| ∎ | ▪Companies within a specified range of the Company’s revenues and market capitalization. ▪Companies within media and entertainment, leisure facilities and restaurant industries. ▪Companies with which we may compete for executive talent. | | | 30 |
|
∎
| Companies within media and entertainment, leisure facilities and restaurant industries.
|
| ∎ | Companies with which we may compete for executive talent.
|
The Peer Group is reviewed, updated, and approved annually by the Compensation Committee and may change periodically. The 20222023 Peer Group was comprised of the following companies:
| | |
|
| | |
| | | | AMC Entertainment Holdings, Inc. | | Lions Gate Entertainment Corp. | | Bloomin’ Brands, Inc. | Brinker International, Inc. |
|
|
| Cedar Fair, L.P. | Cineplex, Inc | Cineworld Group, LLC |
|
|
| Dave & Buster’s Entertainment, Inc. | Hyatt Hotels Corporation | IMAX Corporation |
|
|
| Lions Gate Entertainment Corp. | Live Nation Entertainment, Inc. | | IMAXSix Flags Entertainment Corporation | | | | Brinker International, Inc. | | The Madison Square Garden Company | Wyndham Hotels & Resorts, Inc. | 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 committeeCommittee 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 | | | Executive Chairman and Chief Executive Officer
| | 5 x | | | Executive Vice Presidents | | 2 x | | | Board of Directors | | 5 x |
| | | | |
| | | 34 | |
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 20232024 Annual Meeting, all named executive officers and all directors were in compliance, or working toward 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 risk-mitigating compensation program are: ▪appropriate mix of “short-term" vs. "long-term” pay and “fixed” vs. “variable” pay to reward overall performance; ▪Company performance measured against objective financial metrics during; ▪portion of individual cash bonus payout tied to the individual’s ABO ratings, which mitigate risks associated with compensation are:measures the performance of the individual’s goals set against the Company’s strategic objectives for the year; | | ∎ | appropriate mix of “short- vs. long-term” pay and “fixed” vs. “variable” pay to reward overall performance;
|
| ∎31 | company performance measured against objective financial metrics during non-COVID-19 years;
|
| ∎ | portion of individual cash bonus payout tied to the individual’s ABO ratings, which measures the performance of the individual’s goals set against the Company’s strategic objectives for the year;
|
| ∎ | employees’ commitment to our culture of accountability reinforced through a comprehensive performance management and compensation system;
|
| ∎ | capped payout levels for incentive compensation;
|
| ∎ | stock ownership requirements for directors, NEOs and executive vice-presidents;
|
| ∎ | vest of a portion of long-term equity incentive awards linked to performance over a period of time (with overlapping performance periods during non-COVID-19 years);
|
| ∎ | validation of pay-for-performance on an annual basis by stockholders; and
|
| ∎ | unconditionally prohibits covered employees from hedging transactions, pledging of Company securities and holding Company securities in margin accounts.
|
The
▪employees’ commitment to our culture of accountability reinforced through a comprehensive performance management and compensation system; ▪capped payout levels for incentive compensation; ▪stock ownership requirements for directors, NEOs and executive vice-presidents; ▪vest of a portion of long-term equity incentive awards linked to Company will adoptperformance over time; ▪validation of pay-for-performance on an annual basis by stockholders; and ▪unconditionally prohibits covered employees from hedging transactions, pledging of Company securities and holding Company securities in margin accounts. In 2023, the Company adopted a written claw-backclawback policy that complies with the NYSE listing requirements once the listing requirements are issued by the NYSE and approved by the SEC.requirements. The claw-backclawback policy will requirerequires the Company to recover the amount of erroneously awarded performance-based compensation if the Company is required to preparefile an accounting restatement with the SEC due to the Company's 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 20222023 Annual Report on Form 10-K, and the Board has approved the recommendation.
Respectfully submitted, Nina Vaca (Chair) Benjamin Chereskin Darcy Antonellis Carlos Sepulveda
| | | | |
| | EXECUTIVE COMPENSATION | 35 | |
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
| | | | | | | | | | | Plan Category | | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights | | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the First Column) | | | | | Equity compensation plans approved by security holders | | 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 |
| | | | |
| | | 36 | |
SUMMARY COMPENSATION TABLE FOR 20222023 The following table sets forth summary information concerning the total compensation earned by our NEOs for each of the last three completed fiscal years.
| | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | Salary ($)(1) | | Bonus ($)(2) | | Stock Awards ($)(3) | | Non-Equity Incentive Plan Compensation ($)(4) | | All Other Compensation ($)(5) | | Total ($) | 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 International | | 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 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | 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) | 2023 | 900,000 | — | 5,399,991 | 2,443,500 | 59,002 | 8,802,493 | President and Chief Operating Officer | 2022 | 825,000 | — | 3,628,435 | 1,423,125 | 78,090 | 5,954,650 | | 2021 | 687,587 | — | 1,507,181 | 963,000 | 24,522 | 3,182,560 | Melissa Thomas | 2023 | 596,164 | | 1,049,985 | 1,017,900 | 28,107 | 2,692,156 | Executive Vice President – | 2022 | 575,000 | — | 987,849 | 815,063 | 19,868 | 2,397,780 | Chief Financial Officer | 2021 | 95,833 | 500,000 | 3,546,616 | — | — | 4,142,450 | Michael Cavalier | 2023 | 597,699 | — | 1,049,985 | 1,017,900 | 59,074 | 2,724,658 | Executive Vice President – | 2022 | 583,334 | — | 1,005,030 | 829,238 | 73,303 | 2,490,905 | General Counsel & Business Affairs, Secretary | 2021 | 563,578 | — | 952,966 | 672,067 | 29,086 | 2,217,697 | Valmir Fernandes | 2023 | 577,699 | — | 869,985 | 1,023,120 | 56,712 | 2,527,516 | President – Cinemark | 2022 | 563,336 | — | 832,005 | 839,025 | 68,350 | 2,302,716 | International | 2021 | 555,012 | — | 736,396 | 661,852 | 31,775 | 1,985,034 | Wanda Gierhart(7) | 2023 | 537,699 | — | 1,309,982 | 712,530 | 42,558 | 2,602,769 | 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 reflecting the reductions in base salary from April through August 2020. See Executive Compensation Components-Base Salary for discussions on how base salary is determined. Ms. Thomas was employed as of November 8, 2021. The amount shown reflects the pro-rata amount paid during 2021 based upon an annual salary of $575,000.
|
| (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 performance share units at target granted in February of each year, the retention equity grant awarded in August 2020, the bonus equity grant awarded in December 2020, the merit increase grants on March 10, 2021 and the special grants to Messrs. Gamble and Cavalier on July 28, 2021 as part of the reorganization of the executive leadership team announced in connection with Mark Zoradi’s retirement. Ms. Thomas was granted 163,816 shares of restricted stock as part of her Employment Agreement which will vest over 4 years. For more information on the vesting of Ms. Thomas’s
(1)Ms. Thomas was employed as of November 8, 2021. The amount shown for salary in 2021 reflects the pro-rata amount paid during 2021 based upon an annual salary of $575,000. (2)Ms. Thomas received a $500,000 sign-on bonus in February 2022. (3)The reported numbers reflect the aggregate grant date fair market values of the annual restricted stock awards and performance stockunits at target granted in February of each year, the merit increase grants on March 10, 2021 and the special grants to Messrs. Gamble and Cavalier on July 28, 2021 as part of the reorganization of the executive leadership team announced in connection with Mark Zoradi’s retirement. Ms. Thomas was granted 163,816 shares of restricted stock in November 2021 as part of her Employment Agreement which vest over 4 years. For more information on the vesting of Ms. Thomas’ grant refer to the Company’s current report on Form 8-K filed with the SEC on October 13, 2021.
| | | 32 |
The values set forth in this column represent the aggregate grant date fair value of time-based restricted stock and performance-based performance stock units computed in accordance with FASB ASC Topic 718 (excluding the effect of estimated forfeitures). The grant date fair values of the performance stock units are based on target achievement as the most probable outcome, computed in accordance with FASB ASC Topic 718. See Note 18 to the Company’s 20222023 Annual Report on Form 10-K for a discussion of the assumptions used in determining the grant date fair values of long-term equity incentive awards, including forfeiture assumptions and the period over which the Company will recognize compensation expense for such awards.
As required by the rules of the SEC, the table below provides the grant date fair values of the performance sharestock units at the maximum level of payment. However, as certified by the Compensation Committee, 100% and 175% of the target opportunity of the performance sharestock units awarded in 20202022 was certified by the Compensation Committee and 2022 respectively shall vest.vest in 2025. No performance sharestock units were issued in 2021.
| Name | | 2020 ($) | | 2022 ($) | | 2022 ($) | | 2023 ($) | | Sean Gamble | | 1,286,856 | | 3,812,700 | | 3,812,700 | | 6,479,994 | | Melissa Thomas | | N/A | | 1,037,245 | | 1,037,245 | | 1,259,992 | | Michael Cavalier | | 885,420 | | 1,055,277 | | 1,055,277 | | 1,259,992 | | Valmir Fernandes | | 737,796 | | 873,609 | | 873,609 | | 1,043,993 | | Wanda Gierhart | | N/A | | 811,754 | | 811,754 | | 971,998 | |
| | | | |
| | (4)The reported amounts are the cash bonuses earned for the respective fiscal years. The cash bonuses earned for a fiscal year are paid in the first quarter of the following year subject to the attainment of performance targets set by the Compensation Committee at the beginning of the covered fiscal year. The cash bonuses for 2021 were paid on March 2, 2022. The cash bonuses for 2022 were paid on March 1, 2023. The cash bonuses for 2023 were paid on February 28, 2024. See Executive Compensation Components–CashBonus for a discussion of how cash bonus is set. (5)The compensation reported in this column includes the following: | 37 | |
| | | | | Name | Fiscal Year | Annual Matching Contributions to 401(K) Savings Plan and HSA ($) | Life, Group and Disability Insurance Premiums Paid by Company ($) | Dividends Paid on Restricted Stock and Vested RSU(i) ($) | Sean Gamble | 2023 | 21,050 | 7,701 | 30,251 | | 2022 | 19,550 | 7,699 | 50,841 | | 2021 | 18,025 | 6,497 | — | Melissa Thomas | 2023 | 21,050 | 7,057 | | | 2022 | 12,794 | 7,074 | — | | 2021 | — | — | — | Michael Cavalier | 2022 | 21,050 | 15,621 | 22,403 | | 2022 | 19,550 | 15,620 | 38,133 | | 2021 | 18,650 | 13,215 | — | Valmir Fernandes | 2023 | 19,800 | 18,243 | 18,669 | | 2022 | 18,300 | 18,274 | 31,776 | | 2021 | 17,400 | 10,436 | — | Wanda Gierhart | 2023 | 21,050 | 11,828 | 9,680 | | 2022 | 19,550 | 11,856 | 16,140 |
(i) | (4) | 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 cash bonus payouts for 2020 were paid as a discretionary bonus equal to 75% of target using restricted stock withDividends paid on all outstanding restricted stock, and dividends paid on performance stock units at the time of vest of the underlying Common Stock. The performance stock units granted in 2019 vested in February 2023.
(6)Effective January 1, 2022, Mr. Gamble was promoted to President and Chief Executive Officer and received a salary increase as a result. Prior to January 1, 2021, Mr. Gamble was our Chief Financial Officer. (7)Ms. Gierhart became a named executive officer after Lee Roy Mitchell’s resignation as Executive Chairman in May 2022; therefore, no information is provided for 2021. See Executive Compensation Components-Base Salary for discussions on how base salary is determined. one-year vesting period. See footnote 2 of this table. The cash bonuses for 2021 were paid on March 2, 2022. The cash bonuses for 2022 were paid on March 1, 2023. See Executive Compensation Components–Cash Bonus for a discussion of how cash bonus is set.
|
| (5) | The compensation reported in this column include the following:
|
| | | | | | | | | | | | | | | | | | | Name | | Fiscal Year | | Annual Matching Contributions to 401(K) Savings Plan and HSA ($) | | | | | Life, Group and Disability Insurance Premiums Paid by Company ($) | | | | Dividends Paid on Restricted Stock and Vested RSU(i) ($) | | | | 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 performance stock units at the time of vest of the underlying Common Stock. The performance stock units granted in 2018 vested in February 2022.
|
(6) | Effective January 1, 2022, Mr. Gamble was promoted to President and Chief Executive Officer and received a salary increase as a result.
|
(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 20222023, see Principal Elements of Our 20222023 Executive Compensation on page 2825 for 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 20222023 table on page 4334 for details of the equity granted in 20222023 and Discussion of the Terms of the Employment Agreements on page 4636 for compensation pursuant to the terms of the respective employment agreements. | | | | |
| | 33 | 38 | |
Pay Versus Performanc
e Table | | | | | | | | | | | | | | | | | | | | Pay Versus Performance Table | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Value of Initial Fixed $100 Investment Based on: | | | | | | | | | | | | | | Average CAP to Non-CEO NEOs ($) (4) | | Total Shareholder Return ($) | | Peer Group Total Shareholder Return ($) (5) | | | | 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 (“”) to the CEO reduces the amounts shown in the Summary Compensation Table (“”) by (x) deducting (i) the net decrease in the grant date fair value of equity awards issued to Sean Gamble in 2022 and the fair value of such equity awards as of December 30, 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 12/31/2022 and (y) adding the net increase of the fair value of prior year 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 as that amount has been certified by the Compensation Committee and remains subject to time-based vesting. |
For 2021, the CAP to the CEO reduces the amount shown in the Summary Compensation Table by deducting (i) the decrease in the grant date fair value as for equity awards granted to Mark Zoradi in 2021 which vested in 2021 compared to the fair value of such equity awards on the vest date and (ii) the net decrease in the fair value of prior year equity awards issued to Mark Zoradi that vested in 2021 using the fair value of such equity awards on the vesting date compared to the fair value as of 12/31/2020. All of the outstanding unvested equity awards for Mark Zoradi vested at the end of the term of his agreement in December 2021.
For 2020, the CAP to the CEO reduces the amount shown in the Summary Compensation Table by deducting (i) the net decrease in the grant date fair value of equity awards granted to Mark Zoradi in 2020 and the fair value of such awards as of 12/31/ 2020 (ii) the net decrease in the fair value of prior years unvested equity awards issued to Mark Zoradi outstanding as of 12/31/2019 using the fair value as of 12/31/2019 as compared to the fair value as of 12/31/2020 and (iii) the net decrease in the fair value of prior year equity awards issued to Mark Zoradi that vested in 2020 using the fair value on the vesting date as compared to the fair value as of 12/31/2019. The number of outstanding equity awards at 12/31/2019 includes performance share unit awards that have been certified by the Compensation Committee. For performance share unit awards for which the performance period has not lapsed, the amount included assumed achievement of threshold performance over the performance period as required by the rules of the SEC.
(3) | For 2022, ourNon-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 toNon-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 |
| 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 totime-based
vesting. |
For 2021, the CAP toNon-CEO
NEOs reduces the amount shown in the average Summary Compensation Table by deducting (i) the net decrease of the grant date fair value of equity awards issued in 2021 as compared to the fair value of such equity awards as of 12/31/2021, (ii) the net decrease in the fair value of prior years unvested equity awards outstanding as of 12/31/2020 as compared to the fair value of such equity awards and of 12/31/2021 and (iii) the net decrease of the fair value of prior years equity awards that vested in 2021 using the fair value on the vesting date compared to the fair value of such equity awards as of 12/31/2020.For 2020, the CAP toNon-CEO
NEOs reduces the amounts shown in the average Summary Compensation Table by deducting (i) the net decrease of the grant date fair value of equity awards issued in 2020 as compared to the fair value of such equity awards as of 12/31/2020, (ii) the net decrease in the fair value of prior years unvested equity awards outstanding as of 12/31/2019 as compared to the fair value of such equity awards as of 12/31/2020 and (iii) the net decrease of the fair value of prior year equity awards that vested in 2020 using the fair value of the equity awards on the vesting date compared to the fair value of such awards as of 12/31/2019. The number of equity awards outstanding as of 12/31/2019 includes performance share unit awards that have been certified by the Compensation Committee. For performance share unit awards for which the performance period has not lapsed, the amounts include assumed achievement of threshold performance over the performance period as required by the rules of the SEC.(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 the5-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). |
Three Most Important Measures for Determining NEO Pay
Measure 1 – Adjusted EBITDA
Measure 2 – Revenues
Measure 3 – Cash Flow
CEO PAY RATIO FOR 2022
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, 2022:
| ∎ | | 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:
| ∎ | | 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.
| | | | |
| | | 42 | |
GRANTS OF PLAN-BASEDPLAN-BASED AWARDS IN 20222023 The following table specifies the grants of awards made under our cash bonus and equity incentive plans to the NEOs in 2022.2023. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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 ($)(4) | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(5) | | | Grant date FV of Stock Awards ($)(6) | | | | | | | | | | | | | Threshold | | | | Target | | | | Maximum | | | | Threshold | | | | Target | | | | Maximum | | | | | | | | | | Sean Gamble | | | 2/23/22 | | | | 2/16/22 | | | | 474,375 | | | | 948,750 | | | | 1,423,125 | | | | 65,426 | | | | 130,852 | | | | 228,991 | | | | | | | | 3,812,700 | | | | | 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 | | | 2/23/22 | | | | 2/16/22 | | | | 263,250 | | | | 526,500 | | | | 789,750 | | | | 18,108 | | | | 36,217 | | | | 63,380 | | | | | | | | 1,055,277 | | | | | 2/23/22 | | | | 2/16/22 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 24,145 | | | | 402,014 | | Valmir Fernandes | | | 2/23/22 | | | | 2/16/22 | | | | 254,250 | | | | 508,500 | | | | 762,750 | | | | 14,991 | | | | 29,982 | | | | 52,469 | | | | | | | | 873,609 | | | | | 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 awards
|
(2) | The dates the Compensation Committee approved the bonus targets and grants of the long-term incentive awards
|
(3) | The reported numbers were the estimated future payouts calculated when the Compensation Committee set the target cash bonus percentages in February.
|
See “Executive
| | | | | | | | | | | Name | Grant Date(1) | Approval Date(2) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards ($)(3) | Estimated Future Payouts Under Equity Incentive Plan Awards (#)(4) | All Other Stock Awards: Number of Shares of Stock or Units (#)(5) | Grant date FV of Stock Awards ($)(6) | | | | Threshold | Target | Maximum | Threshold | Target | Maximum | | | Sean Gamble | 2/20/2023 | 2/15/2023 | 675,000 | 1,350,000 | 2,700,000 | 138,699 | 277,397 | 554,794 | | 3,239,997 | | 2/20/2023 | 2/15/2023 | | | | | | | 184,931 | 2,159,994 | Melissa Thomas | 2/20/2023 | 2/15/2023 | 270,000 | 540,000 | 810,000 | 26,969 | 53,938 | 107,876 | | 629,996 | | 2/20/2023 | 2/15/2023 | | | | | | | 35,958 | 419,989 | Michael Cavalier | 2/20/2023 | 2/15/2023 | 270,000 | 540,000 | 810,000 | 26,969 | 53,938 | 107,876 | | 629,996 | | 2/20/2023 | 2/15/2023 | | | | | | | 35,958 | 419,989 | Valmir Fernandes | 2/20/2023 | 2/15/2023 | 261,000 | 522,000 | 783,000 | 22,346 | 44,691 | 89,383 | | 521,991 | | 2/20/2023 | 2/15/2023 | | | | | | | 29,794 | 347,994 | Wanda Gierhart | 2/20/2023 | 2/15/2023 | 189,000 | 378,000 | 567,000 | 20,805 | 41,609 | 83,219 | | 485,993 | | 2/20/2023 | 2/15/2023 | | | | | | | 27,739 | 323,992 | | 2/20/2023 | 2/15/2023 | | | | | | | 42,808 | 499,997 |
(1)The grant date of the long-term incentive awards (2)The dates the Compensation ComponentsCommittee approved the bonus targets and grants of the long-term incentive awards (3)–The reported numbers were the estimated future payouts calculated when the Compensation Committee set the target cash bonus percentages in February. Short-TermSee “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 20222023
(4) | On February 23, 2022, as part of the annual grant cycle, the Compensation Committee awarded Messrs. Gamble, Cavalier and Fernandes and Mses. Thomas and Gierhart an aggregate maximum of 455,891 hypothetical shares of Common Stock as performance share
(4)On February 20, 2023, as part of the annual grant cycle, the Compensation Committee awarded Messrs. Gamble, Cavalier and Fernandes and Mses. Thomas and Gierhart an aggregate maximum of 943,148 hypothetical shares of Common Stock as performance stock units. See “Annual Equity Incentive Awards” on page 28 for a discussion of the performance stock units. Holders of performance stock units receive accumulated dividends that are attributable to the underlying Common Stock to the extent such dividend is declared by our Board and the Common Stock is issued at the time of vest. The accumulated dividend is paid at the same rate the dividend is paid to other stockholders. Our Board has currently suspended the payment of dividends. (5)On February 20, 2023, as part of the annual grant cycle, the Compensation Committee awarded Messrs. Gamble, Cavalier and Fernandes and Mses. Thomas and Gierhart an aggregate of 357,188 shares of restricted stock, of which 42,808 shares of restricted stock was a special grant to Wanda Gierhart, which will vest on the third anniversary of the date of grant. See “Annual Equity Incentive Awards” on page 28 for a discussion of the terms of the restricted stock awards. Holders of restricted stock receive non-forfeitable dividends to the extent declared by our Board, at the same rate paid to other stockholders of the Company. Our Board has currently suspended the payment of dividends. (6)For purposes of this table, the aggregate grant date fair values of performance stock units were determined based upon the target level of payment as the most probable outcome and were computed in accordance with FASB ASC Topic 718. The amounts shown exclude the impact of estimated forfeitures. See Note 18 to the Company’s 2023 Annual Report on Form 10-K, for discussion of the assumptions used in determining the grant date fair values of these share awards, including forfeiture assumptions, and the period over which the Company will recognize compensation expense for such awards. “Annual Equity Incentive Awards” on page 31 for a discussion of the performance share units. Holders of performance share units receive dividends that are attributable to the underlying Common Stock to the extent such dividend is declared by our Board and the Common Stock is issued at the time of vest. The accumulated dividend is paid at the same rate the dividend is paid to other stockholders. Our Board has currently suspended the payment of dividends.
