Toggle SGML Header (+)


Section 1: DEF 14A (DEF 14A)

amch_Current_Proxy

Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.      )

 

 

 

 

Filed by the Registrant  ☒

 

Filed by a Party other than the Registrant  ☐

 

Check the appropriate box:

Preliminary Proxy Statement

☐ 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12

 

AMC ENTERTAINMENT HOLDINGS, INC.

(Name of Registrant as Specified In Its Charter)

 

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

No fee required.

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

(1)

Title of each class of securities to which transaction applies:

 

 

 

 

(2)

Aggregate number of securities to which transaction applies:

 

 

 

 

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

 

 

(4)

Proposed maximum aggregate value of transaction:

 

 

 

 

(5)

Total fee paid:

 

 

 

Fee paid previously with preliminary materials.

☐ 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

(1)

Amount Previously Paid:

 

 

 

 

(2)

Form, Schedule or Registration Statement No.:

 

 

 

 

(3)

Filing Party:

 

 

 

 

(4)

Date Filed:

 

 

 

 

 

 


 

Table of Contents

image1.jpeg

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON APRIL 26, 2017

 

DEAR STOCKHOLDERS:

 

We cordially invite you to attend the Annual Meeting of Stockholders of AMC Entertainment Holdings, Inc., which will be held on April 26, 2017 at  4:00 p.m. (Central Time) at the AMC Theatre Support Center, located at One AMC Way, 11500 Ash Street, Leawood, Kansas 66211 for the following purposes:

 

1.

To elect to our Board of Directors the following three nominees for terms expiring at the 2020 Annual Meeting: Mr. Anthony J. Saich, Mr. Gary F. Locke, and Ms. Kathleen M. Pawlus.

2.

To ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2017.

3.

To conduct a non-binding advisory vote to approve the compensation of named executive officers.

 

These items of business are more fully described in the Proxy Statement accompanying this notice.

 

Our Board has fixed the close of business on February 28, 2017 as the record date for determining the stockholders entitled to notice of and to vote at the Annual Meeting of Stockholders or at any adjournment or postponement thereof. A list of these stockholders will be available at the time and place of the meeting and, during the ten days prior to the meeting, at the office of the Secretary of AMC Entertainment Holdings, Inc. at One AMC Way, 11500 Ash Street, Leawood, Kansas 66211.

 

Only stockholders and persons holding proxies from stockholders may attend the meeting. If your shares are registered in your name, you should bring your proxy card and a proper form of identification such as your driver's license to the meeting. If your shares are held in the name of a broker, trust, bank or other nominee, you will need to bring a proxy or letter from that broker, trust, bank or other nominee that confirms you are the beneficial owner of those shares.

 

In order that your shares may be represented at the meeting if you are not personally present, you are urged to vote your shares by telephone or Internet, or by completing, signing and dating the enclosed proxy card and returning it promptly in the accompanying postage prepaid (if mailed in the United States) return envelope.

 

ALL STOCKHOLDERS ARE EXTENDED A CORDIAL INVITATION

TO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS

 

 

 

 

 

By Order of the Board of Directors,

One AMC Way

 

Picture 3

 

 

11500 Ash Street, Leawood, KS 66211

Senior Vice President, General Counsel and Secretary

 

March 24, 2017

 

Important Notice Regarding the Availability of Proxy Materials

for the Annual Meeting of Stockholders to be Held on April 26, 2017:

The Proxy Statement and 2016 Annual Report to Stockholders 

are available  at http://www.envisionreports.com/amc

 

 


 

Table of Contents

AMC ENTERTAINMENT HOLDINGS, INC.
INDEX

 

 

   

Page
Number

PROXY SUMMARY 

 

GENERAL INFORMATION 

 

VOTING AT THE ANNUAL MEETING 

 

The Proxy 

 

Voting Requirement to Approve each of the Proposals 

 

How Votes Are Counted 

 

DIRECTORS OF THE COMPANY 

 

PROPOSAL 1 ELECTION OF DIRECTORS 

 

Nominees for Election as Class I Directors for a Term Ending 2020 

 

Directors Continuing in Office 

 

Class II Directors—Term Expiring 2018 

 

Class III Directors—Term Expiring 2019 

 

CORPORATE GOVERNANCE 

 

Corporate Governance Guidelines 

 

Risk Oversight 

 

Compensation Policies and Practices as They Relate to Risk Management 

 

Business Conduct and Ethics 

 

10 

Board and Committee Information 

 

10 

Communications with the Board 

 

10 

Director Independence 

 

10 

Board Leadership Structure 

 

10 

Executive Sessions 

 

10 

Attendance at Annual Meetings 

 

11 

Committees 

 

11 

Audit Committee 

 

11 

Compensation Committee 

 

12 

Nominating and Corporate Governance Committee 

 

12 

Compensation Committee Interlocks and Insider Participation 

 

13 

Director Compensation 

 

13 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 

 

15 

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE 

 

17 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 

 

18 

Policies and Procedures with Respect to Related Transactions 

 

18 

Related Person Transactions 

 

18 

PROPOSAL 2 RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

 

21 

AUDIT COMMITTEE REPORT 

 

22 

PRINCIPAL ACCOUNTING FEES AND SERVICES 

 

23 

Audit Committee Pre-Approval Policy 

 

23 

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION 

 

24 

EXECUTIVE COMPENSATION 

 

25 

Compensation Discussion and Analysis 

 

25 

Summary Compensation Table 

 

36 

Grants of Plan-Based Awards 

 

39 

Outstanding Equity Awards as of December 31, 2016 

 

41 

Option Exercises and Stock Vested During the Year Ended December 31, 2016 

 

43 

Pension Benefits as of December 31, 2016 

 

44 

Nonqualified Deferred Compensation 

 

46 

Potential Payments Upon Termination or Change of Control 

 

47 

EQUITY COMPENSATION PLAN INFORMATION 

 

49 

PROPOSAL 3 NON-BINDING ADVISORY VOTE TO APPROVE COMPENSATION OF NAMED EXECUTIVE OFFICERS 

 

50 

OTHER INFORMATION 

 

51 

STOCKHOLDER PROPOSALS 

 

52 

AVAILABILITY OF REPORT ON FORM 10-K 

 

53 

APPENDIX A 

 

A-1

 

 

 

 

i


 

Table of Contents

PROXY STATEMENT

 


 

PROXY SUMMARY

 

This summary highlights selected information and does not contain all of the information that you should consider in deciding how to vote. You should read the entire proxy statement carefully before voting.

 

                                    

 

 

 

2017 ANNUAL MEETING OF STOCKHOLDERS

 

 

Time and Date:

4:00 p.m. (Central Time), Wednesday, April 26, 2017

 

 

Place:

AMC Theatre Support Center located at

One AMC Way, 11500 Ash Street, Leawood, KS 66211

 

 

Record Date:

February 28, 2017

 

 

Voting:

 

As of the record date, holders of our Class A common stock are entitled to one vote per share and holders of our Class B  common stock are entitled to three votes per share.

 

 

Voting Recommendations

 

 

 

 

 

 

 

 

 

Board Vote

Agenda Item

    

Recommendation

Proposal No. 1:
Election to our Board of Directors the following three nominees for terms expiring at the 2020 Annual Meeting: Mr. Anthony J. Saich, Mr. Gary F. Locke, and Ms. Kathleen M. Pawlus.

 

FOR each Director Nominee

Proposal No. 2:
Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2017.

 

FOR

Proposal No. 3:
Non-binding advisory vote to approve the compensation of named executive officers (the “say-on-pay vote”).

 

FOR

 

 

1


 

Table of Contents

GENERAL INFORMATION

 

This proxy statement is provided in connection with the solicitation of proxies by the Board of Directors (the “Board”) of AMC Entertainment Holdings, Inc., a Delaware corporation (“we,” “us,” the “Company” or “AMC”), for use at the 2017 Annual Meeting of Stockholders of the Company, to be held on April 26, 2017 at 4:00 p.m. (Central Time), or any adjournment or postponement thereof, at the AMC Theatre Support Center located at One AMC Way, 11500 Ash Street, Leawood, Kansas 66211 (the “Annual Meeting”).

 

Important Notice Regarding the Availability of Proxy Materials

for the Stockholder Meeting To Be Held on April 26, 2017:

 

Pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), we are providing access to our proxy materials, which include our notice of annual meeting, proxy statement and annual report to stockholders over the Internet at www.envisionreports.com/amc. These proxy materials are available without charge.

 

This proxy statement and the accompanying proxy are first being sent or given to stockholders beginning on or about March 24, 2017. The costs of this proxy solicitation will be borne by the Company, which maintains its principal executive offices at One AMC Way, 11500 Ash Street, Leawood, KS 66211.

2


 

Table of Contents

VOTING AT THE ANNUAL MEETING

 

The only voting securities of the Company are its shares of Class A and Class B common stock (collectively, the “Common Stock”). Only stockholders of record of our Common Stock at the close of business on February 28, 2017, the date selected as the record date by our Board, are entitled to vote at the Annual Meeting. On the record date, there were 55,026,640 shares of Class A common stock and 75,826,927 shares of Class B common stock outstanding. The holders of our Class A common stock are entitled to one vote per share and holders of our Class B common stock are entitled to three votes per share, and such holders generally vote together as a single class on all matters. All of our Class B common stock is held by a subsidiary of the Dalian Wanda Group Co., LTD (together with its affiliates, “Wanda”). Because of the three-to-one voting ratio between our Class B and Class A common stock, Wanda controls a majority of the combined voting power of our Common Stock at the record date and therefore will be able to control all matters submitted to our stockholders for approval at the Annual Meeting.

 

The Proxy

 

If your Common Stock is held through a broker, bank or other nominee (held in street name), you will receive instructions from such entity that you must follow in order to have your shares voted. If you want to vote in person, you must obtain a legal proxy from your broker, bank or other nominee and bring it to the meeting. If you hold your shares in your own name as a holder of record with our transfer agent, you may instruct the proxies how to vote following the instructions listed on the proxy card to vote over the Internet, or by signing, dating and mailing the proxy card. Of course, you can always come to the meeting and vote your shares in person.

 

Proxies provided by telephone or over the Internet or by mailed proxy card by stockholders of record, unless revoked, will be voted at the Annual Meeting as directed by you, or, in the absence of such direction, as the Board recommends for Proposals 1, 2 and 3 at the Annual Meeting. A stockholder submitting a proxy by telephone or over the Internet or by mailed proxy card may revoke such proxy at any time before it is used by giving written notice of revocation to the Secretary of the Company, by delivering to the Secretary of the Company a duly executed proxy bearing a later date or by voting in person at the Annual Meeting. Attendance at the Annual Meeting will not, in and of itself, revoke a proxy. The Proxy Statement and 2016 Annual Report to Stockholders are available at http://www.envisionreports.com/amc or by calling 1-800-652-8683.

 

As of the printing of this proxy statement, we do not know of any other matter to be raised at the meeting. If any matters not described in this proxy statement are properly presented at the Annual Meeting, the proxies will use their own judgment to determine how to vote your shares. If the Annual Meeting is adjourned or postponed, the proxies can vote your shares at the adjournment or postponement as well.

 

Voting Requirement to Approve each of the Proposals

 

·

Proposal No. 1: Election of directors requires a plurality of the votes cast, which means that the three nominees for director receiving the highest number of votes FOR election will be elected as directors. Our Board recommends a vote “for” the election of each nominee.

 

·

Proposal No. 2: Ratification of the appointment of KPMG LLP as our independent registered public accounting firm requires approval by the holders of a majority of the shares (by voting power) present in person or represented by proxy and entitled to vote with respect to this matter. Our Board recommends a vote “for” this proposal.

