ||||
Melissa Thomas | 175 | 395,138 | 592,711 | 987,849 | ||||
Michael Cavalier | 175 | 402,014 | 603,015 | 1,005,030 | ||||
Valmir Fernandes | 150 | 332,800 | 499,205 | 832,005 | ||||
Wanda Gierhart | 150 | 456,493 | 463,859 | 920,352 | ||||
1 The grant date fair values were calculated in accordance with FASB ASC Topic 718 (excluding the effect of estimated forfeitures).
2022 Performance Share Goals
The actual number of performance share units earned by the NEOs is determined by the following formula:
Long-term Incentive Award Values
Target Performance Share Units | X | % Attainment | = | Actual # of 2022 Performance Share Units Earned |
2022 Performance Share Units Earned
The 2022 North American industry box office was down 12% from the $8.5 billion domestic box office used for the approved annual operating budget, while associated Latin American industry attendance was down 15% from the associated Latin American industry attendance used for the approved annual operating budget. As a result, the revenue target was adjusted downward to $2.286 billion and the cash flow target was adjusted downward to $(58) million. For 2022, the Compensation Committee reviewed the Company’s financial results and certified that the Company’s revenue was 107% of the revenue target as adjusted for industry results and cash flow was 161% of the cash flow target as adjusted for industry results, each of which exceeded the maximum performance goals. Consequently, the named executive officers earned 175% of the target performance share amounts. The performance share units will vest on the third anniversary of the grant date.
| Name | Target Shares (#) | Grant Date Value Target ($)(1) | Performance Criteria Payout % | Actual Shares Earned (#) | ||||
Sean Gamble | 130,852 | 2,178,686 | 175% | 228,991 | ||||
Melissa Thomas | 35,598 | 592,711 | 175% | 62,297 | ||||
Michael Cavalier | 36,217 | 603,015 | 175% | 63,380 | ||||
Valmir Fernandes | 29,982 | 499,205 | 175% | 52,469 | ||||
Wanda Gierhart | 27,859 | 463,859 | 175% | 48,754 | ||||
1 The grant date fair values were calculated in accordance with FASB ASC Topic 718 (excluding the effect of estimated forfeitures).
Changes to 2023 Compensation
No increase in base salary of the CEO; Increase in base salary of the other NEOs to reflect their and Cinemark’s consistent outperformance of the industry and its peers
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A detailed discussion relatingCEO base salary increased by 9% to each elementbetter align with market median CEO base salaries, and our other NEOs base salary increased by an average of compensation and the decisions summarized above is included in Executive Compensation Components below.
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| ● | Performance goals for our STIP will continue to use Adjusted EBITDA as a performance metric and will continue to be indexed to the North American industry box office and associated Latin American industry attendance assumptions used for the approved annual operating budget | ||||
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| ● | Performance based long-term equity awards will have a three-year performance period and vest on the third anniversary of date of grant |
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Compensation-Setting Process
We utilize a combination of objective data along with the Company’s business needs in our compensation decision-making process, and we strive to ensure that our programs are complementary, balance risk, and support both the short- and long-term objectives of the Company.
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Roles and Responsibilities
Comprised entirely of “Non- | In the compensation decision making-process for our President & Chief Executive Officer and the other NEOs
⬛ Reviews and approves all new and revised executive compensation programs. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Human Resources Officer | In the ⬛ Works with management’s compensation consultant to develop and review benchmark information. In the compensation-decision making process for our NEOs ⬛ Works with President & Chief Executive Officer to develop recommendations for all components of the | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chief Executive Officer | In the compensation-decision making process for our other NEOs ⬛ Works with our Human Resources Officer to develop recommendations for all components of an officers’ compensation, including recommending compensation levels and performance targets under our STIP, annual equity ⬛ Reviews the
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Independent Compensation Consultant | ⬛ Provides market data, benchmark research, survey information, peer group selection recommendations, and other research relating to
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Competitive Market Positioning
For 2022, the Compensation Committee retained Pearl Meyer as its independent compensation consultant. All research for executive compensation conducted by Pearl Meyer is provided to the Compensation Committee.
In 2022, the aggregate fees paid to Pearl Meyer for its services in assisting with the determination and recommendation as to the form and amount of director and executive compensation were $239,219. The Compensation Committee evaluated the independence of Pearl Meyer under applicable NYSE rules, including the services provided and the associated fees paid, and has concluded that Pearl Meyer was independent and that its engagement did not present any conflicts of interest.
The Compensation Committee conducted a review of the direct compensation components paid to our NEOs against a specific benchmark peer group, with a focus on base pay, annual performance incentive pay and stock-based compensation. This benchmark group consisting of 12 companies (referred to as the “Peer Group”), was selected based on the following attributes:
| ∎ | Companies within a specified range of the
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| ∎ | Companies within media and |
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The Peer Group is reviewed, updated, and approved annually by the Compensation Committee and may change periodically.
The 2022 Peer Group was comprised of the following companies:
| AMC Entertainment Holdings, Inc. | Lions Gate Entertainment Corp. | Bloomin’ Brands, Inc. | ||
| Dave & Buster’s Entertainment, Inc. | Live Nation Entertainment, Inc. | IMAX Corporation | ||
| Brinker International, Inc. | The Madison Square Garden Company | Six Flags Entertainment Corporation | ||
| Cineplex, Inc. | Cineworld Group, LLC | Cedar Fair, L.P. | ||
The Compensation Committee also uses survey compensation data provided by Pearl Meyer. Utilizing the peer data and the survey data, the Compensation Committee evaluates the amount and proportions of base salary, annual incentive pay and long-term compensation, as well as target total direct compensation for the Company’s NEOs. Compensation Committee decisions are qualitative and a result of the Compensation Committee’s business judgment, which is informed by the market data provided by Pearl Meyer. The Compensation Committee believes that the compensation opportunities provided to our Named Executive Officers are appropriate. The Compensation committee continues to monitor current trends and will modify its programs as it determines appropriate.
Additional Compensation Practices
Stock Ownership Guidelines
The Compensation Committee maintains stock ownership guidelines to further align the interests of our executive officers and directors with the interests of our stockholders and to encourage long-term stock ownership. The guidelines apply for so long as the executive officer or director occupies such positions.
The stock ownership guidelines for named executive officers and directors is shown below as multiples of base salary and annual cash retainer, respectively:
| Role | Stock Ownership Requirement | |
| 5 x | |
Executive Vice Presidents | 2 x | |
Board of | 5 x | |
All shares of common stock beneficially owned by the executive officer or director, including time-based restricted stock are counted towards the ownership requirement. Executive officers and directors have five (5) years from the time they become subject to the guidelines to reach the ownership requirements, and compliance is reviewed every year. As of the record date for the 2023 Annual Meeting, all named executive officers and all directors were in compliance with the stock ownership requirement. Compensation Risk Assessment The Compensation Committee monitors our compensation policies and practices to determine whether our risk management objectives are being met and to adjust those policies and practices to address any incentives that have the potential to encourage risks that are reasonably likely to have a material adverse effect on us and any changes in our risk profile. As part of these considerations and consistent with our compensation philosophy, our compensation program, particularly our annual and long-term incentive compensation plans, are designed to provide incentives for the executives to achieve performance objectives without encouraging excessive risk-taking. Highlights of the Company’s compensation program, which mitigate risks associated with compensation are:
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The Company will adopt a written claw-back policy that complies with the NYSE listing requirements once the listing requirements are issued by the NYSE and approved by the SEC. The claw-back policy will require the Company to recover the amount of erroneously awarded performance-based compensation if the Company is required to prepare an accounting restatement due to the material non-compliance of the Company with any financial reporting requirements under applicable securities laws.
Our Compensation Committee monitors and considers the risk mitigating factors when setting executive compensation. Based on such review, the Compensation Committee has concluded that our compensation programs do not create risks that are reasonably likely to have a material adverse effect on the Company or put the Company at risk.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the CD&A as required by Item 402(b) of Regulation S-K with management, and, based on such review and discussion, the Compensation Committee recommended to the Board that the CD&A be included in this proxy statement and incorporated by reference in the Company’s 2022 Annual Report on Form 10-K, and the Board has approved the recommendation.
Respectfully submitted,
Nina Vaca (Chair)
Benjamin Chereskin
Carlos Sepulveda
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SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
| Plan Category | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Reflected in the First Column) | |||
| Equity compensation plans approved by security holders | 890,680 | N/A | 5,821,224 | |||
| Equity compensation plans not approved by security holders | N/A | N/A | N/A | |||
Total | 890,680 | 5,821,224 |
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| Plan Category | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Reflected in the First Column) | |||
| Equity compensation plans approved by security holders | 1,041,907 | N/A | 6,120,016 | |||
| Equity compensation plans not approved by security holders | N/A | N/A | N/A | |||
Total | 1,041,907 | 6,120,016 | ||||
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SUMMARY COMPENSATION TABLE FOR 20202022
The following table sets forth summary information concerning the total compensation earned by our NEOs for each of the last three completed fiscal years.
