DEF 14A 1 imax-def14a_20210609.htm DEF 14A imax-def14a_20210609.htm

 

 

 

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

 

Filed by the Registrant   [X]

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))

 

[X]

Definitive Proxy Statement

 

[   ]

Definitive Additional Materials

 

[   ]

Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

IMAX CORPORATION

(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):

 

[X]

No fee required.

 

[   ]

Fee computed on table below per Exchange Act Rules 14a-6(i) 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:

 

 


 

 

 

 

IMAX Corporation

902 Broadway, 20th Floor

New York, New York, U.S.A. 10010

 

 

 

Dear Fellow Shareholders:

April 27, 2021

 

I hope this letter finds you healthy, safe, and — like all of us here at IMAX — full of optimism as the end of the pandemic starts to come into view.

As I wrote to you last year, IMAX felt the impact of COVID-19 earlier than many companies by nature of our formidable position in China. Now, as theaters around the world reopen, we are beginning to emerge from the pandemic ahead of many in the entertainment industry thanks to our diversified global network.

IMAX is at the forefront of the resurgence of moviegoing in nearly every single country that has reopened, starting last summer with key Asian markets like China, Japan, and South Korea. The highest grossing film of 2020 — The Eight Hundred — was the first commercial film in Asia shot entirely using IMAX® cameras. Remarkably, we achieved our number-one and number-two highest grossing films of all time in Japan — Demon Slayer and Shin Evangelion — during the pandemic. In China, we delivered record-breaking opening weekends for the National Day Golden Week Holiday and the Chinese New Year and captured an outsized 25% of the box office for the re-release of Avatar on just 1% of screens.

As a result of our achievements in Asia, our message to the world has been strong and consistent: where people feel safe and the virus is under control, audiences will eagerly return to the cinema. And global audiences are proving us right with the recent debut of Godzilla vs. Kong — our best domestic opening since January 2020, and a film for which we earned 10% of global box office on only 1% of screens through its first two weekends.

As we’ve led the recovery of our industry, we’ve also drove the evolution of our business — growing our IMAX Enhanced home entertainment initiative, exploring new content and experiences on our screens, developing a direct-to-consumer platform to get closer to our fans, and establishing an innovative joint-venture with an artificial intelligence firm to bring cutting-edge machine learning to image enhancement.

While we are comfortable that there will be a rebound in global moviegoing as further markets reopen, the timing of that rebound is difficult to predict. Hollywood studios continue to shift release dates, particularly in light of the slow vaccine rollout in key European markets. Additionally, many local governments around the world have implemented capacity limitations at the cinema. Fortunately, we continue to maintain a strong financial position — which we recently bolstered by raising $200 million in the capital markets — and we will be ready to capitalize when the resurgence comes.

We know that consumers will continue to turn to strong, trusted brands like IMAX — and that audiences returning to movie theaters for the first time will want the world’s most immersive experience. Ahead lies what looks to be an unprecedented slate of IMAX-friendly films, including many that were Filmed in IMAX such as Top Gun: Maverick, No Time to Die, Dune, and The Suicide Squad. We believe we will capitalize on this opportunity, and that our brand and business will emerge from these challenging times stronger than ever.

I invite you to attend our 2021 Annual and Special Meeting, scheduled to be held on June 9, 2021 via live audio webcast. Shareholders will be asked to vote on a number of proposals, details of which are set forth in the accompanying Notice of Annual and Special Meeting and Proxy Circular and Proxy Statement.

Your vote is important, and we encourage you to ensure your shares are represented. You may vote by completing and returning the accompanying Form of Proxy. You may also vote over the Internet or by telephone. Please refer to the Proxy Circular and Proxy Statement for instructions and additional details.

I look forward to meeting with you. Please continue to stay safe and well.

Sincerely,

/s/ Richard L. Gelfond

Richard L. Gelfond

CEO, IMAX Corporation

 

 


 

 

 

 

 

IMAX Corporation

902 Broadway, 20th Floor

New York, New York, U.S.A. 10010

 

 

 

NOTICE of ANNUAL and SPECIAL MEETING of SHAREHOLDERS

to be held on

Wednesday, June 9, 2021

NOTICE IS HEREBY GIVEN that the Annual and Special Meeting of Shareholders of IMAX Corporation (the “Company”) will be conducted as a virtual meeting via live audio webcast at: https://web.lumiagm.com/223853148 on Wednesday, June 9, 2021 at 10:00 a.m. (Eastern Time) (the “Meeting”), for the following purposes:

 

(1)

to receive the consolidated financial statements for the fiscal year ended December 31, 2020, together with the auditors’ report thereon;

 

(2)

to elect the eight individuals nominated to serve as directors until the close of the next annual meeting of shareholders or until their successors are elected or appointed;

 

(3)

to appoint auditors and authorize the directors to fix the auditors’ remuneration;

 

(4)

to conduct an advisory vote on the compensation of the Company’s Named Executive Officers;

 

(5)

to confirm amendments to By-Law No. 1 of the Company; and

 

(6)

to transact such other business as may properly be brought before the Meeting or any adjournments thereof.

The foregoing items of business are more fully described in the Proxy Circular and Proxy Statement accompanying this Notice of Annual and Special Meeting of Shareholders.

Only shareholders of record as of the close of business April 12, 2021 are entitled to notice of and to vote at the Meeting.

By Order of the Board of Directors,

/s/ Kenneth I. Weissman

KENNETH I. WEISSMAN

Senior Vice President, Legal Affairs

& Corporate Secretary

 

April 27, 2021

 

Registered shareholders and duly appointed proxyholders will be able to attend the Meeting, ask questions and vote, all in real time, by going to https://web.lumiagm.com/223853148, provided they are connected to the Internet and comply with all of the requirements set out in the Proxy Circular and Proxy Statement accompanying this Notice of Annual and Special Meeting of Shareholders. Responses to questions received during the meeting will be provided in a format that is accessible by all meeting attendees. Beneficial shareholders who have not duly appointed themselves as a proxyholder will be able to attend the Meeting as guests provided they are connected to the Internet. Guests will be able to listen to the meeting, but will not be able to vote or submit questions at the Meeting.

 

Shareholders who wish to appoint a person other than the management nominees identified in the accompanying Form of Proxy or Voting Instruction Form (including beneficial shareholders who wish to appoint themselves to attend) must carefully follow the instructions in the accompanying Proxy Circular and Proxy Statement and on their Form of Proxy or Voting Instruction Form. These instructions include the additional step of registering such proxyholder with our transfer agent, Computershare Investor Services Inc., after submitting their Form of Proxy or Voting Instruction Form. Failure to register the proxyholder with our transfer agent will result in the proxyholder not receiving a control number as a username to vote at the Meeting and only being able to attend as a guest.


 


 

 

 

 

YOUR VOTE IS IMPORTANT.

 

Shareholders who are unable to attend the Meeting online are requested to complete and return the accompanying Form of Proxy in the envelope provided for that purpose. Proxies must be deposited with Computershare Investor Services Inc., c/o Proxy Unit, 8th Floor, 100 University Avenue, Toronto, Ontario, Canada, M5J 2Y1 or at the Company’s address noted above on or before 10:00 a.m. (Eastern Time) on Monday, June 7, 2021. Shareholders may also vote in advance of the Meeting by following the instructions for voting by telephone or over the Internet in the accompanying Proxy Circular and Proxy Statement.

 

 

To mitigate risks related to the ongoing global COVID-19 (coronavirus) pandemic, the Meeting will be conducted in a virtual-only format via live audio webcast. The live audio webcast will permit all participants to communicate adequately with each other during the Meeting. Shareholders will not be able to attend the Meeting in person. A summary of the information shareholders will need to attend the Meeting online is provided in the Proxy Circular and Proxy Statement accompanying this Notice of Annual and Special Meeting of Shareholders.

 

The Company is monitoring developments regarding COVID-19. In the event the Company decides to make any changes to the date, time, location or format of the Meeting, the Company will promptly notify shareholders of the change by issuing a news release.

 

 

 

 


 

 

 

 

 

 

PROXY CIRCULAR

AND

PROXY STATEMENT

 

IMAX CORPORATION

902 Broadway, 20th Floor, New York, New York, U.S.A. 10010

tel: 212-821-0100

www.imax.com

 

 

 

 


 

 

Table of Contents

 

GENERAL INFORMATION

 

1

Important Notice Regarding the Availability of Proxy Materials for the Annual and Special Meeting to be held on June 9, 2021

 

1

INFORMATION ON VOTING

 

1

Who Can Vote?

 

1

Difference between a Shareholder of Record and a Beneficial Holder

 

2

VOTING IN ADVANCE OF THE MEETING

 

2

SHAREHOLDERS OF RECORD

 

2

Voting in Person

 

2

Voting by Proxy

 

2

What is a Proxy?

 

2

How do you Appoint a Proxyholder?

 

2

How will a Proxyholder Vote?

 

3

How do you Revoke your Proxy?

 

3

Confidentiality of Voting

 

3

Solicitation of Proxies

 

3

VOTING by beneficial holders

 

4

Voting Online at the Meeting

 

4

Voting through an Intermediary

 

4

U.S. Householding

 

4

Information for U.S. Beneficial Holders

 

4

VOTING AT THE MEETING

 

5

General

 

5

Appointment of a Third Party as a Proxy

 

5

Step 1: Submit your Form of Proxy or Voting Instruction Form:

 

5

Step 2: Register your proxyholder:

 

6

How do I attend and participate at the meeting?

 

6

VOTING REQUIREMENTS TO APPROVE MATTERS TO BE DISCUSSED AT THE 2021 ANNUAL AND SPECIAL MEETING

 

6

Quorum

 

7

PROCEDURE FOR CONSIDERING SHAREHOLDER PROPOSALS FOR OUR 2022 ANNUAL MEETING

 

7

SHAREHOLDER COMMUNICATION

 

7

PRINCIPAL SHAREHOLDERS OF VOTING SHARES

 

7

FINANCIAL STATEMENTS AND AUDITORS’ REPORT

 

8

MATTERS TO BE CONSIDERED AT THE 2021 ANNUAL AND SPECIAL MEETING

 

8

BOARD OF DIRECTORS’ RECOMMENDATIONS FOR YOUR VOTE

 

8

Item No. 1 - ELECTION OF DIRECTORS

 

8

Nominees for Election

 

8

Item No. 2 - APPOINTMENT OF AUDITORS

 

12

Audit Fees

 

13

Audit-Related Fees

 

13

Tax Fees

 

13

All other Fees

 

13

Audit Committee’s Pre-Approval Policies and Procedures

 

13

Item No. 3 – ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION (“Say-on-Pay”)

 

13

 


i


 

 

 

Item No. 4 – CONFIRMATION OF AMENDMENTS TO BY-LAW NO. 1

 

15

Summary of Amendments

 

15

EXECUTIVE OFFICERS

 

16

OTHER KEY EXECUTIVES

 

20

2020 EQUITY COMPENSATION PLAN INFORMATION

 

21

SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT

 

22

COMPENSATION DISCUSSION AND ANALYSIS

 

23

EXECUTIVE SUMMARY

 

23

The Impact of COVID-19

 

24

Performance in 2020

 

25

IMAX Theater Network

 

26

Named Executive Officer Pay in 2020

 

26

CEO Realizable Compensation and Performance

 

27

Chief Executive Officer’s Employment Agreement

 

28

OVERVIEW OF OUR EXECUTIVE COMPENSATION PROGRAM

 

30

Our Purpose and Compensation Philosophy

 

30

Aligning Compensation with our Strategic Objectives

 

30

Compensation Elements

 

31

Core Compensation Elements

 

31

Base Salary

 

31

Annual Cash Bonus

 

31

Long-Term Incentives

 

31

Other Compensation Elements

 

32

Retirement and Pension Plans.

 

32

Perquisites and Other Benefits

 

32

Target Compensation Mix

 

32

Good Governance Policies and Practices

 

33

EXECUTIVE COMPENSATION PROCESSES

 

34

Compensation Committee Oversight

 

34

Role of Outside Consultants

 

35

Role of Management

 

35

Evaluating Compensation

 

35

Shareholder Engagement

 

36

Use of Market Data

 

37

COMPENSATION COMPARATOR GROUP

 

38

Comparator Group Guiding Principles

 

38

Relative TSR Comparator Group

 

38

Managing Compensation Risk

 

39

Share Ownership Guidelines .

 

39

Clawback Policy

 

40

Hedging and Pledging

 

40

PAY AND PERFORMANCE IN 2020

 

40

Base Salary

 

40

Annual Cash Bonus Awards

 

40

Long-Term Incentives in 2020

 

41

One-Time Bridging Awards

 

42

Other Elements of Compensation

 

42

Retirement and Pension Plans

 

42

ii


 

Other Benefits

 

43

Additional Information

 

44

Employment and Change-In-Control Agreements

 

44

Tax and Accounting Considerations

 

44

COMPENSATION COMMITTEE REPORT

 

44

2020 SUMMARY COMPENSATION TABLE

 

45

2020 GRANTS OF PLAN-BASED AWARDS

 

46

OUTSTANDING EQUITY AWARDS AT 2020 FISCAL YEAR-END

 

47

2020 OPTION EXERCISE AND STOCK VESTED

 

48

2020 PENSION BENEFITS

 

48

PAY RATIO DISCLOSURE

 

49

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL

 

49

COMPENSATION OF DIRECTORS

 

55

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

57

CORPORATE GOVERNANCE

 

57

Corporate Governance Guidelines

 

57

Director Independence

 

57

Board Size and Composition

 

58

Board Refreshment

 

58

Board Leadership Structure

 

58

Risk Management

 

59

Nomination Process

 

60

Diversity

 

60

Director Term Limits

 

61

Meetings of the Board of Directors and its Committees

 

61

Committees of the Board

 

62

Audit Committee

 

62

Compensation Committee

 

63

Governance Committee

 

63

Orientation and Education

 

63

Board and Committee Self-Assessment

 

63

Written Position Descriptions

 

64

Directors’ Share Ownership Guidelines

 

64

CORPORATE RESPONSIBILITY

 

65

Human Capital

 

65

Total Rewards

 

65

Diversity and Inclusion

 

65

Employee Health and Safety

 

66

CODE OF BUSINESS CONDUCT AND ETHICS

 

66

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

66

REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED PERSONS

 

67

REPORT OF THE AUDIT COMMITTEE

 

67

NON-GAAP FINANCIAL MEASURES

 

68

AVAILABLE INFORMATION

 

70

APPROVAL BY BOARD OF DIRECTORS

 

70

APPENDIX A

 

A-1

 

 

iii


 

 

Cautionary Note Regarding Forward-Looking Statements

This Proxy Statement contains forward-looking statements, including those regarding anticipated growth and trends in our businesses and markets, industry outlooks, market share, technology transitions, our business, strategies and financial performance, our development of new products, technologies and capabilities, and other statements that are not historical fact, and actual results could differ materially. Risk factors that could cause actual results to differ are set forth in the “Risk Factors” section of, and elsewhere in, our annual report for the fiscal year ended December 31, 2020 on Form 10-K and other filings with the Securities and Exchange Commission. All forward-looking statements are based on management’s estimates, projections and assumptions as of the date hereof, and the Company undertakes no obligation to update any such statements.

 

 

 


 

 

 

 

 

IMAX Corporation

902 Broadway, 20th Floor

New York, New York, U.S.A. 10010

GENERAL INFORMATION

This Proxy Circular and Proxy Statement (the “Circular”) is furnished in connection with the solicitation by the management of IMAX Corporation (the “Company”, “we” or “us”) of proxies to be used at our Annual and Special Meeting, which will be conducted as a virtual meeting to be held via live audio webcast online at: https://web.lumiagm.com/223853148 on Wednesday, June 9, 2021 at 10:00 a.m. (Eastern Time) (the “Meeting”), or at any continuation, postponement or adjournment thereof.