 

·

Proposal No. 3: Non-binding advisory vote on compensation of named executive officers (the “say-on-pay vote”) requires approval by the holders of a majority of the shares (by voting power) present in person or represented by proxy and entitled to vote with respect to this matter. Our Board recommends a vote “for” this proposal. The vote on Proposal No. 3 is advisory.

 

3


 

Table of Contents

How Votes Are Counted

 

A quorum is required to transact business at our Annual Meeting. Stockholders of record holding shares of Common Stock constituting a majority of the shares issued and outstanding and entitled to vote at the Annual Meeting shall constitute a quorum. If you have returned valid proxy instructions or attend the meeting in person, your shares will be counted for the purpose of determining whether there is a quorum, even if you abstain from voting on some or all matters introduced at the meeting.

 

Abstentions will be treated as shares present and entitled to vote for purposes of any matter requiring the affirmative vote of a majority or other proportion of the shares present and entitled to vote. Accordingly, abstentions with respect to the ratification of the appointment of KPMG LLP as our independent registered public accounting firm and the say-on-pay vote will have the same effect as a vote against such proposals. Because a plurality of the votes cast is required to elect directors, abstentions and withheld votes will have no effect on the election of directors. Broker non-votes will be considered as represented for purposes of determining a quorum, but will not otherwise affect voting results.

 

Under rules of the New York Stock Exchange (“NYSE”), brokers may not vote on “non-routine” proposals unless they have received voting instructions from the beneficial owner, and to the extent that they have not received voting instructions, brokers report such number of shares as “non-votes.” The proposals to elect directors and the say-on-pay vote are considered “non-routine,” which means that brokerage firms may not vote in their discretion regarding these items on behalf of beneficial owners who have not furnished voting instructions. The proposal to ratify the appointment of KPMG LLP as our independent registered public accounting firm, however, is considered a “routine” item, which means that brokerage firms may vote in their discretion on behalf of beneficial owners who have not furnished voting instructions. Although Proposal No. 3 is a non-binding advisory vote, our Board will review the results and will take them into account in making a determination concerning executive compensation.

 

4


 

Table of Contents

DIRECTORS OF THE COMPANY

 

Our business and affairs are managed by our Board, which currently consists of the following nine members: Lin (Lincoln) Zhang, Adam M. Aron, Jack Q. Gao, Anthony J. Saich, Gary F. Locke, Kathleen M. Pawlus, Lloyd Hill, Maojun (John) Zeng, and Howard W. Koch, Jr. Mr. Zhang is our non-executive Chairman and Mr. Aron is our Chief Executive Officer (“CEO”).

 

Pursuant to our amended and restated certificate of incorporation, our Board is divided into three classes. The members of each class serve for a staggered, three-year term. Upon the expiration of the term of a class of directors, directors in that class will be elected for three-year terms at the annual meeting of stockholders in the year in which their term expires. The classes are composed as follows:

 

·

Mr. Saich, Mr. Locke, and Ms. Pawlus are Class I directors, whose terms will expire at the 2017 annual meeting of stockholders;

 

·

Mr. Hill, Mr. Zeng, and Mr. Koch are Class II directors, whose terms will expire at the 2018 annual meeting of stockholders; and

 

·

Mr. Zhang, Mr. Aron, and Mr. Gao are Class III directors, whose terms will expire at the 2019 annual meeting of stockholders.

 

5


 

Table of Contents

PROPOSAL 1:

ELECTION OF DIRECTORS

 

At the Annual Meeting, three individuals are to be elected as Class I directors to hold a three-year term of office from the date of their election until the Company's 2020 annual meeting and until their successors are duly elected and qualified. The three nominees for election as Class I directors are: Mr. Saich, Mr. Locke, and Ms. Pawlus.

 

The Nominating and Corporate Governance Committee and the Board believe that the nominees have the requisite qualifications to oversee our business. Set forth below you will find certain information for each of the directors, including the nominees, which we believe evidences the directors' qualifications to serve on the Board.

 

The Board recommends a vote “FOR” each of the nominees.

 

Each of the biographies of the nominees for election as directors below contains information regarding the person's service as a director, business experience, director positions held currently or at any time during the past five years, and the experience, qualifications, attributes and skills that caused the Board to determine that the person should be nominated for election as a director at the Annual Meeting. The following information is as of February 12, 2017.

 

Nominees for Election as Class I Directors for a Term Ending 2020

 

Class I Directors—Term Expiring 2017

 

Mr. Anthony J. Saich,  63, has served as a director of the Company since August 2012. Since July, 2008, Mr. Saich has served as the Director of the Ash Center for Democratic Governance and Innovation and Daewoo Professor of International Affairs at Harvard University. In his capacity as Ash Center Director, Mr. Saich also serves as the director of the Rajawali Foundation Institute for Asia and the faculty chair of the China Public Policy Program, the Asia Energy Leaders Program and the Leadership Transformation in Indonesia Program. Mr. Saich also serves as the Chairman of the Board of Trustees of the China Medical Board and International Bridges to Justice and is the U.S. Secretary-General of the China United States Strategic Philanthropy. Mr. Saich sits on the executive committees of the John King Fairbank Center for Chinese Studies and the Asia Center, both at Harvard University, and serves as the Harvard representative of the Kennedy Memorial Trust. Mr. Saich holds a bachelor's degree in politics and geography from the University of Newcastle, United Kingdom, a master's degree in politics with special reference to China from the School of Oriental and African Studies, London University, and has a Ph.D. from the Faculty of Letters, University of Leiden, the Netherlands. Mr. Saich has over 35 years of experience in international affairs and will provide valuable international insights to the Company.

 

Mr. Gary F. Locke, 67, has served as a director of the Company since February 2016. Mr. Locke is currently a trade consultant and owner of Locke Global Strategies, LLC since 2014. Mr. Locke was the first Chinese American to be elected as a U.S. Governor when the voters of Washington elected him in 1996 and re-elected him in 2000. During his administration he strengthened economic ties between China and Washington State. Mr. Locke then served as U.S. Commerce Secretary from 2009-2011, where he led the effort to implement President Obama's National Export Initiative to double American exports in five years. He then became America's 10th Ambassador to China, serving from 2011-2014, and during his service he opened markets for made-in-USA goods and services and reduced wait times for visa interviews of Chinese applicants from 100 days to three days. Mr. Locke is a member of the board of directors of Fortinet, Inc. He attended Yale University, graduating with a Bachelor degree in political science and received his law degree from Boston University. Mr. Locke brings to the Board a global and valuable business perspective due to his extensive role in politics and experience as an Ambassador to China.

 

Ms. Kathleen M. Pawlus, 56, has served as a director of the Company since December 2014. Ms. Pawlus, retired partner of Ernst and Young, LLP (“EY”), served as the Global Assurance Chief Financial Officer and Chief Operating Officer from 2012 to 2014. EY's Assurance practice is the largest of EY's four service lines and includes its Audit Practice, Fraud, Investigation and Dispute Services Practice, Climate Change and Sustainability Services

6


 

Table of Contents

Practice and its Financial Accounting Advisory Services Practice. Prior to this, from 2006 to 2012, Ms. Pawlus served as EY's Americas Chief Financial Officer, Global PBFA Function Leader and US Firm Chief Financial Officer responsible for finance, IT operations, treasury, purchasing and facilities. Ms. Pawlus served on EY's U.S. Executive Board from 2006 to 2012. Ms. Pawlus earned her bachelor of science degree from Indiana University and is a Certified Public Accountant. Ms. Pawlus brings to the Board extensive financial, accounting, operational and management experience in various capacities with more than 30 years of experience.

 

Directors Continuing in Office

 

Class II Directors—Term Expiring 2018

 

Mr. Lloyd Hill, 73, has served as a director of the Company since December 2013. Prior to his retirement in 2006, Mr. Hill served as the Chief Executive Officer and Chairman of Applebee's International, Inc. Mr. Hill serves on the board of directors and as chairman of the compensation committee and member of the audit committee of Red Robin Gourmet Burgers, Inc. and on the board of directors of E.E. Newcomer Enterprises, Inc. Mr. Hill also serves on the board of directors of Saint Luke's South Hospital, the audit committee for the Saint Luke's Health System and the development board for the University of Texas Medical Branch. Mr. Hill holds a master's degree in business administration from Rockhurst University in Kansas City, Missouri. Mr. Hill has extensive experience and knowledge of public company operations, as well as experience serving on the boards of other public companies.

 

Mr. Maojun (John) Zeng, 45, has served as a director of the Company since February 2016. Mr. Zeng has been President of Wanda Cinema Line Co., Ltd, a subsidiary of Wanda group since March 27, 2014, and has served as a member of its Board of Directors since July 30, 2013. Mr. Zeng previously served as the Assistant to the President of Wanda Cultural Industries Group and Vice President of Wanda Cinema Line Corporation since February 28, 2012. Mr. Zeng holds an undergraduate degree and a master's degree in business administration from Renmin University of China. Mr. Zeng has experience serving in an executive leadership role at a major theatrical exhibition company in China and brings to the Board valuable theatrical exhibition knowledge.

 

Mr. Howard W. “Hawk” Koch, Jr., 71, has served as a director of the Company since October 2014. Mr. Koch is a veteran movie producer and principal at The Koch Company, the former president of the Academy of Motion Picture Arts and Sciences (“AMPAS”), and President Emeritus of the Producers Guild of America. Mr. Koch currently serves on the Board of Directors of the Motion Picture & Television Fund and the National Film Preservation Foundation. Mr. Koch previously served on the Board of Governors of AMPAS from 2004 to 2013 and the Board of Directors of the Producers Guild of America from 1999 to 2012. Mr. Koch has been intimately involved with the making of over 60 major motion pictures, among them such films as “Source Code”,  “Fracture”,  “Primal Fear”,  “Marathon Man,” “Chinatown,” “Wayne's World,” “Peggy Sue Got Married,” “The Idolmaker,” “Heaven Can Wait,” “The Way We Were” and “Rosemary's Baby.” Mr. Koch continues to develop and produce movies. Mr. Koch has over 51 years of experience in the motion picture industry and provides our Board with a unique insight into the production of movies that are exhibited on our screens.

 

Class III Directors—Term Expiring 2019

 

Mr. Lin (Lincoln) Zhang, 44, has served as Chairman and a director of the Company since August 2012. Mr. Zhang has served as President of Wanda Cultural Industry Group since 2012. Mr. Zhang has served on the board of directors of Wanda Cinemaline Corporation since November 2006, Dalian Wanda Commercial Properties Co., Limited since December 2009, and Dalian Wanda Group Co., Limited since February 2011. Mr. Zhang also currently serves on the board of directors of Infront Sports & Media AG, Atletico De Madrid, and World Triathlon Corporation since 2015. Prior thereto, Mr. Zhang served as Vice President of Dalian Wanda Group Co., Limited from December 2009 to December 2012. Mr. Zhang received an M.B.A. from Beijing University and a bachelor's degree in accounting from Dongbei University of Finance and Economics. Mr. Zhang is a non-practicing member of the Chinese Institute of Certified Public Accountants and a non-practicing member of the China Certified Tax Agents Association. Mr. Zhang has over 16 years of experience in financial management and operation management of large companies, especially in corporate strategy and investment, which makes him well-positioned to serve as a director for the Company.

