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
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IMAX Corporation 902 Broadway, 20th Floor New York, New York, U.S.A. 10010 |
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| April 27, |
I hope this letter finds you healthy, safe,Dear Fellow Shareholders:
IMAX’s industry-leading performance in 2021 underscores the superiority of our technology, the strength of our unique model, and the global power of our brand and platform. In a year earmarked for recovery, IMAX drove unqualified success — like alldoubling the recovery growth rate of us herethe industry and recording its largest market share ever of the global box office.
For 2022 and beyond, our ambition is to build on our lead at the box office, and further establish IMAX — full of optimism as the endpremier global technology platform for entertainment and events.
First, it is clear that global audiences are eager to get back to the movies — and, more specifically, IMAX. IMAX finished 2021 with its highest grossing fourth quarter ever, and now enters a 2022 slate representing the most bankable franchises, filmmakers, and stars in the world. More releases than ever feature IMAX technology — from Doctor Strange in the Multiverse of Madness to Top Gun: Maverick to director Jordan Peele’s Nope. The year concludes with the pandemic startshighly anticipated Avatar 2, the sequel to come into view.the film that still stands at the highest grossing IMAX release of all time.
As I wrote to you last year, IMAX felt the impactWe’ve also dramatically accelerated our offering of COVID-19 earlier than many companies by nature of our formidable position in China. Now, as theaterslocal language films around the world, reopen, we are beginning to emerge from the pandemic ahead of manyacross China and Japan, as well as fast-growing film industries 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,India 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, IMAX had its best year ever in 2021 for local language box office.
We’re building on our success to further transform The IMAX Experience®. We continue to experiment with live and interactive events, including our first-ever live concert in December featuring Kanye West and Drake and our exclusive presentation of The Beatles: Get Back earlier this year. We also took a big step forward for our achievements in Asia, our message toIMAX® Enhanced in-home entertainment initiative when we launched on Disney+ late last year.
Around the world has been strong and consistent: where people feel safeacross platforms, IMAX continues to evolve into a destination for fandom of all kinds, 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 contentunique events 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.globally.
I invite you to attend our 20212022 Annual and Special Meeting, scheduled to be held on June 9, 20212022 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
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NOTICE of ANNUAL and SPECIAL MEETING of SHAREHOLDERS
to be held on
Wednesday,Thursday, June 9, 20212022
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:at: https://web.lumiagm.com/223853148meetnow.global/MH4GGMA on Wednesday,Thursday, June 9, 20212022 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, |
| (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; and |
| (5) |
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| 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 on April 12, 202111, 2022 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,meetnow.global/MH4GGMA, 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 meetingMeeting 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 usernamean invite code to participate and 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, 8th Floor, Toronto, Ontario, Canada, M5J 2Y1 or at the Company’s address noted above on or before 10:00 a.m. (Eastern Time) on Monday,Tuesday, June 7, 2021.2022. 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.
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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
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(i)
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CODE OF BUSINESS CONDUCT AND ETHICS AND INSIDER TRADING POLICY |
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REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED PERSONS |
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iii(ii)
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, 20202021 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.
(iii)
IMAX Corporation
902 Broadway, 20th Floor
New York, New York, U.S.A. 10010
This Proxy Circular and Proxy Statement (the “Circular”) is furnished in connection with the solicitation by the management of IMAX Corporation (the “Company”,“Company,” “we” or “us”) of proxies to be used at our Annual and Special Meeting of Shareholders, which will be conducted as a virtual meeting to be held via live audio webcast online at: https://web.lumiagm.com/223853148meetnow.global/MH4GGMA on Wednesday,Thursday, June 9, 20212022 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, 20212022 to holders of our common shares, no par value (the “Common Shares”).
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Registered shareholders and duly appointed proxyholders who participate atin 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”.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, 20212022
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 formForm of proxyProxy or voting instruction form.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 also 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.
The Board of Directors has fixed April 12, 2021,11, 2022 as the record date for the Meeting. As of April 12, 2021,11, 2022, we had 59,358,67958,521,838 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, 2021.11, 2022. You are entitled to one vote on each proposal for each Common Share you held on the record date. The holders of record of 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.
Difference betweenBetween a Shareholder of Record and a Beneficial Holder
If your Common Shares are registered directly in your name on a share certificate or a direct registration system statement, you are considered the shareholder of record with respect to those Common Shares. If you are a shareholder of record, you will receive a Form of Proxy for this Meeting.
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”.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.
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VOTING IN ADVANCEADVANCE OF THE MEETING
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”.Meeting.”
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,Tuesday, June 7, 2021,2022, 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,Tuesday, June 7, 2021,2022, or on the second to last business day prior to any postponed or adjourned meeting. Please refer to the holder account number and 15-digit 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 15- digit 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,Tuesday, June 7, 2021,2022, 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.
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.
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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”,“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 shethe proxyholder 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 shethe proxyholder 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; and
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.Officers.
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 12,13 and “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 15.14.
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 HoldersVOTING 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”.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.
See below under “Voting at the Meeting”.