Name and Principal Position | Year | Salary ($)(1) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | ||||||||
Lee Roy Mitchell Chairman of the Board | 2020 | 589,394 | 764,998 | 0 | 25,688 | 1,380,080 | ||||||||
2019 | 1,000,001 | — | 1,414,002 | 24,089 | 2,438,092 | |||||||||
2018 | 975,000 | — | 1,036,426 | 23,900 | 2,035,326 | |||||||||
Mark Zoradi Chief Executive Officer | 2020 | 740,632 | 5,761,220 | 0 | 413,437 | 6,915,289 | ||||||||
2019 | 1,100,000 | 3,099,012 | 1,944,250 | 165,517 | 6,308,779 | |||||||||
2018 | 1,000,000 | 3,049,518 | 1,063,000 | 132,738 | 5,245,256 | |||||||||
Sean Gamble Chief Operating Officer & Chief Financial Officer | 2020 | 521,435 | 1,821,528 | 0 | 116,007 | 2,458,970 | ||||||||
2019 | 625,000 | 1,119,263 | 837,562 | 107,773 | 2,689,598 | |||||||||
2018 | 600,000 | 1,186,109 | 617,072 | 61,796 | 2,464,977 | |||||||||
Michael Cavalier Executive Vice President – General Counsel & Secretary | 2020 | 440,923 | 1,323,650 | 0 | 107,592 | 1,872,165 | ||||||||
2019 | 540,000 | 833,712 | 723,654 | 108,139 | 2,205,505 | |||||||||
2018 | 525,000 | 918,064 | 539,938 | 123,311 | 2,106,313 | |||||||||
Valmir Fernandes President – Cinemark | 2020 | 441,633 | 1,184,878 | 0 | 114,810 | 1,741,321 | ||||||||
2019 | 540,000 | 698,698 | 615,762 | 109,796 | 1,964,256 | |||||||||
| 2018 | 525,000 | 795,705 | 357,000 | 128,448 | 1,806,153 | |||||||||
Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | All Other Compensation ($)(5) | Total ($) | |||||||
Sean Gamble(6) President and Chief Operating Officer; former Executive Vice President-Chief Financial Officer | 2022 | 825,000 | — | 3,628,435 | 1,423,125 | 78,090 | 5,954,650 | |||||||
2021 | 687,857 | — | 1,507,181 | 963,000 | 24,522 | 3,182,560 | ||||||||
2020 | 521,435 | — | 1,855,609 | — | 116,007 | 2,493,051 | ||||||||
Melissa Thomas Executive Vice President – Chief Financial Officer | 2022 | 575,000 | — | 987,849 | 815,063 | 19,868 | 2,397,780 | |||||||
2021 | 95,833 | 500,000 | 3,546,616 | — | — | 4,142,450 | ||||||||
Michael Cavalier Executive Vice President – General Counsel & Business Affairs, Secretary | 2022 | 583,334 | — | 1,005,030 | 829,238 | 73,303 | 2,490,905 | |||||||
2021 | 563,578 | — | 952,966 | 672,067 | 29,086 | 2,217,697 | ||||||||
2020 | 440,923 | — | 1,348,698 | — | 107,592 | 1,897,214 | ||||||||
Valmir Fernandes President – Cinemark | 2022 | 563,336 | — | 832,005 | 839,025 | 68,350 | 2,302,716 | |||||||
2021 | 555,012 | — | 736,396 | 661,852 | 31,775 | 1,985,034 | ||||||||
2020 | 441,633 | — | 1,208,132 | — | 114,810 | 1,764,575 | ||||||||
Wanda Gierhart(7) Chief Marketing & Content Officer | 2022 | 520,833 | — | 920,352 | 537,469 | 47,546 | 2,026,201 | |||||||
| (1) | The reported amounts for 2020 are the actual amounts earned during 2020 |
| (2) | Ms. Thomas was entitled to a $500,000 sign-on bonus paid in February 2022. |
| (3) | The reported numbers reflect the aggregate grant date fair market values of the annual restricted stock awards and |
The values set forth in this column represent the aggregate grant date fair value of time-based restricted stock and performance-based performance stock units computed in accordance with FASB ASC Topic 718 (excluding the effect of estimated forfeitures). The grant date fair values were calculated based on the closing price of Common Stock on December 14, 2020 of $15.70, August 18, 2020 of $11.04, February 18, 2020 of $31.71, February 19, 2019 of $36.77 and February 19, 2018 of $39.03, per share. The fair market values of the performance-based restrictedperformance stock units are based on target achievement as the most probable outcome, computed in accordance with FASB ASC Topic 718. The amounts shown exclude the impact of estimated forfeitures. See Note 1718 to the Company’s 20202022 Annual Report on Form 10-K for a discussion of the assumptions used in determining the grant date fair values of these long-term equity incentive awards, including forfeiture assumptions and the period over which the Company will recognize compensation expense for such awards.
Mr. Mitchell does not receive any annual grants due to his substantial equity ownership in the Company. and he did not receive any Retention Equity Grant. The reported number for Mr. Mitchell reflects the value of his Bonus Equity Grant.
As required by the rules of the SEC, the table below provides the grant date fair values of the restricted stockperformance share units at the maximum level of payment. AsHowever, as certified by the Compensation Committee, in February 2020, 105%100% and 175% of the target opportunity of the restricted stockperformance share units awarded in 2018 will vest2020 and 2022 respectively shall vest. No performance share units were issued in February 2022. Additionally, as discussed on page 49 under Impact of COVID-19 on Long-term Incentive Compensation, the restricted stock units granted in 2019 and 2020 will vest at target in February 2023 and February 2024, respectively.2021.
Name | 2020 ($) | 2022 ($) | ||
Sean Gamble | 1,286,856 | 3,812,700 | ||
Melissa Thomas | N/A | 1,037,245 | ||
Michael Cavalier | 885,420 | 1,055,277 | ||
Valmir Fernandes | 737,796 | 873,609 | ||
Wanda Gierhart | N/A | 811,754 |
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| Name | 2020 | 2019 | 2018 | |||||||||||||||||
Lee Roy Mitchell | N/A | N/A | N/A | |||||||||||||||||
Mark Zoradi | $ 5,774,993 | $ 4,019,365 | $ 2,812,424 | |||||||||||||||||
Sean Gamble | $ 1,270,429 | $ 1,131,781 | $ 944,955 | |||||||||||||||||
Mike Cavalier | $ 874,118 | $ 838,172 | $ 708,746 | |||||||||||||||||
Valmir Fernandes | $ 728,379 | $ 698,483 | $ 590,602 | |||||||||||||||||
The terms of the restricted stock and restricted stock units granted in 2020 are discussed under Executive Compensation Components-Long-term Equity Incentive Compensation and the footnote disclosures to the Grants of Plan-Based Awards in 2020 table.
The reported amounts are the cash bonuses earned for the respective fiscal years. The cash bonuses earned for a fiscal year are paid in the first quarter of the following year subject to the attainment of performance targets set by the Compensation Committee at the beginning of the covered fiscal year. |
The compensation reported in this column include the following: |
| Name | Fiscal Year | Annual ($) | Life, Group and Disability Insurance Premiums Paid by Company ($) | Dividends Paid on ($) | Other ($) | |||||
Lee Roy Mitchell | 2020 | 17,100 | 8,588 | — | — | |||||
| 2019 | 16,800 | 7,289 | — | — | ||||||
| 2018 | 16,500 | 7,400 | — | — | ||||||
Mark Zoradi | 2020 | 17,100 | 17,582 | 348,755 | 30,000(ii) | |||||
| 2019 | 16,800 | 20,733 | 97,984 | 30,000(ii) | ||||||
| 2018 | 16,500 | 13,960 | 72,278 | 30,000(ii) | ||||||
Sean Gamble | 2020 | 17,100 | 5,675 | 93,231 | — | |||||
| 2019 | 16,800 | 5,684 | 85,289 | — | ||||||
| 2018 | 16,500 | 5,296 | 40,000 | — | ||||||
Michael Cavalier | 2020 | 17,100 | 7,611 | 82,881 | — | |||||
| 2019 | 16,800 | 7,616 | 83,723 | — | ||||||
| 2018 | 16,500 | 7,798 | 99,013 | — | ||||||
Valmir Fernandes | 2020 | 17,100 | 15,374 | 82,336 | — | |||||
| 2019 | 16,800 | 9,760 | 83,235 | — | ||||||
| 2018 | 16,500 | 9,891 | 102,057 | — |
| Name | Fiscal Year | Annual ($) | Life, Group and Disability Insurance Premiums Paid by Company ($) | Dividends Paid on ($) | ||||||||||||||
| Sean Gamble | 2022 | 19,550 | 7,699 | 50,841 | ||||||||||||||
| 2021 | 18,025 | 6,497 | — | |||||||||||||||
| 2020 | 17,100 | 5,675 | 93,231 | |||||||||||||||
| Melissa Thomas | 2022 | 12,794 | 7,074 | — | ||||||||||||||
| 2021 | — | — | — | |||||||||||||||
| Michael Cavalier | 2022 | 19,550 | 15,620 | 38,133 | ||||||||||||||
| 2021 | 18,650 | 13,215 | — | |||||||||||||||
| 2020 | 17,100 | 7,611 | 82,881 | |||||||||||||||
| Valmir Fernandes | 2022 | 18,300 | 18,274 | 31,776 | ||||||||||||||
| 2021 | 17,400 | 10,436 | — | |||||||||||||||
| 2020 | 17,100 | 15,374 | 82,336 | |||||||||||||||
| Wanda Gierhart | 2022 | 19,550 | 11,856 | 16,140 | ||||||||||||||
| (i) | Dividends paid on all outstanding restricted stock, and dividends paid on |
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| (7) | Ms. Gierhart became a named executive officer as a result of Lee Roy Mitchell’s resignation as Executive Chairman in May 2022. |
For a narrative description of the amounts reported in the Summary Compensation Table for 20202022, see Principal Elements of Our 2022 Executive Compensation Components on page 28for a discussion of the various elements of compensation, including general description of the formula or criteria to be applied in determining the amounts payable, material terms of the long-term equity incentive awards, Grants of Plan-Based Awards 2020 2022 table on page 43 for details of the equity granted in 20202022 and Discussion of the Terms of the Employment Agreements with Our NEOson page 46 for compensation pursuant to the terms of the respective employment agreements.