7


 

Table of Contents

Mr. Adam Aron, 62, has served as Chief Executive Officer, President and a director of the Company since January 2016. From February 2015 to December 2015, Mr. Aron was appointed Chief Executive Officer of Starwood Hotels and Resorts Worldwide, Inc. Since 2006, Mr. Aron has served as Chairman and Chief Executive Officer of World Leisure Partners, Inc., a personal consultancy for matters related to travel and tourism, high-end real estate development, and professional sports, that he founded. Mr. Aron served as Chief Executive Officer and Co-Owner of the Philadelphia 76ers from 2011 to 2013, and remains a co-owner currently. From 2006 to 2015, Mr. Aron served as Senior Operating Partner of Apollo Management L.P. Mr. Aron currently serves on the board of directors of Norwegian Cruise Line Holdings, Ltd. and the Philadelphia 76ers. Mr. Aron served on the board of directors of Prestige Cruise Holdings, Inc. from 2007 to 2014. Mr. Aron received a Master’s of Business Administration degree with distinction from the Harvard Business School and a bachelor of arts degree cum laude from Harvard College. Mr. Aron brings to the Board significant business and executive leadership experience, including valuable insight into consumer services. He has more than 20 years of experience as a Chief Executive Officer, more than 26 years of experience as a corporate director, and more than 36 years of consumer-engagement experience.

 

Mr. Jack Q. Gao, 58, has served as a director of the Company since September 2015. Mr. Gao serves as the Group Vice President of Wanda Cultural Industry Group and the Chief Executive Officer of Wanda Film Holdings Company and has held such positions since joining Wanda Group in June 2015. Prior to joining Wanda, Mr. Gao served as Founder of GAO Entertainment, LLC from January to May 2015. Mr. Gao served as Senior Corporate Vice President for News Corporation from 2006 to 2014. His roles at News Corporation included serving as Chief Executive Officer of News Corporation China Investments; Chief Executive Officer of Star TV China Company; Chairman of MySpace China; and Chief Representative of News Corporation Beijing Representative Office. Mr. Gao directed News Corporation strategy, government relations, business development, strategic investments and Star TV's overall sales, distribution and production operations in China. Mr. Gao serves on the board of directors of Infront Sports and Media AG, Beijing Vantone Industrial Co. Ltd., AGTech Holding Ltd. and Mr. Gao served on the board of directors of AirMedia Group Inc. from 2014 to 2015 and Bona Film Group Ltd. from 2012 to 2014. Mr. Gao has served as an Adjunct Professor for the Business School at the Chinese University of Hong Kong. Mr. Gao graduated from the Harbin Institute of Technology and the University of California, Los Angeles with a bachelor's degree, masters degree, and a Ph.D. degree in Engineering. Mr. Gao brings to the board valuable insight into business strategies and development, many years of experience as a senior executive, and experience serving on the boards of other companies.

 

8


 

Table of Contents

CORPORATE GOVERNANCE

 

Corporate Governance Guidelines

 

Our Corporate Governance Guidelines and Principles reflect the principles by which the Board operates and sets forth director qualification standards, responsibilities, compensation, evaluation, orientation and continuing education, board committee structure, chief executive officer performance review, management succession planning and other policies for the governance of the Company. A copy of the Corporate Governance Guidelines and Principles is available on our website at www.amctheatres.com under “Investor Relations”-”Governance”-”Governance Documents”.  

 

Risk Oversight

 

The Board executes its oversight responsibility for risk management directly and through its committees, as follows:

 

The Audit Committee has primary oversight responsibility with respect to financial and accounting risks. The Audit Committee discusses with management the Company's major financial risk exposures and the Company's risk assessment and risk management policies. Management provides to the Audit Committee periodic assessments of the Company's risk management processes and systems of internal control. The Chairman of the Audit Committee reports to the full Board regarding material risks as deemed appropriate.

 

The Board's other committees oversee risks associated with their respective areas of responsibility. For example, the Compensation Committee considers the risks associated with our compensation policies and practices, with respect to both executive compensation and compensation generally. The Board is kept abreast of its committees' risk oversight and other activities via reports of the committee chairmen to the full Board. These reports are presented at every regular Board meeting and include discussions of committee agenda topics, including matters involving risk oversight.

 

The Board considers specific risk topics, including risks associated with our annual operating plan, our capital structure, and cyber security. In addition, the Board receives reports from the members of our senior leadership team that include discussions of the risks and exposures involved in their respective areas of responsibility. Further, the Board is informed of developments that could affect our risk profile or other aspects of our business.

 

Compensation Policies and Practices as They Relate to Risk Management

 

We do not believe that any risks arising from our compensation policies or practices create or encourage the taking of excessive risks that are reasonably likely to have a material adverse effect on the Company. Below are some of the highlights of the Company’s compensation programs that mitigate risks associated with compensation:

 

·

Performance metrics and targets are established by the Compensation Committee within the first 90 days of the relevant performance period;

 

·

Compensation is comprised of a combination of base salary, annual cash incentive, and long-term equity incentive awards;

 

·

Equity compensation vesting is multi-year service based and performance based with overlapping performance periods; and

 

·

Maximum payout for cash incentives is 200% of the value at target and maximum payout for equity incentives is 150% of the value at target.

 

9


 

Table of Contents

Business Conduct and Ethics

 

We have a Code of Business Conduct and Ethics that applies to all of our associates, including our principal executive officer, principal financial officer and principal accounting officer, or persons performing similar functions. These standards are designed to deter wrongdoing and to promote honest and ethical conduct. The Code of Business Conduct and Ethics, which address the subject areas covered by the SEC's rules, may be obtained free of charge through our website: www.amctheatres.com under “Investor Relations”-”Governance”-”Governance Documents”. Any amendment to, or waiver from, any provision of the Code of Business Conduct and Ethics required to be disclosed with respect to any senior executive or financial officer shall be posted on this website.

 

Board and Committee Information

 

The Board held eight meetings during the year ended December 31, 2016. Each director attended at least 75% of the total combined meetings held by the Board plus the meetings held by the committees of the Board on which such director served, except for Mr. Zhang and Mr. Zeng.

 

Communications with the Board

 

Our stockholders and other interested parties may communicate to our Board, its committees or our non-management directors as a group, by writing to the Secretary of AMC Entertainment Holdings, Inc. at One AMC Way, 11500 Ash Street, Leawood, KS 66211. Stockholders and other interested parties should indicate that their correspondence is intended to be communicated to the Board.

 

Director Independence

 

We avail ourselves of the “controlled company” exception under the rules of the NYSE, which permits a listed company of which more than 50% of the voting power for election of directors is held by an individual, a group or another company to not comply with certain of the NYSE's governance requirements. Because more than 50% of our voting power is held by Wanda, we are not required to have a majority of independent directors on our Board. We currently have three independent directors, Mr. Hill, Mr. Saich, and Ms. Pawlus. In addition, while we are not required to have a Compensation Committee or a nominating and corporate governance committee, we have established such committees, each of which is composed of three directors, one of whom is independent.

 

Our Board has determined that Mr. Hill, Mr. Saich, and Ms. Pawlus are independent in accordance with NYSE rules and within the meaning of the Securities Exchange Act of 1934 (the “Exchange Act”) for purposes of serving on our Audit Committee. The remaining members of the Board, Mr. Locke, Mr. Zeng, Mr. Gao, Mr. Aron, Mr. Zhang, and Mr. Koch, are not independent under the NYSE rules or within the meaning of the Exchange Act.

 

Board Leadership Structure

 

Under our current leadership structure, the roles of Chairman of the Board and Chief Executive Officer are held by different individuals. Mr. Zhang serves as our non-executive Chairman of the Board and Mr. Aron serves as our Chief Executive Officer. At this time, our Board believes that this structure is best for the Company as it allows our Chairman to oversee board matters and assist the Chief Executive Officer with strategic initiatives, while enabling our Chief Executive Officer to develop and implement the strategic direction of the Company. Our Chairman is not considered independent under the NYSE rules.

 

Executive Sessions

 

Our non-management directors meet in an executive session, without members of management present, no less than once per year in accordance with the NYSE rules. Our Board Chairman or his designee presides over these executive sessions.

 

10


 

Table of Contents

Attendance at Annual Meetings

 

We encourage our directors to attend our Annual Meeting of Stockholders, absent unusual circumstances. Six directors attended the 2016 Annual Meeting of Stockholders. Mr. Zhang, Mr. Zeng, and Mr. Locke did not attend the 2016 Annual Meeting of Stockholders.

 

Committees

 

Our Board has established three standing committees. The standing committees consist of an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. The standing committees are comprised of directors as provided in the table below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Board Member

    

Audit(1)

    

Compensation

    

Nominating
and Corporate
Governance

Lincoln Zhang

 

 

 

 

 

 

Adam M. Aron

 

 

 

 

 

 

Jack Q. Gao

 

 

 

Chair

 

 

Anthony J. Saich

 

Member

 

 

 

Chair

Gary F. Locke

 

 

 

 

 

Member

Kathleen M. Pawlus

 

Chair

 

 

 

 

Lloyd Hill

 

Member

 

Member

 

 

John Zeng

 

 

 

 

 

 

Howard W. Koch, Jr.

 

 

 

Member

 

Member

Meetings Held in 2016

 

6

 

4

 

4


(1)

Our Audit Committee is comprised of three independent members, all of whom are financially literate as defined in the NYSE rules.

 

Each of our standing committees, the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, operates under a charter, which is available on our website at www.amctheatres.com under “Investor Relations”-”Governance”-”Governance Documents”. The functions performed by each of the standing committees of the Board are briefly described below.

 

Audit Committee

 

Our Audit Committee consists of Mr. Hill, Mr. Saich and Ms. Pawlus. The Board has determined that Mr. Hill and Ms. Pawlus qualify as Audit Committee financial experts as defined in Item 407(d)(5) of Regulation S-K and that each member of our Audit Committee is financially literate as defined in the NYSE rules and each member is independent within the meaning of Rule 10A-3 of the Exchange Act and the NYSE rules.

 

The principal duties and responsibilities of our Audit Committee are as follows:

 

·

to oversee our financial reporting process and internal control system;

 

·

to appoint and replace our independent registered public accounting firm from time to time, determine their compensation and other terms of engagement, oversee their work and perform an annual evaluation;

 

·

to oversee the performance of our internal audit function; and

 

·

to oversee our compliance with legal, ethical and regulatory matters.

 

The Audit Committee has the power to investigate any matter brought to its attention within the scope of its duties. It also has the authority to retain counsel and advisors to fulfill its responsibilities and duties.

11


 

Table of Contents

Compensation Committee

 

Our Compensation Committee consists of Mr. Gao, Mr. Hill, and Mr. Koch. Despite the exception as a “controlled company” under the NYSE rules, our Compensation Committee charter provides that one member of the Compensation Committee will be independent in accordance with NYSE rules, and Mr. Hill is that member. The principal duties and responsibilities of our Compensation Committee are as follows:

 

·

to provide oversight on the development and implementation of the compensation policies, strategies, plans and programs for our key employees and non-employee directors and disclosure relating to these matters;

 

·

to review and approve the compensation of our CEO and our other executive officers; and

 

·

to provide oversight concerning the compensation of our CEO, succession planning, performance of our CEO and related matters.

 

The Compensation Committee engaged and retained Pay Governance, LLC, as an independent executive compensation consultant, to provide advice on 2016 compensation matters. During 2016, Pay Governance provided advice on executive and director compensation programs, executive and director market pay analysis, compensation peer group, CEO pay recommendations and drafting of the Compensation, Discussion and Analysis disclosures contained in the Company’s Proxy Statement. The Compensation Committee reviewed the nature of its relationship with Pay Governance and determined that there were no conflicts of interest with respect to Pay Governance’s independence.