Voting throughThrough 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,Monday, June 4, 2021,6, 2022, 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,Monday, June 4, 2021,6, 2022, or on the third to last business day prior to any postponed or adjourned meeting. Please refer to the 15-digit 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,Monday, June 4, 2021,6, 2022, or on the third to last business day prior to any postponed or adjourned meeting. Please refer to the 15-digit control number provided on the Voting Instruction Form.
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 1B1902 Broadway, Floor 20, New York, New York, USA 10010, Attention: Investor Relations, 905-403-6500.212-821-0100. 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”.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 shethe broker 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.
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 usernamean invite code 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.Computershare in order to register to attend the meeting. 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.USLegalProxy@computershare.com. Requests for registration must be labeled as “Legal Proxy” and be received no later than June 7, 20216, 2022 by 10:00 a.m. (Eastern Time). You will receive a confirmation of your registration by email after Computershare receives your registration materials. You may attend the virtual meeting and vote your shares at https://meetnow.global/MH4GGMA during the Meeting. 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 thatprior to registering their 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 usernamean invite code to voteparticipate 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,intermediary, follow all of the applicable instructions provided by your Intermediaryintermediary AND register yourself as your proxyholder, as described below. By doing so, you are instructing your Intermediaryintermediary to appoint you as proxyholder. It is important that you comply with the signature and return instructions provided by your Intermediary.intermediary. Please also see further instructions below under the heading “How Do I Attend and Participate at the Meeting?”.
5
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, 20206, 2022 and provide Computershare with the required proxyholder contact information so that Computershare may provide the proxyholder with a control number for a usernamean invite code via email to participate in the Meeting. Without a control number for a username,an invite code, proxyholders will not be able to vote at the Meeting but will only be able to participateattend 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 duly appointed proxyholders must have received an email from Computershare containing an invite code. A shareholder of record or a username.duly appointed proxyholder will appear on a list of proxyholders prepared by Computershare, who is appointed to review and tabulate proxies for this Meeting. To be able to vote their shares at the meeting, each shareholder of record or duly appointed proxyholder will be required to enter their 15-digit control number or invite code provided by Computershare at https://meetnow.global/MH4GGMA prior to the start of the meeting.
Log in online at: https://web.lumiagm.com/223853148meetnow.global/MH4GGMA 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”“Shareholder” 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.Computershare.
OR
If you are a duly appointed proxyholder click “I have a login”“Invitation” and then enter your four-digit usernamethe invite code that was provided to you by Computershare, after the voting deadline passed and “Imax2021” (case sensitive) as the password.which will be provided. 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”“Guest” and then complete the online form. Guests can listen to the Meeting but are not able to vote or submit questions.
The virtual meeting platform is fully supported across most commonly used web browsers (note: Internet Explorer is not a supported browser). 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 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. 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 20212022 ANNUAL AND SPECIAL MEETING
Item No. | Vote Required | Broker Discretionary Voting Allowed |
| Plurality of Votes Cast at the Meeting | No |
| Majority of Votes Cast at the Meeting | Yes |
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| 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.
6
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, 2021,11, 2022, we had 59,358,67958,521,838 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 20222023 ANNUAL MEETING
If a shareholder wishes to propose any matter for a vote by our shareholders at our 20222023 Annual Meeting of Shareholders, he or shesuch shareholder must send his or herthe 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, 2021.2022.
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 1B1,902 Broadway, Floor 20, New York, New York, USA 10010, 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, 202111, 2022 beneficially owned or exercised control or direction over more than 5% of our Common Shares other than:
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| Amount and Nature of |
| Percentage of |
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| Amount and Nature of |
| Percentage of |
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| Beneficial Ownership |
| Outstanding |
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| Beneficial Ownership |
| Outstanding |
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Name and Address of Beneficial Owner of Common Shares |
| of Common Shares |
| Common Shares |
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| of Common Shares |
| Common Shares |
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Douglas Group |
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| 8,915,600 |
| (1) |
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| 15.0% |
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| 8,921,185 |
| (1) |
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| 15.24% |
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Kevin and Michelle Douglas |
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James E. Douglas, III |
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K&M Douglas Trust |
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Douglas Family Trust |
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James Douglas and Jean Douglas Irrevocable Descendants’ Trust |
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KGD IDGT |
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MMD IDGT |
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Celtic Financial LLC |
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125 E. Sir Francis Drake Blvd., Suite 400, Larkspur, CA 94939 |
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Invesco Ltd. |
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| 3,262,193 |
| (2) |
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| 5.5% |
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Invesco Advisers. Inc. |
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Invesco Capital Management LLC |
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1555 Peachtree Street NE, Suite 1800, Atlanta, GA 30309 |
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300A Drakes Landing Road, Suite 200, Greenbae, CA 94904 |
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Nantahala Capital Management, LLC |
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| 5,197,490 |
| (2) |
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| 8.88% |
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Messrs. Harkey and Mack |
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130 Main Street. 2nd Floor, New Canaan, CT 06840 |
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Richard L. Gelfond |
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| 3,083,002 |
| (3) |
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| 5.03% |
| ||||||||||||
902 Broadway, 20th Floor, New York, NY 10010 |
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The percentage of outstanding Common Shares is based on dividing the number of Common Shares beneficially owned by such person by 59,358,67958,521,838 Common Shares outstanding as of April 12, 2021.11, 2022.