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Pay Versus Performance Table | ||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||||
| Value of Initial Fixed $100 Investment Based on: | ||||||||||||||||||
Year | SCT Total for CEO ($) (1) | CAP to CEO ($) (2) | Average SCT Total for Non- CEO NEOs ($) (3) | Average CAP to Non-CEO NEOs ($) (4) | Total Shareholder Return ($) | Peer Group Total Shareholder Return ($) (5) | Net Income ($) | Adjusted EBITDA (in millions) ($) (6) | ||||||||||
| 2022 | 5,954,650 | 2,548,269 | 2,304,413 | 1,055,193 | 27.11 | 124.11 | (271,000,000) | 336.5 | ||||||||||
| 2021 | 7,755,000 | 6,764,007 | 2,767,255 | 2,165,556 | 50.46 | 152.43 | (422,800,000) | 79.9 | ||||||||||
| 2020 | 7,011,592 | 1,133,908 | 1,890,430 | 689,145 | 54.50 | 118.35 | (616,800,000) | (276.9 | ) | |||||||||
| (1) | For 2022, our CEO was Sean Gamble. For 2021 and 2020, our CEO was Mark Zoradi. |
| (2) | For 2022, the compensation actually paid (“ CAP SCT |
| (3) | For 2022, our Non-CEO NEOs included Melissa Thomas, Executive Vice President – Chief Financial Officer; Michael Cavalier, Executive Vice President – General Counsel; Valmir Fernandes, President – Cinemark International; and Wanda Gierhart, Chief Marketing and Content Officer. For 2021 and 2020 ourNon-CEO NEOs included Lee Roy Mitchell, Executive Chairman of the Board; Sean Gamble, Executive Vice President – Chief Financial Officer and Chief Operating Officer; Michael Cavalier, Executive Vice President – General Counsel; and Valmir Fernandes, President – Cinemark International. |
| (4) | For 2022, the CAP to Non-CEO NEOs reduces the amounts shown in the average Summary Compensation Table by (x) deducting (i) the decrease in the grant date fair value of equity awards issued in 2022 and the fair value of such equity |
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| awards as of 12/31/2022 and (ii) the net decrease in the fair value of prior years unvested equity awards outstanding as of 12/31/2022 using the fair value as of 12/31/2021 as compared to the fair value as of 12/30/2022 and (y) adding the net increase of the fair value of prior years equity awards that vested in 2022 using the fair value on the vesting date compared to the fair value of such equity awards at 12/31/2021. For performance share units awarded in 2022, the grant date fair value uses maximum achievement as that amount has been certified by the Compensation Committee and remains subject to time-based vesting. |
| (5) | For the fiscal years ended 2020, 2021 and 2022 the peer group TSR includes the S&P 500 Index, AMC Entertainment Holdings, Inc. and IMAX Corporation, the two other publicly held companies in our industry with whom we compete for investor capital. The amounts shown set forth the total shareholder return assuming reinvestment of dividends during the 5-year period ended 12/31/22, 12/31/21 and 12/31/20, respectively, weighted based upon the S&P Index and AMC and IMAX’s stock market capitalization at the beginning of each period for which a return is indicated. |
| (6) | Adjusted EBITDA is a non-GAAP measure used by management and our board of directors to assess our financial performance and enterprise value. Adjusted EBITDA is considered a key performance in our industry. Annex A sets forth our reconciliation of Adjusted EBITDA (in millions). |
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As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of SEC Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our median-compensated employee and the annual total compensation of our CEO.
As a leader and one of the most geographically diverse operators in the motion picture exhibition industry, we operated 518 theaters and 5,847 screens in the U.S. and Latin America as of December 31, 2022, and our employee population consisted of approximately 70% part-time employees, many of whom were compensated on an hourly basis. Our median employee was a theater team member, paid hourly and employed on a part-time basis.
For the year ended December 31, 2020:2022:
the annual total compensation of our median-compensated employee, was $6,011; and
the annual total compensation of our CEO, as reported in the Summary Compensation Table presented elsewhere in this proxy statement, was $6,915,289
based on this information, the ratio of the total compensation of Mr. Zoradi, to the annual total compensation of our median-compensated employee was 1,150 to 1.
| ∎ | The annual total compensation of our median-compensated employee, was $10,152 and the annual total compensation of Sean Gamble our President and CEO during 2022, as reported in the Summary Compensation Table presented elsewhere in this proxy statement, was $5,954,650. |
| ∎ | Based on this information, the ratio of the total compensation of Mr. Gamble, to the annual total compensation of our median-compensated employee was 587 to 1. |
To identify our median employee, as well as to determine the annual total compensation of the “median employee” for this purpose, the methodology and the material assumptions, adjustments, and estimates that we used were as follows:
We determined our median employee based on our employee population as of October 1, 2020 (the “Determination Date”) after excluding the employee populations of certain jurisdictions comprising approximately 5% of our total employees as permitted by the de minimis exception of the applicable rules.
To identify the median employee from our employee population, we used actual salary payments reflected in our payroll records, which we believe is a reasonable method of identifying the median employee. The substantial majority of our employees do not participate in annual bonus or long-term incentive programs, therefore we believe that excluding those programs from consideration does not meaningfully impact the identification of the median employee.
In making these determinations, we annualized the compensation for employees who were on our payroll as of the Determination Date but were salaried new hires and salaried employees who were on a leave of absence by taking an employee’s compensation for the number of bi-weekly pay periods for which they were employed or actively employed and annualizing such amount for the full year of 26 pay periods. Except for the annualization as described, we did not make any assumptions, adjustments, or estimates with respect to total cash compensation.
| ∎ | As permitted by Instruction 2 to Item 402(u) of Regulation S-K, we determined our median employee based on our employee population as of October 1, 2022 (the “Determination Date”). |
| ∎ | Under the de minimis exception of the pay ratio rule, we excluded the employee populations of certain jurisdictions comprising approximately 5% or less of our total employees. The jurisdictions and approximate number of employees excluded were Bolivia (109), Costa Rica (214), Curacao (30), Guatemala (61), Nicaragua (32), and Peru (647). As of October 1, 2022, we had 19,569 employees, comprised of 13,088 U.S. employees and 6,481 non-U.S. employees. |
| ∎ | To identify the median employee from our employee population, we used total compensation including wages, bonuses and benefits reflected in our payroll records, which we believe is a reasonable method of identifying the median employee. The substantial majority of our employees do not participate in a long-term incentive program, therefore we believe that excluding that program from consideration does not meaningfully impact the identification of the median employee. |
| ∎ | In making these determinations, we annualized the compensation for employees who were on our payroll as of the Determination Date but were salaried new hires and salaried employees who were on a leave of absence by taking an employee’s compensation for the number of bi-weekly pay periods for which they were actively employed and annualizing such amount for the full year of 26 pay periods. Except for the annualization as described, we did not make any assumptions, adjustments, or estimates with respect to total cash compensation. |
This pay ratio is a reasonable estimate calculated in a manner consistent with the applicable rules. The rules allow companies to adopt a variety of methodologies, apply certain exclusions, and make reasonable estimates and assumptions that reflect their compensation practices. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio reported above.
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GRANTS OF PLAN-BASED AWARDS IN 20202022
The following table specifies the grants of awards made under our cash bonus and equity incentive plans to the NEOs during and for 2020.in 2022.
| Name | Grant Date(1) | Approval Date(2) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards ($)(3) | Estimated Future Payouts Under Equity Incentive Plan Awards(4) | All Other Stock Awards(5) | Grant Date FV of Stock Awards(6) | Grant Date(1) | Approval Date(2) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards ($)(3) | Estimated Future Payouts Under Equity Incentive Plan Awards ($)(4) | All Other Stock Awards: Number of Shares of Stock or Units (#)(5) | Grant date FV of Stock Awards ($)(6) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Threshold | Target | Maximum | Threshold | Target | Maximum | Threshold | Target | Maximum | Threshold | Target | Maximum | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lee Roy Mitchell | - | 2/12/20 | 510,001 | 1,020,001 | 1,530,002 | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12/15/20 | 12/3/20 | 48,726 | $ | 764,998 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mark Zoradi | - | 2/12/20 | 687,500 | 1,375,000 | 2,062,500 | $ | 3,299,996 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/19/20 | 2/12/20 | 26,017 | 104,068 | 182,119 | $ | 3,299,996 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/19/20 | 2/12/20 | 34,689 | $ | 1,099,988 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8/19/20 | 8/19/20 | 29,891 | $ | 329,997 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12/15/20 | 12/3/20 | 65,684 | $ | 1,031,239 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sean Gamble | - | 2/12/20 | 330,000 | 660,000 | 990,000 | 2/23/22 | 2/16/22 | 474,375 | 948,750 | 1,423,125 | 65,426 | 130,852 | 228,991 | 3,812,700 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/19/20 | 2/12/20 | 5,723 | 22,894 | 40,064 | $ | 725,960 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/19/20 | 2/12/20 | 14,569 | $ | 1,099,988 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8/19/20 | 8/19/20 | 12,554 | $ | 329,997 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12/15/20 | 12/3/20 | 31,528 | $ | 1,031,239 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/23/22 | 2/16/22 | 87,072 | 1,449,749 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Melissa Thomas | 2/23/22 | 2/16/22 | 258,750 | 517,500 | 776,250 | 17,799 | 35,598 | 62,297 | 1,037,245 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/23/22 | 2/14/22 | 23,732 | 395,138 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael Cavalier | - | 2/12/20 | 249,756 | 499,511 | 749,267 | 2/23/22 | 2/16/22 | 263,250 | 526,500 | 789,750 | 18,108 | 36,217 | 63,380 | 1,055,277 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/19/20 | 2/12/20 | 3,938 | 15,752 | 27,566 | $ | 499,496 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/19/20 | 2/12/20 | 10,501 | $ | 277,494 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8/19/20 | 8/19/20 | 10,557 | $ | 116,549 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12/15/20 | 12/3/20 | 23,861 | $ | 374,618 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/23/22 | 2/16/22 | 24,145 | 402,014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Valmir Fernandes | - | 2/12/20 | 249,756 | 499,511 | 749,267 | 2/23/22 | 2/16/22 | 254,250 | 508,500 | 762,750 | 14,991 | 29,982 | 52,469 | 873,609 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/19/20 | 2/12/20 | 3,281 | 13,126 | 22,970 | $ | 416,216 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/19/20 | 2/12/20 | 8,751 | $ | 332,987 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8/19/20 | 8/19/20 | 10,557 | $ | 116,549 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12/15/20 | 12/3/20 | 23,861 | $ | 374,618 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/23/22 | 2/16/22 | 19,988 | 332,800 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Wanda Gierhart | 2/23/22 | 2/16/22 | 170,625 | 341,250 | 511,875 | 13,929 | 27,859 | 48,754 | 811,754 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/23/22 | 2/16/22 | 18,573 | 309,240 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/23/22 | 2/16/22 | 8,844 | 147,253 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | The grant date of the long-term incentive |
| (2) | The dates the Compensation Committee approved the bonus targets and grants of the long-term incentive |
| (3) | The reported numbers were the estimated future payouts calculated when the Compensation Committee set the target cash bonus percentages in February. |
See “Executive Compensation Components–Short-Term Performance-Based Incentive Awards” on page 29 for a description of the STIP process and the target STIP opportunities of each NEO for 2022 |
| (4) |
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Holders of |
|
| (5) | On February |
|
|
grant. See |
| (6) |
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For a narrative description of the amounts reported in the Grants of Plan BasedPlan-Based Awards in 20202022, see “Principal Elements of our 2022 Executive Compensation Components Compensation” beginning on page 27 for a discussion of the various elements of
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compensation, including general description of the formula or criteria to be applied in determining the amounts payable and material terms of the long-term equity incentive awards.
