SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
AMC ENTERTAINMENT INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
[LOGO]
AMC ENTERTAINMENT INC.
106 West 14th Street
Kansas City, Missouri 64105
October 13, 1995
TO THE STOCKHOLDERS OF
AMC ENTERTAINMENT INC.:
The Annual Meeting of Stockholders of AMC Entertainment Inc. will be held at
the Ward Parkway 22 Theatres, 8600 Ward Parkway, Kansas City, Missouri. The
meeting will be held on Thursday, November 9, 1995, at 11:00 a.m. local time and
will be followed by an informal lunch and a movie. The Board of Directors
cordially invites you to attend.
I hope you will attend the meeting in person, but whether or not you expect
to attend, please sign, date and return the enclosed proxy card now, so that
your shares will be represented at the meeting. If you do attend the meeting,
you will be entitled to vote in person.
Very truly yours,
S. H. Durwood
Chairman of the Board
[LOGO]
AMC ENTERTAINMENT INC.
106 West 14th Street
Kansas City, Missouri 64105
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 9, 1995
---------------------
TO THE STOCKHOLDERS OF AMC ENTERTAINMENT INC.:
The Annual Meeting of Stockholders of AMC Entertainment Inc. (the "Company")
will be held at the Ward Parkway 22 Theatres, 8600 Ward Parkway, Kansas City,
Missouri. The meeting will be held on Thursday, November 9, 1995, at 11:00 a.m.
local time for the following purposes:
1. To elect a Board of Directors for the upcoming year;
2. To consider and vote upon a proposal to ratify the appointment of
Coopers & Lybrand L.L.P. as independent public accountants for the
Company for the fiscal year ending March 28, 1996;
3. To consider and vote upon the proposed amendments to the AMC
Entertainment Inc. 1994 Stock Option and Incentive Plan; and
4. To transact such other business as may properly come before the meeting.
The close of business on October 6, 1995, has been designated as the record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting of Stockholders and any adjournments thereof. A list of such
stockholders will be available for review in the office of the Company's
Secretary, on the 17th Floor of the Power and Light Building, located at 106
West 14th Street, Kansas City, Missouri, after October 26, 1995.
By order of the Board of
Directors
Nancy L. Gallagher
Secretary
Kansas City, Missouri
October 13, 1995
YOUR VOTE IS IMPORTANT
If you do not expect to attend the meeting in person, it is important that
your shares be represented. Please use the enclosed proxy to vote on the matters
to be considered at the meeting, sign and date the proxy and mail it promptly in
the enclosed envelope, which requires no postage if mailed in the United States.
Any stockholder may revoke his proxy at any time before the meeting by written
notice to such effect, by submitting a subsequently dated proxy or by attending
the meeting and voting in person.
1
[LOGO]
AMC ENTERTAINMENT INC.
106 West 14th Street
Kansas City, Missouri 64105
PROXY STATEMENT
PROXIES, SOLICITATION AND VOTING:
This Proxy Statement is furnished in connection with the solicitation of the
enclosed proxy by the Board of Directors of AMC Entertainment Inc. (the
"Company") for use at the Annual Meeting of Stockholders to be held at 11:00
a.m. local time on Thursday, November 9, 1995, at the Ward Parkway 22 Theatres,
8600 Ward Parkway, Kansas City, Missouri. This Proxy Statement and the
accompanying proxy are being mailed to stockholders on or about October 13,
1995.
The Board of Directors of the Company has established October 6, 1995, as
the record date for the meeting. Only stockholders of record at the close of
business on the record date are entitled to notice of and to vote at the Annual
Meeting of Stockholders and any adjournments thereof. At the close of business
on September 28, 1995, the Company had outstanding 5,388,880 shares of Common
Stock and 11,157,000 shares of Class B Stock. On all matters other than the
election of Directors, the shares of Common Stock and Class B Stock shall vote
together as if a single class, with each outstanding share of Common Stock
having one vote per share and each outstanding share of Class B Stock having ten
votes per share.
Properly executed and dated proxies which are received by the Company prior
to the Annual Meeting of Stockholders will be voted in accordance with the
instructions thereon. If a proxy is received with no instructions given with
respect to the matters to be acted upon, the shares represented by the proxy
will be voted (i) for the election of the nominees to the Company's Board of
Directors designated below, (ii) for the ratification of the appointment of
Coopers & Lybrand L.L.P. as independent public accountants of the Company for
the fiscal year ending March 28, 1996, and (iii) for the approval of the
proposed amendments to the AMC Entertainment Inc. 1994 Stock Option and
Incentive Plan described herein. A proxy may be revoked at any time by written
notice to such effect received by the Secretary of the Company before the proxy
is voted at the Annual Meeting of Stockholders, by delivery to the Company of a
subsequently dated proxy or by a vote cast in person at the Annual Meeting of
Stockholders by written ballot. On all matters that may properly come before the
meeting other than the amendments to the AMC Entertainment Inc. 1994 Stock
Option and Incentive Plan, abstentions will not be counted in determining
whether any matter has been approved. Broker non-votes will not be counted on
any matter that may properly come before the meeting.
A proxy confers discretionary authority with respect to the voting of the
shares represented thereby on any other business that may properly come before
the meeting and any adjournments thereof. The Board of Directors is not aware
that any such other business is to be presented for action at the meeting and
does not itself intend to present any such other business. However, if any such
other business does come before the meeting, shares represented by proxies given
pursuant to this solicitation will be voted by the persons named in the proxy in
accordance with their best judgment. A proxy also confers discretionary
authority on the persons named therein to approve minutes of last year's Annual
Meeting of Stockholders, to vote on matters incident to the conduct of the
meeting and to vote on the election of any person as director if the nominees
herein named become unable to serve or for good cause will not serve. The cost
of the solicitation of proxies will be paid by the Company.
2
1. ELECTION OF DIRECTORS
Directors are elected annually, and each holds office until such director's
successor is duly elected and qualified or until such director's earlier
resignation or removal. The by-laws of the Company have been amended to provide
that effective as of October 6, 1995, the full Board of Directors will consist
of five (5) members. It is anticipated that five (5) directors will be elected
at the meeting. Three (3) of those directors are to be elected by the holders of
Class B Stock, voting as a class, with each outstanding share having one vote
per share, and two (2) of those directors are to be elected by the holders of
Common Stock, voting as a class, with each outstanding share having one vote per
share.
It is intended that shares represented by the proxies will be voted in favor
of the election of the nominees named below who are to be elected by the holders
of Common Stock, unless otherwise directed by stockholders. Each nominee has
consented to being named as a nominee and to serve if elected. In the event any
nominee for director to be elected by the holders of Common Stock becomes
unavailable, it is intended that the persons named in the proxy will vote for a
substitute who will be designated by the Board of Directors.
DIRECTORS AND NOMINEES FOR DIRECTORS
The Company's Directors and nominees for Directors are as follows:
YEAR FIRST ELECTED
NAME AGE(1) POSITIONS OR APPOINTED
- -------------------- ----------- -------------------------------------------- -------------------
Stanley H. Durwood 75 Chairman of the Board, Chief Executive 1983
Officer, President and Director
Peter C. Brown 37 Executive Vice President, Chief Financial 1992
Officer and Director
Philip M. Singleton 49 Executive Vice President, Chief Operating 1992
Officer and Director
Charles J. Egan, Jr. 63 Director 1986
Paul E. Vardeman 65 Director 1983
<FN>
- ------------------------
(1)at September 28, 1995
All directors of the Company also serve as directors of American
Multi-Cinema, Inc. ("AMC"). AMC is a wholly owned subsidiary of the Company. The
primary business of AMC is the operation of multi-screen motion picture
theatres. There are no family relationships between any Director or any
Executive Officer of the Company. At each Annual Meeting of Stockholders, the
Company intends to nominate as directors to be elected by the holders of Common
Stock individuals who are not officers or employees of the Company or AMC but
who may be incumbent directors.
3
NOMINEES FOR DIRECTORS
TO BE ELECTED BY HOLDERS OF CLASS B STOCK
Mr. Stanley H. Durwood has served as a Director of the Company from its
organization on June 14, 1983 and of AMC since August 2, 1968. Mr. Durwood has
served as Chairman of the Board of the Company and AMC since February 1986, and
has served as Chief Executive Officer of the Company since June 1983 and of AMC
since February 20, 1986. Mr. Durwood served as President of the Company (i) from
June 1983 through February 20, 1986, (ii) from May 1988 through June 1989 and
(iii) was elected President of the Company on October 6, 1995. Mr. Durwood
served as President of AMC (i) from August 2, 1968 through February 20, 1986,
(ii) from May 13, 1988 through November 8, 1990 and (iii) was elected President
of AMC on October 6, 1995. Mr. Durwood is a graduate of Harvard University.
Mr. Peter C. Brown has served as a Director of the Company and AMC since
November 12, 1992. Mr. Brown has served as Executive Vice President of the
Company and AMC since August 3, 1994 and as Chief Financial Officer of the
Company and AMC since November 14, 1991. Mr. Brown served as Senior Vice
President of the Company and AMC from November 14, 1991 until his appointment as
Executive Vice President in August 1994. Mr. Brown served as Treasurer of the
Company and AMC from September 28, 1992 through September 19, 1994. Prior to
November 14, 1991, Mr. Brown served as a consultant to the Company from October
1990 to October 1991. Mr. Brown is a graduate of the University of Kansas.
Mr. Philip M. Singleton has served as a Director of the Company and AMC
since November 12, 1992. Mr. Singleton has served as Executive Vice President of
the Company and AMC since August 3, 1994 and as Chief Operating Officer of the
Company and AMC since November 14, 1991. Mr. Singleton served as Senior Vice
President of the Company and AMC from November 14, 1991 until his appointment as
Executive Vice President in August 1994. Prior to November 14, 1991, Mr.
Singleton served as Vice President in charge of operations for the Southeast
Division of AMC from May 10, 1982. Mr. Singleton holds an undergraduate degree
from California State University, Sacramento and an M.B.A. degree from the
University of South Florida.
TO BE ELECTED BY HOLDERS OF COMMON STOCK
Mr. Charles J. Egan, Jr. has served as a Director of the Company and AMC
since October 30, 1986. Mr. Egan is Vice President and General Counsel of
Hallmark Cards, Incorporated, which is primarily engaged in the business of
greeting cards and related social expressions products, Crayola crayons and the
production of movies for television. Mr. Egan holds an A.B. degree from Harvard
University and an LL.B. degree from Columbia University.
Mr. Paul E. Vardeman has served as a Director of the Company since June 14,
1983 and of AMC since September 28, 1982. Mr. Vardeman has been a partner in the
law firm of Polsinelli, White, Vardeman & Shalton, Kansas City, Missouri, since
1982. Prior thereto, Mr. Vardeman served as a Judge of the Circuit Court of
Jackson County, Missouri. Mr. Vardeman holds undergraduate and J.D. degrees from
the University of Missouri-Kansas City.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR CHARLES J. EGAN, JR. AND
PAUL E. VARDEMAN AS DIRECTORS OF THE COMPANY.
DIRECTORS' MEETINGS AND COMMITTEES
The Company has a 52/53 week fiscal year ending on the Thursday closest to
the last day of March. The Company's last full fiscal year began on April 1,
1994 and ended on March 30, 1995 ("fiscal 1995").
4
The Board of Directors of the Company held four meetings and acted by
unanimous written consent to action nine times in fiscal 1995. All directors
attended at least 75% of the aggregate number of meetings of the Board of
Directors and of Board Committees on which they served.
The Standing Committees of the Board of Directors of the Company are as
follows: the Executive Committee, composed of Messrs. Stanley H. Durwood, Peter
C. Brown and Philip M. Singleton; the Audit Committee, composed of Messrs.
Charles J. Egan, Jr. and Paul E. Vardeman; the Compensation Committee, composed
of Messrs. Charles J. Egan, Jr. and Paul E. Vardeman; the Finance Committee,
composed of Messrs. Peter C. Brown, Charles J. Egan, Jr. and Paul E. Vardeman;
the Employee Benefits Committee, composed of Messrs. Philip M. Singleton and
Charles J. Egan, Jr.; and the Stock Option Committee, composed of Messrs.
Charles J. Egan, Jr. and Paul E. Vardeman.
The principal responsibility of the Executive Committee is to have and
exercise, between meetings of the Board of Directors, all powers and authorities
of the Board of Directors in the management of the business and affairs of the
Company to the full extent allowed by the General Corporation Law of the State
of Delaware. The Executive Committee held no formal meetings during fiscal 1995.
The principal responsibilities of the Audit Committee are to (i) recommend
to the Board of Directors the accounting firm to serve as independent public
accountants of the Company and its subsidiaries, which accounting firm is to be
selected by the Board of Directors or recommended by it for stockholder
approval, (ii) act on behalf of the Board of Directors in meeting with the
independent public accountants and the appropriate corporate officers to review
matters relating to corporate financial reporting and accounting procedures and
policies, the adequacy of financial, accounting and operating controls, and the
scope of the respective audits of the independent public accountants, (iii)
review the results of the audit and submit to the Board of Directors of the
Company any recommendations the Audit Committee may have from time to time with
respect to financial reporting and accounting practices and policies, observed
wrongdoing and existing and potential future financial problems, and financial,
accounting and operations controls and safeguards, and (iv) approve all material
transactions between the Company or AMC and Durwood, Inc. or other related
parties. The Audit Committee held three meetings during fiscal 1995.
The principal responsibilities of the Compensation Committee are to (i)
review and recommend periodically the compensation to be paid to the Executive
Officers of the Company and its subsidiaries, including the amount and timing of
bonus payments and other incentive compensation awards, and (ii) oversee the
preparation of the reports and other information required to be disclosed in
connection with any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934. The Compensation Committee held 22 meetings during fiscal
1995.
The Stock Option Committee administers the Company's 1983 and 1984 Stock
Option Plans, which have expired except with respect to rights under outstanding
awards. The Stock Option Committee held no meetings during fiscal 1995.
The principal responsibilities of the Employee Benefits Committee is to (i)
administer existing employee benefit plans and programs, (ii) periodically
review, and if needed, recommend amendments to such plans and programs and (iii)
to oversee the development of new plans and programs. The Employee Benefits
Committee held no meetings during fiscal 1995.