7
(3) | Mr. Gelfond has sole voting |
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, 2020,2021, 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, 20202021 (the “2020“2021 Form 10-K”), which is being mailed to our shareholders together with this Circular.
MATTERS TO BE CONSIDERED AT THE 2021 AND SPECIAL2022 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. 1 - ELECTION OF DIRECTORS
Our articles provide that the Board of Directors may be comprised of a minimum of 1one 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 nineeight 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, Steve Pamon, Dana Settle, and Darren Throop and Bradley J. Wechsler.Throop. 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 9, 10, 11 and 12 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.
Shareholders who wish to have the Board of Directors consider the nomination of any person for director at the 20222023 Annual Meeting of Shareholders should communicate with the Corporate Secretary. See the description in “Nomination Process” on page 6063 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”.“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.
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 20222023 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.
8
Nominees for Election as Directors for the Term Expiring in 20222023
RICHARD L. GELFOND Director (since March 1994) and Chief Executive Officer
Age: New York, New York, U.S.A.
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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.
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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.
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DARREN THROOP Chairman of the Board of Directors and Director (since June 2015) Age: 57 Toronto, Ontario, Canada Committee Memberships: Compensation Committee | 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. |
ERIC A. DEMIRIAN Director (since September 2010)
Age: Toronto, Ontario, Canada
Committee Memberships: Audit Committee (Chair)
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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)
Mr. Demirian serves as non-executive Chair of the Board of Directors of Descartes Systems Group. He also serves on the
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Key Skills and Experience: Mr. Demirian’s accounting experience combined with his substantial business and transaction experience |
KEVIN DOUGLAS Director (since October 2016)
Age:
Committee Memberships: Compensation Committee (Chair)
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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.
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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.
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10
DAVID W. LEEBRON Director (since September
Age: Houston, Texas, U.S.A.
Committee Memberships: Governance Committee (Chair) Audit Committee
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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 will step down from his position as president of Rice University on June 30, 2022.
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.
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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: Toronto, Ontario, Canada
Committee Memberships: Audit Committee Governance Committee
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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
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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.
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11
STEVE R. PAMON Director
Age: South Orange, New Jersey, U.S.A. Committee Memberships: Governance Committee | 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.
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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: Los Angeles, California, U.S.A.
Committee Memberships: Compensation Committee Governance Committee
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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).
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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.
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12
Item No. 2 - APPOINTMENTAPPOINTMENT 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”.“ABSTAIN.”
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, 20202021 and 2019,December 31, 2020, and fees billed for other services rendered by PwC during those periods.
Type of Fees |
| 2020 ($) |
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| 2019 ($) |
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| Description of Fees |
| 2021 ($) |
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| 2020 ($) |
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| Description of Fees | ||||
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| 1,941,000 |
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| 1,677,000 |
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| 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. |
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| 1,779,000 |
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| 1,941,000 |
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| For professional services rendered 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. | |
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| 89,000 |
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| 81,000 |
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| 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. |
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| 248,000 |
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| 89,000 |
|
| For professional services rendered 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 2021, audit-related fees principally consisted of comfort letter fees associated with the issuance of our convertible notes and, to a much lesser extent, the reimbursement of Canadian Public Accountability Board fees; fees for the audits of the Company’s pension plans; and various other smaller matters. In 2020, audit-related fees consisted primarily of the reimbursement of Canadian Public Accountability Board fees; fees for the audits of the Company’s pension plans; and various other smaller matters. | |
|
| 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. |
|
| 394,000 |
|
|
| 332,000 |
|
| For professional services rendered in connection with tax advice, tax planning, and tax compliance. In 2021 and 2020, tax fees consisted primarily of tax advice related to transfer pricing including APA support and corporate tax consulting in multiple jurisdictions and audit defense. Tax compliance related fees represented $97,000 and $246,000 of the total tax fees in 2021 and 2020, respectively, including corporate tax compliance, indirect tax compliance and various smaller items. | |
|
| 23,000 |
|
|
| — |
|
| For HKSE requirement-Environmental, Social and Governance and Corporate Governance Code reporting |
|
| 26,000 |
|
|
| 23,000 |
|
| For professional services rendered related to HKSE requirement - Environmental, Social and Governance and Corporate Governance Code reporting in 2021 and 2020, as well as knowledge library license fees in 2021. | |
Total |
|
| 2,385,000 |
|
|
| 2,255,000 |
|
|
|
|
| 2,447,000 |
|
|
| 2,385,000 |
|
|
|
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.versus 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.