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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2020 2022
The following table lists the restricted stock and restrictedperformance stock units outstanding for each NEO as of December 31, 2020.2022. There were no stock options outstanding for any NEO as of December 31, 2020.2022.
| Stock Awards | Stock Awards | |||||||||||||||||||||||||||||
| Name | Number of Shares or Units of Stock That Have Not Vested # | Market Value of Shares or Units of Stock That Have Not Vested (7) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested # | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (10) | Number of Shares or Units of Stock That Have Not Vested # | Market Value of Shares or Units of Stock That Have Not Vested ($) (8) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested # | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested | ||||||||||||||||||||||
Lee Roy Mitchel | 48,726 | (6) | $ | 848,320 | - | - | ||||||||||||||||||||||||
Mark Zoradi | 8,007 | (1) | $ | 139,402 | 15,615 | (8) | $ | 271,857 | ||||||||||||||||||||||
| | 50,439 10,909 34,689 29,891 | (2) (3) (4) (5) | $ $ $ $ | 878,143 189,926 603,935 520,402 |
| 26,017 | (9) | $ | 452,956 | |||||||||||||||||||||
| 65,684 | (6) | $ | 1,143,558 | |||||||||||||||||||||||||||
Sean Gamble | 6,426 | (1) | 55,649 | |||||||||||||||||||||||||||
| 3,643 | (2) | 31,548 | ||||||||||||||||||||||||||||
| 56,544 | (3) | 489,671 | ||||||||||||||||||||||||||||
| 15,806 | (4) | 136,880 | ||||||||||||||||||||||||||||
| 87,072 | (6) | 754,043 | ||||||||||||||||||||||||||||
| 5,380 | (1) | $ | 93,666 | 4,397 | (8) | $ | 76,552 | 17,588 | (9) | 152,312 | ||||||||||||||||||||
| | 16,947 6,426 14,569 12,554 | (2) (3) (4) (5) | $ $ $ $ | 295,047 111,877 253,646 218,565 |
| 5,723 | (9) | $ | 99,645 | 22,893 | (10) | 198,253 | ||||||||||||||||||
| 31,528 | (6) | $ | 548,902 | 228,991 | (11) | 1,983,062 | ||||||||||||||||||||||||
Melissa Thomas | 45,500 | (5) | 394,030 | |||||||||||||||||||||||||||
| 72,817 | (5) | 630,595 | ||||||||||||||||||||||||||||
| 23,732 | (6) | 205,519 | ||||||||||||||||||||||||||||
| 62,297 | (11) | 539,492 | ||||||||||||||||||||||||||||
| 4,035 | (1) | $ | 70,249 | 3,256 | (8) | $ | 56,687 | |||||||||||||||||||||||
Michael Cavalier | | 12,711 4,824 10,501 10,557 | (2) (3) (4) (5) | $ $ $ $ | 221,299 83,986 182,822 183,797 |
| 3,938 | (9) | $ | 68,561 | 4,824 | (1) | 41,776 | |||||||||||||||||
Michael Cavalier | 2,626 | (2) | 22,741 | |||||||||||||||||||||||||||
| 39,624 | (3) | 343,144 | ||||||||||||||||||||||||||||
| 4,500 | (4) | 38,970 | ||||||||||||||||||||||||||||
| 24,145 | (6) | 209,096 | ||||||||||||||||||||||||||||
| 13,025 | (9) | 112,797 | ||||||||||||||||||||||||||||
| 15,752 | (10) | 136,412 | ||||||||||||||||||||||||||||
| 23,861 | (6) | $ | 415,420 | 63,380 | (11) | 548,871 | ||||||||||||||||||||||||
Valmir Fernandes | 3,363 | (1) | $ | 58,550 | 2,714 | (8) | $ | 47,251 | 4,074 | (1) | 35,281 | |||||||||||||||||||
| | 10,592 4,074 8,751 10,557 23,861 | (2) (3) (4) (5) (6) | $ $ $ $ $ | 184,407 70,928 152,355 183,797 415,420 |
| 3,281 | (9) | $ | 57,130 | 2,188 | (2) | 18,948 | ||||||||||||||||||
Valmir Fernandes | 33,020 | (3) | 285,953 | |||||||||||||||||||||||||||
| 19,988 | (6) | 173,096 | ||||||||||||||||||||||||||||
| 10,854 | (9) | 93,996 | ||||||||||||||||||||||||||||
| 13,125 | (10) | 113,663 | ||||||||||||||||||||||||||||
| 52,469 | (11) | 454,382 | ||||||||||||||||||||||||||||
Wanda Gierhart | 2,814 | (1) | 24,369 | |||||||||||||||||||||||||||
| 2,129 | (2) | 18,437 | ||||||||||||||||||||||||||||
| 25,126 | (3) | 217,592 | ||||||||||||||||||||||||||||
| 2,848 | (4) | 24,664 | ||||||||||||||||||||||||||||
| 18,573 | (6) | 160,842 | ||||||||||||||||||||||||||||
| 8,844 | (7) | 76,589 | ||||||||||||||||||||||||||||
| 5,628 | (9) | 48,738 | ||||||||||||||||||||||||||||
| 8,513 | (10) | 73,723 | ||||||||||||||||||||||||||||
| 48,754 | (11) | 422,210 | ||||||||||||||||||||||||||||
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| (1) |
|
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The number of shares of restricted stock granted on February 19, 2019 that remained outstanding as of December 31, |
The number of shares of restricted stock granted on February 19, 2020 that remain outstanding as of December 31, 2022. These shares vest on the fourth anniversary of the grant date. |
| (3) | The number of shares of restricted stock granted on February 19, 2021 as part of the annual grant cycle. |
| (4) | The number of shares of restricted stock granted on July 28, 2021 to Messrs. Gamble and Cavalier and Ms. Gierhart on July 28, 2021 as part of the executive realignment and salary increases as a result of increased roles. Twenty-five (25%) of these shares vest on the second anniversary of the grant date and seventy-five percent (75%) of these shares vest on the fourth anniversary of the grant date. |
| (5) | The number of shares of restricted stock awarded |
| (6) | The number of shares of restricted stock |
| (7) | The number of shares of restricted stock granted on February 23, 2022 to Ms. Gierhart as a special grant. These shares of restricted stock shall vest on the second anniversary of the date of grant. |
| (8) | The fair market value was calculated based on the closing price of Common Stock on December |
The number of shares of Common Stock underlying the |
|
The number of shares of Common Stock underlying the |
The |
STOCK OPTION EXERCISES AND STOCK VESTED IN 20202022
The following table provides information on the vesting of restricted stock and restricted stockperformance share units during 20202022 for each of the NEOs. There were no outstanding stock options for any of the NEOs as of December 31, 2020.
Stock Vested2022.
| Name | Stock Awards | Number of Shares Acquired on Vesting # (1) | Value Realized on Vesting(2) ($) | |||||||||
Number of Shares Acquired on Vesting(1) # | Value Realized on Vesting(2) ($) | |||||||||||
Lee Roy Mitchell | - | - | ||||||||||
Mark Zoradi | 124,679 | $ | 3,127,973 | |||||||||
Sean Gamble | 42,670 | $ | 1,044,633 | 42,921 | 754,852 | |||||||
Melissa Thomas | 45,499 | 555,543 | ||||||||||
Michael Cavalier | 37,094 | $ | 693,793 | 33,189 | 582,931 | |||||||
Valmir Fernandes | 36,126 | $ | 716,371 | 29,523 | 517,493 | |||||||
Wanda Gierhart | 18,876 | 331,151 | ||||||||||
| (1) | The reported numbers include Common Stock from the following vest events: |
Remaining |
|
Fifty percent of the restricted stock granted in |
|
Shares of Common Stock underlying |
| (iv) | Restricted stock granted in 2021 for merit increases to Messrs. Gamble, Cavalier and Fernandes and Ms. Gierhart that vested on |
| (v) | Restricted stock granted in 2020 to Messrs. Gamble, Cavalier and Fernandes and Ms. Gierhart that vested on August 20, 2022; and |
|
| 45 |
| (2) | The aggregate dollar amount realized upon vesting was calculated based upon the closing price of our Common Stock on the following dates: |
February |
|
| (iii) | August 18, 2022 of $17.04; and |
| (iv) | November 7, 2022 of $12.21 |
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DISCUSSION OF THE TERMS OF THE EMPLOYMENT AGREEMENTS WITH OUR NEOS
We have employment agreements with our NEOs.Sean Gamble, Melissa Thomas, Michael Cavalier and Valmir Fernandes. Consistent with our compensation philosophy, the Company entered into the employment agreements to align the compensation of certain executive officers more closely with market competitive compensation.
Below is a summary of the key provisions of the current employment agreements of our NEOs.
Term
The initial terms of the employment agreements of Messrs. Mitchell, Gamble, Fernandes and Cavalier and Ms. Thomas is three years. At the end of each year, the term is extended for an additional one-year period unless the NEO’stheir employment is terminated.
Base salary
The base salaries are subject to review each year by our Compensation Committee for increase (but not decrease).
Cash Bonus
In addition to base salaries, the NEOs are eligible to receive a cash bonus upon the Company meeting certain performance targets set by the Compensation Committee for the year. Mr. Zoradi’sMs. Thomas’ target cash bonus shall not be less than 100%90% of his base salary and the maximum target shall not be less than 150% of hisher base salary.
Long-term Equity Incentive Awards
The NEOs are entitled to participate in and receive grants of long-term equity incentive awards. Mr. Zoradi’s long-termMs. Thomas’ annual equity incentive awards must be at least 200%175% of hisher base salary.
Benefits
The NEOs qualify for our 401(k) matching program and are also entitled to certain additional benefits including life insurance and disability insurance. Pursuant to his employment agreement, Mr. Mitchell is entitled to life insurance benefits of not less than $5 million and disability benefits of not less than 66% of his base salary.
Perquisites
Under his employment agreement, Mr. Mitchell is entitled to a luxury automobile and a membership at a country club. Currently, Mr. Mitchell does not have a luxury automobile, or a country club membership paid for by the Company. Unless Mr. Mitchell’s employment is terminated by us for cause or under a voluntary termination, Mr. Mitchell will also be entitled to, for a period of five years, tax preparation assistance upon termination of his employment.
Mr. Zoradi is entitled to receive an annual allowance of $30,000 for personal travel and living expenses, reduced by standard withholding and other authorized deductions.