The Notice of Annual and Special Meeting of Shareholders, the Circular and the form of proxy (the “Form of Proxy”) are intended to be released on or about April 27, 2021 to holders of our common shares, no par value (the “Common Shares”).

 

 

To mitigate risks related to the ongoing global COVID-19 (coronavirus) pandemic, the Meeting will be conducted in a virtual-only format via live audio webcast. The live audio webcast will permit all participants to communicate adequately with each other during the Meeting. Shareholders will not be able to attend the Meeting in person. A summary of the information shareholders will need to attend the Meeting online is provided in the Circular.

 

The Company is monitoring developments regarding COVID-19. In the event the Company decides to make any changes to the date, time, location or format of the Meeting, the Company will promptly notify shareholders of the change by issuing a news release.

 

Registered shareholders and duly appointed proxyholders who participate at the Meeting online will be able to listen to the Meeting, ask questions and vote, all in real time, provided they are connected to the Internet and comply with all the requirements set out below under “Voting at the Meeting”. Beneficial holders who have not duly appointed themselves as proxyholders may still attend the Meeting as guests provided they are connected to the Internet. Guests will be able to listen to the Meeting, but will not be able to vote or submit questions at the Meeting.

In light of the COVID-19 pandemic, the Board of Directors amended By-Law No. 1 on March 4, 2021 to allow the Meeting of Shareholders to be conducted virtually. Shareholders of record will be asked to confirm amendments to By-Law No. 1 at the Meeting. Please refer to Item No. 4 on page 15 for additional information regarding the amendments to By-Law No. 1.

Important Notice Regarding the Availability of Proxy Materials for the Annual and Special Meeting to be held on June 9, 2021

Pursuant to the requirement promulgated by the United States Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials by sending you this full set of proxy materials, including a form of proxy or voting instruction form. You are encouraged to access and review all of the important information contained in the proxy materials before submitting a proxy or voting at the Meeting.

The definitive proxy materials will be available on the Internet at http://www.imax.com/Proxy.

Regardless of the number of Common Shares you hold, your role as a shareholder is very important, and the Board of Directors strongly encourages you to exercise your right to vote.

INFORMATION ON VOTING

Who Can Vote?

The Board of Directors has fixed April 12, 2021, as the record date for the Meeting. As of April 12, 2021, we had 59,358,679 Common Shares issued and outstanding. You are entitled to vote at the Meeting if you were a holder of record of Common Shares as of the close of business on April 12, 2021. You are entitled to one vote on each proposal for each Common Share you held on the record date. The holders of record Common Shares are entitled to receive notice of and to attend all annual and special meetings of the shareholders of the Company.

None of our shareholders has any dissenters’ or appraisal rights with respect to the matters to be voted on at the Meeting.


1


 

 

Difference between a Shareholder of Record and a Beneficial Holder

If your Common Shares are registered directly in your name, you are considered the shareholder of record with respect to those Common Shares.

If your Common Shares are held in a stock brokerage account or by a bank, trust or other nominee, then the broker, bank, trust or other nominee is considered to be the shareholder of record with respect to those Common Shares. However, you are still considered the beneficial owner of those Common Shares, and your Common Shares are said to be held in “street name”. Beneficial holders generally cannot submit a proxy or vote their Common Shares directly and must instead instruct the broker, bank, trust or other nominee on how to vote their Common Shares using the methods described below in “Voting by Beneficial Holders” on page 4.

VOTING IN ADVANCE OF THE MEETING

SHAREHOLDERS OF RECORD

The following instructions for voting before the Meeting are for shareholders of record only. If you are a beneficial holder (meaning that your Common Shares are held in “street name”), please follow your broker’s instructions on how to vote your Common Shares. See the description in “Voting by Beneficial Holders” on page 4.

Voting in Person

See below under “Voting at the Meeting”.

Voting by Proxy

If you are a shareholder of record but do not plan to attend the Meeting, you may vote by proxy. There are three ways to vote by proxy.

Mail – You may vote by completing, dating and signing the enclosed Form of Proxy and promptly returning it, in the pre-addressed envelope provided to you, to Computershare Investor Services Inc. (“Computershare”), for receipt no later than 10:00 a.m. (Eastern Time) on Monday, June 7, 2021, or on the second to last business day prior to any postponed or adjourned meeting.

Telephone – You may vote by telephone from within the United States or Canada by calling the toll-free number shown on the Form of Proxy no later than 10:00 a.m. (Eastern Time) Monday, June 7, 2021, or on the second to last business day prior to any postponed or adjourned meeting. Please refer to the holder account number and control number provided on the Form of Proxy.

Internet – You may vote over the Internet by following the login and voting procedures described on the Form of Proxy. Please refer to the holder account number and control number provided on the Form of Proxy. Detailed voting instructions will then be provided via the Internet to those who have completed the login procedure. You may vote (and revoke a previous vote) over the Internet at any time until 10:00 a.m. (Eastern Time) on Monday, June 7, 2021, or on the second to last business day prior to any postponed or adjourned meeting.

The Internet voting procedure is designed to authenticate shareholders’ identities, to allow shareholders to vote their Common Shares and to confirm that shareholders’ votes have been recorded properly. Shareholders who submit a proxy through the Internet should be aware that they may incur costs to access the Internet, such as usage charges from Internet service providers, and that these costs must be borne by the shareholder. Also, please be aware that we are not involved in the operation of the Internet voting procedure and cannot take responsibility for any access or Internet service interruptions that may occur or any inaccuracies or erroneous or incomplete information that may appear.

If you are using a 15-digit control number to login to the Meeting and you accept the terms and conditions, you will be provided the opportunity to vote by online ballot on the matters put forth at the Meeting. Your previously submitted proxies will be revoked if you vote on the online ballot at the Meeting. If you DO NOT wish to revoke all previously submitted proxies, do not vote on the online ballot at the Meeting.

What is a Proxy?

A proxy is a document that authorizes another person to attend the Meeting and cast votes on behalf of a shareholder of record at the Meeting. If you are a shareholder of record, you can use the accompanying Form of Proxy. You may also use any other legal form of proxy.

How do you Appoint a Proxyholder?

Your proxyholder is the person you appoint to cast your votes for you at the Meeting. The persons named in the enclosed Form of Proxy are directors and officers of the Company. You have the right to appoint one of the persons designated as proxyholders in the accompanying Form of Proxy. In the alternative, you have the right to appoint any other person, who need not be a shareholder of the Company, to attend and act on your behalf at the Meeting, and such right may be exercised by inserting such person’s name in the blank space provided in the enclosed Form of Proxy or by completing another proper form of proxy. The additional registration step outlined below under “Voting at the Meeting” must also be followed.


2


 

 

Your proxy authorizes the proxyholder to vote and otherwise act for you at the Meeting, including any continuation of the Meeting if it is adjourned.

How will a Proxyholder Vote?

If you mark on the proxy how you want to vote on a particular issue (by checking FOR, AGAINST, WITHHOLD, or ABSTAIN), your proxyholder must cast your votes as instructed. If you vote “WITHHOLD” on the proxy it is the equivalent to voting “ABSTAIN”, and you will be abstaining from voting, though you will be treated as present for the purposes of determining a quorum.

The person appointed as proxyholder has discretionary authority and may vote the Common Shares represented thereby as such person considers best with respect to amendments or variations to matters identified in the Notice of Annual and Special Meeting, and with respect to any other matter which may properly come before the Meeting. As of the date of this Circular, we are not aware of any such amendment, variation or other matter proposed or likely to come before the Meeting. If any amendments are proposed to these matters, or if any other matters properly arise at the Meeting, your proxyholder can generally vote your Common Shares as he or she sees fit.

If you do NOT mark on the proxy how you intend to vote on a particular matter, your proxyholder is entitled to vote your Common Shares as he or she sees fit. If your proxy does not specify how you intend to vote on any particular matter, and if you have authorized a director or officer of the Company to act as your proxyholder, your Common Shares will be voted at the Meeting as follows:

 

FOR the election of the eight nominees for the Board of Directors named in this Circular as directors;

 

FOR the appointment of PricewaterhouseCoopers LLP as our independent auditors and authorizing the directors to fix the auditors’ remuneration;

 

FOR the approval, on an advisory basis, of the compensation of our Named Executive Officers; and

 

FOR the confirmation of amendments to By-Law No. 1 of the Company.

For more information about these matters, please see “Item No. 1 - Election of Directors” on page 8, “Item No. 2 - Appointment of Auditors” on page 12, “Item No. 3 – Advisory Vote on Named Executive Officer Compensation” on page 13 and “Item No. 4 – Confirmation of Amendments to By-Law No. 1” on page 15.

How do you Revoke your Proxy?

Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before the Meeting by depositing an instrument in writing (including another proxy) executed by the shareholder or the shareholder’s attorney authorized in writing: (i) at IMAX Corporation at 2525 Speakman Drive, Mississauga, Ontario, Canada L5K 1B1, Attention: Corporate Secretary, at any time up to and including 10:00 a.m. (Eastern Time) on the last business day prior to the date of the Meeting or any adjournment or postponement thereof; or (ii) in any other manner permitted by law. If you revoke your proxy and do not replace it with another form of proxy that has been properly deposited, you may still vote Common Shares registered in your name at the Meeting. If you are using a 15-digit control number to login to the Meeting and you accept the terms and conditions, you will be provided the opportunity to vote by online ballot on the matters put forth at the Meeting. Your previously submitted proxies will be revoked if you vote on the online ballot at the Meeting. If you DO NOT wish to revoke all previously submitted proxies, do not vote on the online ballot at the Meeting.

Confidentiality of Voting

Computershare counts and tabulates proxies in a manner that preserves the confidentiality of your votes. Proxies will not be submitted to management unless:

 

there is a proxy contest;

 

the proxy contains comments clearly intended for management; or

 

it is necessary to determine a proxy’s validity or to enable management and/or the Board of Directors to meet their legal obligations to shareholders or to discharge their legal duties to the Company.

Solicitation of Proxies

While we intend to solicit most proxies by mail, some proxies may be solicited by telephone or other personal contact by our directors, officers or employees. Directors, officers and employees will not receive any additional compensation for such activity. We will, upon request, pay brokers and certain other persons who hold our Common Shares for others their reasonable expenses for sending proxy materials to the beneficial owners of our Common Shares. The cost of solicitation will be borne by us. While we have chosen not to engage the services of a proxy solicitor to aid in the solicitation of proxies and verify records relating to the solicitation at this time, should we decide to do so, we will bear all costs of such solicitation.


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Voting by Beneficial Holders

For beneficial holders of our Common Shares, copies of this solicitation have been distributed to your broker, bank or other intermediary who are required to deliver them to, and seek voting instructions from, beneficial holders (meaning shareholders who hold Common Shares in “street name”). Intermediaries often use a service company such as Broadridge Investor Communications (“Broadridge”) to forward meeting materials to beneficial holders. If you are a beneficial holder, you can vote your Common Shares at the Meeting through your intermediary by following the instructions your intermediary provides to you. As a beneficial holder, while you are invited to attend the Meeting, you will not be entitled to vote at the Meeting unless you make the necessary arrangements with your intermediary to do so, in addition, if applicable, to following the procedures set out below under “Voting at the Meeting”.

For the purposes of Canadian securities laws, beneficial holders fall into two categories – those who object to their identity being made known to the issuers of securities which they own (“OBOs”) and those who do not object to their identity being made known to the issuers of the securities they own (“NOBOs”). Subject to the provisions of Canadian National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer, issuers may request and obtain a list of their NOBOs from intermediaries and may use the NOBO list in connection with any matters relating to the affairs of the issuer, including the distribution of proxy-related materials directly to NOBOs. We are not sending Meeting materials directly to NOBOs; instead, we use and pay intermediaries and agents to send the Meeting materials.

Voting Online at the Meeting

See below under “Voting at the Meeting”.

Voting through an Intermediary

As a beneficial holder, you will be given a Voting Instruction Form by your intermediary which must be submitted in accordance with the instructions provided by the intermediary. You must follow the intermediary’s instructions (which allow the completion of the Voting Instruction Form by mail, telephone or Internet). Occasionally, as a beneficial holder you may be given a form of proxy that has been signed by the intermediary and which is restricted to the number of Common Shares owned by you as the beneficial holder but that is otherwise not completed. This form of proxy does not need to be signed by you. In this case, you can complete the form of proxy and vote by following the instructions provided by the intermediary.

Mail – You may vote by completing, dating and signing the Voting Instruction Form and promptly returning it in the pre-addressed envelope provided to you for receipt by no later than 10:00 a.m. (Eastern Time) on Friday, June 4, 2021, or on the third to last business day prior to any postponed or adjourned meeting.

Telephone – You may vote by telephone from within the United States or Canada by calling the toll-free number shown on the Voting Instruction Form no later than 10:00 a.m. (Eastern Time) on Friday, June 4, 2021, or on the third to last business day prior to any postponed or adjourned meeting. Please refer to the control number provided on the Voting Instruction Form.

Internet – If your intermediary is registered with Broadridge, you may vote over the Internet by following the login and voting instructions on your Voting Instruction Form no later than 10:00 a.m. (Eastern Time) on Friday, June 4, 2021, or on the third to last business day prior to any postponed or adjourned meeting. Please refer to the control number provided on the Voting Instruction Form.

U.S. Householding

Some brokers, banks or other intermediaries may be participating in the practice of “householding” proxy circulars and annual reports. This means that only one copy of the Circular and the annual report may have been sent to multiple shareholders in the same household. Each shareholder will continue to receive a separate Voting Instruction Form. We will promptly deliver a separate copy of either document to you if you request one by writing or calling as follows: IMAX Corporation, 2525 Speakman Drive, Mississauga, Ontario, Canada L5K 1B1, Attention: Investor Relations, 905-403-6500. If you would like to receive separate copies of the proxy circular and proxy statement and the annual report in the future, or if you are receiving multiple copies and want to receive only one copy for your household, you should contact your intermediary.

Information for U.S. Beneficial Holders

If you are a United States (“U.S.”) beneficial holder with an intermediary, you must instruct your U.S. intermediary how to vote your Common Shares. If you do not provide voting instructions, your Common Shares will not be voted on any proposal on which the U.S. intermediary does not have discretionary authority to vote. This is called a “broker non-vote”. In these cases, the broker can register your Common Shares as being present at the Meeting for purposes of determining the presence of a quorum but will not be able to vote on those matters for which specific authorization is required.


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If you do not mark on the Voting Instructional Form how you intend to vote on a particular matter, your broker is entitled to vote your Common Shares as he or she sees fit with respect to “routine” matters such as the ratification of the appointment of PricewaterhouseCoopers LLP as our independent auditors. However, your intermediary does not have discretionary authority to vote on the election of the eight nominees for the Board of Directors named in this Circular as directors, on the advisory vote on Named Executive Officer compensation, on the confirmation of certain amendments to By-Law No. 1 or with respect to other matters which may properly be brought before the Meeting, if your proxy does not specify how you intend to vote on those particular matters. Accordingly, if you are a U.S. beneficial holder it is particularly important that you instruct your U.S. intermediary how you wish to vote your Common Shares on each matter.

VOTING AT THE MEETING

General

Shareholders of record may vote at the Meeting by completing a ballot online during the Meeting, as further described below under “How Do I Attend and Participate at the Meeting?”.

Beneficial holders who have not duly appointed themselves as proxyholder and do not have a 15-digit control number or username will not be able to vote or submit questions at the Meeting but will be able to listen to the Meeting. This is because the Company and Computershare do not have a record of the beneficial holders, and, as a result, will have no knowledge of your shareholdings or entitlement to vote unless you appoint yourself as proxyholder.