|
(5) | On February 23, 2022, as part of the annual grant cycle, the Compensation Committee awarded Messrs. Gamble, Cavalier and Fernandes and Mses. Thomas and Gierhart an aggregate of 182,354 shares of restricted stock, of which 8,844 shares of restricted stock was a special grant to Wanda Gierhart, which will vest on the second anniversary of the date of grant. See “Annual Equity Incentive Awards” on page 31 for a discussion of the terms of the restricted stock awards. Holders of restricted stock receive non-forfeitable dividends to the extent declared by our Board, at the same rate paid to other stockholders of the Company. Our Board has currently suspended the payment of dividends.
|
(6) | For purposes of this table the aggregate grant date fair values of performance share units were determined based upon the maximum level of payment as the Compensation Committee has certified the performance share unit awards at maximum in February 2023 but remain subject to time-based vesting requirements. The amounts shown exclude the impact of estimated forfeitures. See Note 18 to the Company’s 2022 Annual Report on Form 10-K, for discussion of the assumptions used in determining the grant date fair values of these share awards, including forfeiture assumptions, and the period over which the Company will recognize compensation expense for such awards.
|
For a narrative description of the amounts reported in the Grants of Plan-Based Awards in 20222023, see “PrincipalPrincipal Elements of our 20222023 Executive Compensation”Compensation beginning on page 2725 for a discussion of the various elements of | | | | |
| | | 43 | |
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. | | | 34 |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2023YEAR-END 2022 The following table lists the restricted stock and performance stock units outstanding for each NEO as of December 31, 2022.2023. There were no stock options outstanding for any NEO as of December 31, 2022.2023.
| | | | | 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 ($) (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
| | Number of Shares or Units of Stock That Have Not Vested # | | Market Value of Shares or Units of Stock That Have Not Vested (12) | | 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 (12) | Sean Gamble | | | 6,426 | (1) | | 55,649 | | | | | 7,285 | (1) | | td02,646 | | 277,397 | (13) | $3,908,524 | | | 3,643 | (2) | | 31,548 | | | | | | | 56,544 | (3) | | 489,671 | | | | | | | 15,806 | (4) | | 136,880 | | | | | | | 87,072 | (6) | | 754,043 | | | | | | | 17,588 | (9) | | 152,312 | | | | | | | 22,893 | (10) | | 198,253 | | | | | | | 228,991 | (11) | | 1,983,062 | | | | | | | 14,136 | (2) | | $199,176 | | | | | | | 28,272 | (3) | | $398,352 | | | | | | | 11,855 | (4) | | $167,037 | | | | | | | 58,051 | (6) | | $817,939 | | | | | | | 22,893 | (8) | | $322,562 | | | | | | | 228,991 | (9) | | $3,226,483 | | | | | | | | | | | | 184,931 | (10) | | $2,605,678 | | | | | Melissa Thomas | | | 45,500 | (5) | | 394,030 | | | | | 72,817 | (5) | | td,025,992 | | 53,938 | (13) | $759,986 | | | 72,817 | (5) | | 630,595 | | | | | | | 23,732 | (6) | | 205,519 | | | | | | | 62,297 | (11) | | 539,492 | | | | | | | | | | | | 15,823 | (6) | | $222,946 | | | | | Michael Cavalier | | | 4,824 | (1) | | 41,776 | | | | | | | 2,626 | (2) | | 22,741 | | | | | | | 39,624 | (3) | | 343,144 | | | | | | | 4,500 | (4) | | 38,970 | | | | | | | 24,145 | (6) | | 209,096 | | | | | | 62,297 | (9) | | $877,765 | | | | | | | 35,958 | (10) | | $506,648 | | | | | Michael Cavalier | | | 13,025 | (9) | | 112,797 | | | | | 5,251 | (1) | | $73,987 | | 53,938 | (13) | $759,986 | | | 15,752 | (10) | | 136,412 | | | | | 9,906 | (2) | | td39,576 | | | | | | | 63,380 | (11) | | 548,871 | | | | | 19,812 | (3) | | td79,151 | | | | | | | | | | | 3,375 | (4) | | $47,554 | | | | | | 16,098 | (6) | | td26,821 | | | | | | 15,752 | (8) | | td21,946 | | | | | | | 63,380 | (9) | | $893,024 | | | | | | | 35,958 | (10) | | $506,648 | | | | | Valmir Fernandes | | | 4,074 | (1) | | 35,281 | | | | | 4,376 | (1) | | $61,658 | | 44,692 | (13) | $629,710 | | | 2,188 | (2) | | 18,948 | | | | | | | 33,020 | (3) | | 285,953 | | | | | | | 19,988 | (6) | | 173,096 | | | | | | | 10,854 | (9) | | 93,996 | | | | | | | 13,125 | (10) | | 113,663 | | | | | | | 8,321 | (2) | | $117,243 | | | | | | | 16,378 | (3) | | $230,766 | | | | | | | 13,326 | (6) | | $187,763 | | | | | | | 13,125 | (8) | | $184,931 | | | | | | | | 52,469 | (11) | | 454,382 | | | | | 52,469 | (9) | | $739,288 | | | | | | | | | | | | 29,794 | (10) | | $419,797 | | | | | Wanda Gierhart | | | 2,814 | (1) | | 24,369 | | | | | 4,257 | (1) | | $59,981 | | 41,610 | (13) | $586,285 | | | | 2,129 | (2) | | 18,437 | | | | | 6,426 | (2) | | $90,542 | | | | | | | | 25,126 | (3) | | 217,592 | | | | | 12,851 | (3) | | $181,071 | | | | | | | | 2,848 | (4) | | 24,664 | | | | | 2,136 | (4) | | $30,096 | | | | | | | | 18,573 | (6) | | 160,842 | | | | | 12,383 | (6) | | $174,476 | | | | | | | | 8,844 | (7) | | 76,589 | | | | | 8,844 | (7) | | $124,612 | | | | | | | | 5,628 | (9) | | 48,738 | | | | | 8,513 | (8) | | $119,948 | | | | | | | | 8,513 | (10) | | 73,723 | | | | | 48,754 | (9) | | $686,944 | | | | | | | | 48,754 | (11) | | 422,210 | | | | | 27,239 | (10) | | $383,798 | | | | | | | 42,808 | (11) | | $603,165 | | | | |
(1)The number of shares of restricted stock granted on February 19, 2020 that remained outstanding as of December 31, 2023. These shares vest on the fourth anniversary of the grant date. (2)The number of shares of restricted stock granted on February 19, 2021 as part of the annual grant cycle that remained outstanding as of December 31, 2023. 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. These shares vest on the fourth anniversary of the grant date. (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 that remained outstanding as of December 31, 2023. These shares vest on the fourth anniversary of the grant date. (5)The number of shares of restricted stock awarded on November 8, 2021. These shares granted shall vest 50% on November 8, 2024 and 50% on November 8, 2025. (6)The number of shares of restricted stock granted on February 23, 2022 as part of the annual grant cycle. These shares of restricted stock shall vest ratably over a three-year period. (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 grant date. | | | | |
| | 35 | 44 | |
(1) | The number of shares of restricted stock granted on February 19, 2019 that remained outstanding as of December 31, 2022. These shares vest on the fourth anniversary of the grant date.
|
(2) | 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. Twenty-five percent (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.
|
(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 on November 8, 2021. The remaining shares shall vest on November 8, 2023, and the 72,817 shares granted shall vest 50% on November 8, 2024 and 50% on November 8, 2025.
|
(6) | The number of shares of restricted stock granted on February 23, 2022 as part of the annual grant cycle. These shares of restricted stock shall vest ratably over a three-year period.
|
(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 30, 2022 of $8.66 per share.
|
(9) | The number of shares of Common Stock underlying the performance share units granted on February 19, 2019. In February 2021, as part of the discretion based decisions related to the impact of COVID-19, the Compensation Committee certified the performance of the 2019 performance stock units at target. The numbers reported in the chart above reflect the target amount. The performance stock units will remain subject to the additional two-year service requirement and vested on February 19, 2023.
|
(10) | The number of shares of Common Stock underlying the performance share units granted on February 19, 2020. In February 2021, as part of the discretion based decisions related to the impact of COVID-19, the Compensation Committee certified the performance of the 2020 performance share units at target. The numbers reported in the chart above reflect the target amount. The performance share units will remain subject to the additional two-year service requirement and will vest on February 19, 2024.
|
(11) | The number of shares of Common Stock underlying the performance share units granted on February 23, 2022. The reported numbers are based upon the achievement of the maximum performance over the one-year performance period. These performance share units remain subject to an additional two-year service requirement and will vest on February 23, 2025.
|
(8)The number of shares of Common Stock underlying the performance stock units granted on February 19, 2020. In February 2021, as part of the discretion based decisions related to the impact of COVID-19, the Compensation Committee certified the performance of the 2020 performance stock units at target. The numbers reported in the chart above reflect the target amount. The performance stock units will remain subject to the additional two-year service requirement and vested on February 19, 2024. (9)The number of shares of Common Stock underlying the performance stock units granted on February 23, 2022. The reported numbers are based upon the achievement of the maximum performance over the one-year performance period. These performance stock units remain subject to an additional two-year service requirement and will vest on February 23, 2025. (10)The number of shares of restricted stock granted on February 20, 2023 as part of the annual grant cycle. These shares of restricted stock shall vest ratably over a three-year period. (11)The number of shares of restricted stock granted on February 20, 2023 to Ms. Gierhart as a special grant. These shares of restricted stock shall vest on the third anniversary of the grant date. (12)The fair market value was calculated based on the closing price of Common Stock on December 29, 2023 of $14.09 per share. (13)The number of shares of Common Stock underlying the performance stock units granted on February 20, 2023. The reported numbers are based upon the achievement of target level of payment as the most probable outcome and were computed in accordance with FASB ASC Topic 718.
STOCK OPTION EXERCISES AND STOCK VESTED IN 20222023 The following table provides information on the vesting of restricted stock and performance sharestock units during 20222023 for each of the NEOs. There were no outstanding stock options for any of the NEOs as of December 31, 2022.2023.
| Name | | Number of Shares Acquired on Vesting # (1) | | Value Realized on Vesting(2) ($) | | Number of Shares Acquired on Vesting(1) | | Value Realized on Vesting(2) ($) | Sean Gamble | | 42,921 | | 754,852 | | 71,122 | | 879,762 | Melissa Thomas | | 45,499 | | 555,543 | | 53,409 | | 802,608 | Michael Cavalier | | 33,189 | | 582,931 | | 36,927 | | 445,040 | Valmir Fernandes | | 29,523 | | 517,493 | | 29,911 | | 356,622 | Wanda Gierhart | | 18,876 | | 331,151 | | 21,769 | | 264,149 |
(1) | The reported numbers include Common Stock from the following vest events:
|
| (i) | Remaining fifty percent of the restricted stock granted to Messrs. Gamble, Cavalier and Fernandes and Ms. Gierhart in 2018 that vested on February 19, 2022;
|
| (ii) | Fifty percent of the restricted stock granted in 2020 to Messrs. Gamble, Cavalier and Fernandes and Ms. Gierhart that vested on February 19, 2022;
|
| (iii) | Shares of Common Stock underlying restricted stock units granted in 2018 to Messrs. Gamble, Cavalier and Fernandes and Ms. Gierhart that vested February 19, 2022;
|
| (iv) | Restricted stock granted in 2021 for merit increases to Messrs. Gamble, Cavalier and Fernandes and Ms. Gierhart that vested on March 11, 2022;
|
| (v) | Restricted stock granted in 2020 to Messrs. Gamble, Cavalier and Fernandes and Ms. Gierhart that vested on August 20, 2022; and
|
| (vi) | Fifty percent of one of the sign-on grants of restricted stock to Ms. Thomas that vested on November 8, 2022.
|
| | | | |
| | | 45 | |
(1)The reported numbers include Common Stock from the following vest events: (i)Remaining fifty percent of the restricted stock granted to Messrs. Gamble, Cavalier and Fernandes and Ms. Gierhart in 2019 that vested on February 19, 2023; (ii)Fifty percent of the restricted stock granted in 2021 to Messrs. Gamble, Cavalier and Fernandes and Ms. Gierhart that vested on February 19, 2023; (iii)Shares of Common Stock underlying restricted stock units granted in 2019 to Messrs. Gamble, Cavalier and Fernandes and Ms. Gierhart that vested February 19, 2023; (iv)Restricted stock granted in 2021 to Messrs. Gamble and Cavalier and Ms. Gierhart that vested on July 20, 2023; and (v)Fifty percent of one of the sign-on grants of restricted stock to Ms. Thomas that vested on November 8, 2022. (2)The aggregate dollar amount realized upon vesting was calculated based upon the closing price of our Common Stock on the following dates: (i)February 17, 2023 of $11.68; (ii)February 22, 2023 of $12.77; (iii)July 27, 2023 of $16.09; and (iv)November 7, 2023 of $15.42
(2) | The aggregate dollar amount realized upon vesting was calculated based upon the closing price of our Common Stock on the following dates:
|
| (i) | February 17, 2022 of $17.85;
|
| (ii) | March 9, 2022 of $16.37;
|
| (iii) | August 18, 2022 of $17.04; and
|
| (iv) | November 7, 2022 of $12.21
|
DISCUSSION OF THE TERMS OF THE EMPLOYMENT AGREEMENTS We have employment agreements with 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. BelowThe following is a summary of the key provisions of the current employment agreements of our NEOs.NEOs:
Term The initial terms of the employment agreements of Messrs. 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 their 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. Ms. Thomas’ target cash bonus shall not be less than 90% of her base salary. | | | 36 |
Long-term Equity Incentive Awards The NEOs are entitled to participate in and receive grants of long-term equity incentive awards. Ms. Thomas’ annual equity incentive awards must be at least 175% of her 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. Perquisites The employment agreements of Messrs. 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 our NEO’s employment agreements contain various covenants, including covenants related to confidentiality and non-competition (other than certain permitted activities as defined therein). 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 Good Reasongood reason (as defined in the employment agreements), the covenant of non-competition becomes null and void. 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 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”); 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, 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, 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 health 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. Termination Due to Death or Disability In the event an executive’s employment is terminated due to death or disability (as defined in the employment agreement), the executive or the 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 representative following the date the executive was first unable to substantially perform duties under the employment agreement through the date of termination, any benefits payable to executive and/or the 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 health 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 | | | 37 |
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 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 and the sum of two times executive’s base salary. 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. 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). | | | | |
| | | 47 | |
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 provide information on amounts payable had a termination for good reason, a change in control, death or disability occurred on December 31, 2022.2023. 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, 2022.2023. 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 ($)(5) | | Total ($) | Sean Gamble | | 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 | | 1,170,000 | | 1,501,305 | | 26,960 | | 31,240 | | 828 | | 788,120 | | 3,518,453 | Valmir Fernandes | | 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, 2022, the amounts reported are calculated as two times the base salary for Messrs. Gamble, Cavalier and Fernandes and Ms. Thomas. Subject to Treasury Regulations as specified in the respective employment agreements, the amounts would have been payable according to the Company’s normal payroll practices for a period of 24 months to Messrs. Gamble, Cavalier and Fernandes and Ms. Thomas.
|
| | | | | | | | Name | Salary ($) (1) | Bonus ($) (2) | Health Insurance ($)(3) | Life and Disability Insurance ($)(3) | Assistance ($)(4) | Value of Equity Awards ($)(5) | Total ($) | Sean Gamble | 1,800,000 | 3,793,500 | 34,748 | 15,402 | 828 | 7,177,180 | 12,821,658 | Melissa Thomas | 1,200,000 | 1,557,900 | 34,748 | 14,114 | 828 | 2,058,426 | 4,866,016 | Michael Cavalier | 1,200,000 | 1,847,138 | 22,882 | 31,242 | 828 | 2,043,359 | 5,145,449 | Valmir Fernandes | 1,160,000 | 1,862,145 | 32,154 | 36,486 | 828 | 1,670,731 | 4,762,344 |
(2) | For Mr. Gamble and Ms. Thomas, the amounts reported are calculated using the target cash bonus for 2022 plus the cash bonus each would have received for 2022. For Messrs. Cavalier and Fernandes the amounts reported are calculated using the cash bonus received in 2021 plus the cash bonus each would have received for 2022. The reported amounts would have been payable to Messrs. Gamble, Cavalier and Fernandes and Ms. Thomas in a lump sum within 30 days of termination.
|
(1)Based on the base salaries in effect as of December 31, 2023, the amounts reported are calculated as two times the base salary for Messrs. Gamble, Cavalier and Fernandes and Ms. Thomas. Subject to Treasury Regulations as specified in the respective employment agreements, the amounts would have been payable according to the Company’s normal payroll practices for a period of 24 months to Messrs. Gamble, Cavalier and Fernandes and Ms. Thomas. (2)For Mr. Gamble and Ms. Thomas, the amounts reported are calculated using the target cash bonus for 2023 plus the cash bonus each would have received for 2023. For Messrs. Cavalier and Fernandes the amounts reported are calculated using the cash bonus received in 2022 plus the cash bonus each would have received for 2023. The reported amounts would have been payable to Messrs. Gamble, Cavalier and Fernandes and Ms. Thomas in a lump sum within 30 days of termination. (3)The amounts reported are calculated as follows: group health and dental insurance programs for a period of 12-24 months for Messrs. Gamble, Cavalier and Fernandes and Ms. Thomas. Life and Disability insurance includes premiums for basic life insurance, long-term disability, individual disability income protection and short-term disability. (4)Messrs. Gamble, Cavalier and Fernandes and Ms. Thomas are entitled to use our office space for a period of three months following the date of termination. The amount reported is based on the use of a 144 square foot office at a rental rate of approximately $23 per square foot per year. (5)The amounts reported have been determined based on the following provisions in the respective employment agreements. (3) | The amounts reported are calculated as follows: group health and dental insurance programs for a period of 12-24 months for Messrs. Gamble, Cavalier and Fernandes and Ms. Thomas. Life and Disability insurance includes premiums for basic life insurance, long-term disability, individual disability income protection and short-term disability.
|
(4) | Messrs. Gamble, Cavalier and Fernandes and Ms. Thomas are entitled to use our office space for a period of three months following the date of termination. The amount reported is based on the use of a 144 square foot office at a rental rate of approximately $23 per square foot per year.
|
(5) | The amounts reported have been determined based on the following provisions in the respective employment agreements.
|
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. | | | | |
| | 38 | 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. The total number of shares of Common Stock subject to the long-term equity incentive awards that would have vested for each of Messrs. Gamble, Cavalier and Fernandes and Ms. Thomas on December 31, 20222023 are as follows: Unvested Restricted StockStock:
| | | | | Name | | Number of Shares | | Sean Gamble | | | 94,176 | 186,645 | Melissa Thomas | | | 62,790 | 76,669 | Michael Cavalier | | | 44,204 | 59,718 | Valmir Fernandes | | | 35,176 | 47,853 |
Unvested Performance Stock Units:
Unvested Performance Stock Units outstanding, including the 2019 and 2020 performance sharestock units whichthat were certified by the Compensation Committee at target, andthe 2022 performance stock unit awards that were certified at maximum in February 2023 and the 2023 performance sharestock unit awards were certified at maximum.assuming maximum level payout.