The Company does not have a nominating committee.
5
COMPENSATION OF DIRECTORS
Messrs. Charles J. Egan, Jr. and Paul E. Vardeman receive annual cash
compensation of $20,000 each for their services as members of the Boards of
Directors of the Company and AMC and $24,000 each for their services as members
of the Audit Committees of the Company and AMC. Messrs. Egan and Vardeman are
also paid $900 per hour for attending meetings of (i) any board of directors on
which he serves, (ii) the Audit Committee after the twelfth meeting during the
fiscal year and (iii) any other committee on which he serves.
For fiscal 1995, Messrs. Charles J. Egan, Jr. and Paul E. Vardeman received
compensation of $92,600 and $81,800, respectively, for (i) services as members
of the Boards of Directors of the Company and AMC, (ii) attendance at Board of
Directors meetings, and (iii) other committee meetings of the Board of Directors
of the Company or its subsidiaries.
EXECUTIVE OFFICERS
The Company's and its subsidiaries' Executive Officers are as follows:
YEARS
ASSOCIATED(1)
NAME AGE(1) POSITION WITH COMPANY
- -------------------------- --------- ------------------------------------- -----------------
Stanley H. Durwood(2) 75 Chairman of the Board, Chief 49(3)
Executive Officer, President and
Director (the Company and AMC)
Peter C. Brown(2) 37 Executive Vice President, Chief 4
Financial Officer and Director (the
Company and AMC)
Philip M. Singleton(2) 49 Executive Vice President, Chief 20
Operating Officer and Director (the
Company and AMC)
Frank T. Stryjewski 38 Senior Vice President (AMC) 16
Richard T. Walsh 42 Senior Vice President (AMC) 19
Richard J. King 46 Senior Vice President (AMC) 23
Richard L. Obert 56 Vice President and Chief Accounting 6
Officer (the Company and AMC)
Charles P. Stilley 41 President--AMC Realty, Inc. 14
Richard M. Fay 46 President--AMC Film Marketing, Inc. Less than 1
<FN>
-------------------
(1)at September 28, 1995.
(2)For biographical information of these Executive Officers, see
"Directors and Nominees for Directors."
(3)Includes years with the predecessor of the Company.
All current Executive Officers of the Company and its subsidiaries hold such
offices at the pleasure of the Board of Directors, subject, in the case of (i)
Mr. Peter C. Brown, Executive Vice President, Chief Financial Officer and a
Director of the Company and AMC and (ii) Mr. Philip M. Singleton, Executive Vice
President, Chief Operating Officer and a Director of the Company and AMC, to
rights under their respective employment agreements.
6
Mr. Frank T. Stryjewski has served as Senior Vice President in charge of
operations for the South Division of AMC since July 1, 1994. Previously, Mr.
Stryjewski served as Vice President in charge of operations for the Southeast
Division of AMC from December 9, 1991. Mr. Stryjewski served as Vice
President-Operations Resources of AMC from December 1990 to December 1991, and
as Vice President-Human Resources of AMC from December 1988 to December 1990.
Mr. Richard T. Walsh has served as Senior Vice President in charge of
operations for the West Division of AMC since July 1, 1994. Previously, Mr.
Walsh served as Vice President in charge of operations for the Central Division
of AMC from June 10, 1992, and as Vice President in charge of operations for the
Midwest Division of AMC from December 1, 1988.
Mr. Richard J. King has served as Senior Vice President in charge of
operations for the Northeast Division of AMC since January 4, 1995. Previously,
Mr. King served as Vice President in charge of operations for the Northeast
Division of AMC from June 10, 1992, and as Vice President in charge of
operations for the Southwest Division of AMC from October 30, 1986.
Mr. Richard L. Obert has served as Vice President and Chief Accounting
Officer of the Company and AMC since January 9, 1989.
Mr. Charles P. Stilley has served as President of AMC Realty, Inc., a wholly
owned subsidiary of AMC, since February 9, 1993, and prior thereto served as
Senior Vice President of AMC Realty, Inc. from March 3, 1986.
Mr. Richard M. Fay has served as President--AMC Film Marketing, Inc. since
September 8, 1995. Previously, Mr. Fay served as Senior Vice President and
Assistant General Sales Manager of Sony Pictures since 1994. From 1991 to 1994,
Mr. Fay served as Vice President and Head Film Buyer for the eastern division of
United Artists Theatre Circuit, Inc. Prior thereto, Mr. Fay served as Vice
President and film buyer for Loew's Theatres since 1975.
EXECUTIVE COMPENSATION AND COMPENSATION PLANS
The following table provides certain summary information concerning
compensation paid or accrued by the Company and its subsidiaries to or on behalf
of the Company's Chief Executive Officer and each of the four other most highly
compensated Executive Officers of the Company and its subsidiaries (determined
as of the end of the last fiscal year and hereafter referred to as the "named
Executive Officers") for the last three fiscal years ended March 30, 1995, March
31, 1994 and April 1, 1993, respectively.
7
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
-------------
ANNUAL COMPENSATION AWARDS--
---------------------------------------------- SECURITIES
OTHER(1) UNDERLYING ALL(2)
NAME AND PRINCIPAL FISCAL ANNUAL OPTIONS/ OTHER
POSITION YEAR SALARY BONUS COMPENSATION SARS(#) COMPENSATION
- --------------------------- --------- --------- --------- ------------- ------------- -------------
Stanley H. Durwood 1995 $ 452,088 $ 108,949 N/A 22,500 --
Chief Executive 1994 436,800 263,400 N/A -- --
Officer 1993 420,004 141,800 N/A -- --
Edward D. Durwood(3) 1995 294,132 46,693 N/A 5,000 $ 3,045
President 1994 277,338 155,200 N/A 200,000 4,674
1993 269,742 122,900 N/A -- 6,626
Donald P. Harris(3) 1995 277,128 32,991 N/A -- 4,649
President--AMC Film 1994 281,326 106,000 N/A 45,000 4,497
Marketing, Inc. 1993 272,931 66,000 N/A -- 5,661
Philip M. Singleton 1995 273,247 64,149 N/A 4,500 4,663
Chief Operating 1994 264,142 153,600 $51,930 150,000 59,564
Officer 1993 244,466 100,000 N/A -- 45,249
Peter C. Brown 1995 234,836 55,433 N/A 4,500 4,657
Chief Financial 1994 227,016 135,000 N/A 150,000 4,675
Officer 1993 199,331 107,200 N/A -- 13,579
<FN>
-------------------
(1)N/A denotes not applicable. Fiscal 1994 includes gross up of taxes
of $43,285 on moving expenses of Mr. Philip M. Singleton. For the years
presented, excluding Mr. Philip M. Singleton in 1994, perquisites and other
personal benefits did not exceed the lesser of $50,000 or 10% of total
annual salary and bonus.
(2)For fiscal 1995, All Other Compensation includes the Company's
contributions to two defined contribution savings plans in the amount of
$3,045 for Mr. Edward D. Durwood, $4,649 for Mr. Donald P. Harris, $4,663
for Mr. Philip M. Singleton and $4,657 for Mr. Peter C. Brown. For fiscal
1994, the totals include the Company's contributions to a defined
contribution savings plan in the amount of $4,674 for Mr. Edward D.
Durwood, $4,497 for Mr. Donald P. Harris, $4,708 for Mr. Philip M.
Singleton and $4,675 for Mr. Peter C. Brown. In addition, moving expense
for Mr. Philip M. Singleton is included in the amount of $54,856. For
fiscal 1993, the totals include the Company's contributions to a defined
contribution savings plan in the amount of $6,626 for Mr. Edward D.
Durwood, $5,661 for Mr. Donald P. Harris, $6,414 for Mr. Philip M.
Singleton and $5,129 for Mr. Peter C. Brown. In addition, moving expense is
included in fiscal 1993 in the amount of $38,835 for Mr. Philip M.
Singleton and $6,320 for Mr. Peter C. Brown and medical continuation
coverage payments to a previous employer for Mr. Peter C. Brown in the
amount of $2,130.
(3)The employment of Messrs. Edward D. Durwood and Donald P. Harris by
the Company or its affiliates ceased effective as of October 5, 1995 and
October 1, 1995, respectively.
8
OPTION GRANTS
The following table provides certain information concerning individual
grants of stock options made during the last completed fiscal year under the AMC
Entertainment Inc. 1994 Stock Option and Incentive Plan (the "Incentive Plan")
to each of the named Executive Officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF
SECURITIES % OF TOTAL STOCK PRICE
UNDERLYING OPTIONS/ SARS APPRECIATION
OPTIONS/ GRANTED TO EXERCISE OR FOR OPTION TERM
SARS EMPLOYEES IN BASE PRICE EXPIRATION --------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ------------------------ ----------- --------------- ----------- ---------- --------- ---------
Stanley H. Durwood...... 22,500 61.6% $ 11.75 3/29/05 $ 166,275 $ 421,425
Edward D. Durwood(1).... 5,000 13.6% 11.75 3/29/05 36,950 93,650
Donald P. Harris(1)..... -- -- -- -- -- --
Philip M. Singleton..... 4,500 12.4% 11.75 3/29/05 33,250 84,285
Peter C. Brown.......... 4,500 12.4% 11.75 3/29/05 33,250 84,285
<FN>
-------------------
(1)The employment of Messrs. Edward D. Durwood and Donald P. Harris by
the Company or its affiliates ceased effective as of October 5, 1995 and
October 1, 1995, respectively. Under the terms of the Incentive Plan,
options granted to Mr. Edward D. Durwood will lapse unexercised.
The stock options granted during the fiscal year ended March 30, 1995, are
eligible for exercise based upon a vesting schedule. After the first anniversary
of the grant date, 50% of the options will be eligible for exercise. After the
second anniversary of the grant date, all options are fully vested. Vesting of
options will accelerate upon the occurrence of an optionee's death, disability
or retirement, or upon termination of employment within one year after the
occurrence of certain change in control events. With the consent of the Board's
Compensation Committee, optionees may satisfy tax withholding obligations by
electing to have shares otherwise issuable upon exercise of an option withheld.
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to the named Executive
Officers, concerning the exercise of options during the last fiscal year and
unexercised options held as of March 30, 1995.
9
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED
OPTIONS/SARS IN-THE-MONEY
AT FY-END(#) OPTIONS/SARS
EXERCISABLE/UNEXERCISABLE AT FY-END($)
SHARES ACQUIRED VALUE -------------------------- EXERCISABLE/
NAME ON EXERCISE REALIZED SHARES PRICE UNEXERCISABLE
- ------------------------- ----------------- ----------- --------------- --------- -----------------
Stanley H. Durwood....... -- -- 0/22,500 $11.750 $ 0/$2,813
Edward D. Durwood(1)..... -- -- 50,000/150,000 9.375 125,000/375,000
0/5,000 11.750 0/625
Donald P. Harris(1)...... 12,000 $ 63,960 11,250/33,750 9.375 28,125/84,375
Philip M. Singleton...... -- -- 37,500/112,500 9.250 98,438/295,312
0/4,500 11.750 0/563
Peter C. Brown........... -- -- 37,500/112,500 9.250 98,438/295,312
0/4,500 11.750 0/563
<FN>
-------------------
(1)The employment of Messrs. Edward D. Durwood and Donald P. Harris by
the Company or its affiliates ceased effective as of October 5, 1995 and
October 1, 1995, respectively.
LONG-TERM INCENTIVE PLAN
The following table provides certain information concerning shares
("Performance Shares") issuable under performance stock awards approved by the
Compensation Committee during the last completed fiscal year for each of the
named Executive Officers. These awards are subject to, and conditioned upon,
approval of certain amendments to the Incentive Plan which establish the
criteria upon which the awards were based. For a discussion of the proposed
amendments to the Incentive Plan, see Proposal 3, "Amendments to 1994 Stock
Option and Incentive Plan."
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
PERFORMANCE OR
NUMBER OF(1) OTHER PERIOD ESTIMATED FUTURE PAYOUT UNDER
SHARES, UNITS UNTIL NON-STOCK PRICE-BASED PLANS
OR OTHER MATURATION OR ---------------------------------------------
NAME RIGHTS (#) PAYOUT THRESHOLD (#) TARGET (#) MAXIMUM (#)
- ------------------------- ------------- --------------- --------------- ----------- ---------------
Stanley H. Durwood....... 90,000 3 years 30,000 45,000 90,000
Edward D. Durwood(2)..... 20,000 3 years 6,687 10,000 20,000
Donald P. Harris(2)...... -- -- -- -- --
Philip M. Singleton...... 18,000 3 years 6,000 9,000 18,000
Peter C. Brown........... 18,000 3 years 6,000 9,000 18,000
<FN>
-------------------
(1)Maximum
(2)The employment of Messrs. Edward D. Durwood and Donald P. Harris by
the Company or its affiliates ceased effective as of October 5, 1995 and
October 1, 1995, respectively. Under the terms of the Incentive Plan, the
Performance Shares awarded to Mr. Edward D. Durwood have lapsed unearned.
10
The foregoing table shows the number of Performance Shares issuable to a
participant at the end of a three year performance period ending April 2, 1998
(the "Performance Period") at Threshold, Target and Maximum levels of
performance.
A participant's eligibility to receive up to one-half of the maximum number
of Performance Shares issuable under an award is based upon changes in "total
return to stockholders" ("TRS"), which is measured by increases in the market
value of an investment in shares of Common Stock of the Company, assuming
reinvestment of any dividends received.
A participant's eligibility to receive up to the remaining one-half of the
maximum number of Performance Shares issuable under an award is based upon
changes in the "private market value per share" of the Company's Common Stock
("PMVPS") over the Performance Period. PMVPS is determined on a fully diluted
basis (assuming full exercise of all outstanding shares of the Company's
preferred stock, Class B stock, options and other rights to acquire shares of
Common Stock), based on a constant multiple of theatre level EBITDA (theatre
level EBITDA is Company EBITDA less National Cinema Network, Inc. EBITDA), plus
the book value of National Cinema Network, Inc., cash, cash equivalents and
investments and investments in other long-term assets, less corporate
borrowings, capitalized lease obligations and the carrying value of minority
interests in other long-term liabilities. EBITDA is earnings before interest,
taxes, depreciation and amortization.