If you are a beneficial holder and wish to vote at the Meeting, you must appoint yourself as proxyholder by inserting your own name in the space provided on the Voting Instruction Form sent to you and you must follow all of the applicable instructions, including the deadline, provided by your Intermediary. See “Appointment of a Third Party as Proxy” and “How Do I Attend and Participate at the Meeting?” below.

If you are a U.S. beneficial holder, to attend and vote at the Meeting, you must first obtain a valid legal proxy from your broker, bank or other agent and then register in advance to attend the Meeting. Follow the instructions from your broker or bank included with these proxy materials, or contact your broker or bank to request a legal proxy form. After first obtaining a valid legal proxy from your broker, bank or other agent, to then register to attend the Meeting, you must submit a copy of your legal proxy to Computershare. Requests for registration should be directed by mail to the attention of the Proxy Department of Computershare Investor Services Inc. at 100 University Avenue, 8th Floor, North Tower, Toronto, Ontario, M5J 2Y1 or by email at uslegalproxy@computershare.com. Requests for registration must be labeled as “Legal Proxy” and be received no later than June 7, 2021 by 10:00 a.m. (Eastern Time). You will receive a confirmation of your registration by email after Computershare receives your registration materials. Please note that you are required to register your appointment at https://www.computershare.com/IMAX.

Appointment of a Third Party as Proxy

The following applies to shareholders who wish to appoint someone as their proxyholder other than the management nominees named in the Form of Proxy or Voting Instruction Form. This includes beneficial holders who wish to appoint themselves as proxyholder to attend, participate or vote at the Meeting.

Shareholders who wish to appoint someone other than the management nominees as their proxyholder to attend and participate at the Meeting as their proxy and vote their Common Shares MUST submit their Form of Proxy or Voting Instruction Form, as applicable, appointing that person as proxyholder AND register that proxyholder online, as described below. Registering your proxyholder is an additional step to be completed AFTER you have submitted your Form of Proxy or Voting Instruction Form. Failure to register a duly appointed proxyholder will result in the proxyholder not receiving a username to vote in the Meeting and only being able to attend as a guest.

 

Step 1:Submit your Form of Proxy or Voting Instruction Form

To appoint someone other than the management nominees as proxyholder, insert that person’s name in the blank space provided in the Form of Proxy or Voting Instruction Form (if permitted) and follow the instructions for submitting such Form of Proxy or Voting Instruction Form. This must be completed before registering such proxyholder, which is an additional step to be completed once you have submitted your Form of Proxy or Voting Instruction Form.

If you are a beneficial holder and wish to vote at the Meeting, you have to insert your own name in the space provided on the Voting Instruction Form sent to you by your Intermediary, follow all of the applicable instructions provided by your Intermediary AND register yourself as your proxyholder, as described below. By doing so, you are instructing your Intermediary to appoint you as proxyholder. It is important that you comply with the signature and return instructions provided by your Intermediary. Please also see further instructions below under the heading “How Do I Attend and Participate at the Meeting?”.


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Step 2: Register your proxyholder

To register a third party proxyholder, shareholders must visit http://www.computershare.com/IMAX by 10:00 a.m. (Eastern Time) on June 7, 2020 and provide Computershare with the required proxyholder contact information so that Computershare may provide the proxyholder with a control number for a username via email to participate in the Meeting. Without a control number for a username, proxyholders will not be able to vote at the Meeting but will be able to participate as a guest.

How Do I Attend and Participate at the Meeting?

The Company is holding the Meeting in a virtual-only format, which will be conducted via live audio webcast. Shareholders will not be able to attend the Meeting in person.

Attending the Meeting online enables shareholders of record and duly appointed proxyholders, including beneficial holders who have duly appointed themselves as proxyholder, to vote at the Meeting and ask questions at the appropriate times during the Meeting, all in real time. In order to participate online, shareholders must have a valid 15-digit control number and proxyholders must have received an email from Computershare containing a username.

Log in online at: https://web.lumiagm.com/223853148 on your smartphone, tablet or computer. You will need the latest version of Chrome, Safari, Internet Explorer 11, Edge or Firefox. We recommend that you log in at least 15 minutes before the Meeting starts.

If you are a shareholder of record click “I have a login” and then enter your 15-digit control number as the username, which is the control number located on your Form of Proxy or in the email notification you received from Computershare and “Imax2021” (case sensitive) as the password.

OR

If you are a duly appointed proxyholder click “I have a login” and then enter your four-digit username that was provided to you by Computershare after the voting deadline passed and “Imax2021” (case sensitive) as the password. In order to be a duly appointed proxyholder the proxyholder must be registered as described in “Appointment of a Third Party as Proxy” above.

If you are a beneficial holder and have not appointed yourself as a proxyholder (as described above) click “I am a Guest” and then complete the online form. Guests can listen to the Meeting but are not able to vote or submit questions.

If you attend the Meeting online, it is important that you are connected to the Internet at all times during the Meeting in order to vote when balloting commences. It is your responsibility to ensure connectivity for the duration of the Meeting. You should allow ample time to check into the Meeting online and complete the related procedures outlined above.

If you are using a 15-digit control number to login to the Meeting and you accept the terms and conditions, you will provided the opportunity to vote by online ballot on the matters put forth at the Meeting. Your previously submitted proxies will be revoked if you vote on the online ballot at the Meeting. If you DO NOT wish to revoke all previously submitted proxies, do not vote on the online ballot at the Meeting. Responses to questions received during the Meeting will be provided in a format that is accessible by all Meeting attendees.

VOTING REQUIREMENTS TO APPROVE MATTERS TO BE DISCUSSED AT THE 2021 ANNUAL AND SPECIAL MEETING

 

Item No.

Vote Required

Broker Discretionary

Voting Allowed

1.Election of the Eight Nominees for the Board of Directors

Plurality of Votes Cast at the Meeting

No

2.Appointment of PricewaterhouseCoopers LLP as the Company’s Independent Auditors

Majority of Votes Cast at the Meeting

Yes

3.Advisory Vote on Named Executive Officer Compensation

Majority of Votes Cast at the Meeting

No

4.Confirmation of Amendments to By-Law No. 1

Majority of Votes Cast at the Meeting

No

 

Withheld/Abstentions or broker non-votes are counted for purposes of establishing a quorum, but they are not counted as votes cast for or against a proposal.


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Quorum

The Meeting requires a quorum, which for the purposes of the Meeting means:

 

at least two persons present or by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the Meeting, each being a shareholder entitled to vote at the Meeting or a duly appointed proxyholder for a shareholder; and

 

persons owning or representing by proxy not less than 33⅓% of the total number of Common Shares entitled to vote at the Meeting.

As of April 12, 2021, we had 59,358,679 Common Shares issued and outstanding, each carrying the right to one vote at all meetings of our shareholders.

PROCEDURE FOR CONSIDERING SHAREHOLDER PROPOSALS FOR OUR 2022 ANNUAL MEETING

If a shareholder wishes to propose any matter for a vote by our shareholders at our 2022 Annual Meeting of Shareholders, he or she must send his or her proposal to IMAX Corporation, 2525 Speakman Drive, Mississauga, Ontario, Canada L5K 1B1, Attention: Corporate Secretary. We may omit the proposal from next year’s Proxy Circular and Proxy Statement if such proposal does not comply with applicable Canadian corporate law and U.S. securities laws or if it is not received by our Corporate Secretary at the address noted above by December 28, 2021.

SHAREHOLDER COMMUNICATION

Shareholders or other interested parties wishing to communicate with the Board of Directors, or any individual director, may do so by sending a written communication to IMAX Corporation, 2525 Speakman Drive, Mississauga, Ontario, Canada L5K 1B1, addressed to the Board of Directors or any individual director, Attention: Corporate Secretary. The Secretary forwards all such communications to the Board of Directors.

PRINCIPAL SHAREHOLDERS OF VOTING SHARES

We are not aware of any persons who as of April 12, 2021 beneficially owned or exercised control or direction over more than 5% of our Common Shares other than:

 

 

 

Amount and Nature of

 

Percentage of

 

 

 

Beneficial Ownership

 

Outstanding

 

Name and Address of Beneficial Owner of Common Shares

 

of Common Shares

 

Common Shares

 

Douglas Group

 

 

 

8,915,600

 

(1)

 

 

15.0%

 

Kevin and Michelle Douglas

 

 

 

 

 

 

 

 

 

 

 

James E. Douglas, III

 

 

 

 

 

 

 

 

 

 

 

K&M Douglas Trust

 

 

 

 

 

 

 

 

 

 

 

Douglas Family Trust

 

 

 

 

 

 

 

 

 

 

 

James Douglas and Jean Douglas Irrevocable Descendants’ Trust

 

 

 

 

 

 

 

 

 

 

 

KGD IDGT

 

 

 

 

 

 

 

 

 

 

 

MMD IDGT

 

 

 

 

 

 

 

 

 

 

 

Celtic Financial LLC

 

 

 

 

 

 

 

 

 

 

 

125 E. Sir Francis Drake Blvd., Suite 400, Larkspur, CA 94939

 

 

 

 

 

 

 

 

 

 

 

Invesco Ltd.

 

 

 

3,262,193

 

(2)

 

 

5.5%

 

Invesco Advisers. Inc.

 

 

 

 

 

 

 

 

 

 

 

Invesco Capital Management LLC

 

 

 

 

 

 

 

 

 

 

 

1555 Peachtree Street NE, Suite 1800, Atlanta, GA 30309

 

 

 

 

 

 

 

 

 

 

 

The percentage of outstanding Common Shares is based on dividing the number of Common Shares beneficially owned by such person by 59,358,679 Common Shares outstanding as of April 12, 2021.

 

(1)

Based solely on information reported in a Schedule 13D/A filed jointly by Kevin Douglas, Michelle Douglas, James E. Douglas, III, K&M Douglas Trust, James Douglas & Jean Douglas Irrevocable Descendants’ Trust, Douglas Family Trust and Celtic Financial LLC on January 25, 2021 with the SEC. As reported in such filing, Kevin Douglas has shared voting power with respect to 6,677,314 Common Shares. Kevin Douglas and his wife, Michelle Douglas, hold 3,820,221 Common Shares jointly as the beneficiaries and co-trustees of the K&M Douglas Trust. In addition, Kevin Douglas and Michelle Douglas are co-trustees of the James Douglas and Jean Douglas Irrevocable Descendants’ Trust, which holds 2,584,441 Common Shares. Kevin Douglas is the Manager of Celtic Financial LLC, which holds 200,000 Common Shares. Kevin Douglas may be deemed to have shared voting/dispositive power over the 62,652 Common Shares held by the KGD IDGT Trust. Michelle Douglas may be deemed to have shared voting/dispositive power over the 62,652 Common Shares held by the MMD IDGT Trust. Kevin Douglas has shared dispositive power with respect to 8,852,948 Common Shares. Kevin Douglas also has shared dispositive power with respect to 923,645 Common Shares held by James E. Douglas, III, 1,251,989 Common Shares held by the Douglas Family Trust, and 200,000 Common Shares held by Celtic Financial LLC.


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(2)

Based solely on information reported in a Schedule 13G filed by Invesco Ltd. on February 16, 2021 with the SEC. As reported in such filing, Invesco Ltd., in its capacity as a parent holding company to its investment advisers, may be deemed to beneficially own 3,262,193 Common Shares which are held of record by clients of Invesco Ltd. however, no one individual has greater than 5% economic ownership. Invesco Ltd. has sole voting power over 3,259,178 Common Shares and sole dispositive power over 3,262,193 Common Shares. Invesco Ltd. does not hold shared dispositive power or shared dispositive power with respect to any Common Shares.

FINANCIAL STATEMENTS AND AUDITORS’ REPORT

The Board of Directors will submit to the shareholders at the Meeting the consolidated financial statements for the fiscal year ended December 31, 2020, and the auditors’ report thereon. A copy of these financial statements and the auditors’ report are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the “2020 Form 10-K”), which is being mailed to our shareholders together with this Circular.

MATTERS TO BE CONSIDERED AT THE 2021 AND SPECIAL ANNUAL MEETING

BOARD OF DIRECTORS’ RECOMMENDATIONS FOR YOUR VOTE

The following is a summary of matters to be considered at the Meeting together with the Board of Directors’ unanimous recommendations for your votes.

 

Item No.

Board Recommendation

1.Election of the Eight Nominees for the Board of Directors

FOR

2.Appointment of PricewaterhouseCoopers LLP as the Company’s Independent Auditors

FOR

3.Advisory Vote on Named Executive Officer Compensation

FOR

4.Confirmation of Amendment to By-Law No. 1

FOR

 

Item No. 1 - ELECTION OF DIRECTORS

Our articles provide that the Board of Directors may be comprised of a minimum of 1 and a maximum of 15 directors, with the actual number determined from time to time by resolution of the Board of Directors. As of the date of this Circular, the size of the Board of Directors has been set at nine directors.

The Board of Directors is currently composed of Neil S. Braun, Eric A. Demirian, Kevin Douglas, Richard L. Gelfond, David W. Leebron, Michael MacMillan, Dana Settle, Darren Throop and Bradley J. Wechsler. The term of each director will expire at the Meeting. Upon the recommendation of the Governance Committee, our Board of Directors has nominated the eight individuals identified on the following pages for election at the Meeting. All of the nominees are currently serving as our directors, except for Steve Pamon. Mr. Pamon was recommended for consideration by the Governance Committee in consultation with an independent third-party search firm. Messrs. Braun and Wechsler will not stand for re-election and will retire from the Board of Directors effective upon the election of directors at the Meeting. Our Board of Directors thanks Messrs. Braun and Wechsler for their many years of exemplary service. Effective upon the election of directors at the Meeting, the size of the Board of Directors will be reduced from nine to eight directors. Shareholders are not permitted to vote for more than eight nominees.

In any election or appointment of a director to fill a vacancy created by any director ceasing to hold office, the election or appointment shall be for the unexpired term of the director who has ceased to hold office.

On March 25, 2021, Dr. Daniel Nadler executed a Board Advisory Agreement with the Company to become a senior advisor to IMAX’s Board of Directors. Dr. Nadler is the founder of Maximus, a next generation visual effects company, which, on March 11, 2021, entered into a joint venture with the Company to deliver artificial intelligence based high resolution video enhancement technologies across home entertainment. The Board Advisory Agreement, which is terminable by either party, provides for no compensation to Dr. Nadler and contains standard provisions regarding confidentiality and adherence to Company policies.

Nominees for Election

Shareholders who wish to have the Board of Directors consider the nomination of any person for director at the 2022 Annual Meeting of Shareholders should communicate with the Corporate Secretary. See the description in “Nomination Process” on page 60 for more information.

At the Meeting, shareholders will be asked to approve the election of directors by ordinary resolution, which requires that a plurality of the votes cast at the Meeting be in favor of the resolution. In the absence of any instruction on the accompanying Form of Proxy, it is the intention of the persons named by management in the Form of Proxy to vote the Common Shares represented by the proxy in favor of the resolution. Voting “WITHHOLD” is the equivalent to voting “ABSTAIN”. If any of the nominees is for any reason unable to serve as a director, proxies in favor of management will be voted for another nominee in their discretion unless the shareholder has specified in the Form of Proxy that such shareholder’s Common Shares are to be withheld from voting on the election of directors.


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The Board of Directors unanimously recommends a vote FOR the election of each of these nominees as directors.

The nominees for election as directors have indicated to us that they will serve if elected. Each director elected will hold office until the earlier of the close of the 2022 Annual Meeting of Shareholders, until his or her successor is elected or appointed, or until the date of his or her resignation or termination.

The following section lists certain information concerning the persons to be nominated for election to our Board of Directors.

Nominees for Election as Directors for the Term Expiring in 2022

 

 

 

 

RICHARD L. GELFOND

Director (since March 1994)

and Chief Executive Officer

 

Age: 65

New York, New York, U.S.A.