| | | | | Name | | Number of Shares | | Sean Gamble | | | 105,609 | 322,736 | Melissa Thomas | | | 17,718 | 69,422 | Michael Cavalier | | | 46,803 | 85,304 | Valmir Fernandes | | | 38,902 | 70,723 |
The
Equity award values of the equity awards have beenwere calculated using the closing price of Common Stock on December 30, 202229, 2023 of $8.66$14.09 per share. Potential Payments upon Termination for Cause If a NEO terminates his employment voluntarily, or is terminated for cause, we are only required to pay any accrued unpaid base salary through the date of such termination. Potential Payments upon Termination due to Change in Control
| | | | | | | | | | | | | | | Name | | Salary ($)(1) | | Bonus ($)(2) | | Health Insurance ($)(3) | | Life and Disability Insurance ($)(3) | | Assistance ($)(4) | | Value of Equity Awards ($)(5) | | Total ($) | Sean Gamble | | 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 | | 1,170,000 | | 1,837,339 | | 33,700 | | 39,050 | | 828 | | 1,453,806 | | 4,534,723 | Valmir Fernandes | | 1,130,000 | | 1,831,803 | | 47,575 | | 45,685 | | 828 | | 1,175,318 | | 4,231,209 |
(1) | The amounts reported are calculated as follows: two times the base salary in effect as of December 31, 2022 payable in a lump sum within 30 days of such termination.
|
| | | | | | | | Name | Salary ($)(1) | Bonus ($)(2) | Health Insurance ($)(3) | Life and Disability Insurance ($)(3) | Assistance ($)(4) | Value of Equity Awards ($)(5) | Total ($) | Sean Gamble | 1,800,000 | 4,468,500 | 43,435 | 19,253 | 828 | 15,656,921 | 21,988,937 | Melissa Thomas | 1,200,000 | 1,827,900 | 43,435 | 17,643 | 828 | 4,153,323 | 7,243,129 | Michael Cavalier | 1,200,000 | 2,261,757 | 28,603 | 39,053 | 828 | 3,908,679 | 7,438,920 | Valmir Fernandes | 1,160,000 | 2,281,658 | 40,193 | 45,608 | 828 | 3,200,853 | 6,729,140 |
(2) | The amounts reported for Mr. Gamble and Ms. Thomas is equal to the amount each would have received for 2022 and one and a half times the 2022 bonus budget. The amounts reported for Messrs. Cavalier and Fernandes are equal to the amount each would have received for 2022 and one and a half times the bonus for 2021. In each case the amounts would be payable in a lump sum within 30 days of such termination.
|
(3) | The amounts reported are calculated as follows: group health and dental insurance programs for a period of 30 months. Disability insurance includes premiums for long-term disability, individual disability income protection and short-term disability.
|
| | | | |
| | (1)The amounts reported are calculated as follows: two times the base salary in effect as of December 31, 2023 payable in a lump sum within 30 days of such termination. (2)The amounts reported for Mr. Gamble and Ms. Thomas is equal to the amount each would have received for 2023 and one and a half times the 2023 bonus target. The amounts reported for Messrs. Cavalier and Fernandes are equal to the amount each would have received for 2023 and one and a half times the bonus for 2022. In each case the amounts would be payable in a lump sum within 30 days of such termination. (3)The amounts reported are calculated as follows: group health and dental insurance programs for a period of 30 months. Disability insurance includes premiums for long-term disability, individual disability income protection and short-term disability. | 49 | |
(4)(4) | Messrs. Gamble, Cavalier and Fernandes and Ms. Thomas are entitled to use our office space for a period of three months following the date of termination. The reported amount is based on the use of a 144 square foot office at a rental rate of approximately $23 per square foot per year.
| Messrs. Gamble, Cavalier and Fernandes and Ms. Thomas are entitled to use our office space for a period of three months following the date of termination. The reported amount is based on the use of a 144 square foot office at a rental rate of approximately $23 per square foot per year. (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. (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 for each of Messrs. Gamble, Cavalier and Fernandes and Ms. Thomas upon termination due to a change in control on December 31, 20222023 are as follows:
| | | 39 |
Unvested Restricted Stock:
| | | | | Name | | Number of Shares | | Sean Gamble | | | 169,491 | 304,530 | Melissa Thomas | | | 142,049 | 124,598 | Michael Cavalier | | | 75,719 | 90,400 | Valmir Fernandes | | | 59,270 | 72,195 |
Unvested Performance Stock Units:
Unvested Performance Stock Units outstanding, including the 2019 and 2020 performance stock units that were certified by the Compensation Committee at target, and the 2022 performance sharestock units that were certified by the Compensation Committee at maximum in February 2023.2023 and the 2023 performance stock units assuming maximum level payout.
| | | | | Name | | Number of Shares | | Sean Gamble | | | 269,472 | 806,678 | Melissa Thomas | | | 62,297 | 170,173 | Michael Cavalier | | | 92,157 | 187,008 | Valmir Fernandes | | | 76,448 | 154,977 |
Long-term equity incentive award values were calculated using the closing price of our Common Stock on December 29, 2023 of $14.09 per share. Potential Payments upon Termination due to Death or Disability
| | | | | | | | Name | Salary($)(1) | Bonus ($)(2) | Health Insurance ($)(3) | Life and Disability Insurance ($)(3) | Assistance ($)(4) | Value of Equity Awards ($)(5) | Total ($) | Sean Gamble | 900,000 | 2,443,500 | 17,374 | 7,701 | 828 | 7,177,180 | 10,546,583 | Melissa Thomas | 600,000 | 1,017,900 | 17,374 | 7,057 | 828 | 2,058,426 | 3,701,585 | Michael Cavalier | 600,000 | 1,017,900 | 11,441 | 15,621 | 828 | 2,043,359 | 3,689,149 | Valmir Fernandes | 580,000 | 1,023,120 | 16,077 | 18,243 | 828 | 1,670,731 | 3,308,999 |
(1)The amounts reported are the base salary of each named executive officer in effect as of December 31, 2023, payable in a lump sum. (2)The amounts reported are the cash bonus each NEO would receive for 2023 payable in a lump sum at the same time as the cash bonus payments are made to other similarly situated active executives.
(3)The amounts reported are calculated as follows: group health and dental insurance programs for a period of 12 months. Disability insurance includes premiums for long-term disability, individual disability income protection and short-term disability. (4)Messrs. Gamble, Cavalier and Fernandes and Ms. Thomas are entitled to use our office space for a period of three months following the date of termination. The reported amount is based on the use of a 144 square foot office at a rental rate of approximately $23 per square foot per year. (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 pro-rata basis. The pro rata basis for the long-term equity incentive awards is based on the percentage determined by dividing (i) the number of days from and including the grant date of such equity award through the termination 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. The participant or the participant’s estate or representative shall be entitled to receive any previously vested long-term equity incentive awards. Pursuant to the above, the total number of shares of Common Stock subject to the long-term equity incentive awards that would have vested upon death or disability of each of Messrs. Gamble, Cavalier and Fernandes and Ms. Thomas would have been as follows: Unvested Restricted Stock:
| | | Name |
| Number of Shares | Sean Gamble |
| 186,645 | Melissa Thomas |
| 76,669 | Michael Cavalier |
| 59,718 | Valmir Fernandes |
| 47,853 |
| | | 40 |
Unvested Performance Stock Units:
Unvested Performance Stock Units outstanding including the 2020 performance stock units that were certified by the Compensation Committee at target, the 2022 performance stock units which were certified at the maximum in February 2023 and the 2023 performance stock units assuming maximum payout.
| | Name | Number of Shares | Sean Gamble | 322,736 | Melissa Thomas | 69,422 | Michael Cavalier | 85,304 | Valmir Fernandes | 70,723 |
The values of the long-term equity incentive awards have been calculated using the closing price of our Common Stock on December 30, 202229, 2023 of $8.66$14.09 per share. Potential Payments upon Termination due to Death
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
| | | | Plan Category | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights(1) | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the First Column) | Equity compensation plans approved by security holders | 4,697,753 | — | 2,803,778 | Equity compensation plans not approved by security holders | — | — | — | Total | 4,697,753 | — | 2,803,778 |
(1)Includes shares that may be issued under performance stock unit awards if performance metrics are achieved. As of December 31, 2023, there is a maximum of 2,348,564 shares of performance stock units that have been certified or Disabilityare shares issuable under performance stock unit awards with remaining performance periods. Of such amounts, there are 1,471,904 shares issuable at maximum for performance stock unit awards with remaining performance periods.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Salary($)(1) | | | Bonus ($)(2) | | | Health Insurance ($)(3) | | | Life and Disability Insurance ($)(3) | | | Assistance ($)(4) | | | Value of Equity Awards ($)(5) | | | Total ($) | | Sean Gamble | | | 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 | | | 585,000 | | | | 829,238 | | | | 13,480 | | | | 15,620 | | | | 828 | | | | 788,120 | | | | 2,232,286 | | Valmir Fernandes | | | 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, 2022, payable in a lump sum41
|
CEO PAY RATIO FOR 2023 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 501 theaters and 5,719 screens in the U.S. and Latin America as of December 31, 2023, and our employee population consisted of approximately 67% part-time employees, many of whom were compensated on an hourly basis. For 2023, we used the same median employee, a theater team member who was paid hourly and employed on a part-time basis, that was identified in 2022 because there were no changes in our employee population or employee compensation that we reasonably believe would result in a significant change in the pay ratio disclosure.
The annual total compensation of our 2022 median-compensated employee was $10,152, and the annual total compensation of Sean Gamble our President and CEO during 2023, as reported in the Summary Compensation Table presented elsewhere in this proxy statement, was $8,802,493. Based on this information, the ratio of the total compensation of Mr. Gamble, to the annual total compensation of our median-compensated employee was 867 to 1. To identify our median employee in 2022, 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: ▪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 our 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.
Pay Versus Performance Table
The following is disclosure pursuant to the SEC's pay versus performance rules ("PVP Rules"). The PVP Rules create a new definition of pay referred to as Compensation Actually Paid ("CAP"), which is compared to certain performance measures as defined by the SEC. The amounts set forth below in the required table are calculated pursuant to SEC rules but do not represent amounts that have actually been earned or realized by our NEOs. Performance conditions for some of these awards have not yet been satisfied. The Compensation Committee does not utilize CAP as the basis for making compensation decisions. For a more detailed discussion on our compensation philosophy, please refer to Compensation Discussion and Analysis beginning on page 23. | (2) | | The amounts reported are the cash bonus each NEO would receive for 2022 payable in a lump sum at the same time as the cash bonus payments are made to other similarly situated active executives.42
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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 ($)(2) | | Total Shareholder Return ($) | | Peer Group Total Shareholder Return ($)(5) | | Net Income ($) | | Adjusted EBITDA (in millions) ($)(6) | | 2023 | | 8,802,493 | | 12,197,702 | | 2,636,775 | | 3,544,836 | | 42.28 | | 154.34 | | 188,200,000 | | 594.1 | | | | | | | | | | | | | | | | | | | | 2022 | | 5,954,650 | | 3,332,400 | | 2,304,413 | | 1,249,438 | | 25.98 | | 124.11 | | (271,200,000) | | 336.5 | | | | | | | | | | | | | | | | | | | | 2021 | | 7,753,272 | | 6,762,279 | | 2,767,255 | | 1,630,054 | | 48.36 | | 152.43 | | (422,800,000) | | 80.0 | | | | | | | | | | | | | | | | | | | | 2020 | | 6,915,289 | | 1,877,986 | | 1,883,730 | | 946,890 | | 52.24 | | 118.35 | | (616,800,000) | | (276.9) | |
(1)For 2022 and 2023, our CEO was Sean Gamble. For 2021 and 2020, our CEO was Mark Zoradi. (2)The table below sets forth the adjustments to Total Compensation as reported in the Summary Compensation Tables used in calculating the Compensation Actually Paid for each applicable year. Fair value, or changes in fair value, of equity awards was determined by reference to prices on applicable year-end dates or the actual vesting dates. For 2021, all of the outstanding unvested equity awards for Mark Zoradi vested at the end of the term of his employment agreement in December 2021.
| | | | | | | | | | | | | CEO | | Average for Non-CEO NEOs | | | 2023 | 2022 | 2021 | 2020 | | 2023 | 2022 | 2021 | 2020 | | | | | | | | | | | | SCT Total | | $8,802,493 | $5,954,650 | $7,753,272 | $6,915,289 | | $2,636,775 | $2,304,413 | $2,767,255 | $1,883,730 | | | | | | | | | | | | Less, value of Stock Awards reported in SCT | | $5,399,991 | $3,628,435 | $4,571,726 | $5,857,524 | | $1,069,987 | $936,305 | $2,057,955 | $1,301,064 | | | | | | | | | | | | Plus, year-end fair value of current year Equity Awards | | $6,514,202 | $1,887,222 | $3,650,260 | $4,079,720 | | $1,290,763 | $486,991 | $1,016,649 | $1,076,099 | | | | | | | | | | | | Plus, year-over-year change in fair value of oustanding unvested Equity Awards | | $2,017,153 | ($944,003) | — | ($2,167,088) | | $527,645 | ($590,280) | ($59,102) | ($451,356) | | | | | | | | | | | | Plus, year-over-year change in fair value of Equity Awards granted in prior year that vested in the year | | $263,845 | $62,966 | ($69,527) | ($1,092,411) | | $159,640 | ($15,381) | ($36,793) | ($260,519) | | | | | | | | | | | | Compensation actually paid | | $12,197,702 | $3,332,400 | $6,762,279 | $1,877,986 | | $3,544,836 | $1,249,438 | $1,630,054 | $946,890 |
(3)For 2022 and 2023, 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 our Non-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. (5)For the fiscal years ended 2020, 2021, 2022 and 2023, the peer group TSR includes the S&P 500 Index, AMC Entertainment Holdings, Inc. and IMAX Corporation, 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 4-year period ended 12/31/23, 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). Three Most Important Measures for Determining NEO Pay Measure 1 – Adjusted EBITDA Measure 2 – Revenues Measure 3 – Cash Flow
| | | | |
| | 43 | 50 | |
(3) | The amounts reported are calculated as follows: group health and dental insurance programs for a period of 12 months. Disability insurance includes premiums for long-term disability, individual disability income protection and short-term disability.
|
| (4) | | Messrs. Gamble, Cavalier and Fernandes and Ms. Thomas are entitled to use our office space for a period of three months following the date of termination. The reported amount is based on the use of a 144 square foot office at a rental rate of approximately $23 per square foot per year.44
|
(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 pro-rata basis. The pro rata basis for the long-term equity incentive awards is based on the percentage determined by dividing (i) the number of days from and including the grant date of such equity award through the termination 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. The participant or the participant’s estate or representative shall be entitled to receive any previously vested long-term equity incentive awards. Pursuant to the above, the total number of shares of Common Stock subject to the long-term equity incentive awards that would have vested upon death or disability of each of Messrs. Gamble, Cavalier and Fernandes and Ms. Thomas would have been as follows:
|
Unvested Restricted Stock:
| | | | | Name | | Number of Shares | | Sean Gamble
| | | 94,176 | | Melissa Thomas
| | | 62,790 | | Michael Cavalier
| | | 44,204 | | Valmir Fernandes
| | | 35,176 | |
Unvested Performance Stock Units outstanding including the 2019 and 2020 performance share units which were certified by the Compensation Committee at target and the 2022 performance share units which were certified at the maximum.
| | | | | Name | | Number of Shares | | Sean Gamble
| | | 105,609 | | Melissa Thomas
| | | 17,718 | | Michael Cavalier
| | | 46,803 | | Valmir Fernandes
| | | 38,902 | |
The values
| | | | |
| | | 51 | |
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 121,583,236 122,347,232 shares of Common Stock outstanding as of the Record Date. As of the Record Date, there were 1,295 1,169 holders of record of our Common Stock.
| | | | | | | | | | | | | Beneficial Ownership | | | | | Names of Beneficial Owner | | Number(1) | | | Percentage | | 5% Stockholders | | | | | | | | | BlackRock, Inc.(2) | | | 18,965,723 | | | | 15.6 | % | Wellington Management Group LLP(3) | | | 13,145,003 | | | | 10.8 | % | The Vanguard Group(4) | | | 12,598,530 | | | | 10.4 | % | Lee Roy Mitchell(5) | | | 10,176,031 | | | | 8.4 | % | Orbis Investment Management, Ltd.(6) | | | 8,790,744 | | | | 7.2 | % | | | | | | | | | | Directors and NEOs | | | | | | | | | Sean Gamble(7) | | | 689,538 | | | | * | | Melissa Thomas(8) | | | 264,504 | | | | * | | Michael Cavalier(9) | | | 345,498 | | | | * | | Valmir Fernandes(10) | | | 218,751 | | | | * | | Wanda Gierhart (11) | | | 192,003 | | | | * | | Darcy Antonellis(12) | | | 35,832 | | | | * | | Benjamin Chereskin(13) | | | 96,582 | | | | * | | Nancy Loewe(12) | | | 30,158 | | | | * | | Kevin Mitchell | | | 0 | | | | * | | Steven Rosenberg(12) | | | 75,552 | | | | * | | Enrique Senior(12) | | | 46,609 | | | | * | | Carlos Sepulveda(12) | | | 62,558 | | | | * | | Raymond Syufy(12) | | | 42,511 | | | | * | | Nina Vaca(12) | | | 37,555 | | | | * | | Mark Zoradi(12) | | | 513,970 | | | | * | | Executive Officers & Directors as a Group (15 persons)(14) | | | 2,176,481 | | | | 1.8 | % |
| | | | | | | Beneficial Ownership | Names of Beneficial Owner | | Number(1) | | Percentage | 5% Stockholders | | | | | BlackRock, Inc.(2) | | 17,655,782 | | 14.4% | Wellington Management Group LLP(3) | | 13,471,474 | | 11.0% | The Vanguard Group(4) | | 13,207,009 | | 10.7% | Orbis Investment Management, Ltd.(5) | | 12,315,523 | | 10.0% | Lee Roy Mitchell(6) | | 10,176,031 | | 8.3% | Barclays PLC(7) | | 7,686,530 | | 6.2% | | | | | | Directors and NEOs | | | | | Sean Gamble(8) | | 782,776 | | * | Melissa Thomas(9) | | 267,220 | | * | Michael Cavalier(10) | | 357,363 | | * | Valmir Fernandes(11) | | 229,729 | | * | Wanda Gierhart (12) | | 199,184 | | * | Darcy Antonellis(13) | | 43,699 | | * | Benjamin Chereskin(14) | | 104,449 | | * | Nancy Loewe(13) | | 38,025 | | * | Kevin Mitchell(13) | | 7,867 | | * | Steven Rosenberg(13) | | 83,419 | | * | Enrique Senior(13) | | 54,476 | | * | Carlos Sepulveda(13) | | 70,425 | | * | Raymond Syufy(13) | | 50,378 | | * | Nina Vaca(13) | | 45,422 | | * | Mark Zoradi(13) | | 521,837 | | * | Executive Officers & Directors as a Group (15 persons)(15) | | 2,856,269 | | 2.3% |
*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) | (1)In computing the number of shares of Common Stock beneficially owned by a person and the percentage ownership of that person, the Company deemed outstanding shares of Common Stock subject to options held by that person that were currently exercisable at, or were exercisable within 60 days of, the Record Date. The Company did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. (2)Based upon statements in Schedule 13G/A filed by BlackRock, Inc. on January 22, 2024, BlackRock, Inc. on February 10, 2023, Black Rock, Inc. may be deemed to beneficially own the reported shares of Common Stock and has filed Schedule 13G/A as the parent holding company or control person on behalf of its subsidiaries BlackRock Life Limited, BlackRock Advisors, LLC, Aperio Group, LLC, BlackRock (Netherlands) B.V., BlackRock Fund Advisors (beneficially owns 5% or greater of the reported shares), BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Japan Co., Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock Investment Management (Australia) Limited and BlackRock Fund Managers Ltd. The reporting entity has the sole power to vote or direct the vote of 17,427,117 shares and sole power to dispose or direct the disposition of 17,655,782 shares. The address of BlackRock, Inc. is 50 Hudson Yards, New York, NY 10001. (3)Based upon statements in Schedule 13G/A filed by Wellington Management Group LLP, Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP and Wellington Management Company LLP (collectively the Wellington Entities) on February 14, 2024, as an investment adviser and as a parent holding company or control person, Wellington Management Group LLP, Wellington Group Holdings LLP and Wellington Investment Advisors Holdings LLP has shared voting power with respect to 10,683,532 shares and shared dispositive power with respect to 13,471,474 shares. Wellington Management Company LLP, as parent holding company of certain holding companies and the Wellington Investment Advisers listed below, has shared voting power with respect to 10,589,713 shares and shared dispositive power with respect to 12,867,444 shares. The Wellington Investment Advisers are Wellington Management Company LLP, Wellington Management Canada LLC, Wellington Management Singapore Pte Ltd, Wellington Management Hong Kong Ltd, Wellington Management International Ltd, Wellington Management Japan Pte Ltd and | | | 45 |
| | | | |
| | | 52 | |
Wellington Management Australia Pty Ltd. The address of the Wellington Entities is c/o Wellington Management Company LLP, 280 Congress Street, Boston, MA 02210. (4)Based upon statements in Schedule 13G/A filed by The Vanguard Group on February 13, 2024, the Vanguard Group may be deemed to beneficially own the reported shares and has filed Schedule 13G/A as an investment advisor. The Vanguard Group has (i) shared voting power over 182,856 shares (ii) shared dispositive power over 298,583 shares, and (iii) sole dispositive power over 12,908,426 shares. The address of The Vanguard Group is 100 Vanguard Boulevard, Malvern, PA 19355. (5)Based upon statements in Schedule 13G/A filed by Orbis Investment Management Ltd. (“OIML”) and Allan Gray Australia Pty Ltd. (“AGAPL”, collectively, the Orbis Entities) on February 14, 2024, the Orbis Entities may be deemed to beneficially own the reported shares and have filed Schedule 13G/A as non-U.S. institutions. The Orbis Entities have sole voting power and sole dispositive power over 12,315,523 shares. OIML’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. (6)Includes 4,419,095 shares 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. (7)Based upon statements in Schedule 13G filed on February 13, 2024, by Barclays PLC, as a parent holding company or control person, and by Barclays Bank PLC, Barclays Capital Inc. and Barclays Capital Securities Ltd., each as a broker or dealer registered under section 15 of the Act, Barclays PLC has sole voting and dispositive power over 7,695,410 shares and shared voting and dispositive power over 1,866 shares. Barclays Bank PLC, has sole voting and dispositive power over 7,020,946 shares. Barclays Capital Inc. has sole voting and dispositive power over 652,498 shares. Barclays Capital Securities Ltd. has sole voting and dispositive power over 11,220 shares and shared voting and dispositive power over 1,866 shares. Barclays PLC's and Barclays Bank PLC's address is 1 Churchill Place, London, E14 5HP, England. Barclays Capital Inc.'s address is 745 Seventh Ave., New York, NY 10019. Barclays Capital Securities Ltd's address is 5 The North Colonnade, Canary Wharf, London X0 E14 4BB. (8)Includes 348,009, shares of restricted stock and 228,991 certified performance-based shares. (9)Includes 133,383 shares of restricted stock and 62,297 certified performance-based shares. (10)Includes 93,796 shares of restricted stock and 63,380 certified performance-based shares. (11)Includes 75,852 shares of restricted stock and 52,469 shares of certified performance-based shares. (12)Includes 111,202 shares of restricted stock, 48,754 shares of certified performance-based shares. (13)Includes 7,867 shares of restricted stock. (14)Includes 7,867 shares of restricted stock, 3,568 shares held by LEGATUM Partners, L.P., of which shares Mr. Chereskin is the beneficial owner, and 9,736 shares held in a grantor trust of which Mr. Chereskin’s spouse is a trustee. (15)The numbers reported do not include 854,927 shares of Common Stock underlying performance stock awards granted to the NEOs in February 2023 and February 2024 at target.