 

Nominating and Corporate Governance Committee

 

Our Nominating and Corporate Governance Committee consists of Mr. Saich, Mr. Locke, and Mr. Koch. Despite the exception as a “controlled company” under the NYSE rules, our Nominating and Corporate Governance Committee charter provides that one member of the Nominating and Corporate Governance Committee will be independent in accordance with NYSE rules, and Mr. Saich is that member. The principal duties and responsibilities of the Nominating and Corporate Governance Committee are as follows:

 

·

to establish criteria for board and committee membership and recommend to our Board proposed nominees for election to the Board and for membership on committees of the Board; and

 

·

to make recommendations to our Board regarding board governance matters and practices.

 

The Nominating and Corporate Governance Committee is responsible for reviewing with the Board, on an annual basis, the appropriate criteria that directors are required to fulfill (including experience, qualifications, attributes, skills and other characteristics) in the context of the current make-up of the Board and the needs of the Board given the circumstances of the Company. In identifying and screening director candidates, the Nominating and Corporate Governance Committee considers whether the candidates fulfill the criteria for directors approved by the Board, including integrity, objectivity, independence, sound judgment, leadership, courage and diversity of experience (for example, in relation to finance and accounting, strategy, risk, technical expertise, policy-making, etc.).

 

The Board has not adopted a formal diversity policy but pursuant to the Company’s Corporate Governance Guidelines, the Board broadly construes diversity to mean diverse background, education, skills, age, expertise with a proven record of accomplishment and the ability to work well with others. The Nominating and Corporate Governance Committee does not assign specific weight to any particular factor but in selecting members for open Board positions, the Board takes into account such factors as it deems appropriate, which may include the current composition of the Board, the range of talents, experiences and skills that would best complement those already represented on the Board and the need for financial or other specialized expertise. The Board seeks to achieve a mix of members whose experience and backgrounds are relevant to the Company’s strategic priorities and the scope and

12


 

Table of Contents

complexity of the Company’s business. Overall, each of our Board members is committed to the growth of the Company for the benefit of the stockholders, contributes new ideas in a productive and congenial manner and regularly attends board meetings.

 

The Nominating and Corporate Governance Committee considers recommendations for Board candidates submitted by stockholders using substantially the same criteria it applies to recommendations from the Nominating and Corporate Governance Committee, directors and members of management. Stockholders may submit recommendations by providing the person's name and appropriate background and biographical information in writing to the Nominating and Corporate Governance Committee at: Company Secretary, One AMC Way, 11500 Ash Street, Leawood, Kansas 66211 or by emailing: KConnor@amctheatres.com. Invitations to serve as a nominee are extended by the Board itself via the Chairman and the Chairman of the Nominating and Corporate Governance Committee.

 

Compensation Committee Interlocks and Insider Participation

 

Mr. Gao, Mr. Hill and Mr. Koch were members of the Compensation Committee for all actions taken during the year ended December 31, 2016. Mr. Ning Ye was a member of the Compensation Committee until his resignation on February 8, 2016. During the period January 1, 2016 through December 31, 2016, no member of the Compensation Committee had a relationship required to be described under the SEC rules relating to disclosure of related person transactions (other than as described below in “Related Person Transactions” with respect to agreements with Wanda) and none of our executive officers served on the board of directors or compensation committee of any entity that had one or more of its executive officers serving on the Board or the Compensation Committee of the Company.

 

Director Compensation

 

The following section presents information regarding the compensation paid during the year ended December 31, 2016 to members of our Board who were not employees of Wanda or the Company (“non-employee directors”). The other members of our Board do not receive any compensation from the Company. We reimburse all directors for any out-of-pocket expenses incurred by them in connection with their services provided in such capacity.

 

Non-Employee Director Compensation

 

In order to attract and retain qualified non-employee directors, the Company adopted a Non-Employee Director Compensation Plan, effective January 1, 2014, pursuant to which non-employee directors are compensated for their service to the Company. Each non-employee director receives the following annual compensation for services as a Board member:

 

a)

an annual cash retainer of $50,000 for non-employee directors who serve as a Board member;

 

b)

annual stock award with a value of $100,000 for non-employee directors who serve as a Board member. Stock awards are made pursuant to the Company's 2013 Equity Incentive Plan and are fully vested at the date of grant. The number of shares awarded to each non-employee director is determined by dividing $100,000 by the average closing price of the stock for the five trading days prior to the date of the stock award; and

 

c)

an annual cash retainer for non-employee directors who serve on a committee as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Committee

    

Chairperson

    

Member

Audit

  

$

15,000

  

$

5,000

Compensation

  

 

10,000

  

 

5,000

Nominating and Corporate Governance

  

 

10,000

  

 

5,000

 

13


 

Table of Contents

Director Compensation Table

 

The following table presents information regarding the compensation of our non-employee directors during the year ended December 31, 2016. The amounts reflect partial-year Board service for Mr. Locke, who joined the Board in February 2016.

 

 

 

 

 

 

 

 

 

 

 

 

 

Fees Earned or

 

Stock

 

 

 

Name

    

Paid in Cash(1)

    

Awards(2)

    

Total

Anthony J. Saich

 

$

65,000

 

$

98,704

 

$

163,704

Lloyd Hill

 

 

70,000

 

 

98,704

 

 

168,704

Howard W. Koch

 

 

60,000

 

 

98,704

 

 

158,704

Gary F. Locke

 

 

48,715

 

 

97,010

 

 

145,725

Kathleen M. Pawlus

 

 

65,000

 

 

98,704

 

 

163,704

(1)

Includes the annual cash retainer for services as a board member, the annual cash retainer for services as a member of a committee, and the annual cash retainer for services as a chairman of a committee.

 

(2)

Represents the aggregate grant date fair values, as computed in accordance with Financial Accounting Standards Board's Accounting Standard Codification Topic 718, Compensation—Stock Compensation, calculated based upon the closing price of the Company's Class A common stock on January 4, 2016 of $23.17 per share for Mr. Saich, Mr. Hill, Mr. Koch and Ms. Pawlus and upon the closing price of the Company's Class A common stock on February 24, 2016 of $22.55 per share for Mr. Locke.

 

In December 2016, Wanda agreed to make a capital contribution of $10,000,000 to AMC (without any increase in Wanda’s economic interest or voting rights in the Company) for payment to certain officers, directors, and other personnel for extraordinary services rendered in connection with merger and acquisition activity in 2016. This contribution was received during February 2017. As a result of these activities Mr. Jack Q. Gao received a bonus in the amount of $1,500,000 related to his service as a director.

 

14


 

Table of Contents

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth certain information regarding beneficial ownership of our Class A and Class B common stock as of February 28, 2017, with respect to:

 

·

each person or group of affiliated persons known by us to own beneficially more than 5% of any class of the outstanding shares of Class A and Class B common stock, together with their addresses;

 

·

each of our directors, director nominees and our Named Executive Officers; and

 

·

all directors and executive officers as a group.

 

The address for each of our directors, director nominees and Named Executive Officers is c/o AMC Entertainment Holdings, Inc., One AMC Way, 11500 Ash Street, Leawood, Kansas 66211. Each person has sole voting and dispositive power over shares held by them, except as described below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

 

 

Class B

 

 

 

 

 

Common Stock

 

 

 

Common Stock

 

 

 

NAME

    

Number

    

%

    

Number

    

%

 

5% Beneficial Owners:

  

 

 

 

 

 

 

 

 

Wanda America Investment Holding Co. Ltd., a wholly-owned indirect subsidiary of Dalian Wanda Group Co., Ltd.(1)

 

 —

 

 —

 

75,826,927

 

100

%

Driehaus Capital Management, LLC(2)

 

2,965,625

 

5.4%

 

 

 

 

 

The Vanguard Group Inc.(3)

 

3,028,764

 

5.5%

 

 —

 

 —

 

Monterey Capital III S.à r.l.(4)

 

4,536,466

 

8.2%

 

 —

 

 —

 

Directors, Director Nominees and

 

 

 

 

 

 —

 

 —

 

Named Executive Officers:

 

 

 

 

 

 —

 

 —

 

Adam M. Aron(5)

 

51,747

 

*

 

 —

 

 —

 

Craig R. Ramsey(5)

 

84,418

 

*

 

 —

 

 —

 

John D. McDonald(5)

 

50,056

 

*

 

 —

 

 —

 

Elizabeth Frank(5)

 

52,115

 

*

 

 —

 

 —

 

Mark A. McDonald(5)

 

45,718

 

*

 

 —

 

 —

 

Lincoln Zhang(6)

 

 —

 

*

 

 —

 

 —

 

Anthony J. Saich

 

4,090

 

*

 

 —

 

 —

 

Lloyd Hill

 

13,090

 

*

 

 —

 

 —

 

Gary F. Locke

 

4,302

 

*

 

 —

 

 —

 

John Zeng(6)

 

 —

 

*

 

 —

 

 —

 

Howard W. Koch. Jr.

 

6,952

 

*

 

 —

 

 —

 

Kathleen M. Pawlus

 

8,255

 

*

 

 —

 

 —

 

Jack Q. Gao(6)

 

 —

 

*

 

 —

 

 —

 

All directors and executive officers as a group (18 persons)(5)(7)

 

451,394

 

0.8%

 

 —

 

 —

 


(1)

Based on a schedule 13G filed March 5, 2014 by Wanda America Investment Holding Co. Ltd. In such filing, Wanda America Investment Holding Co. Ltd. lists its address as One AMC Way, 11500 Ash Street, Leawood, Kansas 66211. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion applicable to the Class B common stock. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to three votes and is convertible at any time into one share of Class A common stock.

 

(2)

Based on a Schedule 13G filed February 14, 2017 by Driehaus Capital Management, LLC. In such filing, Driehaus Capital Management, LLC.  lists its address as 25 East Erie Street, Chicago, IL 60611. The Schedule 13G indicates shared voting power and sole dispositive power on 2,965,625 shares and Driehaus Active Income Fund has shared voting and dispositive power over 2,018,443 shares.

15


 

Table of Contents

 

(3)

Based on a Schedule 13G/A #3 filed February 9, 2017 by The Vanguard Group Inc. In such filing, The Vanguard Group Inc. lists its address as 100 Vanguard Blvd., Malvern, PA 19355. The Schedule 13G/A indicates sole voting power on 41,048 shares and sole dispositive power on 2,986,306 shares and shared voting power over 3,120 shares and shared and dispositive power over 42,458 shares.

 

(4)

Based on a Schedule 13G filed on December 7, 2016 by Monterey Capital III S.à r.l. (“Monterey”). In such filing, Monterey Capital III S.à r.l. lists their address as 1-3 Boulevard de la Foire, L-1528 Luxembourg. The Schedule 13G indicates Monterey has shared voting and dispositive power with Terra Firma Holdings Limited and Mr. Guy Hands over 4,536,466 shares.

 

(5)

Does not include vested restricted stock units and vested performance stock units that will not be settled, and will be non-transferable, until the third anniversary of the grant date.

 

(6)

Does not include shares of Class B common stock held by Wanda. Mr. Zhang, Mr. Gao, and Mr. Zeng are employees of Dalian Wanda Group Co., Ltd., an affiliate of Wanda American Investment Holding Co. Ltd. None of them have the power to dispose or vote any of our capital stock held by Wanda American Investment Holding Co. Ltd. Wanda American Investment Holding Co. Ltd's ownership of our Class B common stock is set forth in the table.

 

(7)

Includes 130,651 shares of Class A common stock beneficially held by executive officers not named in the table.

 

16


 

Table of Contents

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our Common Stock and other equity securities. Officers, directors and holders of greater than 10% of our Common Stock are required by regulations of the SEC to furnish us with copies of all Section 16(a) reports they file.