 

 

Richard Gelfond has been sole Chief Executive Officer of the Company since April 2009. Mr. Gelfond served as Co-Chairman of the Company with Mr. Wechsler from June 1999 to March 2009 and served as Co-Chief Executive Officer with Mr. Wechsler from May 1996 to March 2009. From March 1994 to June 1999, Mr. Gelfond served as Vice Chairman of the Company. Mr. Gelfond has also been the Chairman and Non-Executive Director of the Company’s subsidiary, IMAX China Holding, Inc., since May 27, 2015, and has been a director of IMAX China Holding, Inc. since 2010.

 

Mr. Gelfond serves as Chairman of the Board of Trustees of the Stony Brook Foundation, Inc., which is affiliated with Stony Brook University. He is also a member of the Academy of Motion Picture Arts and Sciences. Mr. Gelfond serves on the International Advisory Board of the Turkana Basin Institute, a non-profit initiative focusing on field research in the Lake Turkana Basin of Kenya. Mr. Gelfond served as the Chairman of the Columbia Shuttle Memorial Trust Steering Committee, which was established in co-operation with NASA to support the families of the seven crew members of the STS-107 mission of the Space Shuttle Columbia, which came to a tragic end on February 1, 2003.

 

 

Key Skills and Experience:

Mr. Gelfond’s long service as Chief Executive Officer of the Company, as well as his marketing, financial, legal and capital markets expertise, combined with his extensive knowledge of the business, operations and domestic and international markets of the Company and his formidable relationships with studios, exhibitors and other partners and stakeholders of the Company, are valuable assets to the Board.

 

 

  

 

ERIC A. DEMIRIAN

Director (since September 2010)

 

Age: 62

Toronto, Ontario, Canada

 

Committee Memberships:

Audit Committee (Chair)

 

 

Eric Demirian has been President of Parklea Capital Inc., a boutique financial advisory and strategy firm, since 2003, and is President of Demicap Inc., a private investment firm. Prior to Mr. Demirian’s position at Parklea Capital, he held the position of Executive Vice President of Group Telecom, Inc. from 2000 to 2003. Mr. Demirian’s previous positions include partner and head of Information and Communication Practice at PricewaterhouseCoopers (1983 - 2000) and Internal Auditor at the Ontario Lottery and Gaming Corporation (1980 - 1983).

 

Mr. Demirian serves as non-executive Chair of the Board of Directors of Descartes Systems Group. He also serves on the Boards of Enghouse Systems Ltd. and several private companies. Until August 2020, Mr. Demirian served on the board of Redline Communications Inc. Mr. Demirian is a former director and Chair of the Audit Committee of Leisure Canada Inc. (2010 - 2011), Menu Foods Income Fund (2005 - 2010) and Keystone North America Inc. (2007 - 2010). Mr. Demirian has also served as a member of the Advisory Council for the School of Accounting & Finance at Ted Rogers School of Management at Ryerson University, advisor to the Accounting Standards Board of CPA (Canada) and as Director and Treasurer for the Parkinson Foundation of Canada. He is a Chartered Professional Accountant, a Chartered Accountant and a Certified General Accountant, and holds a Bachelor of Business Management from Ryerson University.

 

 

Key Skills and Experience:

Mr. Demirian’s accounting experience combined with his substantial business and transaction experience make him well suited to assist the Board in its assessment of financial and accounting matters. With his strong financial background, Mr. Demirian meets the SEC definition of an Audit Committee financial expert.

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KEVIN DOUGLAS

Director (since October 2016)

 

Age: 58

Larkspur, California, U.S.A.

 

Committee Memberships:

Compensation Committee

 

 

Kevin Douglas has been the Chairman and Founder of Douglas Telecommunications, a family investment office through which Mr. Douglas manages the Douglas family investment portfolio since 1995. Prior to Douglas Telecommunications, he was Chairman of the Board at Rural Cellular Management Corporation. Mr. Douglas has served on the Board of Quantum Fuel Systems, LLC, since 2018. Mr. Douglas also serves on the board of KSR International Co. since 1985 and was formerly on the board of Stamps.com from 2003 to 2009. Mr. Douglas is IMAX Corporation’s largest individual investor and has been a shareholder since 2007. In 2014, the Company partnered with Mr. Douglas and his spouse, Michelle Douglas, to donate an IMAX® theater to the University of Southern California’s School of Cinematic Arts. The Michelle and Kevin Douglas IMAX Theatre and Immersive Media Lab serves as a research and teaching facility for students to learn IMAX filmmaking as well as other immersive entertainment experiences.

 

 

Key Skills and Experience:

Mr. Douglas’ long association with the Company has given him a broad understanding of the Company’s business, its products and the markets in which it operates. Mr. Douglas’ investment and business experience with technology and other companies, together with his expertise in identifying new opportunities for investment and growth, are valuable resources for the Board.

 

 

  

 

DAVID W. LEEBRON

Director (since September
2003)
and Lead Independent
Director

 

Age: 66

Houston, Texas, U.S.A.

 

Committee Memberships:

Governance Committee (Chair)

Audit Committee

 

 

David Leebron has been the President of Rice University since July 2004. Prior to July 2004, Mr. Leebron held the position of Dean of Columbia Law School since 1996 and Professor of Law since 1989.

 

Mr. Leebron is on the Council on Foreign Relations, the board of the Greater Houston Partnership and served as Chair of the Association of American Universities (AAU) from 2016 to 2017.

 

 

Key Skills and Experience:

Mr. Leebron brings his broad legal experience, leadership and management skills as President of Rice University and former Dean of Columbia Law School to the Board which make him well suited to assess legal risks and other challenges faced by the Company, as well as to apply his experience to governance issues faced by the Company and the Board.

 

 


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MICHAEL MACMILLAN

Director (since June 2013)

 

Age: 64

Toronto, Ontario, Canada

 

Committee Memberships:

Governance Committee

 

 

Michael MacMillan is Chief Executive Officer of Blue Ant Media, a Canadian-based media company which he co-founded in 2011. Blue Ant is a producer, distributor and broadcaster with active operations in Toronto, Los Angeles, London and elsewhere internationally. Mr. MacMillan was Chairman and/or CEO of Alliance Atlantis Communications from 1998 to 2007. Mr. MacMillan co-founded Atlantis Films Limited in 1978 which acquired Alliance Communications in a reverse takeover in 1998 and the company subsequently became Alliance Atlantis Communications. Mr. MacMillan retired from Alliance Atlantis in 2007 after selling the company to Canwest Communications and Goldman Sachs. In 2007, he co-founded Samara, a think tank that works to strengthen political engagement in Canada through innovative research and educational programs and serves as Chair.

 

Mr. MacMillan is co-founder and co-owner of Closson Chase, a vineyard and winery in Prince Edward County, Ontario, Canada. A member of the Order of Canada, Mr. MacMillan has volunteered with numerous community and industry organizations over many years and is currently involved with Open Roof Films and Human Rights Watch, amongst other organizations.

 

 

Key Skills and Experience:

Mr. MacMillan’s extensive experience in the entertainment industry as well as his ownership interests in various private companies and involvement with charitable organizations gives him a broad expertise in film and television production, digital publishing and other media, thus bringing additional expertise to the Board in these areas.

 

 

 

 

STEVE R. PAMON

Director Nominee

 

Age: 50

South Orange, New Jersey, U.S.A.

Steve Pamon is an entrepreneur and philanthropist who served as President and Chief Operating Officer of Beyoncé’s musical imprint, artist management, business ventures, and film production company, Parkwood Entertainment from 2015 to 2020. In his role as an Executive Producer at Parkwood, he received two Emmy nominations, plus both a Grammy Award (“Homecoming” / Netflix) and a Peabody Award (“Lemonade” / HBO). Prior to Mr. Pamon’s position at Parkwood Entertainment, he served as Head of Sports and Entertainment Marketing for JPMorgan Chase from 2011 to 2015 and was the Vice President of Strategy and New Business Development for the National Football League from 2008 to 2011. Mr. Pamon’s career journey also includes executive leadership and operating roles with HBO and Time Warner from 2001 to 2008 and McKinsey & Company from 2000-2001.

Mr. Pamon serves on the board of World Wresting Entertainment ("WWE"). He also serves on the board of New York Road Runners, a non-profit organization that produces more than 100 sports events each year, including the famed New York City Marathon.

 

Key Skills and Experience:

Mr. Pamon’s deep relationships with the creative community, as well as his broad experience as a senior executive within some of the leading players in media and entertainment, provides a valuable perspective to the Board as it evaluates new product / service opportunities. He also has experience in management consulting and investment banking, which further strengthens the Board in the areas of corporate strategy and financial matters.

 

 


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DANA SETTLE

Director (since July 2015)

 

Age: 48

Los Angeles, California, U.S.A.

 

Committee Memberships:

Governance Committee

Compensation Committee

 

 

Dana Settle has been a Partner and Co-Founder of Greycroft Partners, a venture capital fund based in New York City and Los Angeles focused on investments in the Internet and mobile markets since March 2006. Throughout her career, Ms. Settle has played a key role in the success of many technology startups. Prior to Greycroft, where she heads the firm’s West Coast arm in Los Angeles, Ms. Settle spent several years as a venture capitalist and adviser to startup companies in the Bay Area.

 

Ms. Settle currently serves on the boards of Greycroft’s investments in AppAnnie, Anine Bing, EBTH.com, Thrive Market, Steelhouse, TheRealReal, Clique Media Group, RocketJump and WideOrbit. She also managed the firm’s investments in Maker Studios (sold to Disney), Trunk Club (sold to JWN), Viddy (sold to FullScreen), AwesomenessTV (sold to Dreamworks), Digisynd (sold to Disney), ContentNext (sold to Guardian Media), Pulse (sold to LinkedIn) and Sometrics (sold to American Express). Ms. Settle’s additional experience includes business development at Truveo (AOL), investment banking at Lehman Brothers and international business development at McCaw Cellular Communications (AT&T).

 

 

Key Skills and Experience:

Ms. Settle’s extensive experience in the private equity markets, as well as her Board positions and ownership interests in various digital and other start-up companies, gives her a broad expertise in emerging technology and media markets which is beneficial to the Board as it examines new opportunities. Ms. Settle also has experience in business development and investment banking which is relevant to the Board’s oversight of the Company’s financial matters.

 

 

  

 

DARREN THROOP

Director (since June 2015)

 

Age: 56

Toronto, Ontario, Canada

 

Committee Memberships:

Compensation Committee
(Chair)

Darren Throop has served as President and CEO of Entertainment One, Ltd. (eOne), a leading entertainment company that specializes in the production and distribution of film, television and family content, since July 2003. In December 2020, Mr. Throop joined diversified play and entertainment company Hasbro, Inc., through its acquisition of eOne. Mr. Throop continues to lead eOne as its President & CEO and he is also an executive officer of Hasbro Inc. He served on the Board of Directors of eOne from 2003 to 2020.

Mr. Throop has over 20 years of executive management experience in the entertainment industry. From 1999 to 2003, Mr. Throop was CEO of Records on Wheels, and prior to that, Mr. Throop owned and operated Canadian music retail chain Urban Sound Exchange.

Mr. Throop was appointed to The Order of Canada in 2020 for his innovative leadership in the entertainment and film industry. He is a member of the International Academy of Television Arts and Sciences, has been inducted into the Canadian Music Hall of Fame, and was recognized as Entrepreneur of the Year by Grant Thornton.

 

 

Key Skills and Experience:

Mr. Throop’s experience in the growth of an entrepreneurial and international entertainment and content brand company which is engaged in television, film and music production, distribution, merchandising and licensing further strengthens the Board’s expertise in these areas.

 

 

Item No. 2 - APPOINTMENT OF AUDITORS

At the Meeting, shareholders will be asked to approve the appointment of PricewaterhouseCoopers LLP, Chartered Accountants (“PwC”), as our independent auditors until the close of the next Annual Meeting of Shareholders at a remuneration rate to be fixed by the Board of Directors.

Shareholders will be asked to approve the appointment by ordinary resolution, which requires that a majority of the votes cast at the Meeting be in favor of the resolution. In the absence of any instruction on the accompanying Form of Proxy, it is the intention of the persons named by management in the Form of Proxy to vote the Common Shares represented by the Form of Proxy in favor of the resolution. Voting “WITHHOLD” is the equivalent to voting “ABSTAIN”.


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Representatives of PwC are expected to participate in the Meeting online and to be available to respond to appropriate questions and to make a statement if they desire to do so.

PwC are our principal independent accountants. PwC have been our auditors for more than five years. The following table presents fees for professional services rendered by PwC for the audits of our annual financial statements for the years ended December 31, 2020 and 2019, and fees billed for other services rendered by PwC during those periods.

 

Type of Fees

 

2020

($)

 

 

2019

($)

 

 

Description of Fees

Audit Fees

 

 

1,941,000

 

 

 

1,677,000

 

 

For professional services rendered by PwC in connection with the audit of our financial statements included in our Annual Report on Form 10-K and of our internal control over financial reporting, the review of our financial statements included in our Quarterly Reports on Form 10-Q, various statutory audits and for services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements for those fiscal years.

Audit-Related Fees

 

 

89,000

 

 

 

81,000

 

 

For professional services rendered by PwC in connection with assurance and related services that are reasonably related to the performance of the audit or review of financial statements and which includes consultations concerning financial accounting and reporting standards and review of regulatory matters. In 2020 and 2019, audit-related fees consisted primarily of reimbursement for 2019 Canadian Public Accountability Board fees; fees for audit of the Company’s pension plan; and various other smaller matters.

Tax Fees

 

 

332,000

 

 

 

497,000

 

 

For professional services rendered by PwC in connection with tax advice, tax planning and tax compliance. In 2020 and 2019, tax fees consisted primarily of the tax advice related to transfer pricing including APA support and corporate tax consulting in multiple jurisdictions and audit defense. Tax compliance related fees represented $246,000 and $283,000 of the total tax fees in 2020 and 2019, respectively, including corporate tax compliance, indirect tax compliance and various smaller items.

All Other Fees

 

 

23,000

 

 

 

 

 

For HKSE requirement-Environmental, Social and Governance and Corporate Governance Code reporting

Total

 

 

2,385,000

 

 

 

2,255,000

 

 

 

 

Audit Committee’s Pre-Approval Policies and Procedures

All audit-related services and all other permissible non-audit services provided by PwC were pre-approved by the Audit Committee, and the fees for each category are budgeted. The Audit Committee requires PwC and management to report actual fees vs. the budget to the extent that actual fees exceed budgeted and approved fees. The Audit Committee reviews all actual fees at year-end. During the year, circumstances may arise when it may become necessary to engage PwC for additional services not contemplated in the original pre-approval categories. In those instances, the Audit Committee requires specific pre-approval before engagement of PwC. The Audit Committee may delegate pre-approval authority to one or more of its members. The member(s) to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting.

 

Item No. 3 – ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION (“Say-on-Pay”)

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), enables our shareholders to vote to approve, on an advisory (nonbinding) basis, the compensation program for our Named Executive Officers (“NEOs”) as disclosed in this Circular.

The Board of Directors, including members of the Compensation Committee, considered the results of the 2019 shareholder Say-on-Pay vote at the 2019 Annual Meeting of Shareholders. In connection with the Compensation Committee’s ongoing evaluation of our compensation practices and the comments from proxy advisory services that our shareholders use, at the end of 2018 and in early 2019, the Compensation Committee and management developed an aggressive, targeted shareholder engagement plan focused on soliciting detailed feedback on the Company’s executive compensation program. This engagement allowed shareholders to speak to members of our Board of Directors, including the Chair, our Lead Independent Director and a member of our Compensation Committee. The objective was to hear feedback directly from our shareholders on our existing compensation program and on the views expressed in proxy advisor guidance used by many of our shareholders.


