Employees Pension and Postretirement Benefits

6 Months Ended

Jun. 30, 2022

Retirement Benefits [Abstract]

Employees Pension and Postretirement Benefits

15. Employee's Pension and Postretirement Benefits

(a)Defined Benefit Plan

The Company has an unfunded defined benefit pension plan, the Supplemental Executive Retirement Plan (the “SERP”), covering its CEO, Richard L. Gelfond. Under the terms of the SERP, if Mr. Gelfond’s employment is terminated other than for cause (as defined in his employment agreement), he is entitled to receive SERP benefits in the form of a lump sum payment. SERP benefit payments to Mr. Gelfond are subject to a deferral for six months after the termination of his employment, at which time Mr. Gelfond will be entitled to receive interest on the deferred amount credited at the applicable federal rate for short-term obligations. Pursuant to an amendment to his employment agreement dated November 1, 2019, the term of Mr. Gelfond’s employment was extended through December 31, 2022, although Mr. Gelfond has not informed the Company that he intends to retire at that time. Under the terms of this amendment to his employment agreement, the total benefit payable to Mr. Gelfond under the SERP was fixed at $20.3 million.

As of June 30, 2022 and December 31, 2021, the Company’s projected benefit obligation and unfunded status related to the SERP are as follows:

	June 30,		December 31,
(In thousands of U.S. Dollars)	2022		2021
Projected benefit obligation:
Obligation, beginning of period	$	20,056	$	20,116
Interest cost		80		72
Actuarial gain		—		(132	)
Obligation, end of period and unfunded status	$	20,136	$	20,056

For the three and six months ended June 30, 2022, the Company recorded interest costs of less than $0.1 million and $0.1 million, respectively (2021 — less than $0.1 million) related to the SERP. The Company expects to recognize additional interest costs of $0.1 million related to the SERP during the remainder of 2022. No contributions are expected to be made to the SERP in 2022.

(b)Defined Contribution Pension Plan

The Company also maintains defined contribution plans for its employees, including its executive officers. The Company makes contributions to these plans on behalf of employees in an amount up to 5% of their base salary subject to certain prescribed maximums. During the three and six months ended June 30, 2022, the Company contributed and recorded expense of $0.3 million and $0.6 million, respectively (2021 — $0.3 million and $0.6 million, respectively) to its Canadian defined contribution plan and $0.1 million and $0.4 million, respectively (2021 — $0.1 million and $0.3 million, respectively) to its defined contribution employee plan under Section 401(k) of the U.S. Internal Revenue Code.

(c)Postretirement Benefits – Executives

The Company has an unfunded postretirement plan for Mr. Gelfond and Bradley J. Wechsler, former Chairman of the Company’s Board of Directors (the “Executive Postretirement Benefit Plan”). The Executive Postretirement Benefit Plan provides that the Company will maintain health benefits for Messrs. Gelfond and Wechsler until they become eligible for Medicare and, thereafter, the Company will provide Medicare supplemental coverage as selected by Messrs. Gelfond and Wechsler. Mr. Wechsler retired from the Company’s Board of Directors on June 9, 2021. The Company maintained Mr. Wechsler’s health benefits through December 31, 2021, and thereafter is providing him with Medicare supplemental coverage.

As of June 30, 2022, the Company’s postretirement benefits obligation under this plan is $0.7 million (December 31, 2021 — $0.7 million). For the three and six months ended June 30, 2022, the Company has recorded an expense of less than $0.1 million (2021 — less than $0.1 million) related to this plan.

(d)Postretirement Benefits – Canadian Employees

The Company has an unfunded postretirement plan for its Canadian employees meeting specific eligibility requirements. The Company will provide eligible participants, upon retirement, with health and welfare benefits. As of June 30, 2022, the Company’s postretirement benefits obligation under this plan is $1.6 million (December 31, 2021 — $1.7 million). For the three and six months ended June 30, 2022, the Company has recorded expense of less than $0.1 million and $0.1 million, respectively, (2021 — less than $0.1 million) related to this plan.

(e)Deferred Compensation Benefit Plan

The Company maintained a nonqualified deferred compensation benefit plan (the “Retirement Plan”) covering the former CEO of IMAX Entertainment and Senior Executive Vice President of the Company. Under the terms of the Retirement Plan, the benefits were due to vest in full if the executive incurred a separation from service from the Company (as defined therein). In 2018, the executive incurred a separation from service from the Company, and as such, the Retirement Plan benefits became fully vested as of December 31, 2018.

As of June 30, 2022, the benefit obligation related to the Retirement Plan was $3.9 million (December 31, 2021 — $3.8 million) and is recorded on the Company’s Condensed Consolidated Balance Sheets within Accrued and Other Liabilities. As the Retirement Plan is fully vested, the benefit obligation is measured at the present value of the benefits expected to be paid in the future with the accretion of interest recognized in the Condensed Consolidated Statements of Operations within Retirement Benefits Non-Service Expense.

The Retirement Plan is funded by an investment in company-owned life insurance (“COLI”), which is recorded at its fair value on the Company’s Condensed Consolidated Balance Sheets within Prepaid Expenses. As of June 30, 2022, fair value of the COLI asset was $3.3 million (December 31, 2021 — $3.3 million). Gains and losses resulting from changes in the cash surrender value of the COLI asset are recognized in the Condensed Consolidated Statements of Operations within Realized and Unrealized Investment Gains.