| (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, BlackRock Investment Management (Australia) Limited and BlackRock Fund Managers Ltd. The reporting entity has the sole power to vote or direct the vote of 18,614,563 shares and sole power to dispose or direct the disposition of 18,965,723 shares. The address of Black Rock Inc. is 55 East 52nd Street, New York, NY 10055. |
(3) | Based upon statements in Schedule 13G/A filed by Wellington Management Group LLP, Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP and Wellington Management Company LLP (collectively the Wellington Entities) on February 14, 2023, each of Wellington Management Group LLP, Wellington Group Holdings LLP and Wellington Investment Advisors Holdings LLP has shared voting power with respect to 11,130,572 shares and shared dispositive power with respect to 13,145,003 shares. Wellington Management Company LLP, as a parent holding company or control person, has shared voting power with respect to 11,040,170 shares and shared dispositive power with respect to 12,658,297 shares. The address of Wellington Entities is c/o Wellington Management Company LLP, 280 Congress Street, Boston, MA 02210.
|
(4) | Based upon statements in Schedule 13G/A filed by The Vanguard Group on February 9, 2023, the Vanguard Group may be deemed to beneficially own the reported shares of Common Stock and has filed Schedule 13G/A as an investment advisor. The Vanguard Group has (i) shared voting power over 163,296 shares (ii) shared dispositive power over 276,138 shares, and (iii) sole dispositive power over 12,598,530 shares. The address of The Vanguard Group is 100 Vanguard Boulevard, Malvern, PA 19355.
|
(5) | 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 308,481, shares of restricted stock and 251,884 certified performance-based shares.
|
(8) | Includes 170,098 shares of restricted stock and 62,297 certified performance-based shares.
|
(9) | Includes 91,525 shares of restricted stock and 79,132 certified performance-based shares.
|
(10) | Includes 72,195 shares of restricted stock and 65,594 shares of certified performance-based shares.
|
(11) | Includes 118,156 shares of restricted stock, 57,267shares of certified performance-based shares.
|
(12) | Includes 8,406 shares of restricted stock.
|
(13) | Includes 8,406 shares of restricted stock, 3,568 shares held by LEGATUM Partners, L.P., of which shares Mr. Chereskin is the beneficial owner and 9,736 shares held in a grantor trust of which Mr. Chereskin’s spouse is a trustee.
|
(14) | The numbers reported do not include 471,574 shares of Common Stock underlying performance awards granted to the NEOs in February 2023 at target.
|
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, thereThere were twono delinquent Section 16(a) reports: (i) the Statement of Changesreports 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, 2022.2023.
| | | | |
| | 46 | 53 | |
APPOINTMENT OF ACCOUNTING FIRM Item 3: Ratification of the Appointment of Deloitte & Touche, LLP as our Independent registered public accounting firm for 2024. 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 2023.2024. 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 2023 and 2022, respectively:
| | | | | Fees | | 2023 ($) | | 2022 ($) | Audit | | 2,243.5 | | 1,834.8 | Audit Related | | — | | — | Tax(1) | | 39.0 | | 74.4 | Other | | 2.1 | | 3.3 | Total | | 2,284.6 | | 1,912.6 |
(1)Fees primarily include transfer pricing studies and 2021, respectively:tax compliance services. | | | | | Fees | | 2022 ($) | | 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 2023.2024.
| | | | | The Board unanimously recommends a vote FOR the ratification of the appointment of Deloitte & Touche, LLP as our independent registered public accounting firm for 2023.2024. |
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 20222023 noted in the table below.above. Audit Committee Report The Audit Committee has reviewed and discussed with management the Company’s audited financial statements for 2022.2023. 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 20222023 Annual Report on Form 10-K for filing with the SEC. Respectfully submitted, Nancy Loewe (Chair) Darcy Antonellis Steven Rosenberg Carlos Sepulveda
| | | | |
| | 47 | 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
VOTE TO APPROVE THE Cinemark Holdings, Inc. 2024 LONG-TERM Incentive Plan Item 4: Vote to Approve 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.Cinemark Holdings, Inc. 2024 Long-Term Incentive Plan. 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 advisorya vote onFOR the Cinemark Holdings, Inc. 2024 Long-Term Incentive Plan. |
We are asking stockholders to approve the Cinemark Holdings, Inc. 2024 Long-Term Incentive Plan (the “2024 Incentive Plan”) to provide for an additional 10,000,000 shares of our common stock to be available for issuance under the 2024 Incentive Plan. On March 21, 2024, upon the recommendation of the Compensation Committee, our Board of Directors adopted the 2024 Incentive Plan, subject to stockholder approval, to be effective as of the date the 2024 Incentive Plan is approved by our stockholders (the “Effective Date”). Since 2007, only once have we increased the number of shares available for issuance under our equity compensation plans, which was in 2017 by 1,000,000 shares and historically our annual share usage has been below the norms of our industry. Additionally, our annual share usage has consistently been below that of our peers and the industry. The shares included in the 2024 Incentive Plan are intended to meet our anticipated equity compensation needs for approximately the next 5 years. The 2024 Incentive Plan replaces and supersedes the Cinemark Holdings, Inc. Amended and Restated 2017 Omnibus Incentive Plan, as amended (the “Prior Plan”) in its entirety. As of March 20, 2024, 770,929 shares remain available for grant under the Prior Plan. If the 2024 Incentive Plan is not approved by our stockholders, we will not be able to make long-term equity incentive awards and that will put us at a significant competitive disadvantage. We believe that our equity-based compensation is important in attracting and retaining the services of key employees, general managers, key contractors, and outside directors of the Company and our subsidiaries in a competitive labor market, which is essential to our long-term growth and success. Therefore, we consider approval of the 2024 Incentive Plan vital to our continued success. It is the judgment of our board of directors that the 2024 Incentive Plan is in the best interests of the Company and its stockholders.
The Prior Plan shall terminate on the Effective Date, and no future awards may be granted thereunder after the Effective Date, provided that the Prior Plan shall continue to apply to awards granted under the Prior Plan prior to the Effective Date.
The purposes of the 2024 Incentive Plan are to advance the interests of the Company and our stockholders by providing significant incentives to selected employees, directors and consultants of the Company and its affiliates, enhance the interest of such individuals in the success of the Company and its affiliates by providing them with an opportunity to become stockholders of the Company, and enhance our ability to attract and retain qualified management and other personnel necessary for our continued progress in the interest of our stockholders. The 2024 Incentive Plan provides for grants of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards, and cash-based awards to selected officers, employees, non-employee directors and consultants performing services for us or our affiliates. However, only our employees and employees of our corporate affiliates are eligible to receive incentive stock options.
In developing our share request for the 2024 Incentive Plan and analyzing the impact of utilizing equity as a means of compensation on our stockholders, our Compensation Committee reviewed the analysis prepared by Pearl Meyer, its independent compensation consultant, which included a summary of the plan terms and share usage, “overhang” and “burn rate”, as well as market practices and trends and the cost of the Prior Plan and the 2024 Incentive Plan. Pearl Meyer’s analysis concluded that the number of shares under the Prior Plan, including the shares added by the 2024 Incentive Plan, is well within generally accepted standards measured by an analysis of the plan cost relative to industry standards. The Compensation Committee and the Board reviewed the analysis prepared by Pearl Meyer in approving the 2024 Incentive Plan. Considering the analysis, and the importance to grant equity-based compensation to attract, retain, reward and motivate employees, the Board has determined that the size of the share reserve under the Prior Plan, including the shares added by the 2024 Incentive Plan, is reasonable and appropriate.
| | | 48 |
Equity Compensation Plan Information
The following table provides certain information as of December 31, 2023, with respect to our equity compensation plans under which our equity securities are authorized for issuance.
| | Stock Awards Outstanding as of Record Date |
|
|
| Restricted Stock Awards(1) | 2,465,865 | Performance Stock Unit Awards(2) | 3,376,855 | Shares Available For Future Grant From Prior Plan | 770,929 | Common Stock Outstanding (as of the named executive officers be held every Record Date) | 1 year122,347,232.
|
(1)As of the Record Date the weighted average grant date fair value was $15.88. (2)Of such amount 751,461 have been certified and are subject to time-based vesting. The remaining 2,625,394 shares relate to the 2023 and 2024 performance stock awards shown at maximum (200% of target) as such grants have remaining performance periods. As of the Record Date, the estimated remaining unrecognized compensation expense related to the outstanding performance stock units was approximately $19.2 million. The weighted average period over which this remaining compensation expense will be recognized in approximately 1.9 years.
Summary of the 2024 Incentive Plan The following is a summary of our 2024 Incentive Plan. A copy of the 2024 Incentive Plan is attached as Annex B to this proxy statement, and the following summary is qualified in its entirety by reference to the full text of the 2024 Incentive Plan.
Eligibility. Any officers, employees, directors or consultants performing services for us or our affiliates who are selected by our Compensation Committee may participate in the 2024 Incentive Plan with only employees being eligible to receive incentive stock options.
Administration. The 2024 Incentive Plan will be administered by the Compensation Committee, which will have full and final authority to select persons to receive awards, establish the terms of awards, and administer and interpret the 2024 Incentive Plan in its sole discretion unless authority is specifically reserved to the Board under the 2024 Incentive Plan, our certificate of incorporation or bylaws, or applicable law. Any action of the Compensation Committee with respect to the 2024 Incentive Plan will be final, conclusive, and binding on all persons. The Compensation Committee may delegate certain responsibilities to our officers or managers. The Board may delegate authority to one or more of our officers to do one or both of the following: (1) designate the officers, employees and consultants who will be granted awards under the 2024 Incentive Plan, other than Section 16 officers; and (2) determine the number of shares subject to specific awards to be granted to such officers, employees and consultants.
Effective Date, Plan Term. The 2024 Incentive Plan will become effective on the Effective Date and will terminate on the tenth anniversary of the Effective Date. No awards may be made under the 2024 Incentive Plan after its termination date, but awards made prior thereto may extend beyond that date.
Available Shares. Subject to certain adjustments, the maximum aggregate number of shares of our common stock that may be issued under the 2024 Incentive Plan is 10,770,929 (which includes 770,929 shares remaining available under the Prior Plan), subject to increase by any awards under the Prior Plan:(i) that are outstanding on the Effective Date, and that, on or after the Effective Date, are forfeited, expire or are canceled; and (ii) any shares subject to awards relating to our common stock under the Prior Plan that are settled in cash on or after the Effective Date, but solely to the extent that such awards, by their terms, could have been settled in common stock. One hundred percent (100%) of the shares authorized for issuance under the 2024 Incentive Plan may be delivered pursuant to incentive stock options.Shares to be issued may be made available from our authorized but unissued shares of common stock, shares held by the Company in its treasury, or shares purchased by the Company on the open market. If an award under the 2024 Incentive Plan or any Prior Plan Award is cancelled, forfeited, or expires, in whole or in part, the shares subject to such forfeited, expired, or cancelled award may again be awarded under the 2024 Incentive Plan. Shares of common stock otherwise deliverable pursuant to an award that are withheld upon exercise or vesting of an award for purposes of paying the exercise price or tax withholdings shall be treated as delivered to the participant and shall be counted against the maximum number of shares of common stock that may be issued under the 2024 Incentive Plan. An award will not reduce the number of shares that may be issued pursuant to the 2024 Incentive Plan if the award or portion thereof is settled in cash.
Maximum Non-Employee Director Compensation. The 2024 Incentive Plan provides that the maximum aggregate dollar value of awards and cash compensation granted under the 2024 Incentive Plan or otherwise during any calendar year to any non-employee director is $1,000,000 (subject to adjustment for certain changes in corporate capitalization), rounded down to the nearest full share of common stock.
| | | 49 |
Awards
The 2024 Incentive Plan provides for awards of options, stock appreciation rights, restricted stock and performance stock unit awards, and other stock-based or cash-based awards.
Options. The 2024 Incentive Plan permits us to grant options intended to qualify as incentive stock options under Section 422 of the Code and nonqualified options which are not intended to qualify as incentive stock options. The Compensation Committee may grant incentive stock options under the 2024 Incentive Plan to any employee of the Company or our corporate affiliates, and nonqualified stock options to any officer, employee, director or consultant performing services for us or any of our subsidiaries. The Compensation Committee will determine the exercise price per share for all options, which will not be less than the market value of a share of common stock on the date of grant. Any incentive stock option granted to any employee owning more than 10% of our common stock will have an exercise price of no less than 110% of our stock’s market value on the grant date. A participant may pay the exercise price for stock acquired by exercise of an option in cash or by certified or bank check, or if permitted by applicable law and by the Compensation Committee, by delivery of previously held shares, share withholding, “cashless exercise” or in any other legal form of consideration acceptable to the Compensation Committee.
The Compensation Committee will specify in the award agreement for each option when the option may be exercised. Options granted under the 2024 Incentive Plan will generally terminate on the 10th anniversary of the date of grant, or the fifth anniversary in the case of an incentive option granted to an employee who owns more than 10% of our common stock. However, if sooner, vested options generally will terminate three months after a participant’s termination of employment or other service other than for cause, as defined in the 2024 Incentive Plan, or one year after the date of a participant’s death or disability. Upon termination of a participant’s employment or other service due to cause, both the vested and unvested portions of any outstanding option held by the participant will immediately be forfeited and will no longer be exercisable.
Restricted Stock. The 2024 Incentive Plan authorizes the grant of shares of restricted stock with restrictions that may lapse over time or upon the achievement of specified performance goals. Restrictions may lapse separately or in such installments as the Compensation Committee deems appropriate, subject to the minimum vesting conditions in the 2024 Incentive Plan (as summarized below). A participant granted restricted stock will have the stockholder rights set forth in the award agreement, including, for example, the right to vote the shares of restricted stock and to receive dividends paid thereon. Except as otherwise determined by the Compensation Committee, restricted stock that is subject to restrictions at the time of termination of employment or other service will be forfeited and become available for grant again under the 2024 Incentive Plan.
Restricted Stock Units or Performance Stock Units. The 2024 Incentive Plan permits the grant of awards of restricted stock units or performance stock units to participants. A restricted stock unit or performance stock unit is a right to receive one share of common stock, or its cash value, subject to vesting conditions. Until all restrictions on the restricted stock units or performance stock units have lapsed, the participant will not be a stockholder of the Company, nor have any of the rights or privileges of a stockholder. However, unless otherwise provided by the Compensation Committee, a restricted stock unit award or performance stock unit will include dividend equivalent rights under which the participant will be credited with an amount equal to any cash dividends paid on our common stock during the restriction period. Any amounts credited to a participant under a dividend equivalent right will be subject to the same terms and restrictions as the restricted stock units. We will establish and maintain a separate account for each participant who receives a restricted stock unit award or performance stock unit, to be credited for the number of restricted stock units or performance stock units granted to such participant and any dividend equivalents received. Restricted stock units or performance stock units awarded under the 2024 Incentive Plan may vest over time or on the achievement of specified performance goals as determined by the Compensation Committee, subject to the minimum vesting conditions in the 2024 Incentive Plan, as set forth in the award agreement for the restricted stock units or performance stock units. The Compensation Committee will establish the performance goals for performance awards under the 2024 Incentive Plan, in its sole discretion. Performance goals may be based on one or more business criteria or other performance measures determined by the Compensation Committee. Performance goals may differ between performance stock unit awards or to any one participant or to different participants. Payment will be made in cash or in stock, as specified in the award agreement, as soon as practicable after each vesting date of restricted stock units or performance stock units, and no later than 2½ months after the end of the calendar year in which the vesting date occurs (unless otherwise subject to a deferral condition that complies with Section 409A of the Internal Revenue Code).
Stock Appreciation Rights. The 2024 Incentive Plan provides for awards of stock appreciation rights. A stock appreciation right is a contractual right to receive the appreciation in the market value of our common stock over time, which may be paid in either (or both) shares of common stock or cash. The Compensation Committee will determine the strike price of a stock | | | 50 |
appreciation right award, which will not be less than the market value of a share of stock on the date of grant. Upon the exercise of a stock appreciation right, a participant will be entitled to receive an amount determined by multiplying (1) the difference between the market value per share of stock on the date of exercise and the strike price by (2) the number of shares for which the stock appreciation right is being exercised (reduced by any amount withheld for payment of taxes). The Compensation Committee will specify when each stock appreciation right may be exercised, subject to minimum vesting conditions in the 2024 Incentive Plan.
Other Stock-Based Awards and Cash-Based Awards. The 2024 Incentive Plan provides for the grant of other stock-based awards not otherwise described in the 2024 Incentive Plan and cash-based awards, subject to such terms and conditions as the Compensation Committee determines.
Sale of the Company, Merger, Consolidation or Similar Transaction. If there is a sale of the Company, as defined in the 2024 Incentive Plan, or other similar corporate transaction or series of transactions, all outstanding Options and SARs shall become fully vested and exercisable without regard to the limitations on exercisability contained in Sections 6 or 9 or the applicable Option Agreement immediately prior to such transaction, and with respect to Restricted Awards, all restrictions shall lapse automatically. The Committee shall (i) cancel any or all outstanding Options, SARs, Restricted Stock Units and Performance Stock Units under the Plan in consideration for payment to the Participants thereof of an amount equal to the portion of the consideration that would have been payable to such Participants pursuant to such transaction giving effect to the accelerated vesting and as if such Options, SARs, Restricted Stock Units and Performance Stock Units had been fully vested immediately prior to such transaction, less the aggregate exercise price that would have been payable therefore and any required withholding tax and (ii) cause all Restricted Shares to be purchased for an equivalent consideration payable in such transaction. In the event of a sale of the Company, all performance stock unit awards with incomplete performance periods in respect of such performance awards in effect on the date of the sale of the Company occurs shall end on such date and the Committee shall (i) determine the extent to which the performance goals have been met or would have been met based upon financial information then available as it deems relevant, or on such other basis determined by the Committee in its sole discretion and (ii) cause to be paid to the applicable participant partial or maximum performance for each performance period based upon the Committee’s determination of the degree of attainment of performance goals or, if not determinable, at the applicable “target” levels of performance. Payment of any amount payable pursuant to the preceding sentence may be made in cash or, if the consideration to be received in such transaction includes securities or other property, in cash and/or publicly tradable securities in the Compensation Committee’s discretion.
Capitalization Adjustments. If there is a change in our corporate capitalization that the Compensation Committee determines would result in dilution or enlargement of the rights of participants under the 2024 Incentive Plan, then the Compensation Committee will adjust any or all of (i) the number or class of securities reserved and available for awards, (ii) the number and class of securities that may be purchased under incentive stock options, (iii) the number and class of securities covered by outstanding awards, (iv) the number of shares of stock specified in the annual per-employee limitations, and (v) the exercise price or strike price relating to any option or stock appreciation right.