 

To our knowledge, based solely upon a review of the copies of such reports furnished to us and/or written representations that no other reports were required to be filed during 2016, all filing requirements under Section 16(a) applicable to our officers, directors and 10% stockholders were satisfied timely.

 

17


 

Table of Contents

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

Policies and Procedures with Respect to Related Transactions

 

The Board has adopted the AMC Entertainment Holdings, Inc. Policy on Transactions with Related Persons as our policy for the review, approval or ratification of any transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which the Company (including any of its subsidiaries) was, is, or will be a participant, and one of the Company's executive officers, directors, director nominees, 5% stockholders (or the immediate family or household members of any of the foregoing) or any firm, corporation or other entity in which any of the foregoing persons controls, is employed by, or has a material ownership interest  (each, a “Related Person”) has a direct or indirect material interest.

 

This policy is administered by the Audit Committee. As appropriate for the circumstances, the Audit Committee will review and consider relevant facts and circumstances in determining whether or not to approve or ratify such transaction. Our policy includes certain factors that the Audit Committee takes into consideration when determining whether to approve a related person transaction as follows:

 

·

the position within or relationship of the related person with the Company;

 

·

the materiality of the transaction to the related person and the Company, including the dollar value of the transaction, without regard to profit or loss;

 

·

the business purpose for and reasonableness of the transaction (including the anticipated profit or loss from the transaction), taken in the context of the alternatives available to the Company for attaining the purposes of the transaction;

 

·

whether the transaction is comparable to a transaction that could be available on an arms-length basis or is on terms that the Company offers generally to persons who are not related persons;

 

·

whether the transaction is in the ordinary course of the Company's business and was proposed and considered in the ordinary course of business; and

 

·

the effect of the transaction on the Company's business and operations, including on the Company's internal control over financial reporting and system of disclosure controls and procedures, and any additional conditions or controls (including reporting and review requirements) that should be applied to such transaction.

 

Related Person Transactions

 

Management Stockholders Agreement

 

On the closing of the merger with Wanda on August 30, 2012 (“Merger”), the Company and Wanda entered into a management stockholders agreement (the “Management Stockholders Agreement”) with members of management, including certain of our Named Executive Officers. The Management Stockholders Agreement was amended in connection with our initial public offering (the “IPO”), and it continued in effect following the completion of the IPO, although the occurrence of the IPO caused certain provisions of the agreement to cease to be in effect.

 

Transfer Restrictions.   Under the Management Stockholders Agreement, each management member agreed, subject to customary exceptions, not to transfer any shares of the Company acquired in connection with the Merger without the written consent of Wanda prior to January 1, 2016 (the “Release Date”). Until the second anniversary following the Release Date, each management member agreed to restrictions on the number of such shares of the Company's Common Stock they may transfer.

 

18


 

Table of Contents

Put Rights.   Beginning on January 1, 2016 (or upon the termination of a management member's employment by the Company without cause, by the management member for good reason, or due to the management member's death or disability) the management members will have the right to require the Company to purchase shares of the Company acquired in connection with the Merger if and only if such shares are not fully and freely tradeable at a price equal to the price per share paid by such management member with appropriate adjustments for any subsequent events such as dividend, splits, combinations and the like. Such put rights expire on January 1, 2019.

 

Piggyback Registration Rights.   Subject to specified limitations, all management members have unlimited piggyback registration rights. The Company has agreed to pay all registration expenses relating to these registrations.

 

Registration Rights Agreements

 

Wanda

 

In connection with the IPO, we entered into a registration rights agreement with Wanda (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, the Company has agreed to use its best efforts to effect registered offerings upon request from Wanda and to grant incidental or “piggyback” registration rights with respect to any Class A common stock held by Wanda. The Class B common stock converts to Class A common stock in certain circumstances.

 

The obligation to effect any demand for registration by Wanda is subject to certain conditions, including limitations on the number of demand registrations and limitations on the minimum value of securities to be registered. In connection with any registration effected pursuant to the terms of the Registration Rights Agreement, we will be required to pay for all of the fees and expenses incurred in connection with such registration, including registration fees, filing fees and printing fees. However, the underwriting discounts and selling commissions payable in respect of registrable securities included in any registration are to be paid by Wanda. We have also agreed to indemnify the holders of registrable securities against all claims, losses, damages and liabilities with respect to each registration effected pursuant to the Registration Rights Agreement.

 

Monterey

 

In connection with our acquisition of Odeon, on November 30, 2016 we agreed to certain registration rights with Monterey Capital III S.à r.l. (“Monterey”) in connection with the shares of our Class A Common Stock it received in the transaction. We agreed to file a registration statement to allow Monterey to sell its shares and granted certain piggyback registration rights. Monterey currently holds 8.2% of our Class A Common Stock, and subject to certain exceptions, may not sell any shares for six months from the closing of the acquisition and may not sell in excess of 50% for a period of twelve months after closing.

 

Tax Sharing Agreement

 

In connection with the IPO, we entered into a tax agreement with a U.S. subsidiary of Wanda. Pursuant to the tax agreement, for any period that we were members of any consolidated or other tax group of which the Wanda subsidiary was the common parent, we will pay the group's tax liabilities attributable to our activities up to the amount that would be payable by us if the Company was the common parent of the consolidated or other tax group and, in addition, we will have the right to control the filing of tax returns, audits and other tax matters of any such consolidated or other tax group.

 

Wanda Receivables and Capital Contribution

 

As of December 31, 2016, the Company recorded a receivable due from Wanda of $10,594,000 for reimbursement of general administrative and other expense incurred on behalf of Wanda and a pledged capital contribution. In December 2016, Wanda agreed to make a capital contribution of $10,000,000 to AMC (without any

19


 

Table of Contents

increase in Wanda’s economic interest or voting rights in the Company) for payments to certain officer, directors, and other personnel for extraordinary services rendered in connection with merger and acquisition activity in 2016. This contribution was received during February 2017.

 

Participation in Public Offering

 

On February 13, 2017, in connection with the additional public offering of Class A common stock, Mr. Aron purchased 31,747 shares of our Class A common stock at the public offering price of $31.50 per share and on the same terms as the other purchasers in the offering.

 

20


 

Table of Contents

PROPOSAL 2:

RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

 

The Audit Committee of the Board has selected KPMG LLP (“KPMG”) as the independent registered public accounting firm to perform the audit of our consolidated financial statements and our internal control over financial reporting for 2017. KPMG served as our independent registered public accounting firm for 2016. KPMG representatives are expected to attend the 2017 Annual Meeting. They will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate stockholder questions. We are asking our stockholders to ratify the selection of KPMG as our independent registered public accounting firm for 2017. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that a change would be in the best interests of the Company and its stockholders.

 

The Audit Committee oversees the selection of a  new lead audit engagement partner every five years. The Audit Committee requires key KPMG partners assigned to our audit to be rotated at least every five years. The Audit Committee and its chair oversee the selection process for each new lead engagement partner. Throughout this process, the Audit Committee and management provide input to KPMG about AMC priorities, discuss candidate qualifications and interview potential candidates put forth by the firm. To help ensure continuing auditor independence, the Audit Committee also periodically considers whether there should be a regular rotation of the independent auditor.

 

If the stockholders fail to ratify the selection of this firm, the Audit Committee may appoint another independent registered public accounting firm or may decide to maintain its appointment of KPMG.

 

The Board recommends a vote “FOR” ratification of the selection of KPMG as our independent registered public accounting firm for 2017.

21


 

Table of Contents

AUDIT COMMITTEE REPORT

 

Our Audit Committee reviews our financial reporting process on behalf of our Board. In fulfilling its responsibilities, the Audit Committee has reviewed and discussed the audited financial statements contained in the 2016 Annual Report on Form 10-K with our management and our independent registered public accounting firm, KPMG. Our management is responsible for the financial statements and the reporting process, including the system of internal controls. KPMG is responsible for expressing an opinion on the conformity of those audited financial statements with U.S. generally accepted accounting principles and expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

 

The Audit Committee has discussed with KPMG the matters requiring discussion by Statement on Auditing Standard No. 1301, Communication with Audit Committees (as amended), and all other matters required to be discussed with the auditors. In addition, the Audit Committee has received the written disclosures and the letter from KPMG required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor's communications with the Audit Committee concerning independence, and has discussed with the independent auditors their independence. The Audit Committee has concluded that the independent auditors currently meet applicable independence standards.

 

Based on the reviews and discussions to which we refer above, the Audit Committee recommended to our Board (and our Board has approved) that the audited financial statements be included in our 2016 Annual Report on Form 10-K, for filing with the SEC.

 

Audit Committee of the Board of Directors

 

Kathleen M. Pawlus (Chairperson)

Lloyd Hill

Anthony J. Saich

22


 

Table of Contents

PRINCIPAL ACCOUNTING FEES AND SERVICES

 

The following table shows the fees that the Company was billed for the audit and other services provided by KPMG for the years ended December 31, 2016 and December 31, 2015. The Audit Committee has considered whether the provision of such services is compatible with maintaining the independence of KPMG and determined they were compatible. The Audit Committee has the sole right to engage and terminate the Company's independent registered public accounting firm, to pre-approve their performance of audit services and permitted non-audit services, and to approve all audit and non-audit fees.

 

 

 

 

 

 

 

 

 

 

Year Ended

 

Year Ended

Type of Fee

    

December 31, 2016

    

December 31, 2015

Audit Fees(a)

  

$

3,452,222

  

$

1,353,184

Audit-Related Fees(b)

 

 

998,902

 

 

527,656

Tax Fees(c)

  

 

45,244

  

 

170,414

All Other Fees(d)

  

 

 —

  

 

3,950

Total

  

$

4,496,368

  

$

2,055,204

(a)

Audit Fees include the audit of our annual financial statements and our internal control over financial reporting, review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements for the years ended December 31, 2016 and December 31, 2015.

 

(b)

Audit-Related Fees includes assurance and related services by KPMG that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees.” The services for the fees disclosed under this category include other accounting related work and work related to acquisitions.

 

(c)

Tax Fees include professional services rendered by KPMG for tax return preparation and tax compliance.

 

(d)

All Other Fees relate to translation fees for Wanda.

 

Audit Committee Pre-Approval Policy

 

The Audit Committee has adopted policies and procedures for the pre-approval of audit services and permitted non-audit services to be performed by our independent registered public accounting firm in order to assure that the provision of such services does not impair the independent registered public accounting firm's independence. The policies provide general pre-approval for certain types of services, as well as approved costs for those services. The term of any general pre-approval is twelve months from the date of pre-approval unless the Audit Committee specifies otherwise. Any costs or services that are not given general pre-approval require specific pre-approval by the Audit Committee. The policy directs that, if management must make a judgment as to whether a proposed service is a pre-approved service, management should seek approval of the Audit Committee before such service is performed.

 

Requests to provide services that require specific approval by the Audit Committee must be submitted to the Audit Committee by both the independent auditor and management, and must include a joint statement as to whether, in their view, the request or application is consistent with the SEC's rules on auditor independence. Under the Audit Committee's pre-approval policy, the chairman of the Audit Committee has the authority to address any requests made for pre-approval of services between Audit Committee meetings, and the chairman must report any pre-approval decisions made between Audit Committee meetings to the Audit Committee at its next scheduled meeting. The policy prohibits the Audit Committee from delegating its responsibility to pre-approve any permitted services to management.

23


 

Table of Contents

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

 

The Compensation Committee has reviewed and discussed with management the disclosures contained in the following section entitled “Compensation Discussion and Analysis.” Based on this review and discussion, the Compensation Committee recommended to the Board that the section entitled “Compensation Discussion and Analysis” be included in this Proxy Statement for the Annual Meeting.

