Employees Pension and Postretirement Benefits

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

Employees Pension and Postretirement Benefits

23. 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 September 19, 2022, the term of Mr. Gelfond’s employment was extended through December 31, 2025, although Mr. Gelfond has not informed the Company that he intends to retire at that time. Under the terms of his employment agreement, as amended, the total benefit payable to Mr. Gelfond under the SERP is fixed at $20.3 million.

As of December 31, 2023 and 2022, the projected benefit obligation for SERP are as follows:

	Years Ended December 31,
(In thousands of U.S. Dollars)	2023		2022
Projected benefit obligation:
Obligation, beginning of period	$	17,315	$	20,056
Interest cost		788		160
Actuarial loss (gain)		75		(2,901	)
Obligation, end of period and unfunded status	$	18,178	$	17,315

As of December 31, 2023, 2022, and 2021, the following amounts related to the SERP were recorded on the Company’s Consolidated Balance Sheets within Accumulated Other Comprehensive Loss and will be recognized as components of net periodic benefit cost in future periods:

		As of December 31,
(In thousands of U.S. Dollars)	2023				2022				2021
Unrealized actuarial gain	$		(2,889	)	$	(3,580	)	$		(679	)
Unamortized prior service cost			—			—				184
Net periodic benefit costs to be recognized in future periods	$		(2,889	)	$	(3,580	)	$		(495	)

For the years ended December 31, 2023, 2022, and 2021, the components of pension expense related to the SERP were as follows:

	Years ended December 31,
(In thousands of U.S. Dollars)	2023			2022		2021
Interest cost	$	788		$	160	$	72
Amortization of prior service cost		—			184		185
Amortization of actuarial gain		(616	)		—		—
Pension expense	$	172		$	344	$	257

The following assumptions were used to determine the SERP obligation and any related costs as of and for the years ended December 31, 2023, 2022, and 2021:

	As of December 31,
	2023			2022			2021
Discount rate		4.42	%		4.55	%		0.80	%
Lump sum interest rate:
First 25 years	N/A			N/A			N/A
First 20 years	N/A			N/A			N/A
Thereafter	N/A			N/A			N/A
Cost of living adjustment on benefits	N/A			N/A			N/A

No contributions were made for the SERP during 2023. The Company expects interest costs of $0.8 million to be recognized as a component of pension cost for the year ended December 31, 2024.

(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 2023, the Company contributed and recorded expense of $1.2 million (2022 — $1.1 million; 2021 — $1.1 million) to its Canadian plan and $0.8 million (2022 — $0.7 million; 2021 — $0.5 million) 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 or its equivalent value.

As of December 31, 2023 and 2022, the Company’s Consolidated Balance Sheets include the following amounts within Accrued and Other Liabilities related to the Executive Postretirement Benefit Plan:

	As of December 31,
(In thousands of U.S. Dollars)	2023			2022
Projected benefit obligation:
Obligation, beginning of year	$	457		$	662
Interest cost		23			18
Benefits paid		(10	)		(8	)
Actuarial loss (gain)		37			(215	)
Obligation, end of year and unfunded status	$	507		$	457

For the years ended December 31, 2023, 2022, and 2021, the components of pension expense related to the Executive Postretirement Benefit Plan were as follows:

	Years Ended December 31,
(In thousands of U.S. Dollars)	2023			2022		2021
Interest cost	$	23		$	18	$	16
Amortization of actuarial gain		(65	)		—		—
Pension expense	$	(42	)	$	18	$	16

As of December 31, 2023, 2022, and 2021, the following amounts related to the Executive Postretirement Benefit Plan were recorded on the Company’s Consolidated Balance Sheets within Accumulated Other Comprehensive Loss and will be recognized as components of net pension cost in future periods:

	As of December 31,
(In thousands of U.S. Dollars)	2023			2022			2021
Unrealized actuarial gain	$	(140	)	$	(242	)	$	(27	)

As of December 31, 2023, 2022, and 2021, the weighted average assumptions used to determine the benefit obligation related to the Executive Postretirement Benefit Plan are as follows:

