Employees Pension and Postretirement Benefits

9 Months Ended

Sep. 30, 2020

Compensation And Retirement Disclosure [Abstract]

Employees Pension and Postretirement Benefits

15.  Employee's Pension and Postretirement Benefits

(a) Defined Benefit Plan

The Company has an unfunded defined benefit supplemental executive retirement plan (the “SERP”) covering Richard L. Gelfond, its CEO. The accounting for the SERP assumes that Mr. Gelfond will receive a lump sum payment of $20.3 million six months after retirement at the end of the current term of his employment agreement (December 31, 2022), although Mr. Gelfond has not informed the Company that he intends to retire at that time.

As at September 30, 2020 and December 31, 2019, the Company’s projected benefit obligation and unfunded status related to the SERP are as follows:

	September 30,		December 31,
	2020		2019
Projected benefit obligation:
Obligation, beginning of period	$	18,840	$	17,977
Prior Service cost		—		456
Interest cost		284		564
Actuarial gain		—		(157	)
Obligation, end of period and unfunded status	$	19,124	$	18,840

The accumulated benefit obligation for the SERP was $19.1 million at September 30, 2020 (December 31, 2019 —$18.8 million). For the three and nine months ended September 30, 2020, the Company recorded interest costs of $0.1 million and $0.3 million, respectively, (2019 — $0.1 million and $0.4 million, respectively) related to the SERP. The Company expects to recognize additional interest costs of $0.1 million related to the SERP during the remainder of 2020. No contributions are expected to be made for the SERP during the remainder of 2020.

(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 nine months ended September 30, 2020, the Company contributed and recorded expense of $0.3 million and  $0.8 million, respectively, (2019 — $0.3 million and $0.9 million, respectively) to its Canadian defined contribution plan and $0.1 million and $0.5 million, respectively, (2019 — $0.1 million and $0.5 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, Chairman of the Company’s Board of Directors. The 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. As at September 30, 2020, the Company’s postretirement benefits obligation under this plan is $0.6 million (December 31, 2019 — $0.7 million). For the three and nine months ended September 30, 2020, the Company has recorded expense of less than $0.1 million and less than $0.1 million, respectively (2019 — less than $0.1 million and less than $0.1 million, respectively) 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 at September 30, 2020, the Company’s postretirement benefits obligation under this plan is $1.5 million (December 31, 2019 — $1.6 million). For the three and nine months ended September 30, 2020, the Company has recorded expense of less than $0.1 million and $0.1 million, respectively (2019 — less than $0.1 million and less than $0.1 million, respectively) 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 the fourth quarter of 2018, the executive incurred a separation from service from the Company, and as such, the Retirement Plan benefits became fully vested as at December 31, 2018 and the accelerated costs were recognized and reflected in Executive Transition Costs on the Consolidated Statement of Operations.

As at September 30, 2020, the benefit obligation related to the Retirement Plan was $3.6 million (December 31, 2019 — $3.6 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 Expenses.

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 at September 30, 2020, fair value of the COLI asset was $3.1 million (December 31, 2019 — $3.2 million). Gains and losses resulting from changes in the cash surrender value of the COLI asset are recognized in the Condensed Consolidated Statement of Operations within Gain (Loss) In Fair Value of Investments.