Tax Withholding Obligations. To the extent provided by the terms of an award agreement, any Company insider trading policy and to the discretion of the Compensation Committee, a participant may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of shares under any award by any one or combination of the following means (in addition to the Company’s right to withhold from any compensation paid to the participant by the Company): (i) cash payment; (ii) authorizing the Company to withhold a number of shares from the shares otherwise issuable to the participant as a result of the exercise or acquisition of shares under the award, the fair market value of which does not exceed either (x) the maximum statutory tax rates in the participant’s applicable jurisdictions or (y) the amount of tax required to be withheld by law, in which case the award will be surrendered and cancelled with respect to the number of shares retained by the Company; (iii) delivering to the Company previously owned and unencumbered shares or (iv) by execution of a recourse promissory note by the participant.
Amendments to the 2024 Incentive Plan and Awards. Our Board may amend or terminate the 2024 Incentive Plan at any time. However, no amendment will be effective without the approval of our stockholders if stockholder approval is required by any law or securities exchange listing requirements. The Compensation Committee may amend any award granted under the 2024 Incentive Plan. However, no amendment or modification may reduce the exercise price or strike price of any option or stock appreciation right or otherwise result in a “repricing” of the option or stock appreciation right without stockholder approval. In addition, no amendment of 2024 Incentive Plan or any award may impair the rights of any participant with respect to any outstanding award without the consent of the participant.
Acceleration of Vesting. Subject to the minimum vesting conditions, the 2024 Incentive Plan permits the Compensation Committee to accelerate the exercisability of an option or stock appreciation right or the vesting of all or part of an award granted under the 2024 Incentive Plan at any time.
| | | 51 |
Clawback or Recoupment. Awards granted under the 2024 Incentive Plan will be subject to the clawback policy adopted by the Company, the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Sarbanes–Oxley Act of 2002, each as amended, and any rules, regulations and binding, guidance published thereunder. In addition, any incentive-based compensation payable to a participant under the 2024 Incentive Plan may be subject to clawback in the circumstances, to the extent, and in the manner, required by the clawback policy adopted by the Company, or by Section 10D(b)(2) of the Exchange Act, as interpreted by rules of the Securities Exchange Commission or by applicable stock exchange listing requirements.
Minimum Vesting Conditions. No portion of an award other than a cash-based award may become vested prior to the first anniversary of the date of grant; provided that such restriction shall not apply to (i) awards granted in connection with an acquisition (whether by asset purchase, merger or otherwise); (ii) awards to non-employee directors that vest on the earlier of the one-year anniversary of the date of grant and the next annual meeting of stockholders that is at least 50 weeks after the immediately preceding year’s annual meeting; and (iii) any additional awards that the Compensation Committee may grant, up to a maximum of five percent (5%) of the available share reserve authorized for issuance under the 2024 Incentive Plan; provided, that the Compensation Committee may authorize the acceleration of vesting of awards in the event of the participant’s death or disability, or the occurrence of the sale of the Company.
Award Transferability. Participants will not be permitted to transfer any award granted under the 2024 Incentive Plan other than by will or by the laws of descent and distribution, and any option will be exercisable during the participant’s lifetime only by the participant or his or her guardian or legal representative. The Compensation Committee, however, may permit awards (other than incentive stock options) to be transferred to members of the participant’s immediate family, to trusts solely for the benefit of such immediate family members and to partnerships in which such family members or trusts are the only partners.
U.S. Federal Income Tax Consequences
The following is a general summary of the material U.S. federal income tax rules applicable to awards under the 2024 Incentive Plan and is intended to reflect the current provisions of the Internal Revenue Code (or IRC) and the regulations thereunder. This summary is not intended to be a complete statement of applicable law, nor does it address foreign, state, local or payroll tax considerations. Moreover, the U.S. federal income tax consequences to any participant may differ from those described herein by reason of, among other things, the circumstances of such participant. This summary is for general information and is not tax advice.
Options. Options granted under the 2024 Incentive Plan may be intended to qualify as incentive stock options under IRC section 422 or may be nonqualified stock options governed by IRC section 83. A participant generally will not recognize any taxable income and we will not be entitled to a tax deduction upon the grant of an option. When a participant exercises a nonqualified stock option, he or she generally will have ordinary taxable income equal to the difference between the market value of the acquired stock on the exercise date and the exercise price for those shares. Subject to satisfying applicable reporting requirements, as discussed below, we generally will be entitled to a corresponding federal income tax deduction. A participant generally will not have taxable income on exercise of an incentive stock option, and we will not be entitled to a deduction. However, the difference between the acquired stock’s market value on the exercise date and the exercise price for those shares could result in alternative minimum tax liability for the participant. A participant’s disposition of shares acquired on exercise of an option will ordinarily result in capital gain or loss. However, a disposition of shares acquired on exercise of an incentive stock option less than two years after the grant date or one year after the exercise date generally will result in ordinary taxable income equal to the difference between the market value of the acquired stock on the exercise date and the exercise price for those shares, with any excess of the amount received by the participant over the market value of the stock on the exercise date being treated as capital gain. We may be entitled to a deduction corresponding to the participant’s ordinary taxable income in the case of such a disposition.
Restricted Awards and Performance Awards. Restricted awards generally are not taxable on grant but are taxable when they are no longer subject to a “substantial risk of forfeiture,” in the case of restricted stock, or when shares are issued or cash is paid in connection with the settlement of restricted stock units. The amount to be included in a participant’s taxable income is the market value of the stock, or the amount of cash paid, at that time. However, under IRC section 83(b) a participant may elect, within 30 days of receiving a restricted stock grant, to recognize in the year of grant ordinary taxable income equal to the market value of the shares on the grant date. If such election is timely made, the participant will not recognize any income when the restricted stock is no longer subject to a substantial risk of forfeiture. Subject to satisfying applicable income reporting requirements, we generally should be entitled to an income tax deduction in the same amount and at the same time as the participant recognizes ordinary income. A participant’s disposition of shares received under a restricted award generally will result in a capital gain or loss.
| | | 52 |
Stock Appreciation Rights. A participant generally will not recognize income upon grant of a stock appreciation right. When the participant exercises the stock appreciation right, he or she will have ordinary taxable income equal to the market value of the stock or cash received. Subject to satisfying applicable income reporting requirements, we generally should be entitled to an income tax deduction in the same amount and at the same time as the participant recognizes ordinary income.
Cash-Based Awards. A participant generally will not recognize income upon grant of any cash-based award but will recognize ordinary income in the year of payment equal to the amount paid, if any. We generally should be entitled to a federal income tax deduction equal to the participant’s taxable income.
New Plan Benefits
Because all grants and awards under the 2024 Incentive Plan are entirely within the discretion of the Compensation Committee, the total benefits allocable under the 2024 Incentive Plan in the future are not determinable. Therefore, we have omitted the tabular disclosure of the benefits or amounts allocated under the 2024 Incentive Plan.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FORAPPROVAL OF THE 2024 INCENTIVE PLAN.
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. Lee Roy Mitchell and Mr. Raymond 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)("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.son-in-law and Kevin Mitchell's brother-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$0.7 million of management fee revenue from Laredo during 2022.2023. 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 | | | 53 |
of the Board through February 15, 2023, and his wife, Tandy Mitchell, own the membership interests of the Operator. The private aircraft iswas used by Mr.Messrs.Lee Roy and Kevin 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 2022,2023, 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, 2022.2023. 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 2022,2023, we paid approximately $22.3$22.1 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$0.03 million of fees related to these services during 2022.2023. 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-electedis currently up for election at the 20212024 Annual Shareholders 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;
|
| | | | |
| | | 56 | |
▪via the Internet – Visit www.proxypush.com/cnk. Follow the instructions shown on your proxy card; ▪by telephone — Follow the instructions shown on your proxy card; ▪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 Annual Meeting. We will pass out written ballots at the Annual Meeting and you may deliver your completed and signed proxy card in person. Submitting your proxy or voting instructions, whether by the Internet, by telephone, or by mail will not affect your right to vote in person should you decide to attend the Annual Meeting.
| ∎ | by telephone — Follow the instructions shown on your proxy card;
|
| ∎ | 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 Annual Meeting. We will pass out written ballots at the Annual Meeting and you may deliver your completed and signed proxy card in person. Submitting your proxy or voting instructions, whether by the Internet, by telephone, or by mail will not affect your right to vote in person should you decide to attend the Annual Meeting.
|
If you are a beneficial holder, you may vote: | ∎ | by instructing your bank or broker — You should receive a voting instruction form from your bank or broker which you must return with your voting instructions to have your shares voted. If you have not received a voting instruction form from your bank or broker, you may contact it directly to provide instructions on how you wish to vote. or
|
| ∎ | ▪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 or ▪by attending the Annual Meeting — If you wish to vote at the Annual Meeting, you will need to obtain a voting instruction form from your broker or bank that holds your shares of record. You will need the control number printed on your voting instruction form in order to vote at the Annual Meeting. | | | 54 |
Difference between a Stockholder of Record and a Beneficial Owner who Holds Stock in Street Name ▪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.
| ∎ | ▪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. 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.
|
| ∎ | 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. Because 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. Quorum 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 counted +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.
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. Melissa 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.
| | | | |
| | | 57 | |
“Routine” and “Non-Routine”“Non-Routine” Ballot Measures Under the broker voting rules of the NYSE, the ratification of the appointment of Deloitte & Touche as the Company’s independent registered public accounting firm for 20232024 (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), and the vote to approve the issuance of common stock (Item 4) are considered “non-routine” matters.“non-routine” matters. 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”“non-routine” matters. A broker non-vote occurs when you do not provide the broker with voting instructions on “non-routine”“non-routine” matters for shares owned by you but held in the name of the broker. For such matters, the broker cannot vote and reports the number of such shares as “broker non-votes.” 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. Voting Requirement for Each of the Items Approval of Item 1: Directors are elected by a plurality voting standard. The nominees who receive the highest number of affirmative votes cast by the stockholders present 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 | | | 55 |
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. Approval of Item 2: 2: The ratification of the appointment of Deloitte & 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: 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. AnnualApproval for Item 4: This advisory The 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 the Cinemark Holdings, Inc. 2024 Long-Term Incentive Plan requires the affirmative vote of a majority of the votes cast by stockholders present in person or disapproverepresented by proxy at the Board’s recommendation. Although non-binding, the BoardAnnual Meeting and the Compensation Committee will carefully review the voting results.entitled to vote thereon.
Changing your vote 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 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. |
| | | | |
| | | 58 | |
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. Inspector of Election The Company has retained a representative of Mediant to serve as an independent tabulator to receive and tabulate the proxies and as an independent inspector of election to certify the results. Proxy Solicitation Costs The Company pays for this proxy solicitation. We use 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.out-of-pocket expenses. Obtaining Company Material 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. Stockholders may receive a copy of the Company’s 20222023 Annual Report on 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. | | | 56 |
DEADLINE FOR STOCKHOLDER PROPOSALS AND STOCKHOLDER DIRECTOR NOMINATIONS FOR THE 20242025 ANNUAL MEETING Stockholder proposals: Stockholder proposals, other than director nominations, requested to be included in the proxy statement for our 20242025 annual meeting, must be received no later than the close of business on December 7, 2023,8, 2024, and comply with Rule 14a-8 under the Exchange Act. Stockholder proposals for consideration at the 20242025 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, no earlier than the opening of business on January 19, 2024,16, 2025, and no later than the close of business on February 18, 2024,15, 2025, 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 20242025 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, no earlier than the opening of business on January 19, 2024,16, 2025, and no later than the close of business on February 18, 2024.15, 2025. 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 comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees for the 20242025 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 20242025 Annual Meeting of Stockholders We intend to file a proxy statement and white proxy card with the SEC in connection with our solicitation of proxies for our 20242025 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 with the SEC without charge from the SEC’s website at: www.sec.gov. | | | | |
| | 57 | 59 | |
ADDITIONAL INFORMATION STOCKHOLDERS SHARING A COMMON ADDRESS If you and other residents at your mailing address own Common Stock in street name, your broker or bank may have sent you a notice that your household will receive only one proxy statement for each company in which you hold stock through that broker or bank. Nevertheless, each stockholder will receive a separate proxy card. This practice, known as “householding,” is designed to reduce the Company’s printing and postage costs. If you did not respond that you did not want to participate in householding, the broker or bank will assume that you have consented and will send one copy of our proxy statement to your address. You may revoke your consent to householding by contacting your broker or bank, if you hold Common Stock in street name, or the Company’s Secretary, if you are the registered holder of the Common Stock. The revocation of your consent to householding will be effective 30 days following its receipt. Upon written or oral request to the Company’s Secretary at the address or telephone number provided above, the Company will deliver promptly a separate copy of this proxy statement to a stockholder at a shared address to which a single copy of this proxy statement was delivered. By written or oral request to the same address (i) a stockholder may direct a notification to the Company that the stockholder wishes to receive a separate annual report or proxy statement in the future or (ii) stockholders who are sharing an address and who are receiving delivery of multiple copies of the Company’s annual reports or proxy statements can request delivery of only a single copy of these documents to their shared address. INCORPORATION BY REFERENCE The material under the headings “Compensation Committee Report,” “Audit Committee Report” and the disclosure regarding independence of the members of the Audit Committee shall not be deemed to be “filed” with the SEC nor deemed incorporated into any future filing with the SEC, except to the extent that we specifically incorporate it by reference into the filing. OTHER MATTERS The Board knows of no other business that will be presented at the Annual Meeting. If any other business is properly brought before the Annual Meeting, proxies received will be voted in respect thereof in accordance with the recommendation of the Board. Discretionary authority with respect to such other matters is granted by the execution of the enclosed proxy. AVAILABILITY OF REPORT ON FORM 10-K A free copy of the 20222023 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 20222023 Annual Report on 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. Cinemark Holdings, Inc. 3900 Dallas Parkway Plano, Texas 75093 April 6, 20231, 2024 | | | | |
| | 58 | 60 | |
ANNEX A: SUPPLEMENTAL FINANCIAL INFORMATION NON-GAAP MEASURES MEASURES Reconciliation of 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 | | | | �� | | | | | | | | | | | Adjusted EBITDA | | $ | 336.5 | | | $ | 80.0 | | | $ | (276.9 | ) | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | Year Ended December 31, | | | 2023 | | | 2022 | | | 2021 | | | Net income (loss) |
| $ | 191.5 | | | $ | (268.0 | ) | | $ | (422.2 | ) | | Add (deduct): | | | | | | | | | | | Income tax expense (benefit) | | 29.9 | | | | 3.0 | | | | (16.8 | ) | | Interest expense(a) | | 150.4 | | | | 155.3 | | | | 149.7 | | | Other (income) expense, net (b) | | (19.6) | | | | 23.6 | | | | 43.5 | | | Cash distributions from equity investees (c) | | 5.7 | | | | 6.9 | | | | 0.2 | | | Depreciation and amortization | | 209.5 | | | | 238.2 | | | | 265.4 | | | Impairment of long-lived and other assets | | 16.6 | | | | 174.1 | | | | 20.8 | | | (Gain) loss on disposal of assets and other | | (7.7) | | | | (6.8 | ) | | | 8.0 | | | Restructuring costs | | | — | | | | (0.5 | ) | | | (1.0 | ) | | Loss on extinguishment of debt and refinancing | | 10.7 | | | | — | | | | 6.5 | | | Non-cash rent expense | | (17.9) | | | | (10.8 | ) | | | (3.4 | ) | | Share-based awards compensation expense (d) | | 25.0 | | | | 21.5 | | | | 29.3 | | | Adjusted EBITDA | | $ | 594.1 | | | $ | 336.5 | | | $ | 80.0 | | |
| (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) | (a)Includes amortization of debt issuance costs, amortization of original issue discount and amortization of accumulated gains (losses) for amended swap agreements. (b)Includes interest income, foreign currency exchange and other related loss, equity in income (loss) of affiliates interest expense - NCM and unrealized gain on investment in NCMI. (c)Includes cash distributions received from equity investees that were recorded as a reduction of the respective investment balances. These distributions are reported entirely within the U.S. operating segment. (d)Non-cash expense included in general and administrative expenses.
| | | A-1 |
ANNEX B: Cinemark Holdings, Inc. 2024 Long Term Incentive Plan
CINEMARK HOLDINGS, INC. 2024 LONG-TERM INCENTIVE PLAN
| | | B-1 |
TABLE OF CONTENTS
| |
| | | | Page |
Purpose | B-3 | Definitions | B-3 | Administration | B-7 | A-1Shares Subject to the Plan
| B-9 | Eligibility | B-9 | Stock Options | B-10 | Restricted Awards | B-11 | Stock Appreciation Rights | B-13 | Other Stock-Based Awards | B-14 | Cash-Based Awards | B-14 | Treatment of Awards on Termination of Continuous Service | B-14 | Covenants of the Company | B-15 | Company Use of Proceeds from Shares | B-15 | Adjustments for Changes in Stock | B-15 | Amendment of the Plan; Awards | B-16 | General Provisions | B-17 | Effective Date and Term of Plan | B-20 | Choice of Law | B-21 | Limitation on Liability | B-21 | Execution | B-21 |
| | | B-2 |
CINEMARK HOLDINGS, INC. 2024 LONG-TERM INCENTIVE PLAN
The Cinemark Holdings, Inc. 2024 Long-Term Incentive Plan (as may be amended or amended and restated from time to time, the “Plan”) was adopted by the Board of Directors of Cinemark Holdings, Inc., a Delaware corporation (the “Company”) on March 21, 2024 (the “Board Approval Date”)to be effective as of the date the Plan is approved by the Company’s stockholders at the Company’s next Annual Shareholder Meeting (the “Effective Date”). The Plan is intended to be an “employee benefit plan” as such term is defined under Rule 405 of the Securities Act and replaces and supersedes the Cinemark Holdings, Inc. 2017 Omnibus Incentive Plan, as amended and restated (the “Prior Plan”) in its entirety. The Prior Plan shall terminate on the Effective Date, and no future awards may be granted thereunder after the Effective Date, provided that the Prior Plan shall continue to apply to awards granted under the Prior Plan prior to the Effective Date.