 

Members of the Compensation Committee:

 

Jack Q. Gao (Chairman)

Lloyd Hill

Howard W. Koch, Jr.

 

24


 

Table of Contents

EXECUTIVE COMPENSATION

 

Compensation Discussion and Analysis

 

Business Highlights for 2016

 

2016 was a transformative year for AMC on many fronts. We acquired Odeon in November, and then acquired Carmike in December. This makes AMC the largest movie theatre operator in the United States, the largest movie theatre operator in Europe and the largest movie theatre operator in the world with over 900 theatres and over 10,000 screens. We continue to execute on our strategy of being the customer experience leader. Based on record industry box office performance in 2016, the acquisition of Starplex Cinemas in December 2015, the acquisition of Odeon in November 2016, the acquisition of Carmike in December 2016 and the success of our strategic initiatives, we increased total revenues approximately 9.8% to $3,235.8 million in 2016, compared to total revenues of $2,946.9 million for 2015. Consistent with our plans to augment shareholder returns through return of capital, we paid dividends to our stockholders of approximately $79.6 million and $78.6 million during 2016 and 2015, respectively.

 

Highlighted below are some of our key accomplishments: 

 

·

AMC set records for the year ended December 31, 2016 for all revenue categories:  admissions, food and beverage and other.

 

·

Total revenues exceeded $3.0 billion for the first time, increasing 9.8% to $3.2 billion compared to total revenues of $2.9 billion for the year ended December 31, 2015.

 

·

Admissions revenues exceeded $2.0 billion for the first time, increasing 8.3% to $2.0 billion compared to $1.9 billion for the year ended December 31, 2015.

 

·

Food and beverage revenues exceeded $1.0 billion for the first time, increasing 12.0% to $1.0 billion, compared to $910.1 million for the year ended December 31, 2015.

 

·

Net earnings increased 7.5% to $111.7 million and diluted EPS increased 6.6% to $1.13 compared to $103.9 million and $1.06, respectively, for the year ended December 31, 2015.

 

·

Adjusted EBITDA(1) grew 12.2% to $602.0 million compared to $536.5 million for the year ended December 31, 2015. Adjusted EBITDA for 2015 benefited from an $18.1 million gain related to the termination of a post-retirement health benefit plan. Excluding this gain in the prior year period, Adjusted EBITDA growth for 2016, compared to 2015 was approximately 16.1%.

 

Compensation Highlights for 2016

 

Our Compensation Committee and the Board approved the following compensation based on our performance during 2016:

 

·

Bonus amounts awarded under the company component of the annual incentive plan (“AIP”) were 92.0% of target.

 

·

Bonus amounts awarded under the individual component of the AIP attained by certain Named Executive Officers were 150.0% of target.

 

·

Equity awards were granted based upon a three year vesting schedule with performance conditions, including net earnings, cash flows from operating activities and adjusted free cash flow targets.


(1)

This item is a non-GAAP financial measure. Reconciliations and definitions of non-GAAP financial measures are provided in Appendix A to this proxy statement.

25


 

Table of Contents

·

Transition Performance Stock Units were granted to bridge the gap between the previous one year grants and the new three year grants. The PSU Transition Awards did not meet the fiscal year 2016 net earnings threshold or the minimum adjusted free cash flow target. The PSU Transition Awards were cancelled and units were returned to the 2013 Employee Incentive Plan pool.

 

Base salaries for our Named Executive Officers increased between 2.0% and 2.5% from 2015 to 2016.

 

Compensation Highlights for 2017

 

We continue to enhance our executive compensation program to make it more performance based and also to better align management's compensation with the long-term interests of our stockholders. Changes to our incentive plan design for 2017 include:

 

·

Increasing the Chief Executive Officer’s target incentive under the AIP to 200% of base salary;

 

·

Changing the performance metrics for Performance Stock Units (“PSUs”) from adjusted free cash flow to adjusted EBITDA and diluted earnings per share, but retaining the net earnings threshold;

 

·

Increasing the maximum achievable units under PSU grants from 150% to 200%; and

 

·

Changing the forfeiture rules for PSU grants to allow for continued vesting on a pro-rata basis for participants whose service terminates (other than for Cause) during the performance period, subject to actual achievement of the performance targets.

 

Compensation Practices

 

The Compensation Committee regularly reviews best practices in executive compensation and uses the following guidelines to design our compensation programs:

 

 

 

What we do:

 

Majority of pay is performance-based and not guaranteed

Compensation mix of base salary, short-term and long-term incentives provides a variety of time horizons to balance our near-term and long-term strategic goals

Equity incentive programs and stock ownership guidelines align management and shareholder interests and provide a method for executive officers to accumulate and maintain an ownership position in the Company

Provide modest perquisites

Provide reasonable post-employment and change of control provisions in employment agreements

Prohibit hedging by executive officers

Include clawback provisions in compensation programs

 

Advisory Vote on Executive Compensation

 

The Board and the Compensation Committee continually evaluate our compensation policies and practices. As part of that process, the Board and the Compensation Committee consider the results of our stockholder advisory vote on executive compensation, commonly known as the “say-on-pay” vote. At the 2016 Annual Meeting, approximately 97.5% of the votes cast in connection with the stockholders advisory vote on compensation of the Named Executive Officers were cast in favor of the proposal. The Company has considered this voting result, and in light of our stockholders' substantial support, our compensation policies and decisions, as explained in this Compensation Discussion and Analysis, continue to be focused on financial performance and aligning the interests of executives with the interests of stockholders.

26


 

Table of Contents

Certain Background Information

 

This section discusses the material elements of compensation awarded to, earned by or paid to our principal executive officer and principal financial officer, and our three other most highly compensated executive officers. These individuals are referred to as the “Named Executive Officers.” On July 19, 2015, the Board appointed Mr. Ramsey to serve in the additional capacities of Interim Chief Executive Officer and President, effective August 7, 2015, which he did until January 4, 2016. The Board hired Mr. Adam M. Aron as the Chief Executive Officer, President, and Director of the Company, effective as of January 4, 2016. Mr. Ramsey continues to serve as the Company's Executive Vice President and Chief Financial Officer.

 

Our executive compensation programs are determined and approved by our Compensation Committee or, in some cases, by the entire Board based upon the recommendation of the Compensation Committee. None of the Named Executive Officers are members of the Compensation Committee or had any role, other than the CEO as described below, in determining the compensation of other Named Executive Officers. Our CEO works together with the Compensation Committee in setting compensation levels and bonuses for our executive officers other than the CEO. Certain elements of compensation are governed by the employment agreement for each Named Executive Officer, discussed below under “Description of Employment Agreements.”

 

Executive Compensation Philosophy, Program Objectives and Overview

 

The goals of the Compensation Committee with respect to executive compensation are:

 

·

to attract, retain, motivate and reward talented executives;

 

·

to tie annual compensation incentives to the achievement of specified performance objectives; and

 

·

to achieve long-term creation of value for our stockholders by aligning the interests of these executives with those of our stockholders.

 

To achieve these goals, we endeavor to maintain compensation plans that are intended to tie a substantial portion of executives' overall compensation to key strategic, operational and financial goals and other non-financial goals that the Compensation Committee deems important. The Compensation Committee evaluates our compensation programs to ensure they are supportive of these goals and our business strategy and align the interests of our executives with those of our stockholders.

 

Total compensation opportunity must serve to attract and retain top performing executives. One factor in establishing our executive compensation target pay levels is relative competitiveness in relation to relevant market data. The Committee reviews data ranging from the 25th to the 75th market percentile and generally sets target pay opportunity with reference to market median.

 

Executive Compensation Program Elements

 

Our executive compensation program consists of the elements described below. The Compensation Committee determines the portion of compensation allocated to each element for each individual Named Executive Officer.

 

The Compensation Committee believes that the use of the combination of base salary, annual incentive compensation, and equity participation offers the best approach to achieving our compensation goals, including attracting and retaining talented and capable executives and motivating our executives and other officers to expend maximum effort to improve the business results, earnings and overall value of our business. To achieve these goals, we endeavor to maintain compensation plans that are intended to tie a substantial portion of executives' overall compensation to key strategic, operational and financial goals such as achievement of target levels of adjusted EBITDA for AIP, adjusted free cash flow, operating cash flows, net earnings and other non-financial goals that the Compensation Committee deems important.

27


 

Table of Contents

Base Salaries

 

Base salaries for our Named Executive Officers are established based on the scope of their responsibilities, taking into account competitive market compensation for similar positions, as well as seniority of the individual, our ability to replace the individual and other primarily judgmental factors deemed relevant by the Compensation Committee. Base salaries for our Named Executive Officers are reviewed from time to time by the Compensation Committee and may be increased pursuant to such review and/or in accordance with guidelines contained in the various employment agreements in order to realign salaries with market levels after taking into account individual responsibilities, performance and experience. The table below shows the annual base salaries for our Named Executive Officers for 2016, compared to 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2016 Annual

 

2015 Annual

 

% Increase

 

    

Base Salary

    

Base Salary

    

2016 vs 2015

Adam M. Aron

 

$

995,000

 

$

 —

 

NA

Craig R. Ramsey

 

 

563,800

 

 

550,000

 

2.5%

John D. McDonald

 

 

517,700

 

 

505,000

 

2.5%

Elizabeth Frank

 

 

511,500

 

 

499,000

 

2.5%

Mark A. McDonald

 

 

453,500

 

 

444,600

 

2.0%

 

Management Transaction Bonus

 

In December 2016, Wanda agreed to make a capital contribution of $10,000,000 to AMC (without any increase in Wanda’s economic interest or voting rights in the Company) for payment to certain officers, directors, and other personnel for extraordinary services rendered in connection with merger and acquisition activity in 2016. This contribution was received during February 2017. The table below shows the amount of cash management transaction bonus for our Named Executive Officers in 2016:

 

 

 

 

 

 

 

Management

 

 

Transaction

 

    

Bonus

Adam M. Aron

 

$

4,500,000

Craig R. Ramsey

 

 

700,000

John D. McDonald

 

 

350,000

Elizabeth Frank

 

 

250,000

Mark A. McDonald

 

 

350,000

 

Annual Incentive Compensation Program

 

The Compensation Committee has the authority to award annual incentive bonuses to our Named Executive Officers pursuant to our annual incentive compensation program (“AIP”), which historically have been paid in cash and traditionally have been paid in a single installment in the first quarter of the subsequent year upon certification of performance by the Compensation Committee. Under employment agreements with our Named Executive Officers, each Named Executive Officer is eligible for an annual bonus, as it may be determined by the Compensation Committee from time to time. We believe that annual bonuses based on performance serve to align the interests of management and stockholders. Individual bonuses are performance based and, as such, can be highly variable from year to year. The annual incentive bonuses for our Named Executive Officers are determined by our Compensation Committee, taking into account the recommendation of our CEO (except with respect to his own bonus).

 

The aggregate bonus under our AIP for each Named Executive Officer, except for Mr. Aron and Mr. Ramsey, was apportioned to a company component and an individual component. In the case of Mr. Aron and Mr. Ramsey, their aggregate bonus is entirely based on company performance with no individual component. The company component was based on attainment of 2016 adjusted EBITDA for AIP (adjusted EBITDA, as calculated on Appendix A further decreased by cash distributions from non-consolidated entities). Under the AIP, the company component payout was on a scale ranging from 0% to 200% of target based on 2016 adjusted EBITDA for AIP

28


 

Table of Contents

ranging from a threshold of $479,920,000 to a maximum of $719,880,000. The following table presents the AIP payout scale for the company component:

 

Picture 15

 

For Mr. Aron and Mr. Ramsey, the Compensation Committee reserved discretion to reduce the company component payout in the event the Company failed to achieve 2016 net earnings (exclusive of certain items) of at least $120.6 million.