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As a result of those meetings, in 2020, the Compensation Committee has implemented numerous material changes to the Company’s executive compensation program that reflect the feedback it received from shareholders in these discussions, such as:

 

the adoption of performance stock units (“PSUs”) for the CEO and other NEOs, granted to the CEO in January 2020 and other NEOs in March 2020;

 

amending the CEO’s employment agreement to include:

 

-

quantifiable metrics to determine the short-term cash bonus for the CEO, rather than a more discretionary approach;

 

-

equal annual long-term incentive awards rather than a front-loaded grant in combination with annual awards;

 

-

increased share ownership requirements;

 

-

updated equity termination and severance provisions;

 

-

updated change-in-control provisions; and

 

-

a fixed, rather than variable, value of the Company’s Supplemental Executive Retirement Plan (“SERP”) obligation; and

 

revising the scope of the clawback provision in our CEO’s employment agreement and adopting a corporate clawback policy;

among other changes, as further described below in “Compensation Discussion and Analysis.”

While the results of our 2020 shareholder Say‐on‐Pay vote at the 2020 Annual Meeting of Shareholders saw an improvement from the prior year, we will continue to evaluate our executive compensation program for further improvement as described below in “Compensation Discussion and Analysis.”

As discussed in this Circular, the objectives of our executive compensation program are to:

 

provide competitive total compensation packages that include short-term cash-based and long-term equity-based incentive components that appropriately encourage and reward performance and retention and that create enduring long-term shareholder value;

 

reward the NEOs for their relative individual contributions to our success;

 

link executive compensation to our long-term strategic objectives; and

 

align the NEOs’ interests with shareholders’ interests through an equity award framework that creates a sense of ownership, mutual goals and shared risk among executives.

Consistent with these goals and as discussed in “Compensation Discussion and Analysis” beginning on page 23 we have structured our overall executive compensation program, which includes annual short-term cash bonuses and long-term equity compensation plans, to motivate executives, particularly through the use of detailed metrics, to achieve results consistent with certain business and individual performance factors, to reward the executives for achieving or exceeding such results and to encourage retention of executives beyond the current year.

We encourage you to carefully review the “Compensation Discussion and Analysis” section, the tabular compensation disclosures and the related narrative disclosures beginning on page 23 for additional information about our compensation programs. This includes (i) details of actions we took in response to the COVID-19 pandemic, including a reduction in the  total  compensation of our CEO and NEOs from their 2019 compensation with measures such as the requirement that our CEO and NEOs use their accrued paid time off (“PTO”) (while continuing to work a full workweek schedule), the non‐payment of any 2020 annual cash bonus, and the non‐adjustment of any of our CEO or NEOs’ outstanding equity awards; and (ii) the implementation of the numerous changes to the Company’s executive compensation program noted above, including the introduction of PSU’s into the Company’s equity mix.

Based on the recommendation of shareholders at our 2017 Annual Meeting of Shareholders, and the Board of Directors’ consideration of that recommendation, we have determined that we will hold a Say-on-Pay vote every year, until the next required shareholder vote to recommend the frequency of such votes. Accordingly, we are asking our shareholders to indicate their support for the compensation program for our NEOs as described in this Circular, particularly in light of the numerous material changes made to such program in the past year. The Say-on-Pay vote gives our shareholders the opportunity to express their views on our NEOs’ compensation program. This Say-on-Pay vote is not intended to address any specific item of compensation, but rather the overall compensation program for the NEOs and the philosophy, policies and practices described in this Circular.

Shareholders will be asked to indicate their support for the compensation program for our NEOs, as discussed in this Circular by ordinary resolution, which requires that a majority of the votes cast at the Meeting be in favor of the resolution. In the absence of any instruction on the accompanying Form of Proxy, it is the intention of the persons named by management in the Form of Proxy to vote the Common Shares represented by the Form of Proxy in favor of the resolution.


14


 

 

The Board of Directors asks its shareholders to vote FOR the following resolution at the Meeting:

RESOLVED that the shareholders approve the compensation of the Company’s Named Executive Officers, as discussed and disclosed in the “Compensation Discussion and Analysis” section, the compensation tables and the related narrative disclosure set forth in the Circular of the Company dated April 27, 2021.

Although the vote is advisory and non-binding in nature, the Board of Directors and the Compensation Committee will review the voting results and will consider shareholder views in connection with our executive compensation program. If there are a significant number of negative votes, the Board of Directors and the Compensation Committee will continue to seek to understand and consider the concerns that influenced the vote in making future decisions about executive compensation programs.

Item No. 4 – CONFIRMATION OF AMENDMENTS TO BY-LAW NO. 1

At the Meeting, the shareholders will be asked to confirm amendments to By-Law No. 1 of the Company by way of repeal and replacement. Under the Canada Business Corporation Act, the directors may, by resolution, make, amend or repeal any by-laws that regulate the business or affairs of the corporation. On March 4, 2021, the Board of Directors repealed By-Law No. 1 of the Company and adopted the Amended and Restated By-Law No. 1, which, among other things, allows Meetings of Shareholders to be conducted virtually.

Summary of Amendments

In 2020, in order to conduct our Annual Meeting of Shareholders virtually in light of the pandemic, we obtained a court order in Ontario giving us special permission to do so. The Board of Directors has determined that it would be appropriate and in the best interests of the Company and its shareholders to provide the opportunity to conduct Meetings of Shareholders virtually going forward. The following is a summary of the amendments and is qualified and subject to the full text of Amended and Restated By-Law No. 1 set forth in Appendix “A” attached to this Circular.

Amended and Restated By-Law No. 1 adopts the following amendments to By-Law No. 1:

 

Meetings of shareholders may be conducted virtually and shareholders may be present virtually at such meetings for purposes of establishing a quorum.

 

A change in the notice requirement for shareholder nominations principally such that a shareholder must submit his or her nominations at least 30 days prior to the annual meeting of shareholders and must include the country of residence of a director, including their Canadian residency status, in the notice of nomination. Under By-Law No.1, a shareholder was required to give this notice at least 30 days before but no more than 65 days prior to the annual meeting of shareholders and residency status was not required.

 

Attendance at a meeting by a person constitutes a waiver of notice of the meeting, except where the attendance is for the express purpose of objection to the transaction of any business on the grounds that the meeting is not lawfully called.

 

Certain other clarifying updates.

A complete copy of the Amended and Restated By-Law No. 1, is included in Appendix “A” attached to this Circular and is available, without charge, at www.imax.com and www.sedar.com and will be mailed, without charge, to any holder of Common Shares upon written request to the Company at IMAX Corporation, 2525 Speakman Drive, Mississauga, Ontario, Canada, L5K 1B1, Attention: Corporate Secretary.

At the Meeting, the Company’s shareholders will be asked to confirm the amendments to By-Law No. 1 by way of repeal and replacement. This will require the approval of shareholders by ordinary resolution, which requires that a majority of the votes cast at the Meeting be in favor of the resolution. In the absence of any instruction on the accompanying Form of Proxy, it is the intention of the persons named by management in the Form of Proxy to vote the Common Shares represented by the Form of Proxy in favor of the ordinary resolution.

The Board of Directors asks its shareholders to vote FOR the following resolution at the Meeting:

RESOLVED that the repeal and replacement of By-Law No. 1 of the Company with Amended and Restated By-Law No. 1 attached on Appendix “A” to the proxy circular of the Company dated April 27, 2021 is confirmed.

 

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EXECUTIVE OFFICERS

The following table sets forth certain information regarding our executive officers as of April 27, 2021.

Name

Age

Position

EXECUTIVE OFFICERS:

Richard L. Gelfond

65

Chief Executive Officer (“CEO”) and Director

Patrick McClymont

51

Chief Financial Officer (“CFO”) and Executive Vice President

Megan Colligan

48

President, IMAX Entertainment and Executive Vice President, IMAX Corporation

Robert D. Lister

52

Chief Legal Officer and Senior Executive Vice President

Mark Welton

57

President, IMAX Theatres

Jacki Bassani

39

Chief People Officer and Executive Vice President

Denny Tu

44

Chief Marketing Officer and Senior Vice President

Giovanni M. Dolci

36

Chief Sales Officer

Edwin Tan

52

Chief Executive Officer, IMAX China Holding, Inc.

Kenneth I. Weissman

49

Senior Vice President, Legal Affairs and Corporate Secretary

Kevin M. Delaney

48

Senior Vice President, Finance and Controller

 

OTHER KEY EXECUTIVES:

Pablo Calamera

58

Chief Technology Officer and Executive Vice President

Craig Dehmel

52

Executive Vice President, Head of Global Distribution, IMAX Entertainment and

 

 

Senior Vice President, IMAX Corporation

Heather Anthony

49

Senior Vice-President, Corporate Finance, Planning & Analysis

Bruce Markoe

64

Senior Vice President of Post Production, Operations and DMR

Mo Rhim

36

Senior Vice-President, Strategy & Partnerships

 

 

  

 

RICHARD L. GELFOND

Chief Executive Officer

and Director

 

 

Richard Gelfond has been sole Chief Executive Officer of the Company since April 2009 and has been a director since March 1994. Mr. Gelfond served as Co-Chairman of the Company with Mr. Wechsler from June 1999 to March 2009 and served as Co-Chief Executive Officer with Mr. Wechsler from May 1996 to March 2009. From March 1994 to June 1999, Mr. Gelfond served as Vice Chairman of the Company. Mr. Gelfond has also been the Chairman and Non-Executive Director of the Company’s subsidiary, IMAX China Holding, Inc., since May 27, 2015, and has been a director of IMAX China Holding, Inc. since 2010.

 

Mr. Gelfond also serves as Chairman of the Board of Trustees of the Stony Brook Foundation, Inc., which is affiliated with Stony Brook University. He is also a member of the Academy of Motion Picture Arts and Sciences. Mr. Gelfond serves on the International Advisory Board of the Turkana Basin Institute, a non-profit initiative focusing on field research in the Lake Turkana Basin of Kenya. Mr. Gelfond served as the Chairman of the Columbia Shuttle Memorial Trust Steering Committee, which was established in co-operation with NASA to support the families of the seven crew members of the STS-107 mission of the Space Shuttle Columbia, which came to a tragic end on February 1, 2003.

 

 

 

 

PATRICK MCCLYMONT

Chief Financial Officer

and Executive Vice

President

 

 

Patrick McClymont joined the Company in August 2016 as Chief Financial Officer and Executive Vice President and leads IMAX’s global financial operations. Prior to joining the Company, Mr. McClymont was Executive Vice President and Chief Financial Officer at Sotheby’s, where he led select P&L activities, corporate strategy, regional Finance Directors in the Americas, Europe and Asia, as well as the finance, accounting, tax, treasury, and investor relations functions. Prior to Sotheby’s, he was Partner and Managing Director at Goldman, Sachs & Co., where he spent 15 years.

Mr. McClymont is a member of the Board of Directors of Standard Motor Products, Inc., (“SMP”) and is a member of the SMP Audit Committee, Compensation and Management Development Committee, Nominating and Corporate Governance Committee and Strategic Planning Committee.

 

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MEGAN COLLIGAN

President, IMAX

Entertainment and

Executive Vice President,

IMAX Corporation

 

 

Megan Colligan joined the Company in February 2019 as President, IMAX Entertainment and Executive Vice President, IMAX Corporation. She has also been a director of IMAX China Holding, Inc. since February 2019. Prior to joining the Company, Ms. Colligan served in executive roles at Paramount Pictures from 2006 to 2017, most recently as Worldwide President of Marketing and Distribution. She spearheaded the marketing and distribution efforts for many of Paramount's most successful franchise properties and oversaw Paramount's Home Entertainment division, a $1 billion annual business for the studio.

A member of the Academy of Motion Picture Arts and Sciences, Ms. Colligan was also the winner of the 2013 Sherry Lansing Award from Big Brothers and Big Sisters of Greater Los Angeles. She has served on the organization's Board since receiving the honor. She chairs the marketing committee and serves on the executive committee and fund development committee. She graduated from Harvard University with a B.A. in American history and African American studies.

 

 

 

 

ROBERT D. LISTER

Chief Legal Officer

and Senior Executive

Vice President

 

Robert Lister joined the Company in May 1999 as Senior Vice President, Legal Affairs and General Counsel, and currently serves as Chief Legal Officer and Senior Executive Vice President. Mr. Lister has held numerous positions at the Company, including Chief Legal Officer and Chief Business Development Officer, Senior Executive Vice President and General Counsel and Executive Vice President, Business & Legal Affairs, Corporate Communications and General Counsel. Prior to joining the Company, Mr. Lister was Vice President, General Counsel and Secretary of Clearview Cinemas, a film exhibitor, from March 1998 until his employment with the Company. From 1996 to 1998, Mr. Lister served as Associate General Counsel of Merit Behavioral Care Corporation, a behavioral healthcare company.

Mr. Lister serves on the Board of Directors of the Company’s Ireland entity, IMAX Theatres International Limited, and also serves on the Board of TCL-IMAX Entertainment Co., Limited, a joint venture of TCL Corporation and the Company, and until March 2016, served as its Chairman. Mr. Lister is a member of the New York State Bar Association.

 

 

 

 

MARK WELTON

President, IMAX Theatres

 

 

Mark Welton joined the Company in July 1997 as Director, Business Affairs and was appointed President, IMAX Theatres in October 2011. Previous to that, Mr. Welton held the position of Executive Vice President, Corporate and Digital Development & Theatre Operation since April 2007. Mr. Welton has held various other positions within the Company including: Senior Vice President, Business Affairs; Senior Vice President, Theatre Operations; and Executive Vice President, Theatre Operations & General Manager, Digital. Prior to joining the Company, Mr. Welton was an associate lawyer at the law firm Stikeman Elliot LLP from 1994 until his employment with the Company. Prior to that, Mr. Welton was an associate accountant at Ernst & Young.

Mr. Welton is a member of the Ontario Bar Association and the Chartered Professional Accountants Canada.

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  JACKI BASSANI

  Chief People Officer and Executive Vice President

 

 

Jacki Bassani joined the Company in December 2019 as Executive Vice President and Chief People Officer. In this role she is responsible for the strategic planning and leadership for the global people function focused on people partnership with the business, total rewards, operations, payroll, diversity and inclusion, talent acquisition and talent management. She also oversees the planning, development, implementation, and administration for all global people programs across the organization with a focus on modernization and bringing the IMAX employee value proposition to life. Jacki also have responsibility and oversite for facilities and health and safety programs for all IMAX global locations.

 

Prior to joining the Company, Ms. Bassani was the Managing Director, and Head of North America, Talent and Rewards at Willis Towers Watson from 2010 to 2019 where she was responsible for managing and growing the company’s business and colleague experience for over 3,500 employees across North America. In addition to this leadership role, during her tenure at Willis Towers Watson, she also provided consulting services to large global organizations and has extensive experience specializing in organizational transformation and employee research. Prior to that, Ms. Bassani held various leadership positions at MercerSirota from 2003 to 2010 where she held the title of Vice President and led the business development and consulting function for Employee Research.

 

Ms. Bassani has an MA in Industrial Organizational Psychology and is a member of the Society of Industrial Organizational Psychologists.

 

 

 

DENNY TU

Chief Marketing Officer

and Senior Vice President

 

 

Denny Tu joined the Company in August 2017 as Executive Vice President, Global Brand & Creative and Senior Vice President and was appointed Chief Marketing Officer in February 2019. Prior to joining the Company, from 2011 to 2017, Mr. Tu was Head of Strategy, Brand & Creative at Sky, Europe's largest entertainment, media, & technology company. Prior to that, he served as Managing Director/Senior Vice President at Autonomy, an advertising & creative agency.