YOUR VOTE IS IMPORTANT! PLEASE VOTE BY: INTERNET Go To: www.proxypush.com/CNK " " Cast yourThe purposes of the Plan are to (i) advance the interests of the Company and its stockholders by providing significant incentives to selected Employees, Directors and Consultants of the Company and its Subsidiaries, (ii) enhance the interest of such persons in the success and progress of the Company and its Subsidiaries by providing them with an opportunity to become stockholders of the Company, and (iii) enhance the ability of the Company and its Subsidiaries to attract and retain qualified management and other personnel necessary for the success and progress of the Company and its Subsidiaries.
a.“Administrator” means the Board or the Committee appointed by the Board in accordance with Section 3. b.“Affiliate” means any parent or direct or indirect subsidiary of the Company, whether now or hereafter existing. c.“Award” means, individually or collectively, any Option, Restricted Award, SAR, other Stock-Based Award or Cash-Based Award granted under the Plan. d.“Award Agreement” means a written agreement between the Company and a Participant evidencing the terms and conditions of an individual Award. Each Award Agreement will be subject to the terms and conditions of the Plan and need not be identical. e.“Board” means the Board of Directors of the Company. f.“Cash-Based Award” means an Award granted under Section 10. g.“Cause” means “Cause” as defined in any written Service Agreement in effect between the applicable Participant and the Company or a Subsidiary, or if such Participant is not a party to a written Service Agreement in which Cause is defined, then Cause means (i) the abuse of illegal drugs, alcohol or other controlled substances or the intoxication of such Participant during working hours, (ii) the commission of, or conviction of, or plea of guilty or nolo contendere of, a felony, (iii) the commission of fraud, embezzlement or theft by such Participant (iv) the unexcused absence by such Participant from such Participant’s regular job location for more than five consecutive days or for more than the aggregate number of days permitted to the Participant under Company vacation and sick leave policies applicable to the Participant, (v) any material violation of the Company’s written policies or codes of conduct or (vi) any conduct or activity of such Participant deemed injurious to the Company in the reasonable discretion of the Company or the Board. h.“Code” means the Internal Revenue Code of 1986, as amended. i.“Committee” means a committee of one or more members of the Board appointed by the Board to administer the Plan in accordance with Section 3(f). j.“Common Stock” means (i) the authorized Common Stock of the Company, par value $.001 per Share, as constituted on the Effective Date or (ii) the shares resulting from a change in the Common Stock as presently constituted which is limited to a change of all of its authorized shares with par value into the same number of shares without par value or as a change in the par value. k.“Company” means Cinemark Holdings, Inc., a Delaware corporation. | | | B-3 |
l.“Consultant” means any natural person who provides bona fide consulting or advisory services to the Company or an Affiliate under a written agreement, which services are not in connection with the offer or sale of securities in a capital raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities. m.“Continuing Directors” means individuals who, with respect to any 12-month period, constitute the Board and any new Director (other than a Director whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of Directors or as a result of any other actual or threatened solicitation of proxies by or on behalf of any Person other than the Board) whose appointment or election by the Board or nomination for election by the Company’s stockholders was approved by a vote onlineof at least two-thirds of the Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which that individual is named as a nominee for Director without objection to the nomination) who either were Directors on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended; n.“Continuous Service” means the service of a Participant with the Company or an Affiliate as an Employee, Director or Consultant is not interrupted or terminated. A Participant’s Continuous Service will not be deemed interrupted or terminated merely because of a change in the capacity in which the Participant renders service, such as a change in status from Employee to Consultant or Director, or a change in the entity for which the Participant renders service, such as from the Company to an Affiliate, so long as there is no interruption or termination of the Participant’s service ; provided, that a change in capacity in which the Participant renders service shall not be deemed a termination of Continuous Service hereunder with respect to any Awards constituting “nonqualified deferred compensation” subject to Section 409A of the Code that are payable upon a termination of Continuous Service, unless such change in capacity constitutes a “separation from service” within the meaning of Section 409A of the Code. The Administrator or its delegate, in its sole discretion, may determine whether Continuous Service will be considered interrupted in the case of any approved leave of absence, including sick leave, military leave or any other personal or family leave of absence. Any payments in respect of an Award constituting nonqualified deferred compensation subject to Section 409A of the Code that are payable upon a termination of Continuous Service shall be delayed for such period as may be necessary to meet the requirements of Section 409A(a)(2)(B)(i) of the Code. On the first business day following the expiration of such period, the Participant shall be paid, in a single lump sum without interest, an amount equal to the aggregate amount of all payments delayed pursuant to the preceding sentence, and any remaining payments not so delayed shall continue to be paid pursuant to the payment schedule applicable to such Award. o.“Date of Grant” means the first date on which all necessary corporate action has been taken by the Administrator to approve the grant of an Award to a Participant as provided under the Plan, provided the key terms and conditions of the Award are communicated to the Participant within a reasonable period thereafter; or such later date as is designated by the Administrator and specified in the Award Agreement or in the resolution adopted by the Committee. In any situation where the terms of the Award are subject to negotiation with the Participant, the Date of Grant will not be earlier than the date the key terms and conditions of the Award are communicated to the Participant. p.“Director” means a member of the Board. q.“Disability” means “Disability” as defined in any written Service Agreement in effect between the applicable Participant and the Company or a Subsidiary, or if such Participant is not a party to a written Service Agreement in which Disability is defined, then “Disability” means a physical or mental impairment that (i) renders the Participant unable to perform the essential functions of the Participant’s service to the Company or its Subsidiaries, even with reasonable accommodation that does not impose an undue hardship on the Company or its Subsidiaries, (ii) has existed for at least 60 consecutive days, and (iii) in the opinion of a physician selected by the Company will last for a duration of at least 180 consecutive days. A Participant’s Disability shall be determined by the Company, in good faith, based upon information supplied by the Participant and a physician selected by the Company. For purposes of determining the rules relating to an Incentive Stock Option, the term “Disability” shall mean a “permanent and total disability” within the meaning of Code Section 22(e)(3). The Participant shall submit to physical exams and diagnostic tests reasonably recommended by such physician. r.“Eligible Director” means a person who is a “non-employee director” as defined in Rule 16b-3(b)(3) under the Exchange Act. | | | B-4 |
s.“Employee” means a common law or statutory employee of the Company or an Affiliate. Mere service as a Director or payment of a Director’s fee by the Company or an Affiliate is not sufficient by itself to constitute being an Employee. t.“Established Securities Market” means a national securities exchange that is registered under Section 6 of the Exchange Act, a foreign national securities exchange that is officially recognized, sanctioned or supervised by governmental authority or any over-the-counter market that is reflected by the existence of an interdealer quotation system. u.“Exchange Act” means the Securities Exchange Act of 1934, as amended. v.“Executive Officer” means an officer of the Company who is an “executive officer” within the meaning of Rule 3b-7 promulgated under the Exchange Act. w.“Exercise Price” means the price per Share at which the holder of an Option may buy an underlying Share on exercise of the Option. x.“Fair Market Value” means, as of the date of any valuation event, the value per Share determined using a presumptively reasonable valuation method under Treasury Regulation Section 1.409A-1(b)(5)(iv), which includes the following methods: i.On any date on which the Common Stock is readily tradable on an Established Securities Market, if the Common Stock is admitted to trading on an exchange or market for which closing prices are reported on any date, Fair Market Value may be determined based on (1) the last sale before or the first sale after the Date of Grant of an Award or any other valuation event; (2) the closing price on the last trading day before the Date of Grant of an Award or any other valuation event; (3) the closing price on the Date of Grant or any other valuation event; or (4) an average selling price during a specified period that is within 30 days before or 30 days after the Date of Grant of an Award, on condition that the commitment to grant an Award based on an average selling price during a specified period must be irrevocable before the beginning of the specified period, and the valuation method must be used consistently for grants of Awards under the Plan and substantially similar programs. ii.If the Common Stock is readily tradable on an Established Securities Market but closing prices are not reported, Fair Market Value may be determined based on (1) the average of the highest bid and lowest asked prices of the Common Stock reported on the last trading day before the Date of Grant of an Award or any other valuation event or on the Date of Grant of an Award or any other valuation event; or (2) an average of the highest bid and lowest asked prices during a specified period that is within 30 days before or 30 days after the Date of Grant of an Award, on condition that the commitment to grant an Award based on an average selling price during a specified period must be irrevocable before the beginning of the specified period, and the valuation method must be used consistently for grants of Awards under the same and substantially similar programs. iii.At any time the Common Stock is not readily tradable on an Established Securities Market, the Administrator will determine the Fair Market Value through the reasonable application of a reasonable valuation method based on the facts and circumstances as of the valuation date, including, at the election of the Administrator, by an independent appraisal that meets the requirements of Code Section 401(a)(28)(C) and the regulations issued thereunder as of a date that is no more than 12 months before the relevant transaction to which the valuation is applied (for example, an Option’s Date of Grant), and that determination will be conclusive and binding on all Persons. y.“Incentive Stock Option” means an Option intended to qualify as an incentive stock option under Section 422 of the Code and the regulations issued thereunder. z.“Nonqualified Stock Option” means an Option not intended to qualify as an Incentive Stock Option. aa.“Officer” means an individual who is an officer of the Company as defined in Rule 16a-1(f) under the Exchange Act. bb.“Option” means an Incentive Stock Option or a Nonqualified Stock Option granted under the Plan. cc.“Participant” means an individual to whom an Award is granted under the Plan or, if applicable, such other Person who holds an outstanding Award. | | | B-5 |
dd.“Permitted Transferee” means a Participant’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son- in-law, daughter-in-law, brother-in-law or sister-in-law (including adoptive relationships), any individual sharing the Participant’s household (other than a tenant or employee), a trust in which these individuals (or the Participant) have more than 50% of the beneficial interest, a foundation in which these individuals (or the Participant) control the management of assets, any other entity in which these individuals (or the Participant) own more than 50% of the voting interests, or such other transferee as may be permitted by the Administrator in its sole discretion. ee.“Performance Stock Unit” means a hypothetical unit granted under an Award to a Participant evidencing the right to receive one Share or an equivalent value in cash equal to the Fair Market Value (as determined by the Administrator) in the future, which right is subject to certain restrictions, performance metrics and risk of forfeiture. ff.“Person” means an individual, partnership, limited liability company, corporation, association, joint stock company, trust, joint venture, labor organization, unincorporated organization, governmental entity or political subdivision thereof or any other entity, and includes a syndicate or group as those terms are used in Section 13(d)(3) or 14(d)(2) of the Exchange Act. gg.“Prior Plan Awards” means (i) any awards under the Prior Plan that are outstanding on the Effective Date, and that, on or after the Effective Date, are forfeited, expire or canceled or otherwise terminated; and (ii) any shares subject to awards relating to Common Stock under the Prior Plan that are settled in cash on or after the Effective Date, but solely to the extent that such awards, by their terms, could have been settled in Shares. hh.“Restricted Award” means an Award of Restricted Stock, Restricted Stock Units or Restricted Stock Units granted under Section 7. ii.“Restricted Period” has the meaning set forth in Section 7. jj.“Restricted Stock” means Shares granted under an Award to a Participant, which are subject to certain restrictions and risk of forfeiture. kk.“Restricted Stock Unit” means a hypothetical unit granted under an Award to a Participant evidencing the right to receive one Share or an equivalent value in cash equal to the Fair Market Value (as determined by the Administrator) in the future, which right is subject to certain restrictions and risk of forfeiture. ll.“Sale of the Company” means the sale of the Company to any Person (other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Affiliate), pursuant to which such Person directly or indirectly acquire (i) “beneficial ownership” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) of capital stock of the Company possessing the voting power under normal circumstances to elect a majority of the Company’s board of directors or entitling such Person to exercise more than 50% of the total voting power of the outstanding shares of capital stock entitled to vote of the Company or of the Surviving Entity (whether by merger, consolidation or sale or transfer of the Company’s capital stock) or (ii) all or substantially all of the Company’s assets determined on a consolidated basis. Notwithstanding the foregoing, a transaction will not constitute a “Sale of the Company” if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the stockholders of the Company as their holding of the Company’s capital stock immediately before the transaction. Notwithstanding the foregoing, with respect to the payment of any amount that constitutes a “deferral of compensation” subject to Section 409A of the Code payable upon a Sale of the Company, a Sale of the Company shall not be deemed to have occurred, unless the Sale of the Company constitutes a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company under Section 409A(a)(2)(A)(v) of the Code. mm.“Sale Value” means the price per share of Common Stock offered to stockholders of the Company in any Sale of the Company or in any merger, consolidation, dissolution or other transaction. nn.“SAR” or “Stock Appreciation Right” means the right under an Award to receive an amount equal to the difference between the Fair Market Value as of the date of exercise and the Strike Price, multiplied by the number of Shares for which the Award is exercised, all as determined under Section 8. oo.“Securities Act” means the Securities Act of 1933, as amended. | | | B-6 |
pp.“Service Agreement” means any written agreement between a Participant and the Company or any of its Subsidiaries regarding the provision of Service to the Company or any of its Subsidiaries by such Participant. qq.“Share” means one share of the Common Stock. rr.“Strike Price” means the base value per Share of a SAR, as determined by the Administrator and as set forth in the Award Agreement. ss.“Subsidiary” or “Subsidiaries” means, as to any Person, any other Person (i) of which such Person or any other Subsidiary of such Person is a general partner, (ii) of which such Person, any one or more of its other subsidiaries of such Person, or such Person and any one or more of its other Subsidiaries, directly or indirectly owns or controls securities or other equity interests representing more than fifty percent (50%) of the aggregate voting power, or (iii) of which such Person, any one or more of its other Subsidiaries of such Person, or such Person and any one or more of its other Subsidiaries, possesses he right to elect more than fifty percent (50%) of the board of directors or Persons holding similar positions; provided, however, with respect to determining rules relating to Incentive Stock Options, the term “Subsidiary” or “Subsidiaries” means a “subsidiary corporation” or “subsidiary corporations” of the Company as defined in Section 424(f) of the Code. tt.“Surviving Entity” means the Company, if immediately following any merger, consolidation or similar transaction, the holders of outstanding voting securities of the Company immediately before the merger or consolidation own equity securities possessing more than 50% of the voting power of the entity existing following the merger, consolidation or similar transaction. In all other cases, the other entity to the transaction and not the Company will be the Surviving Entity. In making the determination of ownership by the stockholders of an entity immediately after the merger, consolidation or similar transaction, equity securities that the stockholders owned immediately before the merger, consolidation or similar transaction as stockholders of another party to the transaction will be disregarded. Further, outstanding voting securities of an entity will be calculated by assuming the conversion of all equity securities convertible (immediately or at some future time whether or not contingent on the satisfaction of performance goals) into securities entitled to vote. a.Administration by Board. The Board will administer the Plan unless and until the Board delegates administration to a Committee, as provided in Section 3(f). b.Authority of Administrator. The Administrator will have the power and authority to select Participants, subject to the limitations set forth in the Plan, and grant Awards under the terms of the Plan. c.Specific Authority. In particular, the Administrator will have the authority to: i.construe and interpret the Plan and apply its provisions; ii.promulgate, amend, and rescind rules and regulations relating to the administration of the Plan; iii.authorize any Person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan; iv.delegate its authority to one or more Officers of the Company with respect to Awards that do not involve any individual who is subject to Section 16 of the Exchange Act, which delegation will be by a resolution that specifies the total number of Shares that may be subject to Awards by the Officer and the Officer may not make an Award to himself or herself; v.determine when Awards are to be granted under the Plan; vi.determine the number of Shares to be made subject to each Award; vii.determine whether each Option is to be an Incentive Stock Option or a Nonqualified Stock Option; viii.prescribe the terms and conditions of each Award, including, without limitation, the Strike Price or Exercise Price and medium of payment, vesting provisions (subject to the minimum vesting conditions under Section 16(a)), and to specify the provisions of the Award Agreement relating to the grant or sale; | | | B-7 |
ix.subject to the restrictions applicable under Section 8(d) and (e) and Section 15(d) and (e), amend any outstanding Awards, including for the purpose of modifying the time and manner of vesting, purchase price, Exercise Price or Strike Price or the term of any outstanding Award; x.determine the duration and purpose of leaves of absences that may be granted to a Participant without constituting termination of their Continuous Service for purposes of the Plan, which periods will be no shorter than the periods generally applicable to Employees under the Company’s employment policies or as required under applicable law; xi.make decisions with respect to outstanding Awards that may become necessary on a Sale of the Company or an event that triggers capital adjustments; xii.establish such rules and procedures it deems desirable to satisfy any obligation of the Company or its Subsidiaries to withhold federal, state or local income tax or other employment taxes with respect to any Awards; xiii.engage outside consultants, auditors and other professional assistance in fulfillment of its duties under the Plan, all at the Company’s expense; and xiv.exercise discretion to make any and all other determinations that it may determine to be necessary or advisable for administration of the Plan. d.Determinations. In making its determinations concerning the Participants who shall receive Awards, as well as the number of shares of Common Stock to be covered thereby and the time or times at which they shall be granted, the Administrator shall take into account the nature of the Service rendered by such Participants, their past, present and potential contribution to the Company’s success and such factors as the Administrator may deem relevant. The Administrator shall determine the form of Award Agreements evidencing Awards under the Plan and the terms and conditions to be included therein; provided such terms and conditions are not inconsistent with the terms of the Plan, the Company’s Certificate of Incorporation or Bylaws. The Administrator may waive any provisions of any Award Agreement, provided such waiver is not inconsistent with the terms of the Plan, the Company’s Certificate of Incorporation or Bylaws. The determinations of the Administrator under the Plan need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated. e.Decisions Final. All decisions made by the Administrator under the provisions of the Plan will be final and binding on the Company and the Participants, unless a decision is determined by a court having jurisdiction to be arbitrary and capricious. i.General. The Board may delegate administration of the Plan to a Committee or Committees of one or more members of the Board, and the term “Committee” applies to any Person or Persons to whom that authority has been delegated. If administration is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in the Plan to the Administrator will thereafter be to the Committee or subcommittee), subject, however, to such resolutions, consistent with the provisions of the Plan, as the Board may adopt. The Board may abolish the Committee at any time and re-vest in the Board the administration of the Plan. The members of the Committee will be appointed by and serve at the pleasure of the Board. The Board may increase or decrease the size of the Committee, add additional members to, remove members (with or without Cause) from, appoint new members in substitution therefor, and fill vacancies, however caused, in the Committee. The Committee shall act by a vote of the majority of its members or, in the case of a Committee comprised of only two members, the unanimous consent of its members, whether present or not, or by the written consent of the majority of its members and shall keep minutes of all of its meetings. Subject to the limitations prescribed by the Plan and the Board, the Committee shall establish and follow such rules and regulations for the conduct of its business as it may determine to be advisable. ii.Committee Composition. The Board has sole discretion to determine whether it intends to comply with the exemption requirements of either Rule 16b-3 under the Exchange Act. However, if the Board intends to satisfy such exemption requirements with respect to Awards to any Officer or | | | B-8 |
Director, the Committee will at all times consist solely of two or more Eligible Directors. Within the scope of that authority, the Board or the Committee may delegate to a committee of one or more members of the Board who are not “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act, or to one or more Officers, the authority to grant Awards to eligible individuals who are not Officers, Directors, “beneficial owners” (as defined in Rule 16a-1(a)(1) under the Exchange Act) of more than 10% of any class of equity securities of the Company registered under Section 12 of the Exchange Act or otherwise subject to Section 16 of the Exchange Act. Nothing in this Section 3(f)(ii) is intended to create an inference that an Award granted other than by a committee of the Board consisting at all times solely of two or more Eligible Directors is not validly granted under the Plan. g.Liability.No member of the Board or any Committee shall be liable for anything done or omitted to be done by him or by any other member of the Board or any Committee in connection with the Plan, except for his own willful misconduct or gross negligence (unless the Company’s Certificate of Incorporation or Bylaws, or any indemnification agreement between the Company and such person, in each case in accordance with applicable law, provides otherwise). 4.Shares Subject to the Plan a.Share Reserve. Subject to adjustment under Section 14(a), the maximum aggregate number of Shares that may be issued under the Plan is 10,770,929, which includes 770,929 Shares remaining available under the Prior Plan, subject to increase by any Prior Plan Awards. b.Return of Shares to the Share Reserve. If any Award under this Plan or Prior Plan is forfeited, cancelled, expires or otherwise terminates, in whole or in part, the number of Shares covered by the Award or Prior Plan Award so forfeited, cancelled, expired or otherwise terminated will revert to and again become available for issuance under the Plan. Each Share subject to any Award granted hereunder or any Prior Plan will be counted against the Share reserve set forth in Section 4(a)on the basis of one Share for every Share subject thereto. Notwithstanding anything in the Plan to the contrary, Shares used to pay the required Exercise Price or that are used or withheld to satisfy tax obligations of the Participant will not be available again for other Awards under the Plan. Awards or portions thereof that are settled in cash and not in Shares will not be counted against the foregoing maximum Share limitations. Notwithstanding anything in this Section 4 to the contrary and subject to adjustment under Section 14(a), the maximum number of Shares that may be issued on the exercise of Incentive Stock Options will equal the aggregate number of Shares stated in Section 4(a) plus, to the extent permitted under Section 422 of the Code and the Treasury regulations thereunder, any Shares that become available for issuance under the Plan under this Section 4(b). c.Source of Shares. Shares issued under an Award may consist of authorized and unissued Shares, Shares held by the Company as treasury shares or Shares purchased on the open market, and may be subject to restrictions deemed appropriate by the Administrator. a.For Awards other than Options and SARs. Restricted Awards, other Stock-Based Awards and Cash-Based Awards may be granted to any Employee, Director or Consultant of the Company or any Affiliate. b.For Nonqualified Stock Options and SARs. Nonqualified Stock Options and SARs may be granted to any Employee, Director or Consultant of the Company or a direct or indirect majority-owned subsidiary of the Company with respect to which the Company, on the Date of Grant, is an “eligible issuer” under Treasury Regulation Section 1.409A-1(b)(5)(iii)(E)(1). c.For Incentive Stock Options. Incentive Stock Options may be granted only to an Employee of the Company or a corporation that, on the Date of Grant, is a “parent corporation” or “subsidiary corporation” of the Company, as those terms are defined in Code Sections 424(e) and 424(f), respectively. i.If the Board or the compensation committee of the Board separately has adopted or in the future adopts a compensation policy covering some or all non-employee Directors that provides for a predetermined formula grant that specifies the type of Award, the timing of the Date of Grant and the number of Shares to be awarded under the terms of the Plan, that formula grant will be incorporated herein by reference and will be administered as if provided under the terms of the Plan | | | B-9 |
without any requirement that the Administrator separately take action to determine the terms of those Awards. ii.Subject to capitalization adjustment under Section 14(a), the aggregate dollar value of Awards (calculated as the Date of Grant fair value of such Awards for financial reporting purposes) and cash compensation granted under this Plan or otherwise during any calendar year to any non-employee Director shall not exceed $1,000,000, rounded down to the nearest full Share. The foregoing limit shall not count any SAR granted in tandem with an Option under Section 8(a). a.Each Option will be in such form and will contain such terms and conditions as the Administrator deems appropriate. All Options will be separately designated Incentive Stock Options or Nonqualified Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates will be issued for Shares purchased on exercise of each type of Option. Notwithstanding the foregoing, the Company will have no liability to any Participant or any other Person if an Option designated as an Incentive Stock Option fails to qualify as an Incentive Stock Option at any time. The provisions of separate Options need not be identical, but each Option will include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions: b.Term and Expiration. The term during which an Option is exercisable shall be that period determined by the Administrator as set forth in the applicable Option Agreement, provided that no Option may be exercisable later than 10 years after the Date of Grant. c.Exercise Price. The Exercise Price for each Option will be equal to or greater than the Fair Market Value on the Date of Grant; provided that an Option granted under an assumption or substitution for another stock option in a manner satisfying the provisions of Section 424(a) of the Code, as if the Option was a statutory stock option, may be granted with an Exercise Price lower than the Fair Market Value on the Date of Grant. No dividends or dividend equivalents will be paid on any outstanding Option. d.Term and Exercise Price of Incentive Stock Options Granted to a Ten Percent Stockholder. Notwithstanding the foregoing, no Incentive Stock Option granted to an Employee who owns (or is deemed to own under Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or of any “parent corporation” or “subsidiary corporation” of the Company, as those terms are defined in Code Sections 424(e) and 424(f), respectively, may be exercisable later than five years after the Date of Grant or have an exercise price that is less than 110% of the Fair Market Value on the Date of Grant. e.Repricing Prohibited. Except as otherwise provided in Section 14without the prior approval of the Company’s stockholders: (i) the Exercise Price of an Option may not be directly or indirectly reduced; (ii) an Option may not be cancelled in exchange for cash, an Option or SAR with an Exercise Price or Strike Price that is less than the Exercise Price of the original Option, any other Award or otherwise; and (iii) the Company may not purchase an Option for value from a Participant if the current Fair Market Value of the Shares underlying the Option is lower than the Option’s Exercise Price. f.Consideration. The Exercise Price for Shares purchased under an Option and all federal, state, local and other income, excise or employment taxes subject to withholding (if any) by the Company or a Subsidiary as a result of the exercise of an Option will be paid in cash or by certified or bank check at the time the Option is exercised, or, to the extent permitted by applicable laws and regulations, in the Administrator’s sole discretion and on such terms as the Administrator approves: (i) by delivery (by actual delivery or by attestation) to the Company of previously-acquired Shares, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal to the aggregate Exercise Price due for the number of Shares being purchased; (ii) if the Common Stock is readily tradable on an Established Securities Market, by a copy of instructions directing a broker to sell Shares for which the Option is exercised and to remit to the Company the aggregate Exercise Price due for the number of Shares being purchased; (iii) by directing the Company to withhold from transfer the number of Shares that otherwise would have been delivered by the Company on exercise of the Option having a Fair Market Value equal to all or part of the aggregate Exercise Price due on exercise (provided that to the extent such direction would result in the Company withholding fractional Shares, the number of Shares to be withheld will be rounded down to the nearest whole and the Participant shall be required to pay the remainder of the Exercise Price in cash or by certified or bank check), in which case the Option will be surrendered and cancelled with respect to the Shares retained as well as the Shares delivered; or (iv) in any other form of | | | B-10 |
legal consideration that may be acceptable to the Administrator. Notwithstanding the foregoing, at any time that the Company is an “issuer” as defined in Section 2 of the Sarbanes-Oxley Act of 2002, no Director or Executive Officer (or equivalent thereof) of the Company or its Affiliates will be permitted to pay any part of the Exercise Price with a promissory note or in any other form that could be deemed a prohibited personal loan under Section 13(k) of the Exchange Act. g.Vesting. The Option may, but need not, vest and therefore become exercisable in periodic installments that may, but need not, be equal (subject to the minimum vesting conditions under Section 16(a). The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Administrator determines to be appropriate. The vesting provisions of individual Options may vary. The Administrator may, but will not be required to, provide that no Option may be exercised for a fraction of a Share. The Administrator may, but will not be required to, provide for an acceleration of vesting and exercisability in the terms of the Award Agreement for any Option on the occurrence of the death or Disability of a Participant or a Sale of the Company. h.Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value of Shares on the Date of Grant with respect to which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under all plans of the Company and any “parent corporation” or “subsidiary corporation” of the Company, as those terms are defined in Code Sections 424(e) and 424(f), respectively) exceeds $100,000, the Options or portions thereof which exceed that limit (according to the order in which they were granted) will be treated as Nonqualified Stock Options. i.Employee Transfer, Approved Leave of Absence. For purposes of Incentive Stock Options, no termination of employment by an Employee will be deemed to result from either (i) a transfer to the employment of the Company from a “parent corporation” or “subsidiary corporation” of the Company, as those terms are defined in Code Sections 424(e) and 424(f), respectively, from the Company to a parent corporation or subsidiary corporation or from one parent corporation or subsidiary corporation to another; or (ii) an approved leave of absence for military service or sickness or for any other purpose approved by the Company, if the period of leave does not exceed three months or, if longer, the Employee’s right to re-employment is guaranteed either by a statute or by contract. j.Disqualifying Dispositions. Each Participant awarded an Incentive Stock Option will be required to immediately notify the Company in writing as to the occurrence of a disqualifying disposition of any Shares acquired by exercise of the Incentive Stock Option, and the price realized on the disqualifying disposition of those Shares. A “disqualifying disposition” is any disposition (including, without limitation, any sale or transfer) before the later of (i) two years after the Date of Grant of the Incentive Stock Option or (ii) one year after the issuance of the Shares acquired by exercise of the Incentive Stock Option. The Company may, if determined by the Administrator and in accordance with procedures established by the Administrator, retain possession of any Shares acquired by exercise of an Incentive Stock Option as agent for the applicable Participant until the end of the period described in the preceding sentence. k.Rights of Participant in Common Stock. Neither any Participant nor the legal representatives, heirs, legatees, distributees or Permitted Transferees of any Participant shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any Option Shares unless and until such Shares are issued to such Person (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). Upon the issuance of such Shares, such Participant shall have absolute ownership of the Shares, including the right to vote such Shares, to the same extent as any other owner of Shares, and to receive dividends thereon, subject, however, to the terms, conditions and restrictions of the Plan and any other undertakings of such holder of Common Stock.