	As of December 31,
	2023			2022			2021
Discount rate		4.80	%		5.01	%		2.71	%

For the years ended December 31, 2023, 2022, and 2021, the weighted average assumptions used to determine the net postretirement benefit expense related to the Executive Postretirement Benefit Plan are as follows:

	Years Ended December 31,
	2023			2022			2021
Discount rate		5.01	%		2.71	%		2.36	%

The following benefit payments are expected to be made as per the current plan assumptions for the Executive Postretirement Benefit Plan in each of the next five years and thereafter following the December 31, 2023 balance sheet date:

(In thousands of U.S. Dollars)
2024	$	10
2025		11
2026		23
2027		25
2028		27
Thereafter		914
Total	$	1,010

(d)Postretirement Benefits – Canadian Employees

The Company has an unfunded postretirement plan for its Canadian employees meeting specific eligibility requirements (the “Canadian Postretirement Benefit Plan”). The Company will provide eligible participants, upon retirement, with health and welfare benefits.

As of December 31, 2023 and 2022, the Company’s Consolidated Balance Sheets include the following amounts within Accrued and Other Liabilities related to the Canadian Postretirement Benefit Plan:

	As of December 31,
(In thousands of U.S. Dollars)	2023			2022
Projected benefit obligations:
Obligation, beginning of year	$	976		$	1,702
Interest cost		48			46
Benefits paid		(140	)		(155	)
Actuarial loss (gain)(1)		—			(539	)
Unrealized foreign exchange loss (gain)		98			(78	)
Obligation, end of year and unfunded status	$	982		$	976

_____________________

(1)In 2023, the actuarial loss was $nil.

For the years ended December 31, 2023, 2022, and 2021, the components of pension expense related to the Canadian Postretirement Benefit Plan were as follows:

	Years Ended December 31,
(In thousands of U.S. Dollars)	2023			2022		2021
Interest cost	$	48		$	46	$	42
Amortization of actuarial gain		(18	)		—		—
Pension expense	$	30		$	46	$	42

The Company expects interest costs of less than $0.1 million to be recognized as a component of benefit cost for the year ended December 31, 2024.

As of December 31, 2023, 2022, and 2021, the following amounts related to the Canadian Postretirement Benefit Plan were recorded on the Company’s Consolidated Balance Sheets within Accumulated Other Comprehensive Loss and will be recognized as components of net pension cost in future periods:

	As of December 31,
(In thousands of U.S. Dollars)	2023			2022			2021
Unrealized actuarial (gain) loss	$	(336	)	$	(354	)	$	185

As December 31, 2023, 2022, and 2021, the weighted average assumptions used to determine the benefit obligation related to the Canadian Postretirement Benefit Plan are as follows:

	As of December 31,
	2023			2022			2021
Discount rate		4.60	%		5.00	%		2.80	%

For the years ended December 31, 2023, 2022, and 2021, the weighted average assumptions used to determine the net postretirement benefit expense related to the Canadian Postretirement Benefit Plan are as follows:

	Years Ended December 31,
	2023			2022			2021
Discount rate		5.00	%		2.80	%		2.30	%

The following benefit payments are expected to be made as per the current plan assumptions for the Canadian Postretirement Benefit Plan in each of the next five years and thereafter following the December 31, 2023 balance sheet date:

(In thousands of U.S. Dollars)
2024	$	96
2025		97
2026		90
2027		88
2028		88
Thereafter		1,020
Total	$	1,479

(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 December 31, 2023, the benefit obligation related to the Retirement Plan was $4.1 million (December 31, 2022 — $3.9 million) and is recorded on the Company’s 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 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 Consolidated Balance Sheets within Prepaid Expenses. As of December 31, 2023, fair value of the COLI asset was $3.5 million (December 31, 2022 — $3.4 million). Gains and losses resulting from changes in the cash surrender value of the COLI asset are recognized in the Consolidated Statements of Operations within Realized and Unrealized Investment Gains (Losses).