PMVPS and TRS are referred to individually and collectively herein as
"Performance Criterion" and "Performance Criteria," respectively.
Such Performance Criteria will be measured against changes in the Standard
and Poor's 500 Index ("S&P 500") over the Performance Period. Required
achievement levels over the Performance Period for both PMVPS and TRS are as set
forth below:
Maximum--2,000 basis points higher than the percentage change in the S&P 500
over the Performance Period;
Target--750 basis points higher than the percentage change in the S&P 500
over the Performance Period;
Threshold--No difference between the percentage change in the S&P 500 and
the percentage change in the Performance Criterion over the Performance Period.
Generally, no shares will be issued with respect to the Company's
performance over the Performance Period as measured by a Performance Criterion
if such performance does not at least meet the Threshold achievement level over
the Performance Period. If the Company's performance as so measured by a
Performance Criterion falls between the Threshold and Target achievement levels,
the number of Performance Shares issuable under an Award with respect to that
Performance Criterion will be determined to the nearest whole number of shares,
so that the actual Award will be at the same percentage between the Threshold
and Target award levels as the actual achievement level falls between the
Threshold and Target achievement levels. Similarly, if the Company's performance
falls between Target and Maximum achievement levels, the number of Performance
Shares will be determined to the nearest whole number of shares, so that the
actual award will be at the same percentage between the Target and Maximum award
levels as the actual achievement level falls between the Target and Maximum
levels. In no event will the
11
number of Performance Shares issuable under an Award with respect to a
Performance Criterion exceed the number of Performance Shares issuable upon
attaining the Maximum achievement level over the Performance Period with respect
to such Performance Criterion.
The right to receive Performance Shares will be accelerated and such
Performance Shares issued, based on the achievement levels of the Performance
Criteria measured to the date of termination, in the event of a participant's
death, disability or retirement, or termination of employment within one year
after the occurrence of certain change of control events.
With the consent of the Compensation Committee, a Grantee may satisfy his
tax withholding obligations by electing to have Performance Shares otherwise
issuable withheld.
Until Performance Shares are issued, participants have no dividend or voting
rights with respect to Performance Shares.
401(K) PLAN
AMC sponsors a defined contribution savings plan (the "401(k) Plan") whereby
employees of AMC or its subsidiaries may (under current administrative rules)
elect to contribute, in whole percentages, from 1% to 16% of compensation,
provided no employee's elective contributions shall exceed the amount permitted
under Section 402(g) of the Internal Revenue Code ($9,240 in 1995). A matching
contribution is made by AMC at 50% of an employee's elective contribution of up
to six percent of the employee's compensation. AMC may increase the 50% matching
contribution to 100%. Employees have full and immediate vesting rights to their
elective contributions and AMC's matching contributions and related earnings.
AMC's contributions to the accounts of the named Executive Officers are included
in the Summary Compensation Table.
DEFINED BENEFIT RETIREMENT AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS
AMC sponsors a defined benefit retirement plan (the "Retirement Plan") which
provides benefits to certain employees of AMC and its subsidiaries based upon
years of credited service and the highest consecutive five-year average annual
remuneration for each participant. For purposes of calculating benefits, average
annual compensation is limited by Section 401(a)(17) of the Internal Revenue
Code, and is based upon wages, salaries and other amounts paid to the employee
for personal services, excluding certain special compensation. A participant
earns a vested right to an accrued benefit upon completion of five years of
vesting service.
AMC also sponsors a Supplemental Executive Retirement Plan to provide the
same level of retirement benefits that would have been provided under the
Retirement Plan had the federal tax law not been changed in the Omnibus Budget
Reconciliation Act of 1993, which reduced the amount of compensation which can
be taken into account in a qualified retirement plan from $235,840 (in 1993),
the old limit, to $150,000 (in 1994 and 1995).
The following table shows the total estimated annual pension benefits
(without regard to minimum benefits) payable to a covered participant under
AMC's Retirement Plan and the
12
Supplemental Executive Retirement Plan, assuming retirement in calendar 1995 at
age 65 payable in the form of a single life annuity. The benefits are not
subject to any deduction for Social Security or other offset amounts. The
following table assumes the old limit would have been increased to $245,000 in
1995.
HIGHEST CONSECUTIVE YEARS OF CREDITED SERVICE
FIVE YEAR AVERAGE -----------------------------------------------------
ANNUAL COMPENSATION 15 20 25 30 35
- -------------------------- --------- --------- --------- --------- ---------
$125,000.................. $ 17,738 $ 23,650 $ 29,563 $ 35,475 $ 41,388
$150,000.................. $ 21,488 $ 28,650 $ 35,813 $ 42,975 $ 50,138
$175,000.................. $ 25,238 $ 33,650 $ 42,063 $ 50,475 $ 58,888
$200,000.................. $ 28,988 $ 38,650 $ 48,313 $ 57,975 $ 67,638
$225,000.................. $ 32,738 $ 43,650 $ 54,563 $ 65,475 $ 76,388
$245,000.................. $ 35,738 $ 47,650 $ 59,563 $ 71,475 $ 83,388
As of March 30, 1995, the years of credited service under the Retirement
Plan for each of the named Executive Officers were: Mr. Edward D. Durwood, 19
years(1); Mr. Donald P. Harris, 17 years(1); Mr. Philip M. Singleton, 20 years;
and Mr. Peter C. Brown, 3 years. Because Mr. Stanley H. Durwood is age 75, he is
receiving minimum required distributions under the Retirement Plan pursuant to
Section 401(a)(9) of the Internal Revenue Code, even though he is an active
employee. The amounts distributed to Mr. Stanley H. Durwood in fiscal 1995 and
1994 from the Company's Retirement Plan were $42,067 and $43,595, respectively,
and are not included in the Summary Compensation Table. In addition, the benefit
Mr. Stanley H. Durwood accrued under the Supplemental Executive Retirement Plan
in calendar 1994 was $43,928 and is not included in the Summary Compensation
Table.
<FN>
-------------------
(1)The employment of Messrs. Edward D. Durwood and Donald P. Harris by
the Company or its affiliates ceased effective as of October 5, 1995 and
October 1, 1995, respectively.
EXECUTIVE INCENTIVE PROGRAM
The Executive Incentive Program ("EIP") covers corporate and field
executives and senior management, including Executive Officers. Awards are
pro-rated per complete quarter of employment and participants must be employed
at fiscal year-end to be eligible for an award.
Maximum awards under the EIP range from 50% of salary for executive
corporate management participants to 30% of salary for senior field management
participants. Awards are based on up to three performance components: division,
company and personal. The division component, which applies to division and film
office participants, is based on each division's performance relative to a
division operating income quota. For purposes of determining this component,
"division operating income" is defined as operating income less general and
administrative expenses and extraordinary expenses ("DOI"). The company
component, which applies to all eligible participants, is based on the Company's
performance relative to an EBITDA (earnings before interest, taxes, depreciation
and amortization) quota. For division level participants, "EBITDA" is defined as
DOI less national film, home office and international general and administrative
expenses plus capitalized lease adjustments. The personal component of an award
is based upon predetermined individual goals and a supervisor's year-end
performance appraisal,
13
and payment is subject to the recommendation of the supervisor and approval of
the Executive Committee. The Compensation Committee of the Board of Directors
approved the annual DOI and EBITDA quotas and approved the personal component of
awards for participants who were Executive Officers.
The division and company components are scaled, based on the Company's
performance, as follows: if 80% or less of a DOI or EBITDA quota, respectively,
is met, no amount is awarded with respect to a component based on that quota; if
more than 80% (up to 100%) of a quota is met, each 1% increase (above 80%) in
the percentage of the quota that is met will result in a 5% increase in award
for the respective component; and if 100% to 110% of a quota is met, each 1%
increase in quota (above 100%) will result in a 10% increase in award for the
respective component. For example, if 100% of a quota is met, 100% of the
related award may be paid, whereas if 110% of a quota is met, 200% of the
related award may be paid. The personal component of an award, which is
contingent on the Company achieving a minimum 80% of the EBITDA quota, can be up
to 15% of an individual's salary (but the aggregate amount of all such awards
may not exceed 10% of the salaries of all participants). The Company's Executive
Committee has discretion to defer payment for up to one year of some or all of
the division and company awards.
1994 STOCK OPTION AND INCENTIVE PLAN
On November 10, 1994, the Company's stockholders approved the AMC
Entertainment Inc. 1994 Stock Option and Incentive Plan (the "Incentive Plan").
Employees of the Company or its subsidiaries who are corporate or field
executives or senior managers, including Executive Officers, are eligible for
awards under the Incentive Plan. The Incentive Plan permits three basic types of
awards: (i) grants of stock options which are either incentive stock options
("ISOs") as defined by Section 422 of the Internal Revenue Code of 1986, as
amended, or non-ISOs ("Non-Qualified Stock Options"), (ii) grants of stock
awards ("Stock Awards"), which may be either performance stock awards
("Performance Stock Awards") or restricted stock awards ("Restricted Stock
Awards"), and (iii) performance unit awards ("Performance Units").
Under the Incentive Plan, the Compensation Committee of the Board of
Directors is authorized to grant ISOs, Non-Qualified Stock Options and Stock
Awards entitling recipients to receive up to an aggregate of 1,000,000 shares of
Common Stock. The Compensation Committee also is authorized to make awards of
Performance Units, which are payable only in cash and valued by reference to
designated criteria, other than shares of Common Stock, which may be established
by the Compensation Committee.
No grantee may receive options to acquire more than 325,000 shares of Common
Stock, Stock Awards entitling the grantee to receive more than 150,000 shares of
Common Stock or cash awards under Performance Units aggregating more than $2
million. During any 12 month period, no grantee may receive options to acquire
more than 65,000 shares of Common Stock or cash awards under Performance Units
aggregating more than $400,000. No grantee may receive a Stock Award or Awards
entitling the grantee to receive free of conditions more than 30,000 shares of
Common Stock with respect to any 12 month period, but determined on an
annualized basis so that more than 30,000 shares may be received at one time
free of conditions with respect to performance periods exceeding 12 months'
duration.
Stock Awards and Performance Unit awards made to persons subject to Section
16 of the Securities Exchange Act of 1934 generally are based on the attainment
during a performance period of 12 months' duration or more of one or more
performance goals as established by the
14
Compensation Committee. Performance goals established by the Compensation
Committee are based upon, as the Compensation Committee deems appropriate, one
or more business criteria referred to in the Incentive Plan.
The Compensation Committee may permit the accelerated exercise of stock
options and the lapse or waiver of restrictions and performance goals on Stock
Awards and Performance Units in the event certain transactions occur, such as a
merger or liquidation of the Company, the sale of substantially all the assets
of the Company, a subsidiary or a division, the sale of a majority interest in a
subsidiary or the change in control of the Company. Similar provisions apply in
the case of death, disability, retirement or other terminations. In addition,
the Compensation Committee may permit all outstanding options held by a grantee
to vest upon any termination of employment.
For a discussion of the proposed amendments to the Incentive Plan, see
Proposal 3, "Amendments to 1994 Stock Option and Incentive Plan."
OTHER EXECUTIVE BENEFIT PLANS
The Executive Medical Reimbursement Plan covers active employees who are
officers of the Company and its subsidiaries and provides up to $2,500 a month
for the following medical expenses: (i) routine physicals, (ii) vision care,
(iii) well baby care, (iv) hospital room and board charges in excess of the
semi-private room and board rate, (v) expenses in excess of usual and customary
charges, subject to 80% co-insurance, (vi) 50% of mental and nervous benefits in
excess of the basic medical plan's $1,500 calendar year maximum, to a lifetime
maximum of $50,000, (vii) dental reimbursement, subject to 80% co-insurance and
a $3,000 calendar year maximum and (viii) an additional $2,000 orthodontia
lifetime maximum. Supplemental Accidental Death and Dismemberment coverage in
the amount of $250,000 is also provided to officers of the Company and its
subsidiaries.
The Executive Savings Plan (the "Savings Plan") covers certain highly
compensated employees (as defined in Section 414(q) of the Internal Revenue
Code) whose elective contributions under the 401(k) Plan have been limited in
order for the 401(k) Plan to satisfy the average deferral percentage
nondiscrimination tests in Section 401(k) of the Internal Revenue Code and/or
whose coverage under the group term life insurance provided by AMC is at the
maximum amount. The Savings Plan provides a 3% increase in pay to all eligible
employees who agree to make a 4% of pay contribution on a monthly basis to an
AMC approved individual universal life insurance policy which is owned by the
employee. The eligible employees can select, within certain parameters, the
portion of their after tax premiums that is allocated to life insurance
protection versus the investment element of the universal life insurance policy.
Such benefit amounts for the named Executive Officers are included in the
Summary Compensation Table.
NONQUALIFIED DEFERRED COMPENSATION PLAN
Effective January 1, 1994, the Company adopted the AMC Nonqualified Deferred
Compensation Plan (the "Deferred Compensation Plan"), a deferred compensation
arrangement designed to permit eligible employees of the Company and certain
affiliates to offset the adverse impact of a change in the federal tax law made
by the Omnibus Budget Reconciliation Act of 1993 (the "Act"), which reduced the
amount of compensation which can be taken into account in a qualified retirement
plan from $235,840 (in 1993) to $150,000 (in 1994 and 1995).
Under the Deferred Compensation Plan, participants in AMC 's 401(k) Plan who
are making the maximum deferral thereunder and whose estimated annual
compensation will exceed
15
$100,000 in 1995 may elect, in advance and irrevocably for each year, to reduce
their compensation and to defer under the Deferred Compensation Plan such
additional portion of their annual compensation as they may determine. Such
participants whose annual compensation in 1995 exceeds $150,000 will have
elective Deferred Compensation Plan deferrals of up to 4% of their compensation
in excess of $150,000 matched by AMC at a rate of 50%, but only to the extent
affected by the change in the law. For example, an employee who will earn
$180,000 in 1995 and who elects to defer 4% of his compensation would have a
match equal to the lesser of (a) 2% of the difference between the $150,000 limit
set forth in Section 401(a)(17) of the Internal Revenue Code of 1986 (the
"Code") and $180,000 and (b) 50% of the difference between the maximum
permissive elective deferral under Section 402(g) of the Code ($9,240 in 1995)
and the amount of such employee's elective deferrals under the 401(k) Plan for
the year. The old limit, the new limit and the Deferred Compensation Plan's
minimum eligibility criteria (compensation over $100,000 to make deferrals and
over $150,000 to be credited with a match) are subject to periodic cost-of-
living adjustments. AMC's maximum obligation under the Deferred Compensation
Plan for any one participant for 1995 is $1,620 (which would probably have been
incurred by AMC had the federal tax law not been changed by the Act).