A Restricted Award is an Award of Restricted Stock, Restricted Stock Units or Performance Stock Units, which provides that, except as otherwise provided in Section 16(e)(ii) with respect to Permitted Transferees, the Restricted Award may not be sold, assigned, transferred or otherwise disposed of, pledged or otherwise encumbered for the period (the “Restricted Period”) determined by the Administrator. Each Restricted Award will be in such form and will contain such terms, conditions, eligibility and Restricted Periods as the Administrator determines to be appropriate, including the treatment of dividends or dividend equivalents, as the case may be. The Administrator in its discretion may provide for the acceleration of the end of the Restricted Period in the terms of any Restricted Award, including in the event of a Sale of the Company. The terms and conditions of the Restricted Award may change from time to time, and the terms and conditions of separate Restricted Awards need not be identical, but each Restricted Award must include (through | | | B-11 |
incorporation of provisions hereof by reference in the Award Agreement or otherwise) the substance of each of the following provisions: a.Payment for Restricted Awards. The purchase price of Shares acquired under a Restricted Award, if any, will be determined by the Administrator, and may be stated as cash, property or prior or future services rendered to the Company for its benefit or an Affiliate for its benefit. Shares acquired in connection with a Restricted Award may be issued for such consideration, having a value not less than the par value thereof, as may be determined by the Administrator. Required consideration for Shares acquired in connection with a Restricted Award may be paid: (i) in cash at the time of purchase; or (ii) in any other form of legal consideration that may be acceptable to the Administrator in its discretion including, without limitation, a recourse promissory note, property or prior or future services that the Administrator determines have a value at least equal to the purchase price of the Restricted Award. Notwithstanding the foregoing, at any time that the Company is an “issuer” as defined in Section 2 of the Sarbanes-Oxley Act of 2002, no Director or Executive Officer (or equivalent thereof) of the Company or an Affiliate will be permitted to pay any portion of the purchase price for Shares acquired under a Restricted Award with a promissory note or in any other form that could be deemed prohibited personal loan under Section 13(k) of the Exchange Act. b.Vesting. The Restricted Award, and any Shares acquired thereunder, will be subject to a Restricted Period that specifies a right of repurchase in favor of the Company, or forfeiture where the consideration was in the form of services, in accordance with a vesting schedule to be determined by the Administrator, subject to the minimum vesting conditions under Section 16(a), which may be based on performance or other criteria. Except as provided under Section 16(a), no Restricted Award may be granted that is, in whole or in part, vested on the Date of Grant and not subject to a Restricted Period. c.Lapse of Restrictions. If a Participant has performed Continuous Service to the Company or its Affiliates, on the expiration or termination of the Restricted Period and the satisfaction of any other conditions prescribed by the Administrator (including, without limitation, the Participant’s satisfaction of applicable tax withholding obligations attributable to the Award), the restrictions applicable to the Restricted Award will lapse and the number of Shares with respect to which the restrictions have lapsed will be issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), free of any restrictions except those that may be imposed by law, the terms of the Plan or the terms of a Restricted Award, to the Participant or the Participant’s beneficiary or estate, as the case may be, unless the Restricted Award is subject to a deferral condition that complies with Section 409A of the Code and the regulations thereunder as may be allowed or required by the Administrator in its sole discretion. The Company will not be required to deliver any fractional Share but will pay, in lieu thereof, the Fair Market Value of the fractional Share in cash to the Participant or the Participant’s beneficiary or estate, as the case may be. With respect only to Restricted Stock Units, unless otherwise subject to a deferral condition that complies with Section 409A of the Code, the Shares (or cash, if applicable) will be issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) and the Participant will be entitled to the beneficial ownership rights of the Shares not later than (i) the date that is 2½ months after the end of the Participant’s taxable year (or the end of the Company’s taxable year, if later) for which the Restricted Period ends and the Restricted Stock Unit is no longer subject to a substantial risk of forfeiture, or such earlier date as may be necessary to avoid application of Section 409A of the Code to the Award. d.Stockholder Rights. Unless otherwise provided by the Administrator in an Award Agreement, the holder of Shares of Restricted Stock shall be entitled to vote such Shares and to receive dividends, if any, paid thereon. e.Dividend Equivalents on Restricted Stock Units. Unless otherwise provided by the Administrator in an Award Agreement, the holder of Restricted Stock Units will be entitled to receive dividend equivalents which shall be subject to the same vesting schedule as the Restricted Stock Units to which they relate. f.Delivery of Restricted Stock. Shares of Restricted Stock will be delivered to the Participant at the Date of Grant either by book-entry registration or by delivering to the Participant, or a custodian or escrow agent (including, without limitation, the Company or one or more of its Employees) designated by the Administrator, a stock certificate or certificates registered in the name of the Participant. If physical certificates representing Shares of the Restricted Stock are registered in the name of the Participant, such certificates must bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Shares. | | | B-12 |
g.Section 83(b) Election. Within thirty days after the Date of Grant for an Award of Restricted Stock hereunder, the Participant may file with respect to all or a portion of the Restricted Stock an election under Code Section 83(b) to include in gross income the Date of Grant Fair Market Value of such Restricted Stock (less the amount, if any, paid therefor) with the Internal Revenue Service. The Code Section 83(b) election, if any, shall be filed in compliance with the Treasury regulations promulgated pursuant to Code Section 83(b). 8.Stock Appreciation Rights a.General. A SAR may be granted either alone or in tandem with all or part of an Option. A SAR granted in tandem with a Nonqualified Stock Option may be granted at or after the time of grant of the related Option, but a SAR granted in tandem with an Incentive Stock Option may be granted only at the time of the grant of the related Option. b.Grant Requirements. A SAR may be granted only if it does not provide for the deferral of compensation within the meaning of Section 409A of the Code. A SAR does not provide for a deferral of compensation if: (i) the Strike Price may never be less than the Fair Market Value on the Date of Grant, (ii) the compensation payable under the SAR can never be greater than the difference between the Fair Market Value on the date of exercise and the Strike Price, (iii) the number of Shares subject to the SAR is fixed on the Date of Grant, and (iv) the SAR does not include any feature for the deferral of compensation other than the deferral of recognition of income until the exercise of the right. No dividends or dividend equivalents may be paid on any outstanding SAR. c.Strike Price. The Administrator will determine the Strike Price of a SAR, which in the case of a SAR granted independent of any Option, will not be less than the Fair Market Value on the Date of Grant. The Strike Price of a SAR granted in tandem with an Option will be the Exercise Price of the related Option. A SAR granted in tandem with an Option will be exercisable only to the same extent as the related Option, provided that by its terms, such SAR will be exercisable only when the Fair Market Value exceeds the Strike Price of the SAR. d.Repricing Prohibited. Except as otherwise provided in Section 14, without the prior approval of the Company’s stockholders: (i) the Strike Price of a SAR may not be directly or indirectly reduced; (ii) a SAR may not be cancelled in exchange for cash, an Option or SAR with an Exercise Price or Strike Price that is less than the Strike Price of the original SAR, any other Award or otherwise; and the Company may not purchase a SAR for value from a Participant if the current Fair Market Value is less than the SAR’s Strike Price. e.Vesting. The SAR will be subject to a Restricted Period that specifies a forfeiture in accordance with a vesting schedule to be determined by the Administrator, subject to the minimum vesting conditions under Section 16(a). The Administrator in its discretion may provide for an acceleration of vesting in the terms of any SAR upon the death or Disability of a Participant or in the event of a Sale of the Company. The Administrator may not grant a SAR that is, in whole or in part, vested on the Date of Grant and not subject to a Restricted Period. f.Exercise and Settlement. On delivery to the Administrator of a written request to exercise a SAR, the holder will be entitled to receive from the Company, an amount equal to the product of (i) the excess of the Fair Market Value on the date of exercise over the Strike Price specified in the Award Agreement, multiplied by (ii) the number of Shares for which the SAR is being exercised. Settlement with respect to the exercise of a SAR will be on the date of exercise and may be made in the form of Shares valued at Fair Market Value on the date of exercise (with or without restrictions as to substantial risk of forfeiture and transferability, as determined by the Administrator in its sole discretion), cash or a combination of Shares and cash, as determined by the Administrator in its sole discretion. g.Reduction in the Underlying Option Shares. On the exercise of a SAR granted in tandem with an Option, the number of Shares for which the related Option is exercisable will be reduced by the number of Shares for which the SAR has been exercised. The number of Shares for which a tandem SAR is exercisable will be reduced on any exercise of any related Option by the number of Shares for which the Option has been exercised. h.Written Request. Unless otherwise determined by the Administrator in its sole discretion, SARs will be settled in Shares. If permitted in the Award Agreement, a Participant may request that any exercise of a SAR be settled for cash, but a Participant will not have any right to demand a cash settlement. A request for a cash settlement may be made only by a written request filed with the Corporate Secretary of the | | | B-13 |
Company during the period beginning on the third business day following the date of release for publication by the Company of quarterly or annual summary statements of earnings and ending on the twelfth business day following that date. Within 30 days of the receipt by the Company of a written request to receive cash in full or partial settlement of a SAR or to exercise the SAR for cash, the Administrator will, in its sole discretion, either consent to or disapprove, in whole or in part, the written request. A written request to receive cash in full or partial settlement of a SAR or to exercise a SAR for cash may provide that, if the Administrator disapproves the written request, the written request will be treated as an exercise of the SAR for Shares. i.Disapproval by Administrator. If the Administrator disapproves in whole or in part any request by a Participant to receive cash in full or partial settlement of a SAR or to exercise such Award for cash, the disapproval will not affect the Participant’s right to exercise the SAR at a later date, to the extent that it would be otherwise exercisable, or to request a cash form of payment at a later date, in each case subject to the approval of the Administrator. Additionally, the disapproval will not affect the Participant’s right to exercise any related Option. 9.Other Stock-Based Awards
The Administrator may, either alone or in connection with the grant of other Awards, grant other stock-based Awards not described in Section 6, 7 or 8 that are payable in, valued in whole or in part by reference to, or are otherwise based on Shares, as deemed by the Administrator consistent with the purpose of the Plan. The Administrator shall determine the terms and conditions of any such Award.