13
Item No. 3 – ADVISORY VOTE ON NAMED EXECUTIVEEXECUTIVE 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 20192021 shareholder Say-on-Pay vote at the 20192021 Annual and Special Meeting of Shareholders. In connection withWhile our result represented a modest improvement from 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,prior year, the Compensation Committee and management developed an aggressive, targetedwere sensitive to the fact it was below market norms. In response, we continued to increasingly engage in shareholder engagement plan focused on soliciting detailed feedback on the Company’s executiveoutreach in 2021 and 2022 to further and better understand and address shareholders’ thoughts regarding our compensation program. This engagement allowed shareholders to speak to membersIn 2021 and early 2022, management contacted the holders of approximately 50% and 55%, respectively, of our Board of Directors, including the Chair, our Lead Independent Directoroutstanding shares, and a memberengaged in active discussions with investors who requested meetings, representing approximately 30% and 44%, respectively, of our Compensation Committee.shares outstanding. 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.
Through the course of conducting these meetings, we received a range of helpful and insightful responses and feedback, including the following:
As a result of those meetings, in 2020,unanimous strong support for the Compensation Committee has implemented numerous material changes made 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 andresponse to previous shareholder engagement efforts, which includes, among other NEOs, granted to the CEO in January 2020 and other NEOs in March 2020;
amending the CEO’s employment agreement to include:things:
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▪ | quantifiable metrics to determine 80% of the |
▪ | an equal annual granting and vesting of RSUs instead of a front-loaded grant. |
revisingagreement with the scopeCompany’s selection of companies for its compensation comparator group analysis of the clawback provisionCEO’s compensation within the peer group;
appreciation of the Company’s ongoing Board refreshment efforts and improvement in our CEO’s employmentdiversity on the Board of Directors and in senior management; and
recognition of the value of the Company’s adoption of a formal environmental, social and governance (“ESG”) framework and related initiatives and agreement with the Company’s direction on social and adopting a corporate clawback policy;governance matters.
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 evaluategenerally noted that our executive compensation program for further improvement as described below inaligned with their expectations. For a detailed discussion on our shareholder engagement efforts, please see “Compensation Discussion and Analysis.”Analysis — Shareholder Engagement” on page 35.
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 2324, 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 for the CEO, 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. The Compensation Committee believes that our compensation program promotes a performance-based culture and aligns the NEOs’ interests with those of our shareholders through a strong emphasis on at-risk compensation tied to the achievement of performance objectives and shareholder value. Our compensation program is also designed to attract and retain highly talented executives in an extremely competitive entertainment landscape who are critical to the successful implementation of the Company’s strategic plan, a plan which is increasingly connected to and reliant upon the evolution of digital entertainment media.
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.
14
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.votes, which will be in 2023. 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.response to shareholder feedback. 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.
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’sComKevinpany’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, 2021.2022.
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. 115
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.
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.
The following table sets forth certain information regarding our executive officers as of April 27, 2021.11, 2022.
Name | Age | Position |
EXECUTIVE OFFICERS: | ||
Richard L. Gelfond |
| Chief Executive Officer (“CEO”) and Director |
|
| Interim Chief Financial Officer (“CFO”) |
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 |
Jacki Bassani |
| Executive Vice President and Chief People Officer |
Denny Tu |
| Chief Marketing Officer and Senior Vice President |
Giovanni M. Dolci |
| Chief Sales Officer |
Edwin Tan |
| Chief Executive Officer, IMAX China Holding, Inc. |
Kenneth I. Weissman |
| Senior Vice President, Legal Affairs and Corporate Secretary |
Kevin M. Delaney |
| Senior Vice President, Finance and Controller |
OTHER KEY EXECUTIVES: | ||
50 | Head of Enterprise Transformation | |
Pablo Calamera |
| Chief Technology Officer and Executive Vice President |
Craig Dehmel |
| Executive Vice President, Head of Global Distribution, IMAX Entertainment and |
|
| Senior Vice President, IMAX Corporation |
|
| Deputy Chief Financial Officer and Senior |
Bruce Markoe |
| Senior Vice President of Post Production, Operations and DMR |
Mo Rhim |
| 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.
|
16
Interim Chief Financial Officer
|
Young. Mr. Mr. Sparacio also serves as a Board Member for Vydia, Inc. (September 2016 to present) and Mr. Sparacio will conclude his role as Interim Chief Financial Officer of the Company on April 30, 2022.
|
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
|
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, a wholly-owned subsidiary of IMAX Corporation, 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.
|
17
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. |
JACKI BASSANI Executive Vice President and Chief People Officer
|
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.
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, IMAX Corporation 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
|
18
19
KEVIN M. DELANEY Senior Vice
| 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.
|
20
CRAIG DEHMEL Executive Vice President,
|
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 language, 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 Mr. Dehmel has a |
Deputy Chief Financial Officer and Senior Vice President
|
Ms. Fernandes is a |
21
BRUCE MARKOE Senior Vice President of
|
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 the USC School of Cinema along with speaking and presenting at many motion picture industry seminars and panels. |
MO RHIM Senior Vice President of |
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
|
22
2020 EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information regarding our Equity Compensation Plans as of December 31, 2020.