A dual UK and U.S. citizen, he serves on the Board of Trustees for Ditch The Label, a leading global anti-bullying charity.

 

 

 

 

GIOVANNI M. DOLCI

Chief Sales Officer

 

Giovanni Dolci joined the Company in October 2012 as Vice President, Theatre Development and was appointed Chief Sales Officer in April 2021. Previous to that, Mr. Dolci held the position of Head of Global Sales since January 2020. Mr. Dolci also held the position of Vice President, Theatre Development and Managing Director, Europe and Africa beginning in January 2017 and became Senior Vice President in March 2018. Prior to joining the Company, he was Director of Business Development and Commercial Operations at Arts Alliance Media. Before his time at Arts Alliance Media, Mr. Dolci worked in film financing focusing on several projects in New Zealand, Italy and the UK. Mr. Dolci also serves on the Board of Directors of IMAX Theatres International Limited, a wholly-owned subsidiary of IMAX Corporation.

 

Mr. Dolci has a degree in Economics and Management from Bocconi University in Milan and an MSc in Management from Cass Business School in London. He is a former Junior Fellow of the Aspen Institute, Italy.

 

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EDWIN TAN

Chief Executive Officer,

IMAX China Holding, Inc.

 

 

Edwin Tan joined the Company in December 2019 as Chief Executive Officer of IMAX China Holding, Inc., a subsidiary of the Company. Prior to joining the Company, Mr. Tan was the Chief Executive Officer of Messe Muenchen China and South East Asia from March 2017 to July 2019 where he led the strategic planning and growth agenda, including successfully completing the first ever acquisition for the company in China. Prior to that, Mr. Tan was President at Wanda Studios Qingdao from 2016 to 2017 and spent 7 years with Reed Exhibitions Greater China in various roles, including Chief Operating Officer from 2014 to 2016, Senior Vice President of Commercial, Strategy and New Business from 2012 to 2014, Vice President of North China and Business Development, Managing Director of Reed Huayin (RHY) and Managing Director of Reed Huaqun (RHQ) from 2009 through 2011, and Regional Director of Business Development & Planning APAC from 2007 through 2008. Mr. Tan was a Managing Director at Sirivatana International from 2005 to 2007 and also worked in various roles in SNP Corporation from 1996 to 2005.

Mr. Tan graduated from Murdoch University with a Bachelor of Economics in 1992 followed by an MBA in Business Administration and Management from The University of Hull in 1997.

 

 

 

KENNETH I. WEISSMAN

Senior Vice President,

Legal Affairs and

Corporate Secretary

 

 

Kenneth Weissman joined the Company in October 2011 as Vice President, Legal Affairs, and has held the position of Senior Vice President, Legal Affairs since 2015. In December 2017, Mr. Weissman was appointed Corporate Secretary, and was also appointed by the Company's Audit Committee as Chief Compliance Officer. Prior to joining the Company, Mr. Weissman was Senior Corporate Counsel at Sony Corporation of America, where he held various positions from 2004 through 2011. Prior to that, Mr. Weissman was an associate lawyer at Skadden, Arps, Slate, Meagher & Flom in New York and Testa, Hurwitz & Thibeault in Boston, and served as a law clerk to the Hon. Judith S. Kaye, Chief Judge of the State of New York.

Mr. Weissman is Corporate Secretary to the Board of Directors of TCL-IMAX Entertainment Co., Limited, a joint venture of TCL Corporation and the Company. Mr. Weissman is a member of the American Bar Association and the Association of Corporate Counsel.

 

 

 

 

KEVIN M. DELANEY

Senior Vice President,

Finance and Controller

 

 

Kevin Delaney joined the Company in December 2019 as Senior Vice President, Finance and Controller, and was subsequently appointed Principal Accounting Officer effective February 2020. Prior to joining the Company, Mr. Delaney served as the Corporate Controller & Chief Accounting Officer of Sotheby’s from 2007 to 2019 and as Assistant Corporate Controller from 2000 to 2007. Mr. Delaney was employed at Sony Music Entertainment from 1998 to 2000 and at Deloitte & Touche LLP from 1994 to 1998.

Mr. Delaney is a Certified Public Accountant and holds a BBA in Public Accounting from Pace University.

 

 

19


 

 

OTHER KEY EXECUTIVES

 

 

 

PABLO CALAMERA

Chief Technology Officer

and Executive Vice President

 

 

Pablo Calamera joined the Company in February 2020 as Chief Technology Officer and Executive Vice President. Prior to joining the Company, Mr. Calamera was Chief Technology Officer for several pioneering startups and public companies, including JW Player from 2017 to 2019, where he oversaw all aspects of technology development and technical operations supporting small businesses to large global enterprises with the best video technology and monetization capabilities on web, mobile and embedded devices. Previous to that, Mr. Calamera served as Chief Technology Officer at Vonage from 2014 to 2017 and at iHeartRadio from 2011 to 2014, where he led technology vision, architecture, R&D and technical operations. Mr. Calamera also held technology leadership roles such as Director at Apple Inc. from 2006 to 2010 and Senior Director at Danger Inc. from 2001 to 2006.

 

 

 

CRAIG DEHMEL

Executive Vice President,
Head of Global
Distribution, IMAX
Entertainment and Senior
Vice President, IMAX
Corporation

 

 

Craig Dehmel joined the Company in September 2016 as Executive Vice President, Head of Global Distribution, IMAX Entertainment and Senior Vice President, IMAX Corporation. Mr. Dehmel manages the global theatrical release planning and execution of Hollywood, local, documentary, and special content releases to IMAX screens worldwide. Prior to joining the Company, he managed the theatrical release planning and execution of all 20th Century Fox-distributed titles in over 100 countries, worldwide, during his sixteen-year career with Fox. He is a member of the Academy of Motion Picture Arts and Sciences. Mr. Dehmel has been a guest lecturer at the Anderson School of Business (UCLA) for the past 20 years, teaching a seminar on the fundamentals of the worldwide theatrical business. He is also a regular guest speaker at the Annenberg School of Communications and Peter Stark Producing Program, both at USC.

Mr. Dehmel has a B.A. in History from Colgate University and an MBA in Entertainment Management and Strategy from the Anderson School at UCLA.

 

 

HEATHER ANTHONY

Senior Vice President of Corporate Finance, Planning & Analysis

 

 

Heather Anthony joined the Company in in June 2008 as Vice President, Investor Relations and currently serves as Senior Vice President, Corporate Finance, Planning & Analysis. Ms. Anthony is responsible for the forecasting, budgeting and long-range planning of the Company’s worldwide operations. Prior to her current role, she served as Vice President, Budgeting & Financial Analysis at IMAX. Prior to IMAX, Ms. Anthony served as the Senior Director of Investor Relations at The Children’s Place Retail Stores, Inc. Prior to that, Ms. Anthony served as a Vice President at Edelman Worldwide and as an Assistant Vice President at Morgen-Walke Associates.


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BRUCE MARKOE

Senior Vice President of
Post Production,
Operations and DMR

 

 

Bruce Markoe joined the Company in July 2015 as Senior Vice President of Post-Production, Operations and DMR. Prior to joining the Company, and starting in 2011, Mr. Markoe was Senior Vice President of Post-Production at Marvel Studios. Before his role at Marvel Studios, Mr. Markoe was Senior Vice President of Post-Production at Overture Films, and previous to that Executive Vice President of Post-Production at Revolution Studios and Head of Post-Production at MGM Studios.

Mr. Markoe is a member of the Academy of Motion Picture Arts and Sciences and has been a guest lecturer at USC School of Cinema along with speaking and presenting at many motion picture industry seminars and panels.

 

 

MO RHIM

Senior Vice President of
Strategy & Partnerships

 

Mo Rhim joined the company in 2019 as the Senior Vice President of Strategy & Partnerships. In this role Ms. Rhim oversees content strategy, partnerships and new technology innovation for the Entertainment division as well as several corporate strategy initiatives developing a direct relationship with consumers and applying data to drive growth. Prior to joining the Company, Ms. Rhim served as the Senior Vice President, International Digital Marketing at Paramount Pictures where she oversaw the digital marketing for theatrical releases across all international markets. Ms. Rhim previously worked at Google from 2005-2016, most recently as Head of Industry, Media and Entertainment overseeing all Google/DoubleClick Marketing Platforms and leading several first-of-kind global deals.

 

 

 

2020 EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth information regarding our Equity Compensation Plans as of December 31, 2020.

 

Plan Category

 

Number of Securities to be

Issued Upon Exercise of

Outstanding Options,

Warrants and Rights

(a)

 

Weighted Average Exercise

Price of Outstanding Options,

Warrants and Rights (1)

(b)

 

Number of Securities Remaining

Available for Future Issuance

Under Equity Compensation

Plans (Excluding Securities

Reflected in Column (a))

(c)

Equity compensation plans approved by security

   holders

 

 

 

6,819,644

 

 

 

 

 

 

19.23

 

 

 

 

 

7,436,333

 

 

 

Equity compensation plans not approved by security

   holders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

6,819,644

 

(2)

 

 

 

 

19.23

 

 

 

 

 

7,436,333

 

(3)

 

 

(1)

The weighted average exercise price under column (b) with respect to equity compensation plans does include Common Shares issuable upon the vesting of outstanding restricted share units, which have no exercise price. Excluding restricted shares units, the weighted average exercise price under column (b) would be $24.96.

 

(2)

Represents 11.57% of 58,921,731 Common Shares outstanding as of December 31, 2020. This number includes outstanding options and restricted share units.

 

(3)

Represents 12.62% of 58,921,731 Common Shares outstanding as of December 31, 2020.

 

21


 

 

SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT

The following table sets forth information with respect to the beneficial ownership of our Common Shares as of April 12, 2021 or as otherwise indicated in the notes below, including: (i) all persons to be nominated for election to the Board of Directors, individually; (ii) all current directors and the NEOs, individually; and (iii) all current directors and executive officers as a group.

 

Name of Beneficial Owner of

Common Shares

 

Common Shares Beneficially

Owned, Controlled or

Directed (1)

Common Shares that can be

Acquired within 60 days

Total

 

Percentage of Outstanding

Common Shares (2)

 

Richard L. Gelfond

 

 

 

314,090

 

(3)

 

 

 

2,713,015

 

 

 

 

 

3,027,105

 

 

 

4.9%

 

Bradley J. Wechsler

 

 

 

217,322

 

(4)

 

 

 

 

 

 

 

 

217,322

 

 

 

*

 

Neil S. Braun

 

 

 

48,397

 

(5)

 

 

 

 

 

 

 

 

48,397

 

 

 

*

 

Eric A. Demirian

 

 

 

45,281

 

(6)

 

 

 

 

 

 

 

 

45,281

 

 

 

*

 

Kevin Douglas

 

 

 

8,915,600

 

(7)

 

 

 

 

 

 

 

 

8,915,600

 

 

 

15.0%

 

David W. Leebron

 

 

 

96,868

 

(8)

 

 

 

 

 

 

 

 

96,868

 

 

 

*

 

Michael MacMillan

 

 

 

23,245

 

(9)

 

 

 

 

 

 

 

 

23,245

 

 

 

*

 

Steve Pamon

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dana Settle

 

 

 

33,575

 

(10)

 

 

 

 

 

 

 

 

33,575

 

 

 

*

 

Darren Throop

 

 

 

15,734

 

(11)

 

 

 

 

 

 

 

 

15,734

 

 

 

*

 

Patrick McClymont

 

 

 

62,328

 

(12)

 

 

 

112,303

 

 

 

 

 

174,631

 

 

 

*

 

Megan Colligan

 

 

 

39,096

 

(13)

 

 

 

71,385

 

 

 

 

 

110,481

 

 

 

*

 

Robert D. Lister

 

 

 

87,924

 

(14)

 

 

 

224,568

 

 

 

 

 

312,492

 

 

 

*

 

Mark Welton

 

 

 

41,475

 

(15)

 

 

 

92,777

 

 

 

 

 

134,252

 

 

 

*

 

All directors and executives

(18 persons)

 

 

 

9,977,640

 

(16)

 

 

 

3,242,340

 

 

 

 

 

13,219,980

 

 

 

21.1%

 

* Less than 1%

 

(1)

Statements as to securities beneficially owned by directors and executive officers, or as to securities over which they exercise control or direction, are based upon information obtained from such directors and executive officers and from records available to us.

 

(2)

The percent of outstanding Common Shares is based on dividing the number of Common Shares beneficially owned by the individual by 59,358,679 Common Shares outstanding as of April 12, 2021, adjusted for Common Shares issuable through the exercise of vested stock options held by such person, and stock options and restricted share units held by such person that vest within 60 days of that date.

 

(3)

Mr. Gelfond has sole voting and dispositive power with respect to 314,090 Common Shares.

 

(4)

Mr. Wechsler has sole voting and dispositive power with respect to 24,022 Common Shares, shared voting and dispositive power with respect to 173,300 Common Shares, and may be deemed to have shared voting/dispositive power over 20,000 Common Shares held by the Brad and Patty Wechsler Foundation.

 

(5)

Mr. Braun has sole voting and dispositive power with respect to 48,397 Common Shares.

 

(6)

Mr. Demirian has sole voting and dispositive power with respect to 45,281 Common Shares.

 

(7)

Mr. Douglas has shared voting power with respect to 6,677,314 Common Shares and shared dispositive power with respect to 8,852,948 Common Shares.

 

(8)

Mr. Leebron has sole voting and dispositive power with respect to 95,568 Common Shares and shared voting and dispositive power with respect to 1,300 Common Shares.

 

(9)

Mr. MacMillan has sole voting and dispositive power with respect to 23,245 Common Shares.

 

(10)

Ms. Settle has sole voting and dispositive power with respect to 33,575 Common Shares.

 

(11)

Mr. Throop has sole voting and dispositive power with respect to 15,734 Common Shares.

 

(12)

Mr. McClymont has sole voting and dispositive power with respect to 62,328 Common Shares.

 

(13)

Ms. Colligan has sole voting and dispositive power with respect to 39,096 Common Shares.

 

(14)

Mr. Lister has sole voting and dispositive power with respect to 87,924 Common Shares.

 

(15)

Mr. Welton has sole voting and dispositive power with respect to 41,475 Common Shares.

22


 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Executive Summary

Page 23

Overview of our Executive Compensation Program

Page 30

Executive Compensation Processes

Page 34

Compensation Comparator Group

Page 38

Pay and Performance in 2020

Page 40

Additional Information

Page 44

 

This Compensation Discussion and Analysis (“CD&A”) describes the material elements of the compensation program for our Named Executive Officers (“NEOs”), the associated rationale, and key decisions and activities for the year ended December 31, 2020. For 2020, our NEOs were:

 

Name

Role

Richard L. Gelfond

Chief Executive Officer

Patrick McClymont

Chief Financial Officer and Executive Vice President

Megan Colligan

President, IMAX Entertainment and Executive Vice President, IMAX Corporation

Robert D. Lister

Chief Legal Officer and Senior Executive Vice President

Mark Welton

President, IMAX Theatres

 

See “Non-GAAP Financial Measures” on page 68 for a reconciliation of all non-GAAP measurements to the most directly comparable U.S. generally accepted accounting principles (“U.S. GAAP”) measures in this “CD&A and a description of how the non-GAAP numbers are calculated from our audited financial statements. In addition to the non-GAAP financial measures discussed below, management also uses “EBITDA”, as such term is defined in IMAX’s Credit Agreement dated as of June 10, 2020, as amended, and which is referred to herein as “Adjusted EBITDA per Credit Facility” or “Adjusted EBITDA”.

 

Executive Summary

 

 

Despite the COVID-19 pandemic closing theaters across the world, IMAX managed effectively throughout the year, generating positive cashflow by year-end, programming slates of strong local language titles in international markets where open theaters achieved close to pre-pandemic attendance levels despite capacity restraints, continuing to add robust new signings and installations, and cutting operating costs, all of which are reflected in a stock price up 100% year-over-year.

