| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
Memorandum on Employment Terms for Mark Welton
On September 18, 2020, IMAX Corporation (the “Company”) and Mark Welton, the Company’s President, IMAX Theatres, executed a memorandum containing updated employment terms for Mr. Welton’s employment with the Company (the “Memorandum”). Pursuant to the Memorandum, Mr. Welton’s annual base salary will be CAD $750,750, subject to annual review, and his target bonus will be 70% of his base salary. The grant date fair value of his annual equity awards will be USD$1.45 million and the mix of awards may include options, restricted share units (“RSUs”) and performance stock units (“PSUs”), to be consistent with the awards granted to other senior executives. Mr. Welton will continue to be entitled to medical and other welfare and fringe benefits on the same basis as generally provided to other senior executives, and his entitlement to reimbursement for certain expenses will be CAD $11,800 per year.
Pursuant to the Memorandum, if the Company terminates Mr. Welton’s employment without cause or Mr. Welton resigns for good reason, Mr. Welton will be entitled to receive: (1) any accrued but unpaid base salary and benefits; (2) a prorated target bonus through the termination or resignation for good reason date for the year in which he is terminated or resigns for good reason; (3) payment equivalent to one month for each year of service with the Company up to a maximum of 24 months (the “Severance Period”) of his then current base salary, target bonus and car allowance; and (4) continued vesting of his outstanding unvested equity awards on their original vesting schedule (in the case of PSUs, subject to the achievement of the original performance conditions, measured at the conclusion of the relevant performance period). In addition to such payments, Mr. Welton will continue to be provided with benefits or, at the Company’s option, pay in lieu of benefits for the duration of the Severance Period. Upon Mr. Welton’s termination without cause or resignation for good reason, the Company may, at its option, require him to work for up to six (6) months of the Severance Period immediately following his notice of termination to assist in transitioning his duties. In the event that the Company elects this option, the Severance Period will be reduced by the duration of the transition period.
In the event that Mr. Welton’s employment is terminated due to death or disability, he (or his estate) would be entitled to any accrued but unpaid base salary and benefits and any earned but unpaid bonus for the year prior to the year of his death or disability.
If Mr. Welton’s employment is terminated without cause as described above within 24 months following a change in control, Mr. Welton will be entitled to the same severance payments and benefits as if he had been terminated without cause, but any granted and outstanding options or RSUs will accelerate and vest immediately, and any outstanding PSUs shall vest according to the greater of (i) the Company’s performance on the last trading day prior to the date on which the change in control is consummated or (ii) the actual performance of the Company during the applicable PSU performance period.
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