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SECURITY OWNERSHIP OF DIRECTORSDIRECTORS AND MANAGEMENT
The following table sets forth information with respect to the beneficial ownership of our Common Shares as of April 12, 202111, 2022 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) |
|
| 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% |
|
|
|
| 369,987 |
|
|
|
|
| 2,713,015 |
| (3) |
|
|
| 3,083,002 |
|
|
| 5.03% |
| |
Bradley J. Wechsler |
|
|
| 217,322 |
| (4) |
|
|
| — |
|
|
|
|
| 217,322 |
|
|
| * |
| ||||||||||||||||||||||
Neil S. Braun |
|
|
| 48,397 |
| (5) |
|
|
| — |
|
|
|
|
| 48,397 |
|
|
| * |
| ||||||||||||||||||||||
Eric A. Demirian |
|
|
| 45,281 |
| (6) |
|
|
| — |
|
|
|
|
| 45,281 |
|
|
| * |
|
|
|
| 47,876 |
|
|
|
|
| — |
|
|
|
|
| 47,876 |
|
|
| * |
| |
Kevin Douglas |
|
|
| 8,915,600 |
| (7) |
|
|
| — |
|
|
|
|
| 8,915,600 |
|
|
| 15.0% |
|
|
|
| 8,921,185 |
| (4) |
|
|
| — |
|
|
|
|
| 8,921,185 |
|
|
| 15.24% |
| |
David W. Leebron |
|
|
| 96,868 |
| (8) |
|
|
| — |
|
|
|
|
| 96,868 |
|
|
| * |
|
|
|
| 102,453 |
| (5) |
|
|
| — |
|
|
|
|
| 102,453 |
|
|
| * |
| |
Michael MacMillan |
|
|
| 23,245 |
| (9) |
|
|
| — |
|
|
|
|
| 23,245 |
|
|
| * |
|
|
|
| 25,840 |
|
|
|
|
| — |
|
|
|
|
| 25,840 |
|
|
| * |
| |
Steve Pamon |
|
|
| — |
|
|
|
|
| — |
|
|
|
|
| — |
|
|
|
| — |
|
|
|
| 5,585 |
|
|
|
|
| — |
|
|
|
|
| 5,585 |
|
|
| * |
|
Dana Settle |
|
|
| 33,575 |
| (10) |
|
|
| — |
|
|
|
|
| 33,575 |
|
|
| * |
|
|
|
| 39,160 |
|
|
|
|
| — |
|
|
|
|
| 39,160 |
|
|
| * |
| |
Darren Throop |
|
|
| 15,734 |
| (11) |
|
|
| — |
|
|
|
|
| 15,734 |
|
|
| * |
|
|
|
| 19,263 |
|
|
|
|
| — |
|
|
|
|
| 19,263 |
|
|
| * |
| |
Patrick McClymont |
|
|
| 62,328 |
| (12) |
|
|
| 112,303 |
|
|
|
|
| 174,631 |
|
|
| * |
| ||||||||||||||||||||||
Patrick McClymont (6) |
|
|
| 62,328 |
|
|
|
|
| — |
|
|
|
|
| 62,328 |
|
|
| * |
| ||||||||||||||||||||||
Joseph Sparacio (7) |
|
|
| 13,925 |
|
|
|
|
| 4,948 |
| (8) |
|
|
| 18,873 |
|
|
| * |
| ||||||||||||||||||||||
Megan Colligan |
|
|
| 39,096 |
| (13) |
|
|
| 71,385 |
|
|
|
|
| 110,481 |
|
|
| * |
|
|
|
| 70,022 |
|
|
|
|
| 109,098 |
| (3) |
|
|
| 179,120 |
|
|
| * |
| |
Robert D. Lister |
|
|
| 87,924 |
| (14) |
|
|
| 224,568 |
|
|
|
|
| 312,492 |
|
|
| * |
|
|
|
| 92,804 |
|
|
|
|
| 188,229 |
| (3) |
|
|
| 281,033 |
|
|
| * |
| |
Mark Welton |
|
|
| 41,475 |
| (15) |
|
|
| 92,777 |
|
|
|
|
| 134,252 |
|
|
| * |
|
|
|
| 57,714 |
|
|
|
|
| 116,983 |
| (3) |
|
|
| 174,697 |
|
|
| * |
| |
All directors and executives (18 persons) |
|
|
| 9,977,640 |
| (16) |
|
|
| 3,242,340 |
|
|
|
|
| 13,219,980 |
|
|
| 21.1% |
| ||||||||||||||||||||||
All directors and executive officers (18 persons) |
|
|
| 9,836,389 |
|
|
|
|
| 3,166,969 |
| (9) |
|
|
| 13,003,358 |
|
|
| * |
|
* 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. The person named in the table has sole voting and investment power with respect to all of their Common Shares unless indicated otherwise. |
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COMPENSATION DISCUSSIONDISCUSSION AND ANALYSIS
Executive Summary | Page |
Overview of our Executive Compensation Program | Page |
Executive Compensation Processes | Page |
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Pay and Performance in | Page |
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, 2020.2021. For 2020,2021, our NEOs were:
Name | Role |
Richard L. Gelfond | Chief Executive Officer |
| Interim Chief Financial Officer |
Patrick McClymont (2) | Former 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 |
(1) | Mr. Sparacio was appointed as Interim Chief Financial Officer in June 2021. Mr. Sparacio will conclude his role as Interim Chief Financial Officer on April 30, 2022. |
(2) | Mr. McClymont resigned as Chief Officer and Executive Vice President effective May 14, 2021. |
See “Non-GAAP Financial Measures” on page 6872 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 “CDCD&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,March 25, 2022, and which is referred to herein as “Adjusted EBITDA per Credit Facility” or “Adjusted EBITDA”.EBITDA.”