Elective deferrals and matching credits, if any, will be credited to a
deferral account maintained by or at the direction of AMC and held in an
irrevocable trust (commonly referred to as a "rabbi trust"). The assets in the
rabbi trust, however, remain subject to the claims of AMC's creditors in the
event of insolvency of AMC or any of its affiliates. Unless AMC or any of its
affiliates become insolvent, upon the earlier of a participant's normal
retirement age (65) or other termination of employment, the participant will
receive the amounts credited to his deferral account, adjusted for earnings and
losses, in a lump sum or in installments over ten years, as elected by the
participant prior to making the deferrals. Both the participant's deferrals and
the match, if applicable, are fully vested at all times.
OTHER COMPENSATION PLANS
On February 2, 1977, the Board of Directors of AMC authorized the continued
payment to Mr. Stanley H. Durwood, in the event of his disability, of 80% of his
then current salary and bonuses for a period of up to two years, such salary
payment to be reduced, if necessary, so that such payments, together with
disability compensation under AMC's group insurance policy, do not exceed 100%
of his then current salary and bonus.
Messrs. Peter C. Brown and Philip M. Singleton each have employment
agreements with AMC dated September 26, 1994, providing for annual base salaries
of no less than $227,000 and $266,000, respectively, and bonuses resulting from
the EIP or other bonus arrangement, if any, as determined from time to time in
the sole discretion of the Compensation Committee of the Board of Directors of
the Company upon the recommendation of the Chairman of the Board of the Company.
Mr. Brown's current annual base salary is $250,000 and Mr. Singleton's current
annual base salary is $280,000. Each employment agreement has a term of two
years. On each September 27, commencing in 1995, one year shall be added to the
term of each employment agreement, so that each employment agreement shall
always have a two-year term as of each anniversary date. Each employment
agreement terminates without severance upon such employee's resignation, death
or his disability as defined in his employment agreement, or upon AMC's good
faith determination that such employee has been dishonest or has committed a
breach of trust respecting AMC. AMC may terminate each employment agreement at
any time, with severance payments in an amount equal to twice the annual base
salary of such employee on the date of
16
termination. Each employee may terminate his employment agreement upon a change
of control of AMC as defined in the employment agreement and receive severance
payments in an amount equal to twice his annual base salary on the date of
termination. AMC may elect to pay any severance payments in a lump sum after
discounting such amount to its then present value, or over a two-year period.
The aggregate value of all severance benefits to be paid to such employee shall
not exceed 299% of such employee's "base amount" as defined in the Internal
Revenue Code for the five-year period immediately preceding the date of
termination. The aggregate amount payable under these employment agreements,
assuming termination by reason of a change of control and payment in a lump sum
at September 28, 1995, was $969,202.
AMC has proposed an employment agreement with Mr. Richard M. Fay which
provides for an annual base salary of $275,000 and a guaranteed $50,000 bonus
which shall be available to Mr. Fay to draw against in whole or in part at any
time during Mr. Fay's first year of employment. Mr. Fay will not be eligible to
participate in the EIP or other bonus arrangement, if any, as determined from
time to time in the sole discretion of the Compensation Committee of the Board
of Directors of the Company upon the recommendation of the Chief Executive
Officer of the Company until after March 31, 1996. Mr. Fay's participation in
the EIP or other bonus arrangement shall be reviewed on or before March 31, 1996
for subsequent years. The proposed employment agreement has a term of three
years, from September 8, 1995 through September 8, 1998. As proposed, the
employment agreement will terminate without severance upon Mr. Fay's
resignation, death or disability as defined in his proposed employment
agreement, or upon AMC's good faith determination that Mr. Fay has been
dishonest or has committed a breach of trust respecting AMC. As proposed, AMC
may terminate the employment agreement at any time, with severance payments in
an amount equal to, at AMC's option, either (i) Mr. Fay's base salary per month
in effect at the time of termination, payable over the remaining term of his
employment, or (ii) the net present value of the monthly payments described in
(i) above, payable within 30 days of the date of termination. As proposed, any
severance payable to Mr. Fay shall be reduced by any wages, compensation or
income, cash or otherwise, received by Mr. Fay from sources other than AMC
during the remaining term of his employment agreement following the date of
termination.
The Company and Mr. Edward D. Durwood entered into an Agreement and General
Release effective October 5, 1995, pursuant to which Mr. Durwood was terminated
upon the recommendation of the Compensation Committee without cause with the
consent of the Company's Board of Directors. The Company paid Mr. Durwood
$498,398 in severance. The Agreement and General Release also provides for
mutual releases between the Company and Mr. Durwood.
AMC and Mr. Donald P. Harris entered into an Agreement and Release effective
October 1, 1995, pursuant to which Mr. Harris resigned as President -- AMC Film
Marketing, Inc. AMC paid Mr. Harris $467,850 in severance. Mr. Harris paid AMC
$110,249, the remaining amount of the principal and accrued interest on a loan
he had previously received from AMC. The Agreement and Release also provides for
mutual releases between AMC and Mr. Harris.
As permitted by the Incentive Plan, stock options and Performance Share
awards granted to participants during the last fiscal year provide for
acceleration upon the termination of employment within one year after the
occurrence of certain change in control events, whether such termination is
voluntary or involuntary, or with or without cause. See "Option Grants" and
"Long-Term Incentive Plan." In addition, the Compensation Committee may permit
acceleration upon the occurrence of certain transactions which may not
constitute a change of control. See "1994 Stock Option and Incentive Plan."
17
The Company maintains a severance pay plan for full-time salaried
nonbargaining employees with at least 90 days of service. For an eligible
employee who is subject to the Fair Labor Standards Act ("FLSA") overtime pay
requirements (a "nonexempt eligible employee"), the plan provides for severance
pay in the case of involuntary termination of employment due to layoff of the
greater of two week's basic pay or one week's basic pay multiplied by the
employee's full years of service up to no more than twelve week's basic pay.
There is no severance pay for a voluntary termination, unless up to two week's
pay is authorized in lieu of notice. There is no severance pay for an
involuntary termination due to an employee's misconduct. Only two week's
severance is paid for an involuntary termination due to substandard performance.
For an eligible employee who is exempt from FLSA overtime pay requirements,
severance pay is discretionary (at the Department Head/Supervisor level), but
will not be less than the amount that would be paid to a nonexempt eligible
employee.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
THE REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS SHALL NOT
BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY
REFERENCE THIS PROXY STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933
OR UNDER THE SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THAT THE
COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT
OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
The Compensation Committee of the Board of Directors of the Company and AMC
(the "Committee") is composed of two independent non-employee directors. The
Committee was established in November 1992 and is responsible for developing the
executive compensation strategy of the Company and AMC and monitoring its
implementation. In carrying out its responsibilities, the Committee, among other
things, reviews the policies of comparable companies and consulted with an
independent compensation consulting firm.
The following is a summary of the Committee's activities through the fiscal
year ended March 30, 1995.
COMPENSATION POLICY. The Company's executive compensation policy has five
overall objectives:
- To align the interests of Executive Officers and employees with those of
the Company and the stockholders.
- To link compensation to the performance of the Company as well as to the
individual contribution of each Executive Officer.
- To maintain total annual cash compensation (salary plus annual incentive)
at rates that are at the third quartile of pay levels of comparable
companies. Because of the relatively small number of motion picture
exhibition companies, this comparison has included companies engaged in
other businesses.
- To increase the alignment of the interests of executives and employees
with stockholder interests by providing a compensation package for
executives and employees that includes an appropriate portion of equity
based compensation. See "Stock Incentives."
- To compensate executives at a level which is competitive in the
marketplace so that the Company can continue to attract, motivate and
retain executives with outstanding abilities.
18
The Committee has begun to shift its philosophy away from total annual cash
compensation (salary plus annual incentive) towards making equity based awards
under the Incentive Plan an increased part of executive remuneration. In fiscal
1995, the Committee's strategy involved granting the performance based stock
awards and the non-qualified stock options described below as the first step in
a three year plan. In the future, the Committee may award additional equity
based incentives.
ANNUAL BASE SALARY. The annual base salary of each of the named Executive
Officers was reviewed and approved by the Committee. Annual base salaries for
the named Executive Officers are determined with reference to a "position rate"
for each of the named Executive Officers. The position rate is determined by
evaluating the responsibilities of the position and comparing it with that of
similar positions in comparable companies as well as companies generally.
The Executive Committee, in turn, established the annual base salaries for
fiscal 1995 for Executive Officers other than the named Executive Officers. The
Executive Committee used the same position rate criteria described above.
The percentage increase in annual base salary for each of the members of the
Executive Committee is anticipated, for the next several years, to be at a lower
than market rate. The annual incentive, if earned at target, will be the
component of total annual cash compensation that achieves the third quartile pay
target. Thus, if the Company's performance in any year is much higher than or
lower than the performance goals that affect annual incentives, total annual
cash compensation for Executive Officers may in the aggregate exceed the third
quartile pay target or be less than the third quartile pay target.
ANNUAL INCENTIVE CASH BONUS. The Committee approved an Executive Incentive
Program (the "EIP") in fiscal 1994 as an incentive for executives to improve the
financial success of the Company. Eligible employees, including Executive
Officers, are rewarded with annual incentive cash bonuses if certain performance
criteria are met and/or exceeded. The incentive award is based upon a
combination of three components, i.e., (i) company component, (ii) division
component and (iii) personal component. For fiscal 1995, the company component
was based upon achievement of a targeted EBITDA (earnings before interest,
taxes, depreciation and amortization) quota. The division component, which
applies to division and film office participants, was based upon achievement of
a targeted Division Operating Income ("DOI") level. DOI was defined as operating
income less general and administrative expenses and extraordinary expenses. The
personal component for Executive Officers other than named Executive Officers
was discretionary based upon achievement of personal goals and objectives as
determined by a participant's performance appraisal, and payment was subject to
the recommendation of the supervisor and approval of the Committee. For the
named Executive Officers, the personal component was determined by the
Committee.
Early in fiscal 1995, the Committee reviewed and approved the
recommendations of the Executive Committee regarding the EBITDA and DOI targets
for fiscal 1995.
The bonuses awarded to the Executive Officers for fiscal 1995 were reviewed
and approved by the Committee. The EIP provides for annual cash incentives to be
paid in a proportionate manner if the Company attains at least 80% of its EBITDA
and/or DOI targets but less than 100%. The Company attained between 80% and 100%
of its EBITDA and DOI targets and thus paid a proportionate amount of the
targeted bonuses for these components to the Executive Officers.
19
The Committee awarded a combined personal component and discretionary bonus
equal to 7.5% of such Executive Officer's base salary (out of a maximum of 15%)
to three of the four members of the Executive Committee and to five of the six
other Executive Officers.
STOCK INCENTIVES. At the Company's Annual Meeting of Stockholders held on
November 10, 1994, the Company's stockholders approved the AMC Entertainment
Inc. 1994 Stock Option and Incentive Plan. Consistent with the Committee's
policy of aligning the interests of its executives with those of the
stockholders, the Committee intends to use the Incentive Plan to incorporate
equity based awards into the ongoing compensation package for executives and
employees. The Committee recommended the proposed amendments to the Incentive
Plan to the Company's Board of Directors to be considered by the Company's
stockholders at this meeting.
In March 1995, the Company made certain performance based stock awards and
granted non-qualified stock options to members of the Executive Committee. After
soliciting and considering recommendations of the Executive Committee, the
Committee made additional performance based stock awards and granted
non-qualified stock options to other Executive Officers and employees in June
1995. Certain of the awards made by the Committee are subject to the approval of
the proposed amendments to the Incentive Plan by the Company's stockholders at
this meeting.
The Committee allocated such performance based stock awards and
non-qualified stock options to the Chief Executive Officer and other Executive
Officers and employees based on subjective consideration of each individual's
participation and contribution to the Company's profitability and long-range
strategy.
CEO COMPENSATION. Mr. Stanley H. Durwood's fiscal 1995 annual base salary
and annual incentive cash bonus were reviewed and approved by the Committee. See
"Annual Base Salary" and "Annual Incentive Cash Bonus." Mr. Stanley H. Durwood
is eligible to participate in the same compensation plans maintained by the
Company and AMC that are available to other Executive Officers of the Company
and AMC described above.
Mr. Stanley H. Durwood's increase in annual base salary was at a below
market rate and comparable to that received by other members of the Executive
Committee and his annual incentive cash bonus was in accordance with the
provisions of the EIP. Mr. Stanley H. Durwood received a performance based stock
award and was granted non-qualified stock options, based upon the considerations
described above. See "Stock Incentives." The Committee intends to compensate Mr.
Durwood in a pattern similar to that of the other named Executive Officers.
Mr. Stanley H. Durwood earned an annual incentive cash bonus respecting the
Company component under the EIP in an amount equal to sixteen and one half
percent of his annual base salary. The Committee awarded Mr. Stanley H. Durwood
an annual incentive cash bonus with respect to the personal and discretionary
components of the EIP equal to seven and one half percent of his annual base
salary. The personal and discretionary components of Mr. Stanley H. Durwood's
annual incentive cash bonus were subjectively assessed, based primarily on
achievement of above threshold EBITDA and the implementation of the Company's
strategy to grow its theatre circuit.