 

 

 

In response to shareholder feedback, the amended CEO employment agreement took effect, with changes including the introduction of PSUs (50% of equity mix) subject to stretching Adjusted EBITDA and Total Shareholder Return (“TSR”) goals.

 

23


 

 

The Impact of COVID-19

We entered 2020 off the back of a record global box office year, with financial strength, high brand engagement, continued investment in system technology and upgrades, and a robust slate of content for the year ahead. However, with the onset of COVID-19, the year presented unprecedented challenges for all businesses and communities, including the entertainment industry and our Company. Our industry moved quickly to join the fight in limiting the spread of the virus, with movie theaters around the world closing and on-set filming largely stopping. The Company also prioritized the safety of our employees, as we pivoted to a remote work environment, and provided access to enhanced benefits including virtual healthcare, a website to provide real-time updates to employees and access to an emotional health support line, all while navigating through uncharted and challenging times.

The pandemic impacted the Company as early as January 2020, with China, where IMAX had 745 theaters in operation, reporting the first known cases of COVID-19. In response to the growing global pandemic, management prioritized cost control, drawing on our revolving credit facility to maintain maximum flexibility while looking for opportunities to minimize costs in a zero-revenue environment. Our consistent and determined efforts to preserve cash by eliminating non-essential costs, together with our geographic diversity (more than 50% of our theater network is located in Asia, where many markets began re-opening as early as last summer) and longstanding relationships with studios, exhibitors, and filmmakers around the world have positioned us well for the reopening of our theaters and the recovery of our industry. The early stages of this recovery can already be seen in our second half 2020 results, which saw a resurgence in the Asian box office, particularly in China and Japan, which contributed to positive EBITDA and cash flow for the Company in Q4. We also saw continued demand for The IMAX Experience® among our exhibition partners, with 65 IMAX theater system agreements signed (includes 17 upgrades) and 71 IMAX theater systems installed (includes 16 upgrades) globally in 2020. By year-end 2020, our backlog stood at a robust 527 theater systems.

The U.S. has proven to be a challenging operating environment, with blockbuster Hollywood releases delayed and movie theaters remaining largely closed or capacity restrained throughout most of 2020 and into early 2021 in the interest of public health and safety. Moreover, several of the few Hollywood films that were released, were released directly to streaming TV platforms, in lieu of an exclusive theatrical release. The local pandemic guidelines and restrictions in the U.S., and the resulting impact on IMAX’s business,  led the Company to make the difficult decision, in lieu of laying off workers, to temporarily furlough approximately 150 of our employees beginning in October 2020, reduce the working hours of other employees and reduce all non-essential capital expenditures to minimum levels. This enabled us to conserve resources and protect jobs over the longer-term in anticipation of a recovery in 2021 resulting from the vaccine rollout and theaters reopening. Our executive leaders played a critical role in keeping our employees engaged during 2020, in a difficult and uncertain operating environment while also facing a challenging new remote-work dynamic. Additionally, they maintained a relentless focus on ensuring the viability and strength of our business by launching key initiatives to advance IMAX’s position for the long-term. Those initiatives included key milestones in our ongoing connected theaters program, the development of IMAX’s direct-to-consumer marketing and interactive platform, and the Company’s investment in next-generation artificial intelligence technology.

The Compensation Committee took these factors into account when making decisions regarding the compensation of our CEO and NEOs for 2020. Notwithstanding the exceptional performance of our executive leaders, the impact of the COVID-19 pandemic and the need to materially cut costs resulted in a meaningful reduction in CEO and NEO compensation. As further discussed below in the section titled “Named Executive Officer Pay in 2020” beginning on page 26, the total compensation of our CEO and NEOs for 2020 was reduced from 2019 with the following measures: the requirement that the NEOs use accrued PTO (while continuing to work a full workweek schedule); the non-payment of any 2020 annual cash bonus to our CEO and NEOs; and the non-adjustment of any of our CEO or NEOs outstanding equity awards.

To address concerns during 2020, given reductions in total compensation (including the non-payment of 2020 annual bonuses), the lapsing of underwater stock options and the maintenance of stretching PSU goals, the Compensation Committee approved one-time “bridging awards” for certain employees of our management team, including our CEO and, with the Compensation Committee working closely with our CEO, our NEOs. These awards are intended to act as a bridge during this uncertain period, retain key members of senior management, and drive the continued commitment and engagement required for the Company to be successful as we approach a period of anticipated recovery in our markets. For our CEO and NEOs, these awards took the form of Restricted Share Unit (“RSU”) awards granted in the first quarter of 2021, each valued at 33% - 56% of the NEO’s base salary, which will vest in two equal installments over two years. For additional information on the bridging awards, please see “One-Time Bridging Awards” beginning on page 42.

24


 

Performance in 2020

Despite the ongoing pandemic environment, IMAX has continued to maintain its operations by relying on its strong, differentiated business model and unique position in the entertainment ecosystem. Our global footprint offers access to open markets and thriving local language film industries, particularly in markets across Asia, where signs of recovery from the pandemic were seen as early as last summer and theater attendance ultimately returned close to pre-pandemic levels despite capacity restraints. Our premium experience and strong brand help ensure that our passionate, engaged fans will be among the first to return to theaters. Finally, our asset-light, flexible business model enables us to manage costs, secure unique opportunities in this dynamic environment, and ultimately generate the improved financial results we posted in the fourth quarter. As described above, the Company’s financial performance in 2020 was materially impacted by COVID-19. Although our full year performance was adversely affected in significant ways, we believe our performance in Q4 demonstrates the early and clear signs of recovery, as presented below:

 

(In thousands of U.S. dollars, except per share amounts)

Key Performance Indicator

Q4 2020

Performance

Fiscal 2020

Performance

Revenue

$55,990

$137,003

Global Box Office

$91,000

$259,200

Gross Margin

$20,313

$21,540

Gross Profit Margin

36.3%

15.7%

U.S. GAAP Net Loss / Net Loss per Share (1)(2)(3)

$(21,245) / $(0.36)

$(143,775) / $(2.43)

Adjusted Net Loss per Share (1)(3)

$(0.21)

$(1.89)

Adjusted EBITDA per Capital Facility (1)

$10,020

$(13,097)

 

(1)

Attributable to common shareholders.

 

 

(2)

Results for the fourth quarter and full year 2020 include $0.3 million ($0.01 per share) and $13.3 million ($0.23 per share), respectively, in income tax expense resulting from our decision to no longer indefinitely reinvest the historical earnings of certain foreign subsidiaries.

 

 

(3)

Results for the fourth quarter and full year 2020 include $4.9 million ($0.08 per share) and $28.6 million ($0.48 per share), respectively, in income tax expense related to a valuation allowance recorded against deferred tax assets in jurisdictions where we could not reliably forecast future tax liabilities due to the uncertainties around the long-term impact of the COVID-19 global pandemic.

 

Results for the fourth quarter of 2020 reflect in particular the strong performance of the IMAX network in China and Japan, where local language releases generated robust box office at near pre-pandemic levels, tapping into pent-up demand for big screen experiences. Additionally, fourth quarter results benefitted from the Company's continued growth in its global network, demonstrating strong exhibitor and consumer demand for The IMAX Experience®. IMAX installed 33 systems and signed 11 agreements in the fourth quarter of 2020 alone, ending the year with 527 systems in backlog.

Moreover, in the fourth quarter of 2020, IMAX achieved positive Adjusted EBITDA per Credit Facility and free cash flow for the first time since the first quarter of 2020, despite material capacity limitations and virtually no new film releases from Hollywood, aside from several movies released concurrently to streaming TV platforms in lieu of an exclusive theatrical release. The Company has posted sequential quarterly improvement in EBITDA, cash flow, revenue, and box office since the global impact of the pandemic first took hold in the second quarter of 2020. As a result, the Company continued to strengthen its balance sheet, ending the year with $317 million in cash and cash equivalents.

25


 

IMAX Theater Network

The IMAX global footprint as of December 31, 2020 remained strong, consisting of 1,650 IMAX theater systems (1,562 commercial multiplexes, 12 commercial destination, and 76 institutional) operating across 84 countries and territories. Due to the impact of COVID-19, the commercial multiplex network growth rate was lower in 2020 compared to the growth rate in prior years. This decline in growth was largely due to limited access and travel, which led to delays in expected installations and openings. Network growth and system backlog are two of the key metrics used by the Board of Directors in evaluating management and Company performance, and are typically included in the Annual Incentive Plan scorecard.

 

Named Executive Officer Pay in 2020

In light of the impact of COVID‐19 on the Company in 2020, our approach to executive compensation focused on balancing cost control for the Company and rewarding and retaining our executive officers. While we recognize the individual performance achievements of our NEOs, the Compensation Committee determined to forego the payment of our NEOs’ 2020 annual cash bonus due to our below target Company performance. Further, the Compensation Committee made no adjustments to any of our NEO’s outstanding equity awards. As an additional cost‐mitigation strategy, we also required our employees, including our NEOs, to use accrued PTO to minimize PTO accrual.

The base salaries of our NEOs are set out in their employment agreements, where applicable. In 2020, the total compensation of our CEO and NEOs for 2020 was reduced from 2019 using various measures, including the requirement that our CEO and NEOs use accrued PTO (while continuing to work a full workweek schedule) from April 26, 2020 through year‐end. The following reflects the base salaries of the NEOs for 2020:

 

Name

Currency

 

2019 Salary

($)

 

2020 Salary

($)

Change

 

Richard L. Gelfond

USD

 

 

 

1,200,000

 

 

 

 

 

1,200,000

 

 

 

0.0

%

Patrick McClymont (1)

USD

 

 

 

706,250

 

 

 

 

 

750,000

 

 

 

6.2

%

Megan Colligan (2)

USD

 

 

 

1,000,000

 

 

 

 

 

1,030,000

 

 

 

3.0

%

Robert D. Lister (3)

USD

 

 

 

715,000

 

 

 

 

 

738,450

 

 

 

3.3

%

Mark Welton (4)

CAD

 

 

 

715,000

 

 

 

 

 

750,750

 

 

 

5.0

%

 

(1)

Mr. McClymont’s base salary increased from $675,000 to $750,000 effective as of August 8, 2019. Mr. McClymont did not receive a salary increase in 2020. As a result of having exhausted his accrued PTO before year end, Mr. McClymont’s actual paid base salary in 2020 was $725,000.

 

 

(2)

Ms. Colligan’s salary was set on appointment and increased effective January 1, 2020, pursuant to her employment agreement.

 

(3)

Mr. Lister’s salary increased to $738,450 effective January 1, 2020, pursuant to his employment agreement, as amended.

 

(4)

Mr. Welton’s salary increased from $715,000 to $750,750 pursuant to his employment memorandum dated September 11, 2020. Mr. Welton is paid in Canadian dollars.

 


26


 

 

Each of our NEOs is entitled to an annual cash bonus as set out in their employment agreements, where applicable. Historically, the Compensation Committee would assess each NEO’s individual performance and the Company’s performance to determine the amount of the annual cash bonus. Given the circumstances presented to us in 2020, however, the Compensation Committee decided to forego any payment of a 2020 annual cash bonus.

Long-term incentive awards were made to the NEOs comprised of PSUs and RSUs, with 2020 marking the introduction of PSUs into the equity mix in response to feedback from shareholders. Awards of PSUs are subject to stretching Adjusted EBITDA (60%) and relative TSR (40%) performance conditions, presented below, that measure our efficiency, operating performance, operating profitability and ability to deliver attractive relative returns to shareholders over a three-year performance period:

 

Average Annual

Adjusted EBITDA Growth Over the Performance Period

Vesting

(% of Target)

 

Relative TSR Percentile Rank

vs. Russell 2000 Over the

Performance Period

Vesting

(% of Target)

<5.0%

0%

 

< 40th

0%

5.0%

50%

 

40th

37.5%

10.0%

75%

 

50th

50%

12.5%

100%

 

60th

75%

15.0%

125%

 

70th

100%

17.5%

150%

 

80th

125%

≥ 20.0%

175%

 

≥ 90th

175%

 

For target vesting, IMAX needs to deliver (i) an average annual Adjusted EBITDA growth of 12.5% over the three-year performance period and (ii) TSR that ranks at the 70th percentile relative to the Russell 2000. It is intended that performance goals in subsequent years will be similarly stretching. In 2020, PSUs accounted for 50% of the annual equity mix of the CEO, and 25% of the annual equity mix for the other NEOs. RSUs accounted for the remainder of the annual equity mix. The proportion of the other NEOs’ annual equity delivered in PSUs increases to 33% in 2021.

CEO Realizable Compensation and Performance

A central tenet of our compensation philosophy is a pay-for-performance culture that rewards superior performance. The following chart demonstrates this by illustrating the relationship between Mr. Gelfond’s compensation in his capacity as our CEO for the last five years with TSR, indexed to $100 on January 1, 2016. For the purpose of this chart, CEO compensation is the data contained in our Summary Compensation Table for the relevant year, which reflects the aggregate grant date fair values of equity awards in the year of the grant.

 

 


27


 

 

In addition to showing correlation on an absolute basis, this is also true when we compare IMAX’s CEO realizable compensation and performance to our compensation comparator group in the last three years, as illustrated in the table below.

 

 

Realizable pay reflects actual cash compensation earned and the intrinsic value of equity grants from the three most recent fiscal years for which the data was available, which for many of our peers does not yet include fiscal 2020. Total Shareholder Return represents the three-year compound annual growth rate in dividend-adjusted close price, using the close price on the last day of the period for which pay was collected. Financial data was sourced from S&P’s Capital IQ financial database and compensation data was sourced from applicable proxy filings.

Notably, as of April 26, 2021 the Company’s stock is up in excess of 24% since December 31, 2020, the date as of which the above tables were calculated. The stock price increase coincides with the continued reopening of IMAX’s theater network and the continued recovery of the industry, particularly in markets like Asia, where theater attendance is now approaching pre-pandemic levels. In 2020, the industry (and the Company) faced unprecedented challenges stemming from the COVID-19 pandemic, including the closure of, or capacity limitations placed on, virtually all theaters across the globe, the delay in release of virtually all new Hollywood films and the release of several of the few films that were released to streaming TV platforms in lieu of a theatrical release window. By the end of the first quarter of 2021, however, we were seeing the re-opening of theaters in countries around the world, pre-pandemic attendance levels in markets across Asia, and new 2021 release dates assigned to dozens of Hollywood films.

The Compensation Committee is confident that this data demonstrates the alignment of pay and performance in keeping with our compensation philosophy.