The employment agreements of Messrs. Zoradi, Gamble, Fernandes and Cavalier and Ms. Thomas provide that, unless the executive’s employment is terminated by us for cause the executive will be entitled to office space and support services for a period of not more than three (3) months following the date of any termination.
Covenants
All of theour NEO’s employment agreements contain various covenants, including covenants related to confidentiality and non-competition (other than certain permitted activities as defined therein). In addition, Mr. Mitchell’s employment agreement has a covenant of non-solicitation (as defined in the employment agreement). All non-compete covenants have a term of one year after termination of the executive’s employment. However, if employment is terminated by the NEO for
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Good Reason (as defined in the employment agreements), the covenant of non-competition becomes null and void. The non-solicitation covenant in Mr. Mitchell’s employment agreement has a term of three years after termination of Mr. Mitchell’s employment.
Severance Payments
The employment agreements provide for severance payments upon termination of employment, the amount and nature of which depends upon the reason for termination.
Termination for Good Reason or Without Cause
If Mr. Mitchell is terminated by us without cause, Mr. Mitchell shall receive accrued compensation (which includes unpaid base salary, a pro rata cash bonus for the year in which the termination occurs and any previously vested long-term equity incentive awards and benefits such as retirement benefits and vacation pay, in accordance with the terms of the plan or agreement pursuant to which such long-term equity incentive awards or benefits were granted) through the date of termination (Accrued Employment Entitlements); an amount equal to Mr. Mitchell’s base salary in effect as of the date of such termination, payable in accordance with the Company’s normal payroll practices for a period of twelve (12) months; an amount equal to the most recent cash bonus Mr. Mitchell received for the year prior to the date of such termination, payable within thirty (30) days of termination and Mr. Mitchell and his dependents will be entitled to continue to participate in the Company’s welfare benefit plans and insurance programs for twelve (12) months from the termination date. Any outstanding stock options granted to Mr. Mitchell shall be vested and/or exercisable for the period through the date of such termination of employment, and shall remain exercisable, in accordance with the terms contained in the plan and the agreement pursuant to which such option awards were granted.
If Mr. Mitchell resigns for good reason (as defined in his employment agreement), he shall receive all of the above stated payments and benefits except that the base salary shall be payable in a lump sum subject to the requirements of Section 409A of the Code.
If Mr. Zoradi resigns for good reason (as defined in the agreement), is terminated by us without cause or upon expiration of the term of the employment agreement, he shall receive, the Accrued Employment Entitlements; an amount equal to his base salary in effect as of the date of such termination payable in accordance with the Company’s normal payroll practices through the end of the term, subject to the requirements of Section 409A of the Code; he and his dependents will be entitled to continue to participate in the Company’s welfare benefit plans and insurance programs for a period of twenty-four (24) months from the termination date; any outstanding long-term equity incentive awards with time-based vesting provisions shall become immediately vested as of the termination date and any long-term equity incentive awards with performance-based vesting provisions shall remain outstanding through the remainder of the applicable performance period, and if or to the extent the performance provisions are attained, shall become vested without regard to any continued employment requirement.
If Messrs. Gamble, Fernandes or Cavalier or Ms. Thomas is terminated by us without cause, the executive shall receive (i) base salary due through the date of the termination, (ii) a prorated bonus, if earned and (iii) previously-vested equity awards and employment benefits (the “Accrued Employment Entitlements;Entitlements”); two times the base
| 46 |
salary in effect as of the date of such termination, payable in accordance with the Company’s normal payroll practices for a period of twenty-four (24) months;months, subject to the requirements of Section 409A of the Code; an amount equal to the cash bonus target in the year of termination, payable in a lump sum within thirty (30) days of termination for Mr. Gamble and Ms. Thomas; an amount equal to the most recent cash bonus received by the executive for the year ended prior to the date of such termination, payable in a lump sum within thirty (30) days of termination;termination, for Messrs. Fernandes and Cavalier; outstanding stock options will become fully vested and exercisable upon such termination; long-term equity incentive awards other than stock options with time-based vesting provisions shall become vested on a pro rata basis and long-term equity incentive awards other than stock options with performance-based vesting provisions shall remain outstanding through the remainder of the applicable performance period and if or to the extent the performance provisions are attained shall become vested on a pro rata basis without any regard to any continued employment requirement. The executive and executive’s dependents will also be entitled to continue to participate in the Company’s welfare benefit plans andhealth insurance programs for a period of twenty-four (24) months from the termination date.
If Messrs. Gamble, Fernandes or Cavalier or Ms. Thomas resigns for good reason (as defined in their respective employment agreement) the executive shall receive all of the above stated payments and benefits except that the base salary shall be payable in a lump sum subject to the requirements of Section 409A of the Code.
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Termination Due to Death or Disability
In the event an executive’s employment is terminated due to his death or disability (as defined in the employment agreement), the executive or histhe executive’s estate will receive: the Accrued Employment Entitlements; a lump sum payment equal to twelve (12) months of executive’s base salary as in effect at the time of termination, provided, in the case of disability, such amount shall be offset by the amount of base salary paid by the Company to executive or his representative following the date hethe executive was first unable to substantially perform his duties under histhe employment agreement through the date of termination, any benefits payable to executive and/or histhe executive’s beneficiaries in accordance with the terms of any applicable benefit plan and the executive (in disability) and executive’s dependents will be entitled to continue to participate in the Company’s welfare benefit plans andhealth insurance programs for twelve (12) months from the termination date. All outstanding long-term equity incentive awards shall vest in accordance with the terms of the incentive plan.
Termination for Cause or Voluntary Termination
In the event an executive’s employment is terminated by us for cause or under a voluntary termination (other than termination due to disability or good reason), the executive will receive accrued base salary through the date of termination and any previously vested rights under a stock option or similar award issued under an incentive compensation plan in accordance with the terms of such plan.
Termination Due to Change in control
Mr. Mitchell does not have a change in control provision in his employment agreement.Control
In the event an executive’s employment is terminated by us (other than for disability, death or cause) or by executive for good reason within one (1) year after a change in control (as defined in the employment agreement), the executive shall receive accrued compensation through the date of termination;termination and the sum of two times executive’s base salarysalary. Mr. Gamble and Ms. Thomas will also receive one and one half times the annual bonus target for the year in which the termination occurs and Messrs. Cavalier and Fernandes will receive one and one half times the most recent cash bonus received by executive for any year ended prior to the date of termination payable in a lump sum within 30 days of termination andtermination. Each executive and executive’s dependents shall be entitled to continue to participate in the Company’s welfare benefit plans and insurance programs for a period of 30 months from the termination date. Any outstanding equity award granted to the executive shall become fully vested and/or exercisable as of the date of such termination and shall remain exercisable in accordance with the terms of the plan or agreement pursuant to which such long-term equity incentive awards were granted. If Mr. Gamble voluntarily terminates his employment after January 1, 2031 (i) any outstanding stock options granted to Mr. Gamble will be vested and/or exercisable for the period through the date of such termination of employment, and will remain exercisable, in accordance with the terms contained in the plan and the agreement pursuant to which such stock options were granted, (ii) any equity incentive award (other than stock options) with time-based vesting provisions granted to Mr. Gamble will be fully vested and (iii) any equity incentive awards with performance-based vesting provisions will remain outstanding through the remainder of the applicable performance period (without regard to any continued employment requirement) and, if or to the extent the performance provisions are attained, such equity incentive awards will become fully vested (without regarding to any continued employment requirement).
Information
| 47 |
The headings – Potential Payments Upon Termination by us Without Cause or by Executive for Good Reason, Potential Payments Upon Termination due to Change in Control and Potential Payments Upon Death or Disability provide informationon amounts payable had a termination for good reason, a change in control, death or disability occurred on December 31, 2020 may be found under the headings – Potential Payments UponTermination by us Without Cause or by Executive for Good Reason, Potential Payments Upon Termination due to Change in Control and Potential Payments Upon Death or Disability.2022.
The following tables provide the amounts payable to the NEOs pursuant to their respective employment agreements upon severance without cause, for a good reason, for cause, death or disability and change in control, assuming such triggering event occurred on December 31, 2020.2022.
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Potential Payments upon Termination by us Without Cause or by Executive for Good Reason
| Name | Salary (1) | Bonus (2) | Health Insurance(3) | Life and Disability Insurance(3) | Assistance(4) | Value of Equity Awards(5) | Total | Salary ($) (1) | Bonus ($) (2) | Health Insurance ($)(3) | Life and Disability Insurance ($)(3) | Assistance ($)(4) | Value of Equity Awards ($)(5) | Total ($) | ||||||||||||||||||||||||||||
Lee Roy Mitchell | $ | 1,020,001 | $ | 1,414,002 | $ | 6,124 | $ | 8,588 | $ | 86,500 | - | $ | 2,535,215 | |||||||||||||||||||||||||||||
Mark Zoradi | $ | 1,100,000 | $ | - | $ | 19,076 | $ | 35,163 | $ | 828 | $ | 8,549,163 | $ | 9,704,230 | ||||||||||||||||||||||||||||
Sean Gamble | $ | 1,320,000 | $ | 837,562 | $ | 27,340 | $ | 11,351 | $ | 828 | $ | 1,054,073 | $ | 3,251,154 | 1,650,000 | 2,371,875 | 42,942 | 15,398 | 828 | 1,730,140 | 5,811,183 | |||||||||||||||||||||
Melissa Thomas | 1,150,000 | 1,332,563 | 9,332 | 14,148 | 828 | 697,201 | 3,204,072 | |||||||||||||||||||||||||||||||||||
Michael Cavalier | $ | 1,110,025 | $ | 723,654 | $ | 27,340 | $ | 15,221 | $ | 828 | $ | 777,677 | $ | 2,654,745 | 1,170,000 | 1,501,305 | 26,960 | 31,240 | 828 | 788,120 | 3,518,453 | |||||||||||||||||||||
Valmir Fernandes | $ | 1,110,025 | $ | 615,762 | $ | 25,154 | $ | 30,748 | $ | 828 | $ | 669,989 | $ | 2,452,505 | 1,130,000 | 1,500,877 | 38,060 | 36,548 | 828 | 641,516 | 3,347,829 | |||||||||||||||||||||
| (1) | Based on the base salaries in effect as of December 31, |
| (2) | For Mr. |
| (3) | The amounts reported are calculated as follows: |
| (4) |
|
| (5) | The amounts reported have been determined based on the following provisions in the respective employment agreements. |
Pursuant to Mr. Zoradi’s employment agreements, any outstanding equity award with time-based vesting provisions would have vested as of the termination date. Any long-term equity incentive awards with performance-based vesting provisions would have remained outstanding through the remainder of the applicable performance period and if or to the extent the performance provisions are attained shall vest without regard to any continued employment requirement.