IMPACT OF INTERNAL REVENUE CODE SECTION 162(M). During 1993, Section 162 of
the Internal Revenue Code of 1986, as amended (the "Code") was amended with
respect to the tax deductibility of executive compensation. Under the Code,
publicly-held companies such as the Company may not deduct compensation paid to
certain Executive Officers to the extent that an executive's compensation
exceeds $1,000,000 in any one year. Although the Committee has attempted to
20
design the AMC Entertainment Inc. 1994 Stock Option and Incentive Plan so that
compensation received pursuant to the plan will be deductible under Section
162(m) of the Code, in certain circumstances, it may not be possible or
practicable or in the Company's best interests to so qualify compensation
pursuant to the plan. In any event, the Committee anticipates that, in most
instances, treatment under Section 162(m) of the Code will not be an issue
because generally no Executive Officer's compensation will exceed $1,000,000 in
any one year.
COMPENSATION COMMITTEE
Charles J. Egan, Jr.
Paul E. Vardeman
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As discussed above, the members of the Executive Committee determined the
annual base salaries of Executive Officers other than the named Executive
Officers. The members of the Executive Committee were Messrs. Stanley H.
Durwood, Edward D. Durwood, Peter C. Brown and Philip M. Singleton. See "Report
of the Compensation Committee on Executive Compensation."
21
STOCK PERFORMANCE GRAPH
THE STOCK PERFORMANCE GRAPH SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY
ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY
FILING UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES EXCHANGE ACT OF
1934, EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THIS
INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH
ACTS.
The following line graph compares the yearly percentage change in the
cumulative total stockholder return on the Company's Common Stock with the
cumulative total return on the Standard and Poor's Corporation Composite 500
Index and with a selected peer group of three companies engaged in the motion
picture exhibition industry, for the period of five fiscal years commencing
March 29, 1990 and ending March 30, 1995. The comparison assumes $100 was
invested on March 29, 1990 in the Company's Common Stock and, in each of the
foregoing indices, assumes the reinvestment of dividends.
The peer group companies selected by the Company for comparison were Carmike
Cinemas, Inc., Cineplex Odeon Corporation and Harcourt General, Inc. and its
predecessor. In December 1993, Harcourt General, Inc. spun off its motion
picture theatre business into a newly formed company, GC Companies, Inc. Holders
of Harcourt General, Inc. stock received one share of GC Companies, Inc. stock
for each ten shares of Harcourt General, Inc. For fiscal 1994, the peer group
companies selected by the Company for comparison were Carmike Cinemas, Inc.,
Cineplex Odeon Corporation, Harcourt General, Inc. and GC Companies, Inc. To
calculate the return for Harcourt General, Inc. for fiscal 1994, the Company
added to the value of each share of Harcourt General, Inc., one-tenth of the
value of a share of GC Companies, Inc. stock as of March 31, 1994. For fiscal
1995, the peer group companies selected by the Company for comparison were
Carmike Cinemas, Inc., Cineplex Odeon Corporation and GC Companies, Inc.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
AMC PEER GROUP S&P 500
1990 100 100 100
1991 75 98 114
1992 62 100 126
1993 133 128 145
1994 177 145 147
1995 195 148 170
22
LEGAL PROCEEDINGS
The following paragraphs summarize significant litigation and proceedings to
which the Company is a party.
IN RE: AMC SHAREHOLDER DERIVATIVE LITIGATION, CHANCERY COURT FOR NEW CASTLE
COUNTY, DELAWARE (CIVIL ACTION NO. 12855). On February 15, 1995, the court
ordered the consolidation of two derivative actions filed against four directors
of the Company, Messrs. Stanley H. Durwood, Edward D. Durwood, Paul E. Vardeman
and Charles J. Egan, Jr., and one of its former directors, Mr. Phillip Ean
Cohen. The two cases were originally filed on January 27, 1993, by Mr. Scott C.
Wallace and on April 16, 1993, by Mr. James M. Bird, respectively. On December
8, 1994, the court, pursuant to a stipulation by the parties, entered an order
approving Mr. Wallace's withdrawal as a derivative plaintiff, granting the
motion for intervention filed by Mr. Philip J. Bogosian, Auginco, Mr. Norman M.
Werther and Ms. Ellen K. Werther, and authorizing the filing of the intervenor's
complaint. The intervenors' complaint includes substantially the same
allegations as the Wallace and Bird complaints. The two actions, as
consolidated, are referred to below as the "Derivative Action."
In the Derivative Action, plaintiffs allege breach of fiduciary duties of
care, loyalty and candor, mismanagement, constructive fraud and waste of assets
in connection with, among other allegations, the provision of film licensing,
accounting and financial services by American Associated Enterprises, a
partnership beneficially owned by Mr. Stanley H. Durwood and members of his
family, to the Company, certain other transactions with affiliates of the
Company, termination payments to a former officer of the Company, certain
transactions between the Company and National Cinema Supply Corporation, and a
fee paid by a subsidiary of the Company to Mr. Cohen in connection with a
transaction between the Company and TPI Entertainment, Inc. The Derivative
Action seeks unspecified money damages and equitable relief and costs, including
reasonable attorney's fees.
On February 9, 1995, the defendants filed a motion to dismiss the Derivative
Action. Discovery has been stayed pending resolution of the motion to dismiss.
The Company is named as a defendant in a number of other lawsuits arising in
the normal course of its business. Management does not expect that any actions
to which the Company is a party will result in a material loss to the Company.
23
SECURITY OWNERSHIP OF BENEFICIAL OWNERS
The following table sets forth certain information as of September 28, 1995,
with respect to beneficial owners of five percent or more of any class of the
Company's capital stock:
NAME AND ADDRESS NUMBER OF SHARES PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
- ------------------------------ --------------------------------------------- ------------------ ---------
Common Stock.................. Durwood, Inc.(1) 2,641,951(2) 49.0%(2)
106 West 14th Street
Kansas City, MO 64105
The Capital Group Companies, Inc. and Capital 322,400(3) 6.0%(4)
Guardian Trust Company(3)
333 South Hope Street
Los Angeles, CA 90071
David L. Babson & Company, Inc.(5) 461,800(5) 8.6%(6)
One Memorial Drive
Cambridge, MA 02142
Class B Stock(7).............. Durwood, Inc.(1) 11,157,000(2) 100.0%(2)
106 West 14th Street
Kansas City, MO 64105
<FN>
- -------------------
(1)A revocable inter-vivos trust and a revocable voting trust established
by Mr. Stanley H. Durwood for the benefit of Mr. Stanley H. Durwood hold
approximately 75% of the voting power of the outstanding capital stock of
Durwood, Inc. ("DI"). American Associated Enterprises, a Missouri limited
partnership of which Mr. Stanley H. Durwood is the limited partner and his
children are the general partners, holds approximately 25% of the voting power
of DI's outstanding capital stock. Mr. Stanley H. Durwood is a director of DI.
Mr. Stanley H. Durwood is Chairman of the Board, Chief Executive Officer,
President and a Director of the Company and AMC.
(2)Class B Stock is convertible into Common Stock on a share-for-share
basis. The stated percentage has been computed without giving effect to the
conversion option. Were all shares of Class B Stock converted there would be
16,545,880 shares of Common Stock outstanding, of which DI would hold 13,798,951
shares, or 83% of the outstanding Common Stock.
(3)As reported by The Capital Group Companies, Inc. and Capital Guardian
Trust Company on Schedule 13G dated February 6, 1995.
(4)Because the number of outstanding shares of Common Stock has increased
since the date of the information in such Schedule 13G, the number of shares of
Common Stock disclosed therein constitutes 6.0% of the outstanding shares of
Common Stock as of September 28, 1995.
(5)As reported by David L. Babson & Company, Inc. on Schedule 13G dated
February 10, 1995.
(6)Because the number of outstanding shares of Common Stock has increased
since the date of the information in such Schedule 13G, the number of shares of
Common Stock disclosed therein constitutes 8.6% of the outstanding shares of
Common Stock as of September 28, 1995.
(7)In the election of Directors, holders of Class B Stock are entitled to
elect three of the Company's five Directors. On other matters, holders of Class
B Stock vote as a class with holders of Common Stock, with each share of Class B
Stock being entitled to ten votes per share.
24
BENEFICIAL OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth certain information as of September 28, 1995
with respect to beneficial ownership by Directors and Executive Officers of the
Company's Common Stock and Class B Stock. The amounts set forth below include
the vested portion of 505,000 shares of Common Stock subject to options under
the Company's 1984 Option Plan held by Executive Officers.
NAME OF AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- ------------------------------ --------------------------------------------- -------------------------- ---------
Common Stock.................. Stanley H. Durwood 2,642,101(1) 49.0%
Edward D. Durwood(4) 100,000(2)(3) 1.8%
Paul E. Vardeman 300 *
Philip M. Singleton 93,000(2) 1.7%
Peter C. Brown 75,000(2) 1.4%
All Directors and Executive Officers as a
group (13 persons, including the individuals
named above)(5) 2,964,869(2) 52.1%
Class B Stock................. Stanley H. Durwood 11,157,000(1) 100.0%
<FN>
- -------------------
*Less than one percent.
(1)See Notes 1 and 2 under "Security Ownership of Beneficial Owners." Mr.
Stanley H. Durwood also directly owns 150 shares of the Company's Common Stock.
(2)Includes shares subject to options to purchase Common Stock under the
Company's 1984 Stock Option Plan, as follows: Mr. Edward D. Durwood--100,000
shares; Mr. Philip M. Singleton-- 150,000 shares; Mr. Peter C. Brown--150,000
shares; and all Executive Officers as a group-- 505,000 shares. The options
granted vest as to exercise rights in 25% annual installments commencing twelve
months after date of grant; thus, options described in the above table represent
one-half of the total options granted to each optionee.
(3)Mr. Edward D. Durwood may also be deemed to be the beneficial owner of
the shares owned by DI.
(4)The employment of Mr. Edward D. Durwood by the Company or its affiliates
ceased effective as of October 5, 1995.
(5)The employment of Mr. Donald P. Harris, who was included in the group of
directors and Executive Officers, by the Company or its affiliates ceased
effective as of October 1, 1995. Mr. Harris owned no stock but is included in
the group of 13 persons.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Executive Officers and Directors, and persons who own more than 10% of the
Company's Common Stock and
25
$1.75 Cumulative Convertible Preferred Stock, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC") and the
American and Pacific Stock Exchanges. Executive Officers, Directors and
greater-than-10% beneficial owners are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file. Based solely on a
review of the copies of such forms furnished to the Company, or written
representations that no Forms 5 were required, the Company believes that during
fiscal 1995 its Executive Officers, Directors and greater-than-10% beneficial
owners complied with all Section 16(a) filing requirements applicable to them,
except that Mr. Richard T. Walsh, an Executive Officer of the Company, had
attributed to him (through his wife's participation in an investment club
composed of approximately ten members) the purchase of 55 shares of $1.75
Cumulative Convertible Preferred Stock. Mr. Walsh's wife received the proceeds
from the liquidated investment club in October 1994, which was reported on Form
5.
CERTAIN TRANSACTIONS
Since its formation, the Company has been a member of an affiliated group of
companies (the "DI affiliated group") beneficially owned by Mr. Stanley H.
Durwood and members of his family. Mr. Stanley H. Durwood is President,
Treasurer and a Director of Durwood, Inc. ("DI") and Chairman of the Board,
Chief Executive Officer, President and a Director of the Company and AMC. There
have been a number of transactions involving the Company or AMC and the DI
affiliated group in prior years. The Company intends to ensure that all
transactions with DI or other related parties are fair, reasonable and in the
best interests of the Company. In that regard, the Audit Committees of the
Boards of Directors of the Company and AMC review all material proposed
transactions between the Company and DI or other related parties to determine
that, in their best business judgment, such transactions meet that standard. The
Audit Committees consist of Messrs. Paul E. Vardeman and Charles J. Egan, Jr.,
neither of whom are officers or employees of the Company or AMC nor
stockholders, directors, officers or employees of DI. Set forth below is a
description of significant transactions which have occurred since April 1, 1994,
or involve receivables that remain outstanding as of September 28, 1995. There
may in the future be other transactions between the Company or AMC and such DI
affiliated group members and individuals.
Certain corporate departments of AMC perform general and administrative
services for DI and its subsidiaries. AMC charged DI and its subsidiaries
$116,000 for such services for fiscal 1995.
Periodically, AMC and DI reconcile any accounts owed by one company to the
other. Charges to the intercompany account have included the allocation of AMC's
general and administrative expenses and payments made by AMC on behalf of DI. In
fiscal 1995, the largest balance owed by DI and its subsidiaries to AMC was
$831,000. As of September 28, 1995, DI owed AMC and its subsidiaries $11,856.
Ms. Marjorie D. Grant, a Vice President of AMC and the sister of Mr. Stanley
H. Durwood, has an employment agreement with the Company providing for an annual
base salary of no less than $100,000, an automobile and, at the sole discretion
of the Chief Executive Officer of the Company, a year-end bonus. Ms. Grant's
employment agreement, executed July 1, 1991, terminates on June 30, 1996, or
upon her death or disability. The agreement provides that in the event Mr.
Stanley H. Durwood fails to control the management of the Company by reason of
its sale, merger or consolidation, or because of his death or disability, or for
any other reason, then the Company and Ms. Grant would each have the option to
terminate the agreement. In such event,
26
the Company would pay to Ms. Grant in cash a sum equal to the aggregate cash
compensation, exclusive of bonus, to the end of the term of her employment under
the agreement, after discounting such amount to its then present value using a
discount rate equal to the lesser of one-half of the current prime rate of
interest or 10% per annum. In November 1991, this agreement was assumed by DI
and was reassumed by the Company in January 1995.
In July 1992, Mr. Jeffery W. Journagan, a son-in-law of Mr. Stanley H.
Durwood, was employed by a subsidiary of the Company. Mr. Journagan's current
salary is $72,150.
AMC loaned $200,000 in January 1987 to Mr. Donald P. Harris, one of the
named Executive Officers in fiscal 1995, in connection with the purchase of his
principal residence. The employment of Mr. Harris by the Company or its
affiliates ceased effective as of October 1, 1995. Mr. Harris paid AMC $110,249,
the remaining amount of the principal and accrued interest on the loan, on
October 1, 1995. The largest principal amount outstanding on the note during
fiscal 1995 was $200,000. For a description of Mr. Harris' Agreement and
Release, see "Other Compensation Plans."