Chief Executive Officer’s Employment Agreement

 

Effective January 1, 2020, Mr. Gelfond’s amended employment agreement (the “Gelfond Agreement”) took effect. The terms of the agreement were informed by extensive shareholder engagement conducted during 2018 and 2019 and reflected the following:

28


 

 

Area

CEO Employment Agreement Change (1)

No increases to pay levels

   No increase to any element of compensation (base salary, short-term incentive award, aggregate value of long-term incentive awards)

   No increase to CEO target compensation, subject to increases at the discretion of the Board of Directors

Formalization of the Annual Cash Bonus Terms

   Formulaic quantitative bonus scorecard introduced to determine 80% of the short-term bonus incentive opportunity

   Discretionary portion reduced to 20% of the short-term bonus incentive opportunity and now based on achievements in non-quantifiable areas of performance clearly connected to our strategy

Introduction of PSUs and removal of front-loaded awards

   Introduction of PSUs, accounting for 50% of the long-term incentive mix (replacing stock options) with the remaining 50% granted in the form of RSUs

   Removal of front-loaded RSU award; replaced with annual awards of RSUs (same aggregate value over contract term) that vest at a rate of 1/3 per annum

   PSUs subject to stretching three-year Adjusted EBITDA growth (60%) and relative TSR performance (40%) conditions, with target vesting requiring 12.5% annual Adjusted EBITDA growth and IMAX relative TSR ranking at the 70th percentile vs. the Russell 2000

Expanded Clawback Policy

   Clawback terms expanded to cover at-fault and no-fault restatements (previously at-fault only)

   Covers annual bonus and equity awards

Increased share ownership guideline

   Increased share ownership guideline from 300% of salary to 400% of salary in 2020 and to 500% of salary in 2021

Updated equity termination and severance provisions

Without cause or resignation for good reason

   Granted but unvested RSUs vest immediately on a time pro-rata basis

   Granted but unvested PSUs vest on a time pro-rata basis at the end of the full three-year performance period, subject to the approved performance conditions

   No entitlement to RSU or PSU awards that are yet to be granted

Death or disability

   Accelerated vesting of granted but unvested awards, with PSUs settled at target

Non-renewal or retirement

   Accelerated vesting of granted but unvested RSUs

   Granted but unvested PSUs vest on a time pro-rata basis at the end of the full three-year performance period, subject to the approved performance conditions

Updated change-in-control provisions

   Annual bonus payable in year of change-in-control based on actual performance annualized over the full year, excluding any costs associated with the change-in-control

   Double trigger vesting for both RSUs and PSUs

   Upon a double trigger, accelerated vesting of granted but unvested RSUs

   Upon a double trigger, granted but unvested PSUs vest based on the greater of actual performance immediately preceding the change-in-control or the date of the end of the applicable performance period, the latter being on the basis that the performance conditions remain relevant

   No entitlement to RSU or PSU awards that have yet to be granted

Fixed value of Company SERP obligation

   Continued participation in SERP with total benefit fixed at 2018 valuation to better manage IMAX exposure to interest and volatility

 

(1)

Areas not specifically addressed have not changed, or not changed materially. This summary is qualified in its entirety by reference to the full Gelfond Agreement, which is filed as an exhibit to our 2020 Form 10-K.


29


 

 

 

Overview of Our Executive Compensation Program

 

Our Purpose and Compensation Philosophy

IMAX is a world leader in entertainment technology with a goal of creating entertainment experiences that exceed all expectations. The IMAX® brand represents a promise to deliver what movie audiences crave — a memorable, more emotionally engaging, more thrilling and shareable experience. To achieve these goals, we rely on the knowledge, skills and expertise of our leadership team, including our NEOs. Our overarching compensation philosophy is to pay for performance. We endeavor to attract and retain the necessary talent to deliver on our strategic objectives, to motivate performance achievement by promoting a pay-for-performance culture, to align executives’ interests to those of our shareholders by having a significant portion of total compensation tied to company performance and to reward superior performance. The following principles have guided us in developing our compensation programs and in determining the total compensation for our NEOs.

Our business is unique, dynamic and complex given our rapid growth, increasingly global footprint and critical relationships within the worldwide entertainment industry.

 

Our NEOs should act in a manner that balances short-term growth and investments with sustainable long-term value creation for our shareholders, without creating undue risk.

Aligning Compensation with our Strategic Objectives

In assessing an individual executive’s performance and aligning it to his or her compensation, the achievement of individual, department and corporate strategic objectives are taken into consideration. For each assessment, the metrics below are used. As noted above, due to the Company’s focus on cost controls during the COVID-19 pandemic, the Compensation Committee determined that our executives will not receive a payment of annual cash bonus for 2020.

Performance Metric

Where It Is Used

Why It Matters to IMAX

Adjusted EPS

     Annual Cash Bonus

Measure of overarching corporate performance, is a key metric used by our investors and is a good indicator of our profitability as it affects stock price

Adjusted EBITDA

     Annual Cash Bonus

     PSUs

Used by investors to evaluate the Company’s operating performance

Free Cash Flow

     Annual Cash Bonus

Measure of the Company’s after-tax cash flow available to reduce debt, add to cash balance and fund other financing activities

Signings

     Annual Cash Bonus

Demonstrates the growth of our network and the geographic and system mix of installations

Global Box Office

     Annual Cash Bonus

Reflects significant driver of revenue from IMAX DMR films and joint revenue sharing arrangements

Relative TSR

     PSUs

Ensures that long-term compensation payouts are aligned with our shareholders’ experience of investing in our stock relative to other companies

 

 

30


 

 

Compensation Elements

Core Compensation Elements

The IMAX executive compensation program consists of three core elements. Depending on an individual’s role, he or she may be eligible to participate in other plans either in addition to or instead of one or more detailed below.

Element

Purpose

Key Features

Base Salary

Compensate for services during the year

 

Provide a base level of income and cash flow

 

Take into consideration the competition for top talent in the industry

 

      Specified within an NEO’s employment agreement and/or reviewed and amended during the Company’s annual review period. In all cases, the Compensation Committee reviews and approves all NEO base salaries

      Takes account of a number of factors including:

     the role and its associated responsibilities

      the NEO’s capability, knowledge, skills and experience within the context of the role requirements

      market data for similar roles

      actual and relative performance and contributions

      the overall total compensation for the role

 

Annual Cash Bonus

Link short-term incentive compensation to the achievement of specific performance metrics that are consistent with corporate strategic priorities and objectives

 

Recognize and reward individual performance and relative contribution, in addition to rewarding Company performance

 

      No guaranteed bonuses

      Target bonuses specified within an NEO’s employment agreement and range from 60% to 100% of salary

      CEO bonus capped at two-times salary

      Performance assessment takes account of a combination of Company and individual performance

      For NEOs other than the CEO, these are generally weighted equally

      Subject to clawback policy

Long-Term Incentives

Create alignment between NEOs and shareholders

 

Recognize scope of responsibilities

 

Reward demonstrated performance

 

Encourage retention

      Provided through a combination of PSUs and RSUs

      In 2020, PSUs represent 50% of the CEO’s equity mix and 25% of the equity mix for the other NEOs (increases to 33% in 2021)

      Award values specified within an NEO’s employment agreement or determined during the annual performance review and equity grant process and consider performance, total compensation, scope of responsibility, importance of retention, market data and internal relativities

      PSUs vest after three years subject to the achievement of Adjusted EBITDA (60%) and relative TSR vs. the Russell 2000 (40%) conditions

      RSUs vest in equal thirds over three years

      All NEOs have minimum share ownership requirements

      Subject to clawback policy

 

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Other Compensation Elements

These three elements are supplemented by additional benefits that include retirement and pension plans, and perquisites.

Element

Purpose

Key Features

Retirement and Pension Plans

Provide for long-term financial security

 

Encourage retention

     All employees are offered the opportunity to participate in a plan, based on their role and country of residence, including defined contribution employee retirement plans under Section 401(k) of the Internal Revenue Code in the United States and Registered Retirement Savings Plans in Canada

     Additionally, the CEO participates in the SERP and is the beneficiary of an unfunded retiree health benefit plan

 

Perquisites and Other Benefits

Enable a NEO to focus fully on their role

 

Provide for well‐being and security

 

Contribute to competitive overall pay practice

     Executive supplemental health plan

     Executive wellness program

     Car‐related benefits (company car or car allowance) and the ability to be reimbursed for reasonable car‐related expenses

     For certain NEOs, death in service benefits (lump sum payment under company life insurance policies), premiums on supplemental life insurance policies and reimbursement of qualifying expenses related to tax, financial and estate planning services, charitable giving, business club memberships and incidentals

 

Target Compensation Mix

The three core elements of an executive officer’s target compensation are assessed separately and in combination relative to the market, typically upon entry into or the renewal of an employment agreement, or in association with a promotion or change in role scope or during the Company’s annual performance review and compensation review process. The Compensation Committee believes that an NEO’s compensation levels and mix should reflect the scope and impact of his or her role in contributing to Company performance. As the scope and impact of an individual role increases, the following principles take hold:

A higher percentage of short-term and long-term compensation should be variable and at risk and based on specific metrics of Company performance, as well as individual performance and contribution.

 

A higher percentage of total compensation should be long-term in nature, to motivate actions conducive to long-term growth and success aligned to shareholder interests and tied to increasing shareholder value in a sustainable manner.

 

Equity compensation should increase as a percentage of total compensation, to further align an NEO’s interests with those of our shareholders, encouraging sustainable growth, long-term profits and an ownership mentality.

 

We annually determine the appropriate level of incentive compensation based on an NEO’s performance, relative contribution and company performance. Other factors we consider in determining the appropriate mix of an NEO’s incentive compensation include the ability of the executive to further corporate business objectives, particularly key strategic and operational initiatives, their management and budgetary responsibility, the importance of retention and his or her level of seniority.

While this target compensation mix was designed prior to the unexpected impact of COVID‐19, the Compensation Committee determined that the emphasis on long‐term variable compensation remains conducive to the Company’s long‐term growth and success. For 2020, the Compensation Committee did not make adjustments to any NEO’s target compensation mix, maintaining a target total direct compensation for the CEO and other NEOs placed with significant emphasis on equity compensation (70% for the CEO and 52% for the other NEOs on average) and on overall variable compensation (Long-Term Incentive Plan (the “LTIP”) and target bonus together, which accounted for 85% for the CEO and 73% for the other NEOs on average). Although the mix was not shifted, as described in this CD&A, the Compensation Committee determined to not make any payments under the short‐term variable compensation component of our target compensation mix for 2020.

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CEO (1)

Other NEOs (2)

 

 

(1)

Reflects target compensation mix for 2020 – comprised base salary and target annual bonus and target equity awards; excludes the one-time bridging awards.

 

 

(2)

Reflects target compensation mix for 2020 - comprised base salary, target annual bonus and target equity awards; excludes the one‐time bridging awards.

 

Good Governance Policies and Practices

There are several policies and practices that the Compensation Committee has approved or avoided, to reflect the best interests of our shareholders and take account of the high governance standards to which we hold ourselves accountable. These are summarized below.

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What We Do

 

What We Avoid

    Link executive pay to IMAX performance and shareholder interests through our annual and long-term incentive plans

 

 

      No single-trigger change-in-control provisions for long-term incentive awards

    Balance short- and long-term incentives, cash and equity, and fixed and variable pay appropriately

 

      No evergreen share reserves

    Deliver the majority of target compensation based on direct and/or indirect (stock price exposure) performance

 

      No hedging or pledging of equity holdings

    Deliver long-term equity compensation in a combination of time-based RSUs and performance-based PSUs

 

      No re-pricing of underwater stock options without shareholder approval

    Use performance metrics that clearly align with our business strategy and key strategic drivers

 

      No tax gross-ups on perquisites

    Compare compensation and performance to a relevant group of comparator companies

 

      No 280G excise tax gross-ups

    Conduct an annual “Say-on-Pay” vote

 

      No guaranteed bonuses

    Require NEOs, a broader group of our executives, and outside directors to meet designated share ownership requirements

 

 

    Maintain a clawback policy and clawback provisions in employment and incentive agreements to provide the ability to recoup unearned incentive compensation

 

 

    Provide only limited and reasonable perquisites

 

 

    Engage an outside independent compensation consultant

 

 

 

Executive Compensation Processes

 

Compensation Committee Oversight

The Compensation Committee is comprised solely of independent directors who, at the end of 2020, were Darren Throop (Chair), Kevin Douglas and Dana Settle. The Chairman of the Board, Bradley J. Wechsler, and our Lead Independent Director, David W. Leebron, are invited to attend Compensation Committee meetings but are not formal members.

Details of the Compensation Committee’s duties are summarized in “Corporate Governance” on page 57 and are fully documented in the Compensation Committee’s written charter which can be found on the Company’s corporate website – www.imax.com.

The overarching purposes of the Compensation Committee are to discharge the responsibilities of the Board relating to the compensation of the Company’s executive officers and to administer the Company’s Management Bonus Plan and long-term incentive plans. Specifically, the Compensation Committee:

 

prepares and approves the compensation package of the CEO;

 

reviews and approves corporate factors relevant to the compensation of the CEO and evaluates the performance of the CEO against these factors;

 

reviews all new employment, consulting, retirement and severance arrangements for the CEO;

 

reviews and discusses shareholder and/or proxy advisor feedback relating to compensation matters;

 

reviews and approves annually the components and the amount of compensation paid to potential NEOs;

 

evaluates and makes recommendations to the Board of Directors regarding our equity-based and incentive compensation plans, policies and programs;

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performs the functions required of it under the Company’s equity incentive plans, such as the granting of awards;

 

publishes disclosure required by regulations including the annual Compensation Committee Report to shareholders on the Company’s executive compensation policies and programs;

 

periodically assesses the adequacy of the Compensation Committee Charter and recommends changes to the Board;

 

conducts a review and evaluation of the Compensation Committee’s operating effectiveness and reports to the Board the results of the evaluation; and

 

reviews this CD&A and recommends to the Board of Directors its inclusion in this Circular.

Role of Outside Consultants

As set out in its Charter, the Compensation Committee has the authority to retain outside consultants to provide independent advice to the Compensation Committee.

In 2020, the Compensation Committee retained Willis Towers Watson (“WTW”) as its independent compensation consultant. WTW reported directly to the Compensation Committee. During the year WTW provided advice on proxy advisor and investor views related to the impact of COVID-19 on executive compensation; potential changes to the compensation program as compared to market practice; and general ongoing advice related to executive compensation, as requested. The Compensation Committee considers and incorporates the analysis and advice from WTW as well as support and insight from management when making decisions. Other nominal services were provided to management during the year related to drafting the CD&A, incentive design below the executive level and employee communication, that cost no more than an aggregate total of $120,000 in fees. While pre-approval by the Compensation Committee is not required to authorize such services for management, the Compensation Committee was made aware at the outset of the services WTW provided to management. In considering WTW independence, the Compensation Committee reviewed several factors relating to WTW and the individuals providing services to us and the Compensation Committee. Based on a review of these factors, including those required by the SEC and NYSE, the Compensation Committee determined that (i) WTW is independent and (ii) WTW’s engagement presents no conflicts of interest.

In 2020, Mercer (Canada) Inc. (“Mercer”) provided the Company with services related to the post-retirement medical benefit plan for Mr. Gelfond. Mercer’s aggregate fees for such services did not exceed $120,000. Mercer did not provide any services to the Compensation Committee in 2020.

In 2020, Exequity, LLP (“Exequity”), an independent executive compensation consulting firm, provided management with advice on the impact of COVID-19 on executive compensation programs and potential changes to our compensation program as compared to of market practice. Exequity’s aggregate fees for such services did not exceed $120,000. Exequity did not provide any services to the Compensation Committee in 2020.

Role of Management

The Compensation Committee is accountable for any changes in compensation or employment terms for the CEO, who is not included in any committee discussions or decisions regarding changes to his own compensation.

The Board of Directors has determined that to best align executive compensation with our shareholders’ interests and the Company’s business strategy, the CEO should make recommendations to the Compensation Committee with respect to the compensation of the other NEOs, given his familiarity with day-to-day operations and insight into executive performance. Accordingly, for the other NEOs, recommendations are made by the CEO and subsequently reviewed and approved by the Compensation Committee.

Each year, the CEO reviews the performance of each of the senior executives, in consultation with the Chief People Officer and other supervising executives as appropriate, and makes recommendations on all elements of compensation, except for those components of compensation already set out in an NEO’s employment agreement. In such situations, the CEO makes recommendations on the relevant elements of compensation at the time the employment agreement is being negotiated.

Evaluating Compensation

In evaluating the compensation for an NEO, the Compensation Committee or the CEO, as applicable, considers the following:

 

the individual’s skill set, experience, historical performance and expected future contribution, and the impact, including direct and indirect financial and non-financial costs to the Company if the individ