 

The individual component of the bonus is based on achievement of individual key performance objectives and overall individual performance and contribution to our strategic and financial goals. Under the AIP, our Compensation Committee and, except with respect to his own bonus, CEO, retain certain discretion to decrease or increase individual component bonuses relative to the targets based on qualitative or other subjective factors deemed relevant by the Compensation Committee.

 

2016 AIP Payout. Our Compensation Committee and the Board have approved bonus amounts to be paid in 2017 for the performance during 2016. The Company attained adjusted EBITDA for AIP of $561,978,000 for the year ended December 31, 2016, which was determined by our Compensation Committee to be a 92% payout of the company component. The Company attained net earnings of $111,667,000 for the year ended December 31, 2016, which exceeded the net earnings threshold applicable to Mr. Aron and Mr. Ramsey when certain pre-determined items were excluded. For the remaining Named Executive Officer's the individual component of the bonus, which was subject to the approval by the Compensation Committee, was approved following a review of each Named Executive Officer's individual performance and contribution to our strategic and financial goals. Bonus amounts awarded under the individual component bonuses of the AIP attained by certain Named Executive Officers were 150.0% of target.

 

The following table summarizes the AIP bonus for our Named Executive Officers for 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Target

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AIP

 

 

 

 

%

 

%

 

Company

 

Individual

 

 

 

 

 

 

 

 

Bonus

 

 

 

 

Allocated

 

Allocated

 

Component

 

Component

 

 

 

 

 

 

 

 

as % of

 

Target

 

to

 

to

 

Achievement

 

Achievement

 

Total AIP

 

 

2016 Base

 

Base

 

Bonus

 

Company

 

Individual

 

(92.0% of

 

(150%)

 

Bonus

 

  

Salary

   

Salary

   

Amount

   

Component

   

Component

   

Target)

   

Target)

   

Amount

Adam M. Aron

 

$

995,000

 

125%

 

$

1,243,750

 

100%

 

 —

 

$

1,144,250

 

$

 —

 

$

1,144,250

Craig R. Ramsey

 

 

563,800

 

70%

 

 

394,660

 

100%

 

 —

 

 

363,078

 

 

 —

 

 

363,078

John D. McDonald

 

 

517,700

 

70%

 

 

362,390

 

80%

 

20%

 

 

266,708

 

 

108,675

 

 

375,383

Elizabeth Frank

 

 

511,500

 

65%

 

 

332,475

 

80%

 

20%

 

 

244,720

 

 

99,750

 

 

344,470

Mark A. McDonald

 

 

453,500

 

65%

 

 

294,775

 

80%

 

20%

 

 

216,982

 

 

88,425

 

 

305,407

 

Among the factors considered in determining the individual component payouts for Named Executive Officers were:

 

·

Completion of both the Carmike and Odeon acquisitions;

 

·

Attainment of record results in revenues, food and beverage spend per guest, and adjusted EBITDA margin;

29


 

Table of Contents

·

Renovation of 43 theatres during 2016;

 

·

Successful launch of a new website and mobile app;

 

·

Reduction in film exhibition costs from 54% to 53.2%; and

 

·

Redesign and implementation of improved AMC Stubs loyalty program.

 

Equity-Based Incentive Compensation Program

 

In December 2013, in conjunction with the IPO, the Board adopted and the Company's then-sole stockholder approved the 2013 Equity Incentive Plan. The 2013 Equity Incentive Plan provides for grants of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSU”), performance stock units (“PSU”), stock awards, and cash performance awards. We believe that the equity-based incentive compensation program furthers our goal to attract, retain and motivate talented executives by enabling such executives to participate in the Company's long-term growth and financial success and aligns the interests of management and stockholders. The maximum number of shares of Class A common stock available for delivery pursuant to awards granted under the 2013 Equity Incentive Plan is 9,474,000 shares. As of December 31, 2016, there were 7,739,524 shares remaining available for issuance.

 

The 2013 Equity Incentive Plan is administered by the Compensation Committee. Subject to the limitations set forth in the 2013 Equity Incentive Plan, the Compensation Committee has the authority to determine the persons to whom awards are to be granted, prescribe the restrictions, terms and conditions of all awards, interpret the 2013 Equity Incentive Plan and adopt rules for the administration, interpretation and application of the 2013 Equity Incentive Plan.

 

Equity Awards Granted in 2016

 

On March 1, 2016, the Board approved grants of Restricted Stock Units (“RSU”) and Performance Stock Units (“PSUs”) to certain of the Company's employees under the 2013 Equity Incentive Plan. Each RSU and PSU represented the right to receive one share of Class A common stock on a future settlement date. Settlement of the RSUs and PSUs may be accelerated under certain circumstances. See “Potential Payments Upon Termination or Change of Control.” See the “Summary Compensation Table” and “Grants of Plan-Based Awards” for information on the individual grants made to our Named Executive Officers.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity Awards Granted in 2016

 

    

RSUs

    

RSUs (162(m))

    

PSUs

    

PSU Transition

    

Total

Adam M. Aron

 

 —

 

86,037

 

86,037

 

 —

 

172,074

Craig R. Ramsey

 

16,648

 

 —

 

16,648

 

5,407

 

38,703

John D. McDonald

 

 —

 

16,648

 

16,648

 

5,407

 

38,703

Elizabeth Frank

 

 —

 

16,648

 

16,648

 

5,407

 

38,703

Mark A. McDonald

 

 —

 

16,648

 

16,648

 

5,407

 

38,703

(1)

At 100% of target.

 

Restricted Stock Units.  With respect to our Named Executive Officers, 50% of the grant consisted of RSUs. The RSUs for certain Named Executive Officers covered by IRS Code 162(m), would vest over 3 years with 1/3 vesting, on the date the Compensation Committee certifies that the Company has achieved cash flow from operating activities of at least $100,000,000 for the fiscal year prior to a vesting date, if the executive remains employed on such date. This applies to all Named Executive Officers except Mr. Ramsey (our principal financial officer). The RSUs granted to Mr. Ramsey vest 1/3 per year over three years on January 2, 2017, January 2, 2018 and January 2, 2019 based upon a service condition only. A dividend equivalent equal to the amount paid in respect of one share of Class A common stock underlying the RSUs began to accrue with respect to the RSUs on the date of grant. Such accrued dividend equivalents are paid to the holder upon settlement of the RSU’s.

30


 

Table of Contents

Performance Stock Units.  With respect to our Named Executive Officers, 50% of the grant consisted of PSUs with both a three year cumulative adjusted free cash flow performance target, a cumulative net earnings performance threshold and a service condition, covering a performance period beginning January 1, 2016 and ending on December 31, 2018. The PSUs vest on the date the Compensation Committee certifies achievement of the performance threshold and target based on a scale ranging from 80% to 120% of the performance target with the vested amount ranging from 30% to 150%. No PSUs will vest if the Company does not achieve the adjusted free cash flow target and net earnings threshold or the participant’s service does not continue through the last day of the performance period. The vested PSUs will be settled within 30 days of vesting. A dividend equivalent equal to the amount paid in respect of one share of Class A common stock underlying the PSUs began to accrue with respect to the PSUs on the date of grant. Such accrued dividend equivalents are paid to the holder, based on the number of PSUs that vested.

 

The PSU awards vest based on (1) attainment of a cumulative fiscal years 2016-2018 net earnings threshold of $373,200,000 and (2) attainment of a cumulative fiscal years 2016-2018 adjusted free cash flow minimum of $433,280,000, target of $541,600,000, and maximum of $649,920,000, with the vested amount of PSUs ranging from 30% to 150% of the award.

 

These performance targets should not be viewed as predictive or estimates of future performance and the actual achievement of these targets is subject to numerous known and unknown risks and uncertainties, including, without limitation, those described under “forward looking statements”,  “risk factors”, or similar headings in our quarterly and annual reports filed with the SEC. The Compensation Committee establishes these targets solely to help align its pay with performance. The targets are not intended to provide investors or any other party with guidance about our financial performance or operating results.

 

Adjusted free cash flow is a non-GAAP financial measure and should not be construed as an alternative to net earnings as an indicator of operating performance or as an alternative to cash flow provided by operating activities as a measure of liquidity (as determined in accordance with U.S. GAAP). The Company defines adjusted free cash flow as Adjusted EBITDA minus the sum of cash distributions from non-consolidated entities, cash taxes, cash interest, capital expenditures (excluding change in construction payables) net of landlord contributions, mandatory payments of principal under any credit facility and payments under capital lease obligations and financing lease obligations. As shown on Appendix A, the Company makes adjustments to Adjusted EBITDA for certain cash requirements to determine amounts available for general capital purposes from our operations. Adjusted free cash flow may not be comparable to similarly titled measures reported by other companies or other similar measures of cash flow.

 

The following table presents the PSU performance and payout scale:

 

Picture 26

 

2016 Performance Stock Unit Transition Awards.  In recognition of the shift from one year to three year performance periods for annual equity awards, on March 1, 2016, PSU transition awards were granted to certain members of management and executive officers, with both a 2016 adjusted free cash flow (as defined above) performance target and net earnings performance threshold and a service condition, covering a performance period beginning January 1, 2016 and ending on December 31, 2016. The PSUs were to vest based on a scale ranging from 80% to 120% of the performance target with the vested amount ranging from 30% to 150%. No PSUs were to vest if the Company does not achieve the adjusted free cash flow target or net earnings threshold or the participant’s

31


 

Table of Contents

service does not continue through the last day of the performance period. The vested PSUs were to be settled within 30 days of vesting. A dividend equivalent equal to the amount paid in respect of one share of Class A common stock underlying the PSUs began to accrue with respect to the PSUs on the date of grant. Such accrued dividend equivalents were to be paid to the holder upon vesting of the PSUs. Mr. Aron was not eligible for the PSU Transition Awards. No PSU Transition Awards vested as the Company did not achieve the adjusted free cash flow or net earnings target.

 

The PSU Transition Awards were to vest on the date the Compensation Committee certified achievement of the following: 1) a fiscal year 2016 net earnings threshold of $120,600,000 and 2) fiscal year 2016 adjusted free cash flow target of $189,100,000, minimum of $151,280,000, and maximum of $226,920,000, with the vested amount of PSUs ranging from 30% to 150% of the award.

 

The PSU Transition Awards granted on March 1, 2016 did not meet the fiscal year 2016 net earnings threshold or minimum adjusted free cash flow threshold. The PSU Transition Awards were cancelled and units were returned to the 2013 Employee Incentive Plan pool.

 

Retirement Benefits

 

We provide retirement benefits to the Named Executive Officers under both qualified and non-qualified defined benefit and defined contribution retirement plans. The Defined Benefit Retirement Income Plan for Certain Employees of American Multi Cinema, Inc. (“AMC Defined Benefit Retirement Income Plan”) and the AMC 401(k) Savings Plan are both tax-qualified retirement plans in which the Named Executive Officers participate on substantially the same terms as our other participating employees. Due to limitations on benefits imposed by the Employee Retirement Income Security Act of 1974 (“ERISA”), we established a non-qualified supplemental defined benefit plan (the “AMC Supplemental Executive Retirement Plan”). On November 7, 2006, our Board approved a proposal to freeze the AMC Defined Benefit Retirement Income Plan and the AMC Supplemental Executive Retirement Plan, effective as of December 31, 2006. Benefits no longer accrue under the AMC Defined Benefit Retirement Income Plan or the AMC Supplemental Executive Retirement Plan for our Named Executive Officers or for other participants.

 

The “Pension Benefits” table and related narrative section “Pension and Other Retirement Plans” below describes our qualified and non-qualified defined benefit plans in which our Named Executive Officers participate.