For a description of Mr. Edward D. Durwood's Agreement and General Release,
see "Other Compensation Plans."
For a description of certain employment agreements between the Company and
Messrs. Peter C. Brown and Philip M. Singleton, and the proposed employment
agreement between AMC and Mr. Richard M. Fay, see "Other Compensation Plans."
FEDERAL INCOME TAXES
DI and the Company entered into an agreement dated July 1, 1983 pursuant to
which, so long as DI and the Company filed a consolidated federal income tax
return, the Company paid to DI the amount of tax that would be payable
calculated as if the Company filed a separate consolidated federal income tax
return for such period and all prior taxable periods, provided, however, that if
such return reflected a refund due to the Company, DI was obligated to pay the
Company an amount equal to such refund when and if the consolidated group is
able to realize the Company's tax benefit in the future. Due to the Company's
issuance of the $1.75 Cumulative Convertible Preferred Stock on March 3, 1994,
the Company is no longer eligible to file a consolidated federal income return
with DI. The agreement still applies to all tax years for which DI and the
Company previously filed a consolidated federal income tax return.
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors recommends that the stockholders ratify the
appointment of Coopers & Lybrand L.L.P. as independent public accountants to
audit the financial statements of the Company for the fiscal year ending March
28, 1996. Representatives of Coopers & Lybrand L.L.P. are expected to be present
at the Annual Meeting of Stockholders, and if present, will have the opportunity
to make a statement if they wish, and are expected to be available to respond to
appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF
COOPERS & LYBRAND L.L.P. AS INDEPENDENT PUBLIC ACCOUNTANTS TO AUDIT THE
FINANCIAL STATEMENTS OF THE COMPANY FOR THE FISCAL YEAR ENDING MARCH 28, 1996.
27
3. AMENDMENTS TO 1994 STOCK OPTION AND INCENTIVE PLAN
GENERAL
The Board of Directors recommends to the stockholders for their approval and
adoption the proposed Amendments (as such term is defined below) to the AMC
Entertainment Inc. 1994 Stock Option and Incentive Plan (the "Incentive Plan").
The approval by an affirmative vote of the holders of a majority of the
Company's outstanding shares of stock present at the Annual Meeting of
Stockholders in person or by proxy is required for adoption of the Amendments.
Abstentions will be counted in the tabulation of votes cast on the Amendments
and will have the same effect as negative votes. Broker non-votes will not be
counted in determining whether the Amendments are approved.
The Company's Executive Officers and directors, other than Messrs. Charles
J. Egan, Jr. and Paul E. Vardeman, are eligible to participate in the Incentive
Plan and certain of them have received awards subject to stockholder approval of
the Amendments. Therefore, such Executive Officers and directors may be deemed
to have an interest in the proposed Amendments.
Set forth below are summaries of the Amendments and of the Incentive Plan,
after giving effect to the Amendments. THE COMPLETE TEXT OF THE INCENTIVE PLAN,
SHOWING THE CHANGES MADE BY THE AMENDMENTS, IS SET FORTH AS EXHIBIT A TO THIS
PROXY STATEMENT. THE FOLLOWING SUMMARY OF THE MATERIAL FEATURES OF THE INCENTIVE
PLAN AND THE AMENDMENTS DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO EXHIBIT A.
THE AMENDMENTS
On March 29, 1995, the Board of Directors approved amendments to the
Incentive Plan which had been recommended to it by the Compensation Committee of
the Company's Board of Directors (the "Committee"), which is responsible for the
administration of the Incentive Plan. Certain of these changes require
stockholder approval under the provisions of the Incentive Plan because they may
be deemed to materially increase benefits to participants. Certain changes also
require stockholder approval under Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"), and proposed regulations thereunder, because
they involve material terms of performance goals, as defined by such
regulations. Therefore, such changes (the "Amendments") were approved subject to
stockholder approval and awards made by the Committee thereafter that were based
upon such Amendments have been conditioned upon receipt of such stockholder
approval. In the aggregate, current participants have been awarded a maximum of
201,000 Performance Shares which are based on new business criteria and other
matters provided for in the Amendments and which therefore are contingent upon
stockholder approval.
The following is a description of the changes that will be made to the
Incentive Plan if the Amendments are approved by stockholders.
(i) The class of employees referred to in Section 4 of the Incentive
Plan as eligible to receive awards will be expanded to include all managers
of the Company, including field and theatre managers; previously,
participation was limited to corporate or field executives and senior
managers. As a result of this change, lower level managers also may be given
an opportunity to participate in the Incentive Plan.
28
(ii) As permitted by recently proposed regulations under Section 162(m)
of the Code, the requirement in Section 9 of the Incentive Plan that goals
for performance based awards be set prior to the start of a performance
period will be changed so that such goals may be set by a date not later
than 90 days after the start of such performance period. This change will
provide more time for the Committee to deliberate and to have access to more
complete information concerning the prior year's performance when making
awards.
(iii) The business criteria set forth in Section 9 of the Incentive Plan
upon which performance goals may be based will be expanded so that such
business criteria will include (a) the private market value of shares of the
Company's Common Stock ("Shares") on a fully diluted basis (assuming full
exercise or conversion of all outstanding shares of the Company's preferred
stock, Class B stock, options and other rights to acquire Shares), based on
a constant multiple of theatre level EBITDA (earnings before interest,
taxes, depreciation and amortization) (theatre level EBITDA is Company
EBITDA less National Cinema Network, Inc. EBITDA), plus the book value of
National Cinema Network, Inc., cash, cash equivalents and investments and
investments in other long-term assets, less corporate borrowings,
capitalized lease obligations and the carrying value of minority interests
in other long-term liabilities, (b) the return to stockholders, measured by
increases in the market value of an investment in Shares, assuming the
reinvestment of dividends received, and (c) the return on assets within a
participant's span of responsibility.
The business criteria of private market value per share was introduced
as a business criteria in an effort to focus executives' attention directly
on the operational activities that contribute to increases in the value of
the Company, and, ultimately, the stock price. The contribution of National
Cinema Network, Inc. to the private market value per share of the Company is
measured on a different basis than the Company's other operating
subsidiaries because National Cinema Network, Inc. is not a theatre
exhibition company. Similarly, the concept of return to stockholders was
introduced as a business criteria upon which performance goals might be
based because it was believed that such a measure would help to more closely
align the interests of participants with those of stockholders. Return on
assets was introduced to provide a business criteria for use in future
years, as additional new screens are opened, to help ensure that the
Company's growth strategy is accomplished.
(iv) In addition to being measurable against the performance of a peer
group of two or more companies, as currently provided in the Incentive Plan,
under Amendments to Sections 7, 8 and 9 of the Incentive Plan, business
criteria may be measured against (a) the prior year's or years' performance
of any operations-based unit or span of a participant's responsibility,
instead of only that of the Company or a subsidiary or division of the
Company, as currently provided, or (b) a broad-based group of stocks, such
as the Standard and Poor's 500 Index, instead of a broad-based group of
stocks issued by companies whose risk profiles are similar to the Company's,
as currently provided.
Providing for the measurement of business criteria against an
operations-based unit or span of a participant's responsibility will permit
the measurement of results based on units of the Company smaller than a
division. This will facilitate the granting of awards to individuals at
lower levels in the organization. The Standard and Poor's 500 Index or
similar broad-based groups of stock were introduced as measurement groups
instead of "groups of stocks with similar risk profiles" to permit the
Company to compare performance against an easily tracked index, which the
Committee believes will allow more frequent feedback on performance than
would be possible if a customized index were used.
29
(v) Amendments to Sections 11.1, 12 and 20 of the Incentive Plan
clarify various provisions of the Plan permitting the payment of
performance-based awards upon termination of employment as a result of the
occurrence of certain events (such as death, disability, retirement or a
change of control) or upon the occurrence of certain extraordinary corporate
transactions (such as a sale of assets, liquidation, merger or a change in
control), in each case prior to the end of a performance period, by
providing that under such circumstances such awards will be based upon the
extent to which performance goals have been achieved, measured to the date
of termination or the occurrence of such event, as the case may be.
Presently, the Incentive Plan permits acceleration of awards upon the
occurrence of such events but does not specify how the number of shares
deliverable or the amount payable to participants under performance based
awards is to be determined upon such acceleration.
(vi) An Amendment to Section 12 of the Incentive Plan clarifies the
power of the Committee to waive satisfaction of performance goals upon the
occurrence of a change of control or upon termination of employment
following a change of control. The Committee presently has the power to
waive performance goals upon the occurrence of such events but the Incentive
Plan does not expressly state when the Committee's power to waive such goals
can be exercised. The Amendment provides that the waiver may be made either
at the time an award is made or thereafter, thus conforming the Committee's
power with respect to performance based awards to that which the Committee
possesses under Section 12 with respect to restricted share awards and stock
options.
DESCRIPTION OF THE INCENTIVE PLAN (AFTER GIVING EFFECT TO AMENDMENTS)
GENERAL
The Incentive Plan permits three basic types of awards: (i) grants of stock
options which are either incentive stock options ("ISOs") as defined by Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), or non-ISOs
("Non-Qualified Stock Options"), (ii) grants of stock awards ("Stock Awards"),
which may be either performance stock awards ("Performance Stock Awards") or
restricted stock awards ("Restricted Stock Awards"), and (iii) performance unit
awards ("Performance Units").
Under the Incentive Plan, the Committee is authorized to grant ISOs,
Non-Qualified Stock Options and Stock Awards entitling recipients to receive up
to an aggregate of 1,000,000 shares of the Company's 66 2/3 CENTS par value
Common Stock, in accordance with the Plan, without further authorization from
the stockholders. The Committee is also authorized to make awards of Performance
Units, which are payable only in cash and are valued by reference to designated
criteria, other than shares of Common Stock, which may be established by the
Committee. No grantee may receive options to acquire more than 325,000 shares of
Common Stock, Stock Awards entitling the grantee to receive more than 150,000
shares of Common Stock or cash awards under Performance Units aggregating more
than $2 million. During any 12 month period, no grantee may receive options to
acquire more than 65,000 shares of Common Stock or cash awards under Performance
Units aggregating more than $400,000. No grantee may receive a Stock Award or
Awards entitling the grantee to receive free of conditions more than 30,000
shares of Common Stock with respect to any 12 month period, but determined on an
annualized basis so that more than 30,000 shares may be received at one time
free of conditions with respect to performance periods exceeding 12 months'
duration.
30
Stock Awards and Performance Unit awards made to persons subject to Section
16 of the Securities Exchange Act of 1934 (the "Exchange Act") generally will be
based on the attainment during a performance period of 12 months' duration or
more of one or more performance goals as established by the Committee not later
than 90 days after the start of each performance period with respect to which
such an award is made. The Committee shall certify that the performance goals
have been achieved before payment of any such award. Performance goals
established by the Committee shall be based upon, as the Committee deems
appropriate, one or more of the following business criteria: (i) Company or
subsidiary EBITDA (earnings before interest, taxes, depreciation and
amortization); (ii) Company or subsidiary earnings or earnings per share; (iii)
public market prices of Company stock; (iv) division operating income, or "DOI"
(operating income less general and administrative expenses and extraordinary
expenses); (v) division level EBITDA (DOI less national film, home office and
international general and administrative expenses plus capitalized lease
adjustments); (vi) private market value of Shares on a fully-diluted basis
(assuming full exercise of all outstanding shares of preferred stock, Class B
stock, options and other rights to acquire Shares), based on a constant multiple
of theatre level EBITDA (Company EBITDA less National Cinema Network, Inc.
EBITDA), plus the book value of National Cinema Network, Inc., cash, cash
equivalents and investments and investments in other long-term assets, less
corporate borrowings, capitalized lease obligations and the carrying value of
minority interests in other long-term liabilities; (vii) return to stockholders,
measured by increases in the market value of an investment in Shares, assuming
reinvestment of dividends received; and (viii) return on assets within a
participant's span of responsibility. The Committee may, in its discretion,
determine whether an award will be paid under any one or more of the business
criteria. In setting performance goals, such criteria may be measured against
one or more of the following: (i) the prior year's or years' performance of the
Company, a subsidiary, a division or other operations-based unit or span of a
participant's responsibility; (ii) the performance of a broad based group of
stocks such as, but not limited to, the Standard and Poor's 500 Index; and (iii)
the performance of a peer group of two or more companies. Such performance goals
may be, but need not be, different for each performance period.
The Committee may set different (or the same) goals for different grantees
and for different awards, and performance goals may include standards for
minimum attainment, target attainment and maximum attainment. In all cases,
however, performance goals shall include a minimum performance standard below
which no part of the relevant award will be earned. The Committee may reduce the
amount of, or eliminate, a performance goal based award that would otherwise be
payable but may not increase the compensation payable under an award otherwise
due upon attainment of a performance goal.
ELIGIBILITY
Employees of the Company or its subsidiaries who are corporate or field
executives or senior managers, including Executive Officers, and other managers,
including field and theatre managers, are eligible for awards under the
Incentive Plan. All officers of the Company are considered employees for this
purpose whether or not they are also directors. Directors who are not also
employees, however, are not eligible for awards under the Incentive Plan. Awards
may be made without regard to prior awards made under the Incentive Plan or any
other plan or participation in any other benefit plan of the Company or its
subsidiaries. Presently there are approximately 40 officers (including three
directors) and approximately 150 other employees of the Company and its
subsidiaries eligible to participate in the Incentive Plan. If the Amendments
are adopted, approximately 700 additional employees will be eligible to
participate under the Incentive Plan.
31
AWARDS MADE AND PRESENTLY PROPOSED UNDER INCENTIVE PLAN
On March 29, 1995 and June 28, 1995, the Committee awarded Performance
Shares and Non-Qualified Stock Options to certain employees of the Company as
part of a three year incentive program under the Incentive Plan. The following
tables provide certain information concerning Performance Shares and
Non-Qualified Stock Options awarded to date under the Incentive Plan to (i) each
of the persons identified in the Summary Compensation Table, (ii) all current
executive officers of the Company as a group, (iii) all current directors and
nominees for director who are not executive officers, as a group, (iv) all
current employees, including officers who are not executive officers, as a
group, and (v) associates of directors, executive officers and nominees for
director, as a group.