Pursuant to the employment agreements of Messrs. Gamble, Cavalier and Fernandes and Ms. Thomas, any outstanding long-term equity incentive awards with time-based vesting provisions would have vested on a pro rata basis. Any long-term equity incentive awards with performance-based vesting provisions would have remained outstanding through the remainder of the applicable performance period and, if or to the extent the performance provisions are attained, shall vest without regard to any continued employment requirement on a pro rata basis. There is no provision in Mr. Mitchell’s agreement for vest of any long-term equity incentive awards.
| 48 |
The pro rata basis for the long-term equity incentive awards is based on the percentage determined by dividing (i) the number of days from and including the grant date of such long-term equity incentive award through the termination date of the NEO’s employment, by (ii) the number of days from the grant date to the full vesting date/end of the applicable performance period, as applicable, of such long-term equity incentive awards.
|
Pursuant to the above, the The total number of shares of Common Stock subject to the long-term equity incentive awards that would have vested for each of Messrs. Zoradi, Gamble, Cavalier and Fernandes and Ms. Thomas on December 31, 20202022 are as follows:
Unvested Restricted Stock
| Name | Number of Shares | |||
| ||||
| ||||
Sean Gamble | ||||
Melissa Thomas | 62,790 | |||
Michael Cavalier | ||||
Valmir Fernandes | ||||
RestrictedUnvested Performance Stock Units outstanding including the 2019 and 2020 performance share units which were certified by the Compensation Committee at target, and in February 2023 performance share unit awards were certified at maximum.
| Name | Number of Shares | |||
| ||||
| ||||
Sean Gamble | ||||
Melissa Thomas | 17,718 | |||
Michael Cavalier | ||||
Valmir Fernandes | ||||
The values of the equity awards have been calculated using the closing price of Common Stock on December 31, 202030, 2022 of $17.41$8.66 per share.
Potential Payments upon Termination for Cause
If a NEO terminates his employment voluntarily, or is terminated for cause, we are only required to pay any accrued unpaid base salary through the date of such termination.
Potential Payments upon Termination due to Change in Control
| Name | Salary(1) | Bonus(2) | Health Insurance(3) | Life and Disability Insurance(3) | Assistance(4) | Value of Equity Awards(5) | Total | Salary ($)(1) | Bonus ($)(2) | Health Insurance ($)(3) | Life and Disability Insurance ($)(3) | Assistance ($)(4) | Value of Equity Awards ($)(5) | Total ($) | ||||||||||||||||||||||||||||
Lee Roy Mitchell | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
Mark Zoradi | $ | 2,200,000 | $ | 2,916,375 | $ | 23,845 | $ | 43,954 | $ | 828 | $ | 8,549,163 | $ | 13,734,165 | ||||||||||||||||||||||||||||
Sean Gamble | $ | 1,320,000 | $ | 1,256,343 | $ | 34,175 | $ | 14,189 | $ | 828 | $ | 2,755,098 | $ | 5,380,632 | 1,650,000 | 2,846,250 | 53,678 | 19,248 | 828 | 3,801,420 | 8,371,424 | |||||||||||||||||||||
Melissa Thomas | 1,150,000 | 1,591,313 | 11,665 | 17,685 | 828 | 1,769,636 | 4,541,127 | |||||||||||||||||||||||||||||||||||
Michael Cavalier | $ | 1,110,025 | $ | 1,085,481 | $ | 34,175 | $ | 19,027 | $ | 828 | $ | 2,034,359 | $ | 4,283,894 | 1,170,000 | 1,837,339 | 33,700 | 39,050 | 828 | 1,453,806 | 4,534,723 | |||||||||||||||||||||
Valmir Fernandes | $ | 1,110,025 | $ | 923,643 | $ | 31,443 | $ | 38,435 | $ | 828 | $ | 1,796,085 | $ | 3,900,458 | 1,130,000 | 1,831,803 | 47,575 | 45,685 | 828 | 1,175,318 | 4,231,209 | |||||||||||||||||||||
| (1) |
|
| (2) | The amounts reported |
| (3) | The amounts reported are calculated as follows: |
|
| (4) | Messrs. |
| (5) | The amounts reported have been determined based on the following provision in the respective employment agreements: upon termination due to change in control, any outstanding equity award granted to the NEO shall be fully vested and all restrictions shall lapse. |
Pursuant to the above, the total number of shares of Common Stock subject to the long-term equity incentive awards that would have vested on for each NEOof Messrs. Gamble, Cavalier and Fernandes and Ms. Thomas upon termination due to a change in control on December 31, 20202022 are as follows:
Unvested Restricted Stock:
| Name | Number of Shares | |||
| ||||
| ||||
Sean Gamble | ||||
Melissa Thomas | 142,049 | |||
Michael Cavalier | ||||
Valmir Fernandes | ||||
RestrictedUnvested Performance Stock Units outstanding, including the 2019 and 2020 performance stock units:units that were certified by the Compensation Committee at target and the 2022 performance share units that were certified by the Compensation Committee at maximum in February 2023.
| Name | Number of Shares | |||
| ||||
| ||||
Sean Gamble | ||||
Melissa Thomas | 62,297 | |||
Michael Cavalier | ||||
Valmir Fernandes | ||||
The values of the long-term equity incentive awards have been calculated using the closing price of our Common Stock on December 31, 202030, 2022 of $17.41$8.66 per share.
Potential Payments upon Termination due to Death or Disability
| Name | Salary(1) | Bonus(2) | Health Insurance(3) | Life and Disability Insurance(3) | Assistance(4) | Value of Equity Awards(5) | Total | Salary($)(1) | Bonus ($)(2) | Health Insurance ($)(3) | Life and Disability Insurance ($)(3) | Assistance ($)(4) | Value of Equity Awards ($)(5) | Total ($) | ||||||||||||||||||||||||||||||||||||||||||
Lee Roy Mitchell | $ | 1,020,001 | $ | - | $ | 6,124 | $ | 8,588 | $ | 86,500 | $ | 39,403 | $ | 1,160,616 | ||||||||||||||||||||||||||||||||||||||||||
Mark Zoradi | $ | 1,100,000 | $ | - | $ | 9,538 | $ | 17,582 | $ | 828 | $ | 6,485,834 | $ | 7,613,782 | ||||||||||||||||||||||||||||||||||||||||||
Sean Gamble | $ | 660,000 | $ | - | $ | 13,670 | $ | 5,675 | $ | 828 | $ | 1,054,073 | $ | 1,734,246 | 825,000 | 1,423,125 | 21,471 | 7,699 | 828 | 1,730,140 | 4,008,263 | |||||||||||||||||||||||||||||||||||
Melissa Thomas | 575,000 | 815,063 | 4,666 | 7,074 | 828 | 697,201 | 2,099,832 | |||||||||||||||||||||||||||||||||||||||||||||||||
Michael Cavalier | $ | 555,012 | $ | - | $ | 13,670 | $ | 7,611 | $ | 828 | $ | 777,677 | $ | 1,354,798 | 585,000 | 829,238 | 13,480 | 15,620 | 828 | 788,120 | 2,232,286 | |||||||||||||||||||||||||||||||||||
Valmir Fernandes | $ | 555,012 | $ | - | $ | 12,577 | $ | 5,374 | $ | 828 | $ | 669,989 | $ | 1,253,780 | 565,000 | 839,025 | 19,030 | 18,274 | 828 | 641,516 | 2,083,673 | |||||||||||||||||||||||||||||||||||
| (1) | The amounts reported are the base salary of each named executive officer in effect as of December 31, |
| (2) | The amounts reported are the cash bonus each NEO would |
| 50 |
| (3) | The amounts reported are calculated as follows: |
| (4) | Messrs. |
|
| (5) | The amounts reported have been determined based on the following provision in the respective employment agreements: any outstanding long-term equity incentive awards shall vest on a pro rata basis. Any long-term equity incentive awards with performance-based vesting provisions shall remain outstanding through the remainder of the applicable performance period and, if or to the extent the performance provisions are attained, shall vest without regard to any continued employment requirement on a |
Unvested Restricted Stock:
| Name | Number of Shares | |||
| ||||
| ||||
Sean Gamble | ||||
Melissa Thomas | 62,790 | |||
Michael Cavalier | ||||
Valmir Fernandes | ||||
Restricted stockUnvested Performance Stock Units outstanding including the 2019 and 2020 performance share units based onwhich were certified by the assumption thatCompensation Committee at target and the maximum IRR would be achieved over2022 performance share units which were certified at the relevant performance period:maximum.
| Name | Number of Shares | |||
| ||||
| ||||
Sean Gamble | ||||
Melissa Thomas | 17,718 | |||
Michael Cavalier | ||||
Valmir Fernandes | ||||
The values of the long-term equity incentive awards have been calculated using the closing price of our Common Stock on December 31, 202030, 2022 of $17.41$8.66 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Each member of the Compensation Committee qualifies as an independent, non-employee director and no member of the Compensation Committee has served as an officer or employee of the Company. During 2019, none of our executive officers served as a member of the board of directors or the compensation committee of any entity that has one or more executive officers serving on our Board or on the Compensation Committee of our Board.