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IMAX demonstrated consistent momentum throughout 2021 across key financial metrics, with performance in line with or exceeding pre-pandemic levels. Below lists the most significant highlights of COVID-19our 2021 financial performance.
We entered 2020 off the back of a recordOur global box office year, with financial strength, high brand engagement, continued investment in system technology and upgrades, and a robust slate of content forgrew year-over-year by 146%, more than double 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 spreadincrease seen by commercial exhibitors.
IMAX® theaters captured 3% of the virus, with movie theaters around the world closing and on-set filming largely stopping. The Company also prioritized the safety ofglobal market, 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, severallargest share ever 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.global box office. 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.
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 postedaccelerated in the fourth quarter. As described above,quarter, with IMAX taking 3.5% of the Company’s financial performance in 2020 was materially impacted by COVID-19. Although our full yearglobal box office and 5.6% of the domestic box office.
Fourth quarter global box office performance was adversely affectedour sixth highest grossing quarter ever.
For the full-year 2021, IMAX saw a dramatic, positive swing in profitability, of more than $80 million in Adjusted EBITDA per Credit Facility. We also drove solid improvement in virtually all results over the prior year, with net loss attributable to common shareholders improving from ($143.8) million to ($22.3) million, and our strong momentum evidenced in positive EBITDA every quarter since Q4 2020.
Our balance sheet remained strong with $516 million in available liquidity, following a raise of more than $200 million in a convertible debt offering at attractive rates and the repurchase of $14 million of IMAX common shares during the year.
The table below highlights significant ways, we believeimprovements in our key performance in Q4 demonstrates the early and clear signs of recovery, as presented below:indicators from fiscal 2020.
(In thousands of U.S. dollars, except percentages and per share amounts)
Q4 2020 Performance | Fiscal 2020 Performance | Fiscal 2021 Performance | Fiscal 2020 Performance | |
Global Box Office | $638,200 | $259,200 | ||
Revenue | $55,990 | $137,003 | $254,883 | $137,003 |
Global Box Office | $91,000 | $259,200 | ||
Gross Margin | $20,313 | $21,540 | $134,406 | $21,540 |
Gross Profit Margin | 36.3% | 15.7% | ||
Gross Margin Percentage | 52.7% | 15.7% | ||
U.S. GAAP Net Loss / Net Loss per Share (1)(2)(3) | $(21,245) / $(0.36) | $(143,775) / $(2.43) | $(22,329) / $(0.38) | $(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) | ||
Adjusted Net Loss / Adjusted Net Loss per Share (1)(3)(4) | $(8,420) / $(0.14) | $(112,063) / $(1.89) | ||
Adjusted EBITDA per Credit Facility (1)(4) | $68,642 | $(13,097) | ||
Net Cash Provided by (used in) Operating Activities | $6,065 | $(23,011) | ||
Free Cash Flow (4) | $6,058 | $(32,266) |
| (1) | Attributable to common shareholders. |
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| (2) | Results for the |
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| (3) | Results for the |
(4) | See “Non-GAAP Financial Measures” on page 72 for a reconciliation of all non-GAAP measurements to the most directly comparable U.S. GAAP measure and a description of how the non-GAAP numbers are calculated from our audited financial statements. |
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ResultsWhile our 2021 performance reflected IMAX’s ability to capitalize on improving pandemic conditions which impacted audience and studio behaviors, it also evidenced the success of our multi-year strategic efforts. As a premier global technology platform for entertainment and events, we have built a robust and comprehensive IMAX content portfolio consisting of Hollywood blockbusters, local language movies, exclusive events and experiences, and documentaries. Key achievements in 2021 include:
Seven of our top ten releases and more than 50% of our global box office included IMAX DNA, meaning they were either filmed in IMAX or featured an expanded aspect ratio with up to 26% more image.In 2020, four of our top ten releases and approximately 33% of our global box office included IMAX DNA.
Our efforts to diversify our creative partnerships drove our highest grossing year ever for local language films, with the fourth quarterhighest-grossing local language film in the world, China’s The Battle of 2020 reflectLake Changjin, using IMAX certified cameras.
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including a live Q&A with Mr. Coen and actress Frances McDormand streamed from the IMAX theater in Lincoln Square, New York, and West Side Story, featuring a live Q&A with director Steven Spielberg and his cast, which was streamed from an IMAX theater in Century City, California. Also, in the first quarter of 2022, we partnered with Disney to hold a special screening of The Beatles: Get Back – The Rooftop Concert, featuring a live Q&A with director and producer Peter Jackson streaming to 68 IMAX theaters worldwide. |
We launched our IMAX Enhanced consumer electronics platform on Disney+ in particular the strong performance ofNovember 2021, expanding our in-home entertainment footprint and extending the IMAX network in Chinabrand and Japan, where local language releases generated robust box office at near pre-pandemic levels, tappingtechnology 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 exhibitorstreaming environment.