PERFORMANCE ESTIMATED FUTURE PAYOUT
OR OTHER (NUMBER OF SHARES)
NUMBER(1)(2) PERIOD UNTIL -----------------------------------
OF SHARES, MATURATION OR THRESHOLD TARGET
NAME PERFORMANCE (#) PAYOUT (#) (#) MAXIMUM (#)
- ------------------------------------- --------------- ------------- ----------- --------- -----------
Stanley H. Durwood................... 90,000 3 years 30,000 45,000 90,000
Edward D. Durwood(3)................. -- -- -- -- --
Donald P. Harris(3).................. -- -- -- -- --
Philip M. Singleton.................. 18,000 3 years 6,000 9,000 18,000
Peter C. Brown....................... 18,000 3 years 6,000 9,000 18,000
All current executive officers, as a
group............................... 157,500 3 years 52,500 78,750 157,500
Current directors and nominees for
director who are not executive
officers, as a group................ 0 -- 0 0 0
All current employees who are not
executive officers, as a group...... 43,500 3 years 14,500 21,750 43,500
Associates of directors, executive
officers or nominees for director,
as a group.......................... 0 -- 0 0 0
<FN>
-------------------
(1)Maximum
(2)The Performance Share Awards shown in the table are based on
business criteria and other provisions included in the Amendments and were
granted subject to, and conditioned upon, approval of the Amendments. The
applicable business criteria upon which such awards were based are total
return to stockholders and private market value per share. The actual
number of shares received by participants under such awards will be based
on changes in such criteria over the performance period as measured against
changes in the Standard and Poor's 500 Index over such period. For a more
detailed description of the conditions which must be met before shares may
be received under the Performance Share Awards referred to in the preceding
table, see "Long Term Incentive Plan."
(3)When their employment with the Company ceased, awards made under the
Incentive Plan to these individuals lapsed unexercised and are therefore
not included in this table.
32
NUMBER(1) POTENTIAL REALIZABLE
OF VALUE AT ASSUMED
SECURITIES ANNUAL RATES OF STOCK
UNDERLYING PRICE APPRECIATION
OPTIONS/ EXERCISE OR FOR OPTION TERM
SARS BASE PRICE EXPIRATION ------------------------
NAME GRANTED (#) ($/SH) DATE 5% ($) 10% ($)
- ---------------------------- ----------- --------------- ----------- ----------- -----------
Stanley H. Durwood.......... 22,500 $ 11.75 03/29/05 $ 166,275 $ 421,425
Edward D. Durwood(2)........ -- -- -- -- --
Donald P. Harris(2)......... -- -- -- -- --
Philip M. Singleton......... 4,500 11.75 03/29/05 33,255 84,285
Peter C. Brown.............. 4,500 11.75 03/29/05 33,255 84,285
All current executive a-31,500 a- 11.75 a-03/29/05 a- 232,785 a- 589,995
officers, as a group...... b- 8,250 b- 14.50 b-06/28/05 b- 75,240 b- 190,658
Current directors and
nominees for director who
are not executive officers,
as a group................. 0 -- -- -- --
All current employees who
are not executive officers,
as a group................. 12,750 14.50 6/28/05 116,280 294,653
Associates of directors,
executive officers or
nominees for director, as a
group...................... 0 -- -- -- --
<FN>
-------------------
(1)The Non-Qualified Stock Option Awards shown in the table could be
made under the Incentive Plan prior to giving effect to the Amendments and
are not conditioned on stockholder approval of the Amendments. For a
summary of the vesting provisions of the options granted, see "Option
Grants."
(2)Because their employment with the Company ceased, options granted to
these individuals will lapse unexercised and are therefore not included in
the table.
As part of the three year program referred to above, the Committee presently
intends to grant additional performance based Non-Qualified Stock Options to
certain employees of the Company. These grants may be made annually over a three
year period based on the Company's performance against annual goals for fiscal
years 1996 through 1998. Presently it is anticipated that the performance goals
and business criteria that will be used in determining the amount of options to
be granted under this component of the program for fiscal 1996 will be the same
as those that the Committee used to grant Performance Shares at the beginning of
the three year period. See "Long-Term Incentive Plan". However, unlike the
Performance Shares, which will be awarded based upon performance over the entire
three year period, any such option grants that are made will be based on annual
performance for a fiscal year.
The following table shows the threshold, target and maximum number of
options which the Committee presently intends to grant with respect to fiscal
1996 under the Incentive Plan to (i) each of the persons currently in the
Company's employ identified in the Summary Compensation Table, (ii) all current
executive officers of the Company, as a group, (iii) all current directors and
nominees for director who are not executive officers, as a group, (iv) all
current employees,
33
including officers who are not executive officers, as a group, and (v)
associates of directors, executive officers and nominees for directors, as a
group. However, the Committee may determine to grant different amounts or types
of awards to participants under the Incentive Plan, or to base such awards on
different performance goals or business criteria, or to make no awards, and
participants will have no rights under any such awards until they are made by
the Committee.
PRESENTLY ESTIMATED NUMBER OF
PERFORMANCE-BASED OPTIONS WHICH MAY
BE
GRANTED IN FISCAL 1996
-----------------------------------
NAME THRESHOLD TARGET MAXIMUM
- ------------------------------------------------------------- ----------- --------- -----------
Stanley H. Durwood........................................... 15,000 22,500 45,000
Philip M. Singleton.......................................... 3,000 4,500 9,000
Peter C. Brown............................................... 3,000 4,500 9,000
All current executive officers, as a group................... 26,500 39,750 79,500
Current directors and nominees for director who are not
executive officers, as a group.............................. 0 0 0
All current employees who are not executive officers, as a
group....................................................... 8,500 12,750 25,500
Associates of directors, executive officers or nominees for
director, as a group........................................ 0 0 0
ADMINISTRATION
The Incentive Plan is administered by the Compensation Committee of the
Company's Board of Directors (the "Committee"), consisting of not fewer than two
members of the Board of Directors none of whom are employees of the Company or
any of its subsidiaries. No member of the Committee is eligible to receive an
award under the Incentive Plan. The members of the Committee are appointed by
the Board of Directors and serve at the discretion of the Board of Directors.
See "Directors' Meetings and Committees."
The Committee has the sole, final and conclusive power to administer,
construe, and interpret the Incentive Plan and to make rules to implement the
provisions thereof. The Committee is authorized among other matters to determine
to whom awards are to be granted, to designate the number of shares covered by
each award, to fix the duration of awards, to set the time or times at which
each award may be exercised, to determine performance goals, if any, applicable
to an award, to accelerate vesting, exercise or payment of an award and to adopt
such other rules and regulations as it may deem appropriate for the
administration of the Incentive Plan. The Committee may grant awards in
replacement of other awards granted under the Incentive Plan or any other plan
of the Company or any of its subsidiaries. Any expenses of administration of the
Incentive Plan are borne by the Company.
Service on the Committee constitutes service as a Director of the Company,
and members of the Committee are entitled to indemnification and reimbursement
as Directors of the Company, pursuant to its Bylaws and to any agreements
pursuant thereto between the Company and its Directors providing for
indemnification.
34
TYPES OF AWARDS UNDER THE INCENTIVE PLAN
STOCK OPTIONS. A stock option, which can be either an ISO or a
Non-Qualified Stock Option, is the right to purchase shares of the Company's
Common Stock at a set price for a period of time in the future. Under the
Incentive Plan, the purchase price of shares subject to any option must be at
least 100% of their fair market value on the date of grant. "Fair market value"
is defined in the Incentive Plan generally as the closing sales price of the
Company's Common Stock on the date the option is granted. As defined under the
Incentive Plan, the fair market value of a share of common stock on September
28, 1995 was $17.75.
The maximum period for exercise (i.e., term) of an ISO, with the exception
of any ISOs granted to a person owning more than 10% of the voting power of the
Company, is ten years from the date the option was granted. With regard to ISOs
granted to persons owning more than 10% of the voting power of the Company, the
minimum purchase price of shares is 110% of their fair market value on the date
of grant and the maximum term is five years. The term of Non-Qualified Stock
Options is left to the Committee's discretion.
The Committee can fix a shorter term for an ISO and can impose such other
terms and conditions on the grant of options as it chooses, consistent with the
Incentive Plan and with applicable laws and regulations which, with respect to
ISOs, limit the size of individual grants. Pursuant to federal tax law and
regulations in effect as of the date of this proxy statement, the aggregate fair
market value of the stock for which an employee's ISOs granted after 1986
becomes exercisable for the first time during any calendar year is limited to
$100,000. Options or portions of options that exceed this limit are treated as
Non-Qualified Stock Options.
Unless otherwise determined by the Committee or permitted by the Incentive
Plan, no option may be exercised until the expiration of six months following
the date of its grant.
STOCK AWARDS. A Stock Award is the grant of a right to receive shares of
Common Stock of the Company at a future date without the payment of cash, but
conditioned upon the observance or fulfillment of stated conditions. A Stock
Award may be either a "Performance Stock Award", under which the receipt of
shares will be conditioned upon the attainment of performance goals by the
Company, a subsidiary or a division during a performance period, or a
"Restricted Stock Award", under which the receipt of shares is conditioned on
the continued employment of the grantee or such other conditions as the
Committee may impose, or both. Under the Plan, subject to provisions permitting
acceleration, the receipt of shares by Executive Officers under Stock Awards
will be conditioned upon the attainment of one or more performance goals over a
performance period of 12 months' duration or longer. Unless otherwise determined
by the Committee and subject to the terms of the Plan, no shares may be issued
under Restricted Stock Awards unless the Grantee remains employed by the Company
or a subsidiary for a period of one year after the date of grant.
PERFORMANCE UNITS. A Performance Unit is an award payable only in cash and
valued by reference to designated criteria, other than Common Stock, which will
be established by the Committee. Subject to provisions of the Incentive Plan
permitting acceleration, Performance Units granted to Executive Officers will be
conditioned on the attainment of one or more performance goals during a
performance period of 12 months' duration or longer.
35
VESTING PROVISIONS; ACCELERATION.
The Committee may permit the accelerated exercise of stock options and the
lapse or waiver of restrictions and performance goals on Stock Awards and
Performance Units in the event certain transactions occur, such as a merger or
liquidation of the Company, the sale of substantially all the assets of the
Company, a subsidiary or a division, the sale of a majority interest in a
subsidiary, the change in control of the Company or termination of a grantee's
employment following a change in control. Similar provisions apply in the case
of death, disability, retirement or other terminations. For example, performance
goal requirements and forfeitability restrictions on Stock Awards and
Performance Units lapse in the event of death, disability or retirement. Under
the Amendments, if a performance based award is accelerated upon the occurrence
of such an event, the shares deliverable or amount payable under such Awards
will be determined based on the extent to which performance goals have been
achieved through the date such termination or other accelerating event occurs.
In addition, the Committee may permit all outstanding options held by a grantee
to vest upon any termination of employment. All benefits under the Incentive
Plan not yet received by a grantee automatically terminate, however, on
termination of the grantee's employment for cause.
SHARES SUBJECT TO ADJUSTMENT UNDER THE INCENTIVE PLAN
A maximum of 1,000,000 shares of the Company's 66 2/3 CENTS par value Common
Stock may be issued under the Incentive Plan. All shares available under the
Plan are subject to adjustments to be made by the Committee for such events as a
merger, recapitalization, stock dividend, stock split or other similar change
which could affect the number of or kind of outstanding shares of Common Stock.
In such events, the Committee also may make adjustments in the number and kind
of shares subject to outstanding options and Stock Awards and in the option
price. Unpurchased shares subject to an option that lapses or terminates without
exercise, shares subject to Stock Awards that are never issued because the
conditions of the award are not fulfilled and shares related to awards which are
settled in cash in lieu of shares, are available for future awards. Shares
withheld by the Company pursuant to a withholding tax election, as described
below under "Withholding Taxes", and shares used to pay for the purchase price
of options, shall be deemed issued under the Incentive Plan.
EXERCISE OF RIGHTS UNDER AWARDS GRANTED
A person entitled to exercise an option under the Incentive Plan may do so
by notifying the Secretary of the Company in writing of the number of shares
with respect to which an option is being exercised. Such notice must be
accompanied by payment in full of the purchase price in the form of cash,
certified bank cashier's check or money order or shares of Company Common Stock
or a combination thereof having equivalent value. With the Committee's approval,
a grantee may pay the exercise price by delivering a promissory note to the
Company provided that, except when treasury shares are used to satisfy an option
exercise, at least the par value of the shares issued is paid in cash or
equivalents or shares of Common Stock as provided above.
The Committee may require grantees to execute an investment letter imposing
resale restrictions and other conditions if necessary to comply with applicable
federal or state securities laws.
36
WITHHOLDING TAXES
In lieu of requiring a grantee to pay amounts sufficient to satisfy the
Company's withholding obligation attributable to an award, the Committee may
permit grantees to have shares otherwise issuable under an award withheld. Any
such election must be made in writing before the day a grantee's tax liability
with respect to an award is determined and must be irrevocable. Additional
restrictions are imposed on officers, directors and greater than 10%
stockholders of the Company.
NONTRANSFERABILITY
No rights under any award are transferable except by will or by the laws of
descent and distribution or a qualified domestic relations order and the
benefits of any award may only be exercised and received personally by the
grantee during his or her lifetime or by a guardian or legal representative or
other permitted successor.
DURATION OF AND CHANGES TO THE PLAN
The Incentive Plan will remain in effect until all awards have been
exercised or satisfied in accordance with their terms but no award may be made
under the Incentive Plan after the earlier of the date of the first
stockholders' meeting in 1999 or December 31, 1999. The Incentive Plan may be
terminated, suspended or modified at any time by the Company's Board of
Directors; however, certain changes in the Incentive Plan require the approval
of the Company's stockholders. Such changes relate to amendments which would (i)
materially increase benefits to participants under the Incentive Plan, (ii)
materially increase the number of securities which may be issued under the
Incentive Plan, or (iii) materially modify the requirements as to eligibility to
participate under the Incentive Plan.