DELINQUENT SECTION 16(a) REPORTS
To the Company’s knowledge, during 2020, all Section 16(a) filing requirements applicable to its insiders were complied with except for the late reporting on Form 4 for one transaction for each of Messrs. Zoradi, Gamble, Cavalier and Fernandes.
|
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 119,539,989 121,583,236 shares of Common Stock outstanding as of the Record Date. As of the Record Date, there were 1,153 1,295 holders of record of our Common Stock.
| Beneficial Ownership | ||||||||
| Names of Beneficial Owner | Number(1) | Percentage | ||||||
5% Stockholders | ||||||||
FMR LLC(2) | 15,268,540 | 13 | % | |||||
BlackRock, Inc.(3) | 12,284,669 | 10 | % | |||||
Wellington Management Group LLP(4) | 11,475,166 | 10 | % | |||||
The Vanguard Group(5) | 9,318,753 | 8 | % | |||||
Directors and NEOs | ||||||||
Lee Roy Mitchell(6) | 10,176,031 | 9 | % | |||||
Mark Zoradi(7) | 701,204 | * | ||||||
Sean Gamble(8) | 214,110 | * | ||||||
Michael Cavalier(9) | 256,536 | * | ||||||
Valmir Fernandes(10) | 139,081 | * | ||||||
Darcy Antonellis(11) | 22,223 | * | ||||||
Benjamin Chereskin(12) | 82,973 | * | ||||||
Nancy Loewe(13) | 16,549 | * | ||||||
Steven Rosenberg(13) | 61,943 | * | ||||||
Enrique Senior(13) | 68,054 | * | ||||||
Carlos Sepulveda(13) | 48,949 | * | ||||||
Raymond Syufy(13) | 28,902 | * | ||||||
Nina Vaca(13) | 23,946 | * | ||||||
Executive Officers & Directors as a Group (14 persons)(14) | 11,840,501 | 10 | % | |||||
* | Less than 1%. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | In computing the number of shares of Common Stock beneficially owned by a person and the percentage ownership of that person, the Company deemed outstanding shares of Common Stock subject to options held by that person that were currently exercisable at, or were exercisable within 60 days of, the Record Date. The Company did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. |
|
| (2) |
|
|
Based upon statements in Schedule 13G/A filed by BlackRock, Inc. on February |
| 52 |
| (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., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, |
Based upon statements in Schedule |
Based upon statements in Schedule 13G/A filed by The Vanguard Group on February |
Includes 4,419,095 shares of Common Stock owned by The Mitchell Special Trust. Mr. Mitchell is the co-trustee of The Mitchell Special Trust. Mr. Mitchell expressly disclaims beneficial ownership of all shares held by The Mitchell Special Trust. |
| (6) | Based upon statements in Schedule 13G filed by Orbis Investment Management Ltd. (“OIML”) and Allan Gray Australia Pty Ltd. (“AGAPL”, collectively, the Orbis Entities) on February 14, 2023, the Orbis Entities may be deemed to beneficially own the reported shares of common stock and have filed Schedule 13G as non-U.S. institutions. The Orbis Entities have sole power to vote or direct the vote of 8,790,744 shares. OMIL’s address is Orbis House, 25 Front Street, Hamilton Bermuda HM11, and AGAPL’s address is Level 2, Challis House, 4 Martin Place, Sydney NSW2000, Australia.. |
| (7) | Includes |
| (8) | Includes |
| (9) | Includes |
| (10) | Includes |
| (11) | Includes |
| (12) | Includes 8,406 shares of restricted stock. |
Includes |
|
| (14) | The numbers reported do not include |
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our officers, directors and persons who beneficially own more than ten percent of our common stock to file reports of ownership and changes in ownership with the SEC. With respect to our most recent fiscal year, there were two delinquent Section 16(a) reports: (i) the Statement of Changes in Beneficial Ownership on Form 4 filed by Caren Bedard on April 22, 2022, which reported a transaction of withholding of shares for tax liability for restricted stock that vested on April 3, 2022, and (ii) the Statement of Changes in beneficial Ownership on Form 4 filed by Enrique Senior on December 19, 2022, which reported a transaction that took place on December 9, 2022.
| 53 |
APPOINTMENT OF ACCOUNTING FIRM
| Item 3: | Ratification of the Appointment of Deloitte & Touche, LLP as our Independent registered public accounting firm for 2023. |
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 2023. As a matter of good corporate governance, we are seeking stockholder ratification of the appointment of Deloitte & Touche. If the stockholders do not ratify the appointment of Deloitte & Touche, the Audit Committee may review its future selection of auditors. Even if the selection is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public 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.
We paid the following fees (in thousands) to Deloitte & Touche and its affiliates for professional services rendered by them during 2022 and 2021, respectively:
| Fees | 2022 ($) | 2021 ($) | ||
Audit | 1,834.8 | 2,160.3 | ||
Audit Related | — | — | ||
Tax(1) | 74.4 | 81.6 | ||
Other | 3.3 | 3.3 | ||
Total | 1,912.6 | 2,245.2 | ||
| (1) | Fees primarily include transfer pricing studies and tax compliance services. |
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.
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 2023.
| The Board unanimously recommends a vote FOR the ratification of the appointment of Deloitte & Touche, LLP as our independent registered public accounting firm for 2023. |
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 & 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 2022 noted in the table below.
Audit Committee Report
The Audit Committee has reviewed and discussed with management the Company’s audited financial statements for 2022. We have discussed with Deloitte & 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 & Touche as required by the applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence and have discussed with Deloitte & Touche its independence. Based on the above review and discussions, we recommended to the Board that the audited financial statements for the Company be included in the Company’s 2022 Annual Report on Form 10-K for filing with the SEC.
Respectfully submitted,
Nancy Loewe (Chair)
Darcy Antonellis
Steven Rosenberg
Carlos Sepulveda
| 54 |
ADVISORY VOTE ON EXECUTIVE COMPENSATION VOTE FREQUENCY
| Item 4: | Advisory vote on the frequency of vote on our executive compensation program. |
This item affords stockholders the opportunity to cast an advisory vote on how often we should include a vote in our proxy materials for approval of our compensation program for the NEOs.
This advisory vote is non-binding on the Board. Stockholders will be able to specify one of four choices for this item on the proxy card: one year, two years, three years or abstain. Stockholders are not voting to approve or disapprove the Board’s recommendation. Although non-binding, the Board and the Compensation Committee will carefully review the voting results.
| Our Board unanimously recommends that an advisory vote on the compensation of the named executive officers be held every 1 year. |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Our Board has adopted a written policy supplementing our Code of Business Conduct and Ethics relating to the review, approval and ratification of transactions between us and “related parties” as generally defined by applicable rules under the Securities Act of 1933, as amended. The policy covers any related party transaction 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 theater 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 theater revenues. We recorded approximately $0.6 million of management fee revenue from Laredo during 2022. 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 theater. 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.
| 55 |
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 founder and a member of the Board through February 15, 2023, 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 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 2022, the aggregate amounts paid to the Operator for the use of the aircraft was less than $0.1 million.
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 theater 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 approximately $0.1 million of service fees during the year ended December 31, 2022.
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 served as a consultant to the Company under a Consultant Agreement until July 2022. Under the Consulting Agreement, Mr. Hebert received approximately $0.2 million during 2022.
Century Theatres
Our subsidiary, Century Theatres, currently leases 12 theaters 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 2022, we paid approximately $22.3 million in rent for these leases. Since 2019, we began providing digital equipment support to drive-in theaters owned by Syufy Enterprises, Inc. We recorded $31,500 of fees related to these services during 2022.
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. Lee Roy Mitchell (Class III) resigned from the Board effective February 15, 2023 and nominated his son, Kevin Mitchell as his replacement for the remainder of his term, which expires at the annual meeting in 2025. Mr. Sepulveda (Class II) is also a current nominee. Mr. Sepulveda was re-elected at the 2021 Annual Meeting.
GENERAL INFORMATION
Attending the Annual Meeting?
You may attend the meeting in-person at 3800 Dallas Parkway, Plano, Texas 75093.
Voting Procedures
If you are a stockholder of record, you may vote:
| ∎ | via the Internet – Visit www.proxypush.com/cnk. Follow the instructions shown on your proxy card; |
|
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
How do I attend the Company’s Annual Meeting?
To be admitted to the virtual-only Annual Meeting, stockholders as of the Record Date must use the following link: www.virtualshareholdermeeting.com/CNK2021 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:
| ∎ |
|
by telephone — Follow the instructions shown on your proxy |
| ∎ | 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 |
| ∎ | in person by attending the |
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. |
| ∎ | by attending the |
How can I submit questions for the Annual Meeting?
If you have questions pertaining to the businessDifference between a Stockholder of the Annual Meeting, you must submit itRecord and a Beneficial Owner who Holds Stock 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 18, 2021. 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/CNK2021. 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 II directors, to ratify the selection of Deloitte and Touche as our independent registered public accounting firm for 2021 and to hold a non-binding, advisory vote on our 2020 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 and Touche as our independent registered public accounting firm for 2021 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 2020. 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.
What is the Record Date and what does it mean?
The Record Date for the Annual Meeting is March 25, 2021. 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:Street Name
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right to grant your proxy directly to us or to a third party, or to vote at |
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 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”
| ∎ | Beneficial owners who hold 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” 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. SinceBecause a beneficial owner in street name is not the stockholder of record, you may not vote these shares at the Annual Meeting unless you obtain a voting instruction form from the broker or bank that holds your shares, giving you the right to vote the shares at the Annual Meeting.
How many shares must be present to holdQuorum for 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
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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?The Proxy Process
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, executive officers 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. It is important that you attend the Annual Meeting 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 happens if I do not give specific voting instructions?
Stockholder of Record.
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If you are a stockholder of record
“Routine” 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
then 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.
Beneficial Owner.
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 matters”, your broker or bank may not vote your shares for you. With respect to these “non-routine matters”, the aggregate number of unvoted shares is reported as “broker non-votes”.
Which ballot measures are called “routine” or “non-routine”?Non-Routine” Ballot Measures
Under the broker voting rules of the NYSE, the ratification of the appointment of Deloitte and& Touche as the Company’s independent registered public accounting firm for 20212023 (Item 2) is considered a “routine” matter, and the election of directors (Item 1) and the non-binding, annual advisory vote on executive compensation (Item 3) are considered “non-routine” matters.
What are broker non-votes?Broker Non-Votes and Abstentions
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” matters. A broker non-vote occurs when you do not provide the broker with voting instructions on “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.”
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How are broker non-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 requirementVoting Requirement for eachEach of the items?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 at 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 Form 8-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.
Approvalof Item 2: The ratification of the appointment of Deloitte and& Touche requires the affirmative vote of a majority of the votes cast by stockholders present at the Annual Meeting or represented by proxy at the Annual Meeting and entitled to vote thereon. Since this item is considered a “routine” matter, broker non-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 3:3: The advisory vote on executive compensation requires the affirmative vote of a majority of the votes cast by stockholders present at the Annual Meeting or represented by proxy at the Annual Meeting and entitled to vote thereon.
How doesAnnual for Item 4: This advisory vote is non-binding on the Board. Stockholders will be able to specify one of four choices for this item on the proxy card: one year, two years, three years or abstain. Stockholders are not voting to approve or disapprove the Board’s recommendation. Although non-binding, the Board recommend I vote?and the Compensation Committee will carefully review the voting results.