The Administrator may, either alone or in connection with the grant of other Awards, grant Cash-Based Awards in such amounts and upon such terms, as the Administrator determines. a.Value. Each Cash-Based Award shall specify a payment amount or payment range as determined by the Administrator. b.Method of Payment. Payment, if any, with respect to a Cash-Based Award shall be made in cash in accordance with the terms of the Award. 11.Treatment of Awards on Termination of Continuous Service a.Unvested Awards Generally. Unless otherwise provided in an Award Agreement or in a Service Agreement the terms of which have been approved by the Administrator and subject to Section 8(e), if a Participant’s Continuous Service terminates for any reason, the Participant will forfeit the unvested portion of any Award acquired in consideration of services, all unvested Shares held by the Participant as of the date of termination under the terms of any Award will be forfeited or, if applicable, may be repurchased by the Company at the lesser of the purchase price paid by the Participant or the current Fair Market Value, and the Participant will have no rights with respect to any Award or Shares so forfeited or repurchased. i.Other than for Cause or death or Disability. Unless otherwise provided in an Award Agreement or in a Service Agreement the terms of which have been approved by the Administrator, if a Participant’s Continuous Service is terminated for any reason other than due to the Participant’s death or Disability or by the Company for Cause, the Participant may exercise his or her Option or SAR (to the extent vested and exercisable as of the date of termination) during the period ending on the earlier of (1) the date that is three months after the termination of the Participant’s Continuous Service or (2) the expiration of the original term of the Award as set forth in the Award Agreement. Any unexercised Option or SAR held by the Participant will automatically terminate at the close of business on the last day of such period and will thereafter not be exercisable. ii.For Cause. If the Participant’s Continuous Service is terminated by the Company or an Affiliate for Cause, all outstanding Options and SARs (whether or not vested) will be forfeited and expire as of the beginning of business on the date of termination. iii.Participant Death or Disability. Unless otherwise provided in an Award Agreement or in a Service Agreement the terms of which have been approved by the Administrator, if a Participant’s Continuous Service is terminated as a result of the Participant’s death or Disability, the Participant’s | | | B-14 |
Option or SAR may be exercised (to the extent the Option or SAR was vested and exercisable as of the date of termination) by the Participant or the Participant’s estate, designated beneficiary or such other Person who acquired the right to exercise the Option or SAR by bequest or inheritance, but only during the period ending on the earlier of the date that is 12 months following the date of termination or the expiration of the original term of the Option or SAR as set forth in the Award Agreement.Any unexercised Option or SAR held by the Participant or such other Person will terminate at the end of such period. iv.Extension of Option or SAR Termination Date. An Award Agreement may provide that if the exercise of an Option or SAR following the termination of the Participant’s Continuous Service for any reason (other than on the Participant’s death or Disability or termination by the Company for Cause) would violate any applicable federal, state or local law, the Option or SAR will terminate only on the earlier of the expiration of the original term of the Option or SAR or the date that is 30 days after the exercise of the Option or SAR would no longer violate any applicable federal, state or local law. 12.Covenants of the Company a.Availability of Shares. During the terms of the Awards, the Company will keep available at all times the number of Shares required to satisfy the Awards. b.Securities Law Compliance. Each Award Agreement will provide that no Shares may be purchased or sold thereunder unless and until any then applicable requirements of state, federal or applicable foreign laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel. The Company will use reasonable efforts to seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Awards and to issue and sell Shares on exercise of Awards; however, this undertaking will not require the Company to register under the Securities Act the Plan, any Award or any Shares issued or issuable under any Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company determines to be necessary for the lawful issuance and sale of Shares under the Plan, the Company will be relieved from any liability for failure to issue and sell Shares on exercise of any Awards unless and until that authority is obtained. 13.Company Use of Proceeds from Shares
Proceeds from the sale of Shares under the Plan will be general funds of the Company. 14.Adjustments for Changes in Stock a.Capitalization Adjustments. If any change is made in the Common Stock without the receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of Shares, exchange of Shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), then (i) the aggregate number of Shares or class of securities that may be purchased under Awards granted hereunder, (ii) the aggregate number of Shares or class of securities that may be purchased under Incentive Stock Options granted hereunder, (iii) the number or class of securities covered by outstanding Awards, (iv) the maximum number of Shares with respect to which Options and SARs may be granted to any single Employee during any calendar year, and (v) the Exercise Price of any Option and the Strike Price of any SAR in effect before the change will be proportionately adjusted by the Administrator to reflect any increase or decrease in the number of issued Shares or change in the Fair Market Value resulting from the transaction; provided, that any fractional Shares resulting from the adjustment aggregated until and eliminated at the time of exercise or settlement by rounding down. The Administrator will make these adjustments in a manner that will provide an appropriate adjustment that neither increases nor decreases the value of the Award as in effect immediately before the corporate change, and its determination will be final, binding and conclusive. The conversion of any securities of the Company that are by their terms convertible will not be treated as a transaction “without receipt of consideration” by the Company. b.Dissolution or Liquidation. In the event of a dissolution or liquidation of the Company that does not constitute a Sale of the Company, all outstanding Awards will terminate immediately before the dissolution or liquidation; provided that not less than fifteen days’ prior written notice of the date so fixed shall be given to each Participant, and each Participant shall have the right, (i) to exercise his or her | | | B-15 |
Options to the extent they are vested and exercisable and purchase or receive the full number of Shares not previously exercised under such Options as applicable, if (and only if) such Options have not at the time expired or been terminated and (ii) to receive Shares under all of Participant’s Restricted Awards on which all restrictions have lapsed in accordance with the Plan and the applicable Award Agreement and for which Shares have not already been delivered prior to such termination date. Failing such exercise, any unexercised portion of all Options granted hereunder and all Restricted Awards on which restrictions have not lapsed as of the termination date shall be forfeited and deemed cancelled as of the effective date of such liquidation or dissolution. The Company shall deliver the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) required to be delivered by clause (ii) of the immediately preceding sentence no later than 3 days prior to the termination date. c.Sale of the Company. Notwithstanding anything herein to the contrary, except as provided by the Committee in an Award Agreement or in a Service Agreement, upon a Sale of the Company, all outstanding Options and SARs shall become fully vested and exercisable without regard to the limitations on exercisability contained in Section 6 or 8 or the applicable Award Agreement immediately prior to such transaction, and with respect to Restricted Awards, all restrictions shall lapse automatically. In the event of a Sale of the Company, the performance period for all Restricted Stock Units or Performance Stock Units with incomplete performance periods as of the date the Sale of the Company occurs shall end on such date and the Committee shall (i) determine, in its sole discretion, the extent to which the performance goals have been met or would have been met based upon the financial information then available or on such other basis determined by the Committee in its sole discretion and (ii) cause to be paid to the applicable Participant partial or maximum performance for each performance period based upon the Committee’s determination of the degree of attainment of performance goals, or if not determinable, at the applicable “target” levels of performance. The Administrator will (i) cancel any or all outstanding Options, SARs, Restricted Stock Units and Performance Stock Units under the Plan in consideration for payment to the Participants an amount equal to the portion of the consideration payable to such Participants pursuant to such transaction giving effect to the accelerated vesting as if such Awards had been fully vested immediately prior to such transaction, less the aggregate exercise price that would have been payable therefore, if any, and any required withholding tax; and (ii) cause all Restricted Shares to be purchased for an equivalent consideration payable in such transaction. Payment of any amount payable pursuant to the preceding sentence may be made in cash or, in the event that the consideration to be received in such transaction includes securities or other property, in cash or publicly tradable securities in the Administrator’s discretion. 15.Amendment of the Plan; Awards a.Plan Amendment. The Board at any time may amend or terminate the Plan. However, except as provided in Section 14(a) relating to adjustments on changes in the Common Stock, no amendment will be effective unless approved by the stockholders of the Company to the extent stockholder approval is necessary to satisfy any applicable law or any securities exchange listing requirements. At the time of any amendment, the Board will determine, on advice from counsel, whether the amendment will be contingent on stockholder approval. b.Contemplated Amendments. It is expressly contemplated that the Board may amend the Plan in any respect the Board determines necessary or advisable to provide eligible Employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations issued thereunder relating to Incentive Stock Options or to the nonqualified deferred compensation provisions of Section 409A of the Code and to bring the Plan and Awards granted hereunder into compliance therewith. Notwithstanding the foregoing, neither the Board nor the Company nor any Affiliate will have any liability to any Participant or any other Person as to any tax consequences expected, but not realized, by a Participant or any other Person due to the receipt, exercise, vesting or settlement of any Award granted hereunder. c.Award Amendment. Subject to Section 8(d) and(e) and Section 15(d) and (e), the Administrator at any time may amend the terms of any one or more Awards. Except as otherwise permitted under Section 14, unless stockholder approval is obtained: (i) no amendment or modification may reduce the Exercise Price of any Option or the Strike Price of any SAR; (ii) the Administrator may not cancel any outstanding Option or SAR and replace it with a new Option or SAR, another Award or cash, if doing so would be considered a “repricing” for purposes of the stockholder approval rules of the applicable securities exchange or inter-dealer quotation system on which the Common Stock is listed or quoted; and (iii) the Administrator may | | | B-16 |
not take any other action that is considered a repricing for purposes of the stockholder approval rules of the applicable securities exchange or inter-dealer quotation system on which the Common Stock is listed or quoted. d.No Impairment of Rights. No amendment of the Plan or an Award may impair rights under any Award granted before the amendment or increase a Participant’s obligations under his or her Award, unless (i) the Company requests the consent of the Participant and (ii) the Participant consents in writing. For the avoidance of doubt, a cancellation of an Award where the Participant receives a payment equal in value to the Fair Market Value (or the Sale Value) of the vested Award or, in the case of a vested Option or SAR, the difference between the Fair Market Value (or the Sale Value) of the Shares subject to an Option or SAR and the Exercise Price or Strike Price, is not an impairment of the Participant’s rights that requires consent of the Participant. e.Acceleration of Exercisability and Vesting. Subject to Section 16(a), the Administrator will have the power and sole discretion to accelerate the time at which an Award may first be exercised or the time during which an Award or any part thereof will vest for any reason, notwithstanding the provisions in the Award stating the time at which it may first be exercised or the time during which it will vest. a.Minimum Vesting Conditions. No portion of an Award other than a Cash-Based Award may become vested prior to the first anniversary of the Date of Grant; provided that such restriction shall not apply to (i) Awards granted in connection with an acquisition (whether by asset purchase, merger or otherwise); and (ii) any Awards that the Administrator may grant up to a maximum of five percent (5%) of the available Share reserve authorized for issuance under the Plan pursuant to Section 4(a) (subject to adjustment under Section 14(a)); provided, further, that the Administrator may authorize acceleration of vesting of such Awards in the event of the Participant’s death or Disability, or the occurrence of the Sale of the Company as provided in Section 14(c). b.Stockholder Rights. Except as provided in Section 7(d)and (e)and Section 14of the Plan or as otherwise provided in an Award Agreement, no Participant will be considered the holder of, or to have any of the rights of a holder with respect to, any Shares subject to an Award unless and until the Participant has satisfied all requirements for exercise, payment or delivery of the Award, as applicable, under its terms, and no adjustment will be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions of other rights for which the record date is before the date of issue of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). c.Participation not a Guarantee of Service Right. Nothing in the Plan or any instrument executed or Award granted pursuant thereto will confer on any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Award was granted or will affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without Cause; (ii) the service of a Consultant under the terms of the Consultant’s agreement with the Company or an Affiliate; or (iii) the service of a Director under the Bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be. d.Effect of Plan. Neither the adoption of the Plan nor any action of the Board, the Committee or the Administrator shall be deemed to give any Employee, Director or Consultant any right to be granted an Award or any other rights, except as may be evidenced by an Award Agreement or a Service Agreement, or any amendment thereto, duly authorized by the Administrator and executed on behalf of the Company, and then only to the extent and on the terms and conditions expressly set forth in such Award Agreement or Service Agreement. The existence of the Plan and the Awards granted hereunder shall not affect in any way the right of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of bonds, debentures, or shares of preferred stock ahead of or affecting the Common Stock or the rights thereof, the dissolution or liquidation of the Company or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding. | | | B-17 |
i.Each Award will be exercisable during the Participant’s lifetime only by the Participant, or, if permissible under applicable law, by the Participant’s legal guardian or representative. No Award may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant other than by will or by the laws of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance will be void and unenforceable against the Company or any Affiliate; provided that the designation of a beneficiary will not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance. ii.Notwithstanding the foregoing, the Administrator may, in its sole discretion, permit a Participant to transfer an Award (other than an Incentive Stock Option) by gift or domestic relations order, without consideration, to a Permitted Transferee, subject to such rules as the Administrator may adopt consistent with any applicable Award Agreement to preserve the purposes of the Plan, on condition that the Participant first gives the Administrator advance written notice describing the terms and conditions of the proposed transfer and the Administrator notifies the Participant in writing that the transfer would comply with the requirements of the Plan. If the Award Agreement does not provide for transferability, then the Award will be transferable and exercisable only as provided in the preceding Section 16(e)(i). iii.The terms of an Award transferred in accordance with Section 16(e)(ii) will apply to the Permitted Transferee, and any reference to a Participant in the Plan or in the Award Agreement will refer to the Permitted Transferee, except that (1) the Permitted Transferee will not be entitled to transfer the Award other than by will or the laws of descent and distribution, (2) the Permitted Transferee is not entitled to exercise a transferred Option unless there is in effect a registration statement on an appropriate form covering the Shares to be acquired by the exercise of the Option if the Administrator determines, consistent with the Award Agreement, that a registration statement is necessary or appropriate, (3) neither the Administrator nor the Company is required to provide any notice to a Permitted Transferee, whether or not notice is or would otherwise have been required to be given to the Participant, and (4) the consequences of the termination of the Participant’s Continuous Service under the Plan and the Award Agreement will continue to be applied with respect to the Participant, including, without limitation, that an Option will be exercisable by the Permitted Transferee only to the extent, and for such period, specified in the Plan and the Award Agreement. f.Section 409A of the Code. The Administrator shall take into account compliance with Section 409A of the Code in connection with any grant of an Award under the Plan, to the extent applicable. The Plan and Awards are intended to comply with or be exempt from the applicable requirements of Section 409A of the Code and shall be limited, construed, and interpreted in accordance with such intent. To the extent that any Award is subject to Section 409A of the Code, it shall be paid in a manner that will comply with Section 409A of the Code, including proposed, temporary, or final regulations or any other guidance issued by the Secretary of the Treasury and the Internal Revenue Service with respect thereto. Notwithstanding any contrary provision in the Plan or Award Agreement, any payment(s) of “nonqualified deferred compensation” (within the meaning of Section 409A of the Code) that are otherwise required to be made under the Plan to a “specified employee” (as defined under Section 409A of the Code) as a result of such employee’s “separation from service” (other than a payment that is not subject to Section 409A of the Code) shall be delayed for the first six (6) months following such separation from service (or, if earlier, until the date of death of the specified employee) and shall instead be paid (in a manner set forth in the Award Agreement) upon expiration of such delay period. While the Awards granted hereunder are intended to be structured in a manner to avoid the imposition of any penalty taxes under Section 409A of the Code, in no event whatsoever shall the Company or any of its Affiliates be liable for any additional tax, interest, or penalties that may be imposed on a Participant as a result of Section 409A of the Code or any damages for failing to comply with Section 409A of the Code or any similar state or local laws (other than for withholding obligations or other obligations applicable to employers, if any, under Section 409A of the Code). g.Withholding Obligations. To the extent provided by the terms of an Award Agreement, any Company insider trading policy (including blackout periods) and to the discretion of the Administrator, a Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of Shares under an Award by any one or combination of the following means (in addition to the Company’s right to withhold from any compensation paid to the Participant by the Company): | | | B-18 |
ii.authorizing the Company to withhold a number of Shares from the Shares otherwise issuable to the Participant as a result of the exercise or acquisition of Shares under the Award, the Fair Market Value of which does not exceed either (A) the maximum statutory tax rates in the Participant’s applicable jurisdictions or (B) the amount of tax required to be withheld by law, in which case the Award will be surrendered and cancelled with respect to the number of Shares retained by the Company (provided that to the extent such direction would result in the Company withholding fractional Shares, the number of Shares to be withheld will be rounded down to the nearest whole and the Participant shall be required to pay the remainder of the tax withholding obligation in cash or by certified or bank check); iii.delivering to the Company previously owned and unencumbered Shares; or iv.by execution of a recourse promissory note by the Participant.
Notwithstanding the foregoing, at any time that the Company is an “issuer” as defined in Section 2 of the Sarbanes-Oxley Act of 2002, no Director or Executive Officer (or equivalent thereof) of the Company or an Affiliate will be permitted to pay any portion of the tax withholding with respect to any Award with a promissory note or in any other form that could be deemed a prohibited personal loan under Section 13(k) of the Exchange Act.
Notwithstanding anything in this Section 16(g) to the contrary, unless otherwise provided in the terms of an Award Agreement, payment of the tax withholding in the form of Share withholding pursuant to clause (ii) or by delivery of previously owned Shares pursuant to clause (iii) by a Participant who is or has been in the immediately preceding six months an Officer or Director, or who is otherwise subject to Section 16 of the Exchange Act, shall not be permitted unless pre-approved by the Administrator, in its discretion, in a manner consistent with the specificity requirements of Note (3) to Rule 16b‑3(e) under the Exchange Act, including specifically identifying the name of the Participant, the nature of the transaction, the determination of the number of Shares to be withheld or delivered and any other terms of the transaction determined to be material by the Administrator. h.Other Compensation Arrangements. Nothing contained in the Plan will prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if stockholder approval is required; and those arrangements may be either generally applicable or applicable only in specific cases. i.Recapitalizations. Each Award Agreement will contain provisions required to reflect the provisions of Section 14(a). j.Delivery. Subject to Section 16(k) on exercise of a right granted under an Option, SAR or other Stock-Based Award or Cash-Based Award that may be exercised at the discretion of a Participant, the Company will issue Shares or pay any amounts due within a reasonable period thereafter. Subject to any statutory or regulatory obligations the Company may otherwise have, for purposes of the Plan, 30 days will be considered a reasonable period. k.Government and Other Regulations. i.The Company’s obligation to settle Awards in Shares or other consideration is subject to all applicable laws, rules and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions of any Award to the contrary, the Company will be under no obligation to offer to sell or to sell, and is prohibited from offering to sell or selling, any Shares under an Award unless the Shares have been properly registered for sale under the Securities Act or unless the Company has received an opinion of counsel, satisfactory to the Company, that the Shares may be offered or sold without registration pursuant to an available exemption therefrom and the terms and conditions of that exemption and of all applicable state securities laws have been fully complied with. The Company will be under no obligation to register for sale under the Securities Act any of the Shares to be offered or sold under the Plan. The Administrator is authorized to provide that all certificates or book entries for Shares or other securities of the Company or any Affiliate delivered under the Plan will be subject to such stop transfer orders and other restrictions as the Administrator may consider advisable under the Plan, the applicable Award Agreement, the federal securities laws, or the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or inter-dealer quotation system on which the Shares or other securities are then listed or quoted and any other | | | B-19 |
applicable federal, state, local or non-U.S. laws. Notwithstanding any provision in the Plan to the contrary, the Administrator reserves the right to add any additional terms or provisions to any Award granted under the Plan that it in its sole discretion considers necessary or advisable in order that the Award complies with the legal requirements of any governmental entity to whose jurisdiction the Award is subject. ii.The Administrator may cancel an Award or any portion thereof if it determines, in its sole discretion, that legal or contractual restrictions, blockage or other market considerations would make the Company’s acquisition of Shares from the public markets, the Company’s issuance of Shares to the Participant, the Participant’s acquisition of Shares from the Company or the Participant’s sale of Shares to the public markets, illegal, impracticable or inadvisable. If the Administrator determines to cancel all or any portion of an Award in accordance with the foregoing, the Company will pay to the Participant an amount equal to the excess of (1) the aggregate Fair Market Value of the Shares subject to the Award or portion thereof canceled (determined as of the applicable exercise date, or the date that the Shares would have been vested or delivered, as applicable), over (2) the aggregate Exercise Price or Strike Price (in the case of an Option or SAR, respectively) or any amount payable as a condition of delivery of Shares (in the case of any other Award). The amount payable will be delivered to the Participant as soon as practicable following the cancellation of the Award or portion thereof. l.Clawback or Recoupment. Notwithstanding any other provision in this Plan, the Company may cancel any Award, require reimbursement of any Award by a Participant, and effect any other right of recoupment of equity or other compensation provided under the Plan in accordance with the Company’s Clawback Policy. In addition, a Participant may be required to repay to the Company previously paid compensation whether provided pursuant to the plan or an Award agreement, in accordance with the Clawback Policy. By accepting an Award, the Participant is agreeing to be bound by the Clawback Policy, as in effect or as may be adopted and/or modified from time to time by the Company in its discretion (including, without limitation, to comply with applicable law or stock exchange listing requirements). m.Reliance on Reports. Each member of the Administrator and each member of the Board will be fully justified in acting or failing to act, as the case may be, and will not be liable for having so acted or failed to act in good faith, in reliance on any report made by the independent public accountant of the Company and its Affiliates or any other information furnished in connection with the Plan by any agent of the Company or the Administrator or the Board, other than himself. n.Foreign Participants. Without amending the Plan, the Administrator may grant Awards to eligible individuals who are foreign nationals on such terms and conditions different from those specified in the Plan as may, in the judgment of the Administrator, be necessary or desirable to foster and promote achievement of the purposes of the Plan and, in furtherance of such purposes, the Administrator may make such modifications, amendments, procedures, subplans and the like as may be necessary or advisable to comply with the provisions of laws and regulations in other countries or jurisdictions in which the Company or its Affiliates operate. o.Other Provisions. The Award Agreements authorized under the Plan may contain such other provisions not inconsistent with the Plan, including, without limitation, restrictions on the exercise of the Awards, as the Administrator may consider advisable. p.Unfunded Status of Awards. The Plan is intended to constitute an “unfunded” plan for incentive compensation. With respect to any cash payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award gives any such Participant any rights that are greater than those of a general creditor of the Company. 17.Effective Date and Term of Plan. a.The Plan shall be effective as of the Effective Date. Unless otherwise terminated as provided herein, the Plan will continue in effect until, and automatically terminate on, [May 14, 2034], the day before the 10th anniversary of the Effective Date, or, if the stockholders approve an amendment to the Plan that increases the number of Shares subject to the Plan, the day before the 10th anniversary of the date of such stockholder approval. No Award may be granted under the Plan after that date, but Awards theretofore granted may extend beyond that date and will continue to be governed by the terms and conditions of the Plan. The Board may suspend or terminate the Plan at any earlier date under | | | B-20 |
Section15(a). No Awards may be granted under the Plan while the Plan is suspended or after it is terminated.
The laws of the State of Delaware will govern all questions concerning the construction, validity and interpretation of the Plan, without regard to that state’s conflict of law rules. 19.Limitation on Liability
The Company and any Affiliate that is in existence or that hereafter comes into existence will have no liability to any Participant or to any other Person as to (a) the non-issuance or sale of Shares due to the Company’s inability to obtain from any regulatory body having jurisdiction the authority, considered by the Company’s counsel, necessary for the lawful issuance and sale of any Shares hereunder; (b) any tax consequences expected, but not realized, by a Participant or any other Person due to the receipt, exercise or settlement of any Award granted hereunder; or (c) the failure of any Award that is determined to be “nonqualified deferred compensation” to comply with Section 409A of the Code and the regulations thereunder.
To record the adoption of the Plan by the Board, the Company has caused its authorized officer to execute the Plan as of the date specified below.
Signature page follows
| | | B-21 |
IN WITNESS WHEREOF, on authorization of the Board, the undersigned has executed the Cinemark Holdings, Inc. 2024 Long-Term Incentive Plan on _____________, 2024.
CINEMARK HOLDINGS, INC.
By: ___________________________________ Michael Cavalier Executive Vice President – General Counsel and Business Affairs
| | | B-22 |
CINEMARK™ P.O. BOX 8016, CARY, NC 27512-9903 Your vote matters! Have your Proxy Cardballot ready " Followand please use one of the simple instructions to record your vote PHONECall 1-866-503-2691 " Use any touch-tone telephone "methods below for easy voting: Your control number Have your Proxy Card ready " Follow the simple recorded instructions MAIL " Mark, sign and date your Proxy Card " Fold and return your Proxy Card12 digit control number located in the postage-paid envelope providedbox above available when you access the website and follow the instructions. Scan QR for digital voting Cinemark Holdings, Inc. Annual Meeting of Stockholders For Stockholders of recordRecord as of March 24, 2023 TIME: Thursday,20, 2024 Wednesday, May 18, 2023, 9:0015, 2024, 8:30 AM, Central Daylight Time PLACE: Cinemark West Plano and XD Theater 3800 Dallas Parkway, Plano, TX 75093-7859 Internet: www.proxypush.com/CNK • Cast your vote online • Have your Proxy Card ready • Follow the simple instructions to record your vote Phone: 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 YOUR VOTE IS IMPORTANT! PLEASE VOTE BY: 8:30 AM, Central Daylight Time, May 15, 2024. This proxy is being solicited on behalf of the Board of DirectorsDirectors. 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 capitalcommon stock of Cinemark Holdings, Inc., which that 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_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 Copyright © 2024 BetaNXT, Inc. or its affiliates. All Rights Reserved
CINEMARK™ Cinemark Holdings, Inc. Annual Meeting of Stockholders Please make your marks like this: X THE BOARD OF DIRECTORS RECOMMENDS A VOTE: FOR ON PROPOSALS 1, 2, 3 AND 3 THE BOARD RECOMMENDS THAT AN ADVISORY4 PROPOSAL YOUR VOTE ON THE COMPENSATION FOR NAMED EXECUTIVE OFFICERS BE HELD EVERY 1 YEAR. BOARD OF DIRECTORS PROPOSAL YOUR VOTE RECOMMENDS 1. Election of DirectorsClass II directors, each for a term that expires in 2027. FOR WITHHOLD 1.01 Nancy LoeweDarcy Antonellis FOR #P2# #P2# 1.02 Steven RosenbergCarlos Sepulveda FOR #P3# #P3# 1.03 Enrique SeniorMark Zoradi 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 the appointment of Deloitte & Touche LLP as our independent registered public accounting firm Deloitte & Touche LLPfirm. FOR for4. Vote to approve the fiscal 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#Cinemark Holdings, Inc. 2024 Long-Term Incentive Plan. FOR 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 authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy/Vote Form. Signature (and Title if applicable) Date Signature (if held jointly) Date
|
|
|
|
|