We completed the production of our Xenon projectors as part of our transition to an all-Laser product line and consumer demand for The IMAX Experience®. expanded our Laser product suite. We believe that our Laser projectors provide greater brightness and clarity, higher contrast, a wider color gamut and deeper blacks, while consuming less power and lasting longer than existing digital technology, delivering the best, most immersive theatrical 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.
The IMAX global footprint as of December 31, 20202021 remained strong, consisting of 1,6501,683 IMAX theater systems (1,562(1,599 commercial multiplexes, 12 commercial destination, and 76 institutional)72 institutional locations) operating across 8487 countries and territories. Due toDespite the impact ofcontinued COVID-19 pandemic, the commercial multiplex network growth rate was lower in 2020 comparedcontinued 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.grow year-over-year. Network growth and system backlog are two of the keyimportant metrics used by the Board of Directors in evaluating management and Company performance, and are typically included in the Annual Incentive Planannual incentive plan scorecard.
Named Executive Officer Pay in 20202021
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 reflects2021, the base salaries for our NEOs were paid pursuant to the terms of their respective employment agreements, and all remained unchanged from 2020. Our executive compensation program emphasizes at-risk, variable pay with 85% of the NEOsCEO’s target compensation delivered in annual or long-term incentive awards. The CEO’s target compensation (base salary, bonus, and equity grants) has not increased since 2017. In addition, half of the CEO’s 2021 annual long-term incentive award was in the form of PSUs, which are subject to adjusted EBITDA and relative TSR performance goals as discussed further below. Please see section titled “Pay and Performance in 2021” in this CD&A for 2020:
Name | Currency |
| 2019 Salary ($) |
| 2020 Salary ($) | Change |
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Richard L. Gelfond | USD |
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| 1,200,000 |
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| 1,200,000 |
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| 0.0 | % |
Patrick McClymont (1) | USD |
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| 706,250 |
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| 750,000 |
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| 6.2 | % |
Megan Colligan (2) | USD |
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| 1,000,000 |
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| 1,030,000 |
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| 3.0 | % |
Robert D. Lister (3) | USD |
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| 715,000 |
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| 738,450 |
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| 3.3 | % |
Mark Welton (4) | CAD |
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| 715,000 |
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| 750,750 |
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a detailed discussion of NEO compensation.
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Mr. Sparacio was appointed as Interim Chief Financial Officer in June 2021, following the resignation of Mr. McClymont. Reflecting the interim nature of his role, Mr. Sparacio is entitled to an annual base salary of $500,000, which is 33% lower than Mr. McClymont’s, and a one-time award of RSUs with a grant date value of $650,000 in order to align his interests with those of our shareholders and the performance of IMAX. Mr. Sparacio was not eligible for an annual incentive award.In recognition of the extension of his services, Mr. Sparacio received an additional one-time RSU award of $100,000 granted on March 7, 2022. The RSU award will vest in full upon the successful completion of his extended term as interim CFO on April 30, 2022.
EachWith the exception of Mr. Sparacio, each of our NEOs is entitled to an annual cash bonus as set out in theirhis or her employment agreements,agreement, where applicable. Historically, theThe Compensation Committee would assessassessed each NEO’s individual performance and the Company’s strong overall performance highlighted above to determine the amount of the annual cash bonus. Given the circumstances presentedThis resulted in payouts, including our CEO’s, ranging from 107% to us in 2020, however, the Compensation Committee decided to forego any payment158% of a 2020 annual cash bonus.target.
Long-termIn 2021, long-term incentive awards were made to the NEOs comprisedin a combination of PSUs and RSUs, with 2020 marking50% of the CEO’s equity and 33% of other NEOs’ equity delivered in the form of PSUs. As part of our phased introduction of PSUs, into the proportion of the other NEOs’ annual equity mixdelivered in responsePSUs increased to feedback from shareholders. Awards of PSUs50% in 2022, meaning that all NEOs have an equally weighted equity mix. PSU awards are subject to stretching three-year 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: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) | PSU Vesting (% of Target) |
| Relative TSR Percentile Rank vs. Russell 2000 Over the Performance Period | PSU Vesting (% of Target) | |
<5.0% | 0% |
| < 40th | 0% | <5.0% | 0% |
| < 40th | 0% |
5.0% | 50% |
| 40th | 37.5% | 5.0% | 50% |
| 40th | 37.5% |
10.0% | 75% |
| 50th | 50% | 10.0% | 75% |
| 50th | 50% |
12.5% | 100% |
| 60th | 75% | 12.5% | 100% |
| 60th | 75% |
15.0% | 125% |
| 70th | 100% | 15.0% | 125% |
| 70th | 100% |
17.5% | 150% |
| 80th | 125% | 17.5% | 150% |
| 80th | 125% |
≥ 20.0% | 175% |
| ≥ 90th | 175% | ≥ 20.0% | 175% |
| ≥ 90th | 175% |
For target vesting, IMAX needs to deliver (i) an average annual Adjusted EBITDA growthIn addition, named executive officers received a one-time award 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 goalsRSUs in subsequent years will be similarly stretching. Inrespect of 2020 PSUs accounted for 50%performance. These bridging awards, granted in light of the annual equity miximpact of COVID-19 in general, and specifically the Company’s focus on cash containment, were disclosed last year. They were granted to retain key members of senior management, who performed strongly in managing the Company through the challenges of the CEO,pandemic, and 25% ofto drive the annual equity mixcontinued commitment and engagement required for the other NEOs. RSUs accounted forCompany to be successful during a period of recovery in our markets. Given the remaindertiming of these awards, which were granted in the annual equity mix. The proportionfirst quarter of 2021, the other NEOs’ annual equity deliveredawards are included in PSUs increases to 33%the 2021 Summary Compensation Table, notwithstanding their being granted in 2021.connection with 2020 performance.