The Board recommends that you vote:
FOR each of the nominees for director;
FOR the ratification of the appointment of Deloitte and Touche as our independent registered public accounting firm for 2021; and
FOR the non-binding, advisoryChanging your 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 and voting your shares.
| ∎ | 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 and voting your shares. |
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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 if you have obtained a voting instruction form from your broker or bank giving you the right to vote your shares.
Who counts the votes?Inspector of Election
The Company has retained a representative of Broadridge Financial SolutionsMediant 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?Proxy Solicitation Costs
The Company pays for this proxy solicitation. We use Broadridge Financial Solutions,DFIN, 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.
HowObtaining Company Material
You can I obtain copiesalso visit our website at https://ir.cinemark.com for free access to our corporate governance documents and our filings with the SEC, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-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 Company’s annual reports and other available information about the Company?website is www.sec.gov.
Stockholders may receive a copy of the Company’s 20202022 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, Plano, Texas 75093.
You can also visit our Website at https://ir.cinemark.com/ for free access to our corporate governance documents and our filings with the SEC, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-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 is www.sec.gov.
DEADLINE FOR STOCKHOLDER PROPOSALS AND STOCKHOLDER DIRECTOR NOMINATIONS FOR THE 20222024 ANNUAL MEETING
For inclusion in the proxy statementStockholder proposals: Stockholder proposals, other than director nominations, requested to be included in ourthe proxy statement and form of proxy for our 20222024 annual meeting, must be in writing and received byno later than the endclose of business on December 3, 20217, 2023, and comply with Rule 14a-8 under the Exchange Act. Stockholder proposals for consideration at the 2024 annual meeting, but not for inclusion in the proxy materials, must be in writing, received by the Company’s Secretary at our principal executive offices at 3900 Dallas Parkway, 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 2022 annual meeting may do so in accordance with our by-laws. These procedures provide that stockholders who wish to bring a proper subject of business before the 2022 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 than 120 days before the anniversary date of the Annual Meeting and must be accompanied by the information listed below. As a result, any notice given by or on behalf of a stockholder pursuant to these provisions of our by-laws (and not pursuant to the SEC’s Rule 14a-8(e)) must be received no earlier than the opening of business on January 20, 2022,19, 2024, and no later than the close of business on February 19, 202218, 2024, submitted by a shareholder of record, and must set forth the information required by the Company’s by-laws.
Stockholder Director Nominations: Under the Company’s by-laws, notice by stockholders who intend to nominate directors at the 2024 annual meeting of stockholders must be in writing and received by the Company’s Secretary at our principal executive offices at 3900 Dallas Parkway, Plano, Texas 75093, Attention: Michael Cavalier, Company Secretary.no earlier than the opening of business on January 19, 2024, and no later than the close of business on February 18, 2024. Notice of director nominations must be submitted by a stockholder of record and must set forth the information required by the Company’s by-laws. If you are a beneficial owner of shares held in street name, you can contact the organization that holds your shares for information about how to register your shares directly in your name as a shareholder.
To recommend a candidate for electioncomply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the BoardCompany’s nominees for the 20222024 annual meeting of stockholders must provide timely notice by the same deadline noted in the preceding paragraph for the submission of nominations. Such notice must comply with the additional requirements of Rule 14a-19(b) under the Exchange Act.
Solicitation of Proxies for 2024 Annual Meeting of Stockholders
We intend to file a stockholder must submitproxy statement and white proxy card with the following information toSEC in connection with our solicitation of proxies for our 2024 annual meeting of shareholders. Shareholders may obtain our proxy statement (and any amendments and supplements thereto) and other documents as and when filed by the Company Secretary:
with the name and address ofSEC without charge from the stockholder of record and the beneficial owner, if any, on whose behalf the proposal is made;SEC’s website at: www.sec.gov.
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;
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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.
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.
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.
AVAILABILITY OF REPORT ON FORM 10-K
A free copy of the 2022 Annual Report Form 10-K may also be obtained at the website maintained by the SEC at www.sec.gov or by visiting our website at https://ir.cinemark.com/ and clicking on the “Financials” tab and then on “SEC Filings.” Upon your written request, we will provide to you a complimentary copy of our 20202022 Annual Report Form 10-K (without exhibits) as filed with the SEC. Your request should be mailed to the Company’s offices, addressed as follows: Cinemark Holdings, Inc., Attention: Company Secretary, 3900 Dallas Parkway, Plano, Texas 75093. A free copy of the 2020 Form 10-K may also be obtained at the website maintained by the SEC at www.sec.gov or by visiting our website at https://ir.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:
Cinemark Holdings, Inc.
3900 Dallas Parkway
Plano, Texas 75093
Attention: Michael Cavalier, SecretaryApril 6, 2023
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ANNEX A: SUPPLEMENTAL FINANCIAL INFORMATION
By OrderReconciliation of the Board of Directors,Adjusted EBITDA
(unaudited, in millions)
| Twelve Months Ended December 31, | ||||||||||||
| 2022 | 2021 | 2020 | ||||||||||
Net loss | $ | (268.0 | ) | $ | (422.2 | ) | $ | (617.9 | ) | |||
Add (deduct): | ||||||||||||
Income taxes | 3.0 | (16.8 | ) | (309.4 | ) | |||||||
Interest expense | 155.3 | 149.7 | 129.9 | |||||||||
Loss on extinguishment of debt | — | 6.5 | — | |||||||||
Other expense, net (a) | 23.6 | 43.5 | 62.4 | |||||||||
Distributions from DCIP (b) | — | — | 10.4 | |||||||||
Cash distributions from other equity investees (c) | 6.9 | 0.2 | 15.0 | |||||||||
Non-cash distributions from DCIP (d) | — | — | (12.9 | ) | ||||||||
Depreciation and amortization | 238.2 | 265.4 | 259.8 | |||||||||
Impairment of long-lived and other assets | 174.1 | 20.8 | 152.7 | |||||||||
(Gain) loss on disposal of assets and other | (6.8 | ) | 8.0 | (8.9 | ) | |||||||
Restructuring charges | (0.5 | ) | (1.0 | ) | 20.3 | |||||||
Non-cash rent expense | (10.8 | ) | (3.4 | ) | 2.3 | |||||||
Share based awards compensation expense (e) | 21.5 | 29.3 | 19.4 | |||||||||
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Adjusted EBITDA | $ | 336.5 | $ | 80.0 | $ | (276.9 | ) | |||||
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Michael Cavalier
Executive Vice President – General Counsel and Secretary
April 2, 2021
| (a) | Includes interest income, foreign currency exchange loss, equity in loss of affiliates and interest expense - NCM and excludes distributions from NCM and DCIP. |
| (b) | Includes cash distributions received from DCIP that were recorded as a reduction of the respective investment balances. These distributions are reported entirely within the U.S. operating segment. |
| (c) | Includes cash distributions received from equity investees, other than those from DCIP noted above, that were recorded as a reduction of the respective investment balances. These distributions are reported entirely within the U.S. operating segment. |
| (d) | Includes non-cash distribution of projectors from DCIP. These distributions are reported entirely within the U.S. operating segment. |
| (e) | Non-cash expense included in general and administrative expenses. |
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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CINEMARK HOLDINGS, INC.
ANNUAL MEETING OF STOCKHOLDERS
YOUR VOTE IS IMPORTANT! PLEASE VOTE BY: INTERNET Go To: www.proxypush.com/CNK " " Cast your vote online P.O. BOX 8016, CARY, NC 27512-9903 Have your Proxy Card ready " Follow the simple instructions to record your vote PHONECall 1-866-503-2691 " Use any touch-tone telephone " Have your Proxy Card ready " Follow the simple recorded instructions MAIL " Mark, sign and date your Proxy Card " Fold and return your Proxy Card in the postage-paid envelope provided Cinemark Holdings, Inc. Annual Meeting of Stockholders For Stockholders of record as of March 24, 2023 TIME: Thursday, May 20, 2021
18, 2023, 9:00 a.m. CDTAM, Central Time PLACE: Cinemark West Plano and XD Theater 3800 Dallas Parkway, Plano, TX 75093-7859 This proxy is being solicited on behalf of the Board of Directors The undersigned hereby appoints Melissa Thomas and Michael Cavalier (the "Named Proxies"), and each or either of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to vote all the shares of capital stock of Cinemark Holdings, Inc., which the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED IDENTICAL TO THE BOARD OF DIRECTORS' RECOMMENDATION. This proxy, when properly executed, will be voted in the manner directed herein. In their discretion, the Named Proxies are authorized to vote upon such other matters that may properly come before the meeting or any adjournment or postponement thereof. You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the Board of Directors_ recommendation. The Named Proxies cannot vote your shares unless you sign (on the reverse side) and return this card. PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE
www.virtualshareholdermeeting.com/CNK2021
Important Notice Regarding the AvailabilityCinemark Holdings, Inc. Annual Meeting of Proxy MaterialsStockholders Please make your marks like this: X THE BOARD OF DIRECTORS RECOMMENDS A VOTE: FOR ON PROPOSALS 1, 2 AND 3 THE BOARD RECOMMENDS THAT AN ADVISORY VOTE ON THE COMPENSATION FOR NAMED EXECUTIVE OFFICERS BE HELD EVERY 1 YEAR. BOARD OF DIRECTORS PROPOSAL YOUR VOTE RECOMMENDS 1. Election of Directors FOR WITHHOLD 1.01 Nancy Loewe FOR #P2# #P2# 1.02 Steven Rosenberg FOR #P3# #P3# 1.03 Enrique Senior FOR #P4# #P4# 1.04 Nina Vaca FOR #P5# #P5# FOR AGAINST ABSTAIN 2. Advisory vote to approve compensation of named executive officers. FOR #P6# #P6# #P6# 3. Ratification of independent registered public accounting firm Deloitte & Touche LLP FOR for the Annual Meeting:
The Form 10-Kfiscal year ending December 31, 2023. #P7# #P7# #P7# 1YR 2YR 3YR ABSTAIN 4. Advisory vote on the frequency of vote on our executive compensation program. 1 YEAR #P8# #P8# #P8# #P8# Check here if you would like to attend the meeting in person. Authorized Signatures - Must be completed for your instructions to be executed. Please sign exactly as your name(s) appears on your account. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and Noticeauthority. Corporations should provide full name of corporation and Proxy Statement are available at www.proxyvote.comtitle of authorized officer signing the Proxy/Vote Form. Signature (and Title if applicable) Date Signature (if held jointly) Date
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