 

Non-Qualified Deferred Compensation Program

 

Named Executive Officers are permitted to elect to defer base salaries and their cash bonuses under the AMC Non-Qualified Deferred Compensation Plan. Amounts deferred under the plans are credited with an investment return determined as if the participant's account were invested in one or more investment funds made available by the Committee and selected by the participant. The Company may, but need not, credit the deferred compensation account of any participant with a discretionary or profit sharing credit as determined by the Company. We believe that providing the Named Executive Officers with deferred compensation opportunities is a cost-effective way to permit officers to receive the tax benefits associated with delaying the income tax event on the compensation deferred, even though the related deduction for the Company is also deferred.

 

The “Non-Qualified Deferred Compensation” table and related narrative section below describe the non-qualified deferred compensation plan and the benefits thereunder.

 

Severance and Other Benefits Upon Termination of Employment

 

We believe that the occurrence, or potential occurrence, of a change of control transaction will create uncertainty regarding the continued employment of our executive officers. This uncertainty results from the fact that many change of control transactions result in significant organizational changes, particularly at the senior executive level. In order to encourage certain of our executive officers to remain employed with us during an important time when their prospects for continued employment following the transaction are often uncertain, we provide the

32


 

Table of Contents

executives with severance benefits if they terminate their employment within a certain number of days following specified changes in their compensation, responsibilities or benefits following a change of control. Accordingly, we provide such protections for each of the Named Executive Officers and for other of our senior officers in their respective employment agreements. The Compensation Committee evaluates the level of severance benefits provided to our executive officers on a case-by-case basis. We consider these severance protections consistent with competitive practices.

 

As described in more detail below under “Compensation Discussion and Analysis—Potential Payments Upon Termination or Change of Control,” pursuant to their employment agreements, each of the Named Executive Officers is entitled to severance benefits in the event of termination of employment without cause and certain Named Executive Officers are entitled to severance benefits upon death or disability. In the case of Mr. Aron and Ms. Frank, resignation for good reason also entitles her to severance benefits.

 

All Other Compensation

 

The other compensation provided to each Named Executive Officer is reported in the All Other Compensation column of the “Summary Compensation Table” below, and is further described in footnote (5) to that table. All other compensation during the year ended December 31, 2016 consists of Company matching contributions under our 401(k) savings plan, which is a qualified defined contribution plan and life insurance premiums. On occasion, our Named Executive Officers receive event tickets from the Company, amusement park passes, event tickets and gifts from vendors for personal use and there is no incremental cost associated with these items.

 

Independent Compensation Consultant

 

For compensation related decisions effective for 2016, the Compensation Committee retained the services of Pay Governance LLC as independent executive compensation consultant to advise the Compensation Committee on compensation matters related to the executive and director compensation programs. In 2016, Pay Governance assisted the Compensation Committee with, among other things:

 

·

executive and director market pay analysis;

 

·

reviewing and making changes to the compensation peer group;

 

·

development of executive and director pay programs;

 

·

CEO Pay Recommendations; and

 

·

drafting the Proxy Statement and Compensation, Discussion and Analysis disclosures.

 

Pay Governance reported to the Compensation Committee and had direct access to the Chairman and the other members of the Compensation Committee. Beyond advice related to the executive and director compensation programs, Pay Governance did provide other services to the Company in 2016, but the amount paid to Pay Governance was immaterial. The Compensation Committee reviewed the nature of its relationship with Pay Governance and has concluded that Pay Governance’s work for the Compensation Committee does not raise any conflicts of interest with respect to Pay Governance’s independence.

 

In July 2016, the Compensation determined that it was in the best interests of the Company to retain the services of AON Hewitt (“AON”) as independent executive compensation consultant to replace Pay Governance and advise the Compensation Committee on compensation matters related to the executive and director compensation programs for 2017.

 

33


 

Table of Contents

Adoption of a Peer Group

 

The Company has adopted a peer group of companies as a reference group to provide a broad perspective on competitive pay levels and practices. Peer companies were selected based on industry classification, company size in terms of revenue and market capitalization, and similarity in business operations. The Compensation Committee periodically reviews and updates the Peer Group, as necessary, upon recommendation of its independent executive compensation consultant. The Compensation Committee reviewed the peer group composition for 2016 and made no changes.

 

For 2016, the Company's peer group consisted of the following 13 companies:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2015 Revenue

 

 

 

Peer

    

Industry

    

(in thousands)

    

Market Capitalization

Brinker International, Inc.

 

Restaurants

 

$

3,257,489

 

$

2.06 Billion

Carmike Cinemas, Inc.

 

Movie Production, Theatres

 

 

804,368

 

 

N/A

The Cheesecake Factory Incorporated

 

Restaurants

 

 

2,100,609

 

 

2.74 Billion

Bloomin' Brands, Inc.

 

Restaurants

 

 

4,377,676

 

 

1.88 Billion

Cinemark Holdings Inc.

 

Movie Production, Theatres

 

 

2,852,609

 

 

5.04 Billion

DreamWorks Animation SKG Inc.

 

Entertainment Production

 

 

915,863

 

 

N/A

IMAX Corporation

 

Entertainment

 

 

373,805

 

 

2.05 Billion

Lions Gate Entertainment Corp.

 

Entertainment Production

 

 

2,399,640

 

 

N/A

Netflix, Inc.

 

CATV Systems

 

 

6,779,511

 

 

61.92 Billion

Panera Bread Co.

 

Specialty Eateries

 

 

2,681,580

 

 

5.35 Billion

Regal Entertainment Group

 

Movie Production, Theatres

 

 

3,127,300

 

 

3.36 Billion

Buffalo Wild Wings, Inc.

 

Restaurants

 

 

1,812,722

 

 

2.73 Billion

Madison Square Garden Co.

 

Entertainment-Diversified

 

$

1,071,511

 

$

4.30 Billion


(1)

The Company included restaurants in its peer group as a portion of its revenues comes from dine-in-theatre locations.

 

Compensation Claw-back Under Certain Circumstances

 

Pursuant to the terms of the 2013 Equity Incentive Plan, for a period of one year following the date on which the value of an award under the 2013 Equity Incentive Plan is realized, such value must be repaid in the event (i) the Named Executive Officer is terminated for “Cause” (as defined in the Named Executive Officer's respective employment agreement), or (ii) after termination for any other reason it is determined that such Named Executive Officer (a) engaged in an act during his or her employments that would have warranted termination for “Cause”, or (b) engaged in conduct that violated a continuing obligation to the Company. Mr. Aron's and Ms. Frank's employment agreements require repayment of any bonus compensation based on materially inaccurate financial statements or performance metrics.

 

Executive Stock Ownership Guidelines and Anti-Hedging Policy

 

The Company has adopted stock ownership guidelines for our executives, including our Named Executive Officers. Our CEO is required to acquire and hold shares of our Class A common stock with a fair value at least equal to three times his base salary, and the other Named Executive Officers are required to acquire and hold shares of our Class A common stock with a fair value at least equal to two times their respective base salaries. Each Named Executive Officer is required to achieve the applicable guideline ownership amount within later of, (1) three years following the IPO or (2) three years after becoming a Named Executive Officer. All Named Executive Officers, with the exception of Mr. Aron have achieved the Class A common stock ownership guideline. As of February 24, 2017, Mr. Aron held 51,747 of Class A common stock valued at approximately $1.6 million. Mr. Aron has two years remaining to meet his ownership guideline. Further, our Insider Trading Policy prohibits the Named Executive Officers from entering into hedging positions with respect to their stock ownership. Pursuant to the Management Stockholders Agreement, our Named Executive Officers may not transfer shares of the Company acquired in connection with the Merger without the written consent of Wanda prior to January 1, 2016, after which certain limitations on transfer continue for a period of two years.

34


 

Table of Contents

IRS Code Section 162(m)

 

Section 162(m) of the Internal Revenue Code generally disallows publicly held companies a tax deduction for compensation in excess of $1,000,000 paid to their chief executive officer and the three other most highly compensated executive officers (other than the principal financial officer) unless such compensation qualifies for an exemption for certain compensation that is based on performance. Our intent generally is to design and administer executive compensation programs in a manner that will preserve the deductibility of compensation paid to our executive officers, and we believe that a substantial portion of our current executive compensation program satisfies the requirements for exemption from the $1,000,000 deduction limitation, to the extent applicable, taking into account the special rules that apply to compensation provided pursuant to agreements in effect. However, we reserve the right to design programs that recognize a full range of performance criteria important to our success, even where the compensation paid under such programs may not be deductible. The Compensation Committee will continue to monitor the tax and other consequences of our executive compensation program as part of its primary objective of ensuring that compensation paid to our executive officers is reasonable, performance based and consistent with the goals of the Company and its stockholders.

 

35


 

Table of Contents

Summary Compensation Table

 

The following table presents information regarding compensation of our principal executive officer and our principal financial officer, and our three other most highly compensated executive officers for services rendered during the year ended December 31, 2016. These individuals are referred to as “Named Executive Officers.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name and Principal Position

    

Year

    

Salary

    

Bonus

    

Stock Awards(1)

    

Non-Equity
Incentive Plan
Compensation(2)

    

Change in

Pension

Value and

Nonqualified

Deferred

Compensation

Earnings(3)(4)

    

All Other
Compensation(5)

    

Total

Adam M. Aron

 

2016

 

$

991,200

 

$

4,500,000

 

$

4,281,202

 

$

1,144,250

 

$

 —

 

$

15,352

 

$

10,932,004

Chief Executive Officer,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

President and Director

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Craig R. Ramsey

 

2016

 

 

563,800

 

 

700,000

 

 

962,930

 

 

363,078

 

 

48,906

 

 

20,506

 

 

2,659,220

Executive Vice President and

 

2015

 

 

550,000

 

 

 —

 

 

1,365,735

 

 

668,250

 

 

 —

 

 

40,748

 

 

2,624,733

Chief Financial Officer

 

2014

 

 

510,985

 

 

 —

 

 

875,628

 

 

377,338

 

 

103,441

 

 

15,548

 

 

1,882,940

John D. McDonald

 

2016

 

 

517,700

 

 

350,000

 

 

962,930

 

 

375,383

 

 

100,309

 

 

13,925

 

 

2,320,247

Executive Vice President North

 

2015

 

 

505,000

 

 

 —

 

 

796,838

 

 

428,442

 

 

 —

 

 

20,454

 

 

1,750,734

American Operations

 

2014

 

 

493,074

 

 

 —

 

 

875,628

 

 

371,070

 

 

248,446

 

 

6,774

 

 

1,994,992

Elizabeth Frank

 

2016

 

 

511,500

 

 

250,000

 

 

962,930

 

 

344,470

 

 

34,118

 

 

11,770

 

 

2,114,788

Executive Vice President and

 

2015

 

 

499,000

 

 

 —

 

 

796,838

 

 

392,139

 

 

 —

 

 

11,770

 

 

1,699,747

Chief Content and

 

2014

 

 

500,449

 

 

 —

 

 

875,628

 

 

343,800

 

 

 —

 

 

11,570

 

 

1,731,447

Programming Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mark A. McDonald

 

2016

 

 

453,500

 

 

350,000

 

 

962,930

 

 

305,407

 

 

94,347

 

 

13,925

 

 

2,180,109

Executive Vice President,

 

2015

 

 

444,600

 

 

 —

 

 

796,838

 

 

326,281

 

 

 —

 

 

18,954

 

 

1,586,673

Global Development

 

2014

 

 

444,167

 

 

 —

 

 

875,628

 

 

317,453

 

 

217,612

 

 

6,003

 

&nb