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 illustratingcharts illustrate the relationship between Mr. Gelfond’s compensation in his capacity as our CEO and our performance. The first chart considers IMAX on an absolute basis, comparing Summary Compensation Table compensation for the last five years with TSR, indexed to $100 on January 1, 2016. For the purpose of this2017. The second 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.
In addition to showing correlationconsiders IMAX on an absolutea relative basis, this is also true when we compare IMAX’s CEOcomparing Mr. Gelfond’s realizable compensation and performance to our compensation comparator group inover the last three years, as illustratedyears. (Two companies that were included in the table below.2018 peer group, were excluded from the analysis; Glu Mobile Inc. was acquired by Electronic Arts Inc. in August of 2021 and TiVo Corporation merged with Xperi Holding Corporation in June 2020.)
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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 2020.2021. 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 confidentbelieves 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:
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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.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 |
| 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. | We are taking the next evolutionary step for our business, growing beyond theatrical blockbusters to include unique events and experiences globally. We compete for talented leaders with vision and expertise in the evolution of digital entertainment media. |
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.
Where It Is Used | Why It Matters to IMAX | |
Adjusted |
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| • 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 |
Liquidity | •Annual Cash Bonus | Demonstrates the Company’s ability to finance its obligations and pursue short-term and long-term strategies |
Signings | • Annual Cash Bonus | Demonstrates the growth of |
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 |
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The IMAX executive compensation program consists of three core elements. Depending on an individual’s role, he or shethe individual may be eligible to participate in other plans either in addition to or instead of one or more of the elements detailed below.
Element | Purpose | Key Features |
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
| • • ▪ ▪ ▪ ▪ ▪ | |
Link
Recognize and reward individual performance and relative contribution, in addition to rewarding Company performance
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• •Due to the challenging environment of the COVID-19 pandemic, no cash bonuses were paid to NEOs’ for 2020 performance | |
Create alignment between NEOs and shareholders
Recognize scope of responsibilities
Reward demonstrated performance
Encourage retention | • • • • • • • |
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These three elements are supplemented by additional benefits that include retirement and pension plans, and perquisites.
Purpose | Key Features | |
Provide for long-term financial security
Encourage retention | • • | |
Enable
Provide for well‐being and security
Contribute to competitive overall pay practice | • • • •
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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 compensationFor 2021, the incentive mix was designed priorchanged to increase the unexpected impactproportion of COVID‐19,performance-based equity in the Compensation Committee determined thatlong-term incentive mix of non-CEO NEOs (other than Mr. Sparacio), increasing the proportion of PSUs in the equity mix from 25% to 33%. The non-CEO NEOs’ proportion of PSUs in the equity mix increased to 50% in 2022. This maintains our emphasis on long‐term variable compensation remains conduciveand increases the amount tied to the Company’sobjective three-year performance goals. The Compensation Committee views equity compensation in aggregate as an important way of aligning NEOs to our long‐term growth and success. For 2020,success, through exposure to our stock price performance generally and, in the Compensation Committee did not make adjustments to any NEO’s target compensation mix, maintaining a target total direct compensation for the CEOcase of PSUs, our EBITDA 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.relative TSR performance.
CEO (1) | Other NEOs (2) | |
| (1) | Reflects target compensation mix for |
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| (2) | Average mix for Ms. Colligan, Mr. Lister, and Mr. Welton. Reflects target compensation mix for |
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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.
What We Do |
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✓Link executive pay to IMAX performance and shareholder interests through our annual and long-term incentive plans
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✓Balance short- and long-term incentives, cash and equity, and fixed and variable pay appropriately |
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✓Deliver the majority of target compensation based on direct and/or indirect (stock price exposure) performance |
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✓Deliver long-term equity compensation in a combination of time-based RSUs and performance-based PSUs, with increasing use of PSUs |
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✓Use performance metrics that clearly align with our business strategy and key strategic drivers |
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✓Compare compensation and performance to a relevant group of comparator companies |
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✓Conduct an annual “Say-on-Pay” vote |
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✓Require NEOs, a broader group of our executives, and outside directors to meet designated share ownership requirements |
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✓ Maintain a clawback policy and clawback provisions in employment and incentive agreements to provide the ability to recoup unearned incentive compensation |
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✓ Provide only limited and reasonable perquisites |
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✓ Engage an outside independent compensation consultant |
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