In addition to the Amendments, upon the recommendation of the Committee the
Board of Directors has approved other amendments to the Incentive Plan which do
not require stockholder approval under the foregoing test or Section 162(m) of
the Code. These changes are (i) an amendment to Section 12 that authorizes the
Committee to limit the acceleration of awards upon the occurrence of a change of
control to circumstances in which termination results from such an event (as
originally adopted, the Incentive Plan authorized the Committee to accelerate
Awards merely upon the occurrence of a change of control), and (ii) amendments
to Section 22 respecting the timing of elections to utilize shares to satisfy
tax withholding obligations. These amendments have been incorporated into the
Incentive Plan set forth in Exhibit A hereto.
The Committee may at any time unilaterally amend or terminate and cash out
any unexercised or unpaid award, whether earned or unearned, including awards
earned but not yet paid, and/or substitute another award of the same or
different type, to the extent it deems appropriate; provided, that any amendment
to (but not termination of) an outstanding award which, in the Committee's
opinion, is materially adverse to the grantee, or any amendment or termination
which, in the opinion of the Committee, may subject the grantee to liability
under Section 16 of the Exchange Act, shall require the grantee's consent.
FEDERAL INCOME TAX CONSEQUENCES OF THE INCENTIVE PLAN
Under the Code and Treasury regulations, as now in effect, the principal
federal income tax consequences of awards under the Incentive Plan in the normal
operation thereof are as summarized below.
37
INCENTIVE STOCK OPTIONS ("ISOS"). ISOs under the Incentive Plan are
intended to meet the requirements of Section 422 of the Code. No tax
consequences result from the grant of the option. If an option holder acquires
stock upon the exercise of an ISO, no income will be recognized by the option
holder for ordinary income tax purposes (although the difference between the
option exercise price and the fair market value of the stock subject to the
option may result in alternative minimum tax liability to the option holder) and
the Company will be allowed no deduction as a result of such exercise if the
following conditions are met: (a) at all times during the period beginning with
the date of the granting of the ISO and ending on the day three months before
the date of such exercise, the option holder is an employee of the Company or of
a subsidiary; and (b) the option holder makes no disposition of the acquired
stock within two years from the date the ISO is granted nor within one year
after the stock is transferred to the option holder. In the event of a sale of
such stock by the option holder after compliance with these conditions, any gain
realized over the price paid for stock ordinarily will be treated as long-term
capital gain, and any loss will be treated as long-term capital loss, in the
year of the sale.
If the option holder fails to comply with the employment or holding period
requirements discussed above, the option will not be treated as an ISO and the
holder will recognize ordinary income in an amount equal to the lesser of (i)
the excess of the fair market value of the stock on the date the option was
exercised over the exercise price or (ii) the excess of the amount realized upon
such disposition over the exercise price. If the option holder is treated as
having received ordinary income because of his failure to comply with either
condition above, an equivalent deduction will be allowed to the Company in the
same year.
NON-QUALIFIED STOCK OPTIONS. No tax consequences result from the grant of a
Non-Qualified Stock Option under the Incentive Plan. An option holder who
exercises a Non-Qualified Stock Option with cash will generally realize
compensation taxable as ordinary income in an amount equal to the difference
between the option price and the fair market value of the shares on the date of
exercise, and the Company will be entitled to a deduction from income in the
same amount. The option holder's tax basis in such shares will be the fair
market value on the date of exercise, and when the holder disposes of the
shares, he will recognize capital gain or loss, either long-term or short-term,
depending on the holding period of the shares.
STOCK AWARDS. Stock Awards granted under the Incentive Plan and paid in
Common Stock will constitute ordinary income to the recipient, and a deductible
expense to the Company, in the year paid, if the stock is not subject to
forfeiture restrictions, or in the year in which any such restrictions lapse,
unless the participant elects to recognize income in the year the award is made
by making a timely election under Section 83(b) of the Code. Unless a Section 83
election is made, the amount of the grantee's taxable income and the Company's
corresponding deduction in connection with a Stock Award that is restricted will
be equal to the fair market value of the stock on the date the restrictions
lapse.
PERFORMANCE UNITS. The award of a Performance Unit under the Incentive Plan
will not result in tax consequences to the Company or the grantee. Upon payment
of amounts under the award, the grantee will realize compensation taxable as
income in an amount equal to the cash received and the Company will be entitled
to a deduction in the same amount.
PAYMENTS CONTINGENT ON CHANGE IN CONTROL. Grantees might under certain
circumstances be deemed to have received "parachute payments" within the meaning
of Section 280G of the Code to the extent that stock options become immediately
exercisable (or restrictions on Stock
38
Awards or Performance Units lapse) as a result of a change in the ownership or
control of the Company, or in connection with options or awards granted within
one year preceding such a change. In general, if the sum of all payments to a
grantee constituting "parachute payments" equals or exceeds three times the
grantee's "base amount" (annualized compensation over a five-year period), the
grantee will be subject to a 20% excise tax on the excess of the "parachute
payments" over the grantee's "base amount", and the Company will be denied any
deduction for such excess. "Parachute payments" and "excess parachute payments"
do not include certain payments that are established by clear and convincing
evidence to be "reasonable compensation" to the grantee for services rendered on
or after the change.
LIMITATION ON DEDUCTIBILITY. During 1993, Section 162 of the Code was
amended with respect to the tax deductibility of executive compensation. Under
the Code, publicly-held companies such as the Company may not deduct
compensation paid to certain Executive Officers to the extent that an
executive's compensation exceeds $1,000,000 in any one year. Proposed
regulations under Section 162(m) of the Code provide an exception for
"performance based" compensation, including stock options granted under a stock
option plan that has been previously approved by stockholders, provided that
such options are not issued below the fair market value of the stock on the date
of the grant. Compensation other than stock options, however, must meet other
requirements in order to qualify as tax deductible "performance based"
compensation. The Company has attempted to comply with those provisions of the
Code, as construed by proposed regulations thereunder, relating to performance
goals so that compensation received by affected Executive Officers under the
Incentive Plan can qualify as "performance based" assuming all other Code
requirements are met at the time an award is made or paid. However, under
certain circumstances it may not be possible or practicable or in the Company's
best interests for compensation under the Incentive Plan to qualify under
Section 162(m) of the Code, and the Committee makes no representation that
awards will so qualify. The Committee anticipates that in most instances
treatment under Section 162(m) of the Code will not be an issue because
generally no Executive Officer's compensation will exceed $1,000,000 in any one
year.
The foregoing is only a general summary of the principal tax consequences to
the Company and the grantee from the grant of awards and the exercise of options
under the Incentive Plan. The foregoing discussion is neither intended nor
offered as a complete summary or as a legal interpretation, and it does not
address any consequences other than Federal income tax consequences.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE
PROPOSED AMENDMENTS TO THE AMC ENTERTAINMENT INC. 1994 STOCK OPTION AND
INCENTIVE PLAN.
4. OTHER MATTERS TO COME BEFORE THE MEETING
No other matters are intended to be brought before the meeting by the
Company nor does the Company know of any matters to be brought before the
meeting by others. If, however, any other matters properly come before the
meeting, the persons named in the proxy will vote the shares represented thereby
in accordance with the judgment of management on any such matters.
Stockholders who wish to present proposals for action at the Annual Meeting
of Stockholders to be held in 1996 should submit their proposals to the Company
at the address of the Company set
39
forth on the first page of this Proxy Statement. Proposals must be received by
the Company no later than June 19, 1996, for consideration for inclusion in the
next year's Proxy Statement and proxy.
By order of the Board of
Directors
Nancy L. Gallagher
Secretary
REQUESTS FOR ANNUAL REPORT
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION FOR FISCAL 1995 WILL BE SENT TO STOCKHOLDERS
UPON REQUEST WITHOUT CHARGE. REQUESTS SHOULD BE MADE TO THE DIRECTOR OF INVESTOR
RELATIONS, AMC ENTERTAINMENT INC., P.O. BOX 419615, KANSAS CITY, MISSOURI
64141-6615.
40
EXHIBIT A
TO PROXY STATEMENT
SET FORTH BELOW IS THE AMC ENTERTAINMENT INC. 1994 STOCK OPTION AND
INCENTIVE PLAN, AS PROPOSED TO BE AMENDED. PROPOSED DELETIONS FROM THE PLAN AS
ORIGINALLY ADOPTED ARE MARKED THROUGH, AND PROPOSED ADDITIONS ARE UNDERLINED.
AMC ENTERTAINMENT INC.
1994 STOCK OPTION AND INCENTIVE PLAN
1. PURPOSE
The AMC Entertainment Inc. 1994 Stock Option and Incentive Plan is intended
to incorporate stock-based and results-oriented awards into the ongoing
compensation packages of executives and managers and to thereby increase the
alignment of the interests of such persons and stockholders. The Plan is
intended to foster in participants a strong incentive to exert maximum effort
for the continued success and growth of the Company and its Subsidiaries and the
enhancement of stockholders' interests, to aid in retaining individuals who
exert such efforts and to assist in attracting the best available individuals in
the future.
2. DEFINITIONS
When used herein, the following terms shall have the meaning set forth
below:
2.1 "AMC" means American Multi-Cinema, Inc., a wholly-owned subsidiary of
the Company.
2.2 "AWARD" means an Option, a Stock Award or a Performance Unit.
2.3 "BOARD" means the Board of Directors of the Company.
2.4 A "CHANGE OF CONTROL EVENT" shall be deemed to have occurred at the
first time that (a) a majority of the Board of Directors of the Company, over a
two-year period, is replaced from the directors who constituted the Board of
Directors of the Company at the beginning of such period, which replacement
shall not have been approved by the Board of Directors of the Company (or
replacement directors approved by the Board of Directors of the Company), as
constituted at the beginning of such period, or (b) a person or entity or group
of persons or entities acting in concert as a partnership or other group (other
than the DI affiliates, any Subsidiary, any employee stock purchase plan, stock
option plan or other stock incentive plan or program, retirement plan or
automatic reinvestment plan or any substantially similar plan of the Company or
any Subsidiary or any person holding securities of the Company for or pursuant
to the terms of any such employee benefit plan) shall, as a result of a tender
or exchange offer, open market purchases, privately negotiated purchases or
otherwise, have become the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of securities of the Company representing 50% or more of
the combined voting power of the then outstanding securities of the Company
ordinarily (and apart from rights accruing under special circumstances) having
the right to vote in the election of Directors.
2.5 "CODE" means the Internal Revenue Code of 1986 as amended from time to
time.
A-1
2.6 "COMMITTEE" means the Board's Compensation Committee, or such other
committee of Directors as may be designated by the Board, authorized to
administer this Plan. The Committee shall consist of not fewer than two (2)
Directors and shall be constituted so as to permit the Plan to comply with Rule
16b-3 or any successor provision of similar import.
2.7 "COMMON STOCK" means the Company's Common Stock, par value 66 2/3 CENTS
per share.
2.8 "COMPANY" means AMC Entertainment Inc., a corporation organized and
existing under the laws of the State of Delaware, or such Company by whatever
name it may at the time have.
2.9 "DI AFFILIATES" means (a) Mr. Stanley H. Durwood, his spouse and any of
his lineal descendants and their respective spouses (collectively the Durwood
Family ), (b) any controlled affiliate of any member of the Durwood Family and
(c) any trust for the benefit of one or more members of the Durwood Family
(whether or not any member of the Durwood Family is a trustee of such trust) or
one or more charitable organizations.
2.10 "DIRECTOR" means a member of the Board.
2.11 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time.
2.12 "FAIR MARKET VALUE" means with respect to the Company's Shares the
closing sales price of the Shares, as reported on the American Stock Exchange,
or, if not so reported, on the NASDAQ/National Market System, or, if not so
reported, the closing sales price as reported by any other appropriate reporting
system of general circulation, on the date for which the value is to be
determined, or if there is no closing sales price on such date, then on the last
day for which transactions in Shares were so reported prior to the date on which
the value is to be determined.
2.13 "GRANTEE" means a person to whom an Award is made.
2.14 "INCENTIVE STOCK OPTION" or "ISO" means an Option awarded under the
Plan which meets the terms and conditions established by Code Section 422 and
applicable regulations thereunder for such an Option.
2.15 "NON-QUALIFIED STOCK OPTION" or "NQSO" means an Option awarded under
the Plan which by its terms and conditions is not an ISO.
2.16 "OPTION" means the right to purchase, at a price, for a term, under
conditions, and for cash or other considerations (which may include a note from
the Grantee) fixed by the Committee in accordance with such restrictions as the
Plan and the Committee impose, a number of Shares specified by the Committee
(subject to limitations imposed by this Plan). An Option can be either an ISO or
NQSO or a combination thereof.
2.17 "PLAN" means the Company's 1994 Stock Option and Incentive Plan.
2.18 "PERFORMANCE UNIT" means an Award payable only in cash and valued by
reference to designated criteria (other than Shares) established by the
Committee.
2.19 "RULE 16B-3" means Rule 16b-3 promulgated under the Exchange Act.
2.20 "SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
2.21 "SHARES" means shares of the Company's Common Stock or if by reason of
the adjustment provisions hereof any rights under an Award under the Plan
pertain to any other security, such other security.
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2.22 "STOCK AWARD" means the grant of a right to receive, at a time or
times fixed by the Committee in accordance with the Plan and subject to such
other limitations and restrictions as the Plan and the Committee impose, the
number of Shares specified by the Committee. A Stock Award may be either a
"PERFORMANCE STOCK AWARD", under which the receipt of Shares, subject to
provisions of the Plan permitting acceleration, will be conditioned on the
attainment by the Company or a Subsidiary or a division during a performance
period of performance goals established by the Committee, or a "RESTRICTED STOCK
AWARD", under which the receipt of Shares, subject to provisions of the Plan
permitting acceleration, is conditioned on the continued employment of the
Grantee or such other conditions as the Committee may impose, or both.
2.23 "SUBSIDIARY" means any business, including AMC, whether or not
incorporated, in which the Company, at the time an Award is granted or in other
cases at the time of reference, owns directly or indirectly not less than 50% of
the equity interest.
2.24 "SUCCESSOR" means the legal representative of the estate of a deceased
Grantee or the person or persons who shall acquire the right to exercise an
Option, to receive Shares issuable in satisfaction of a Stock Award or to
receive other amounts payable under an Award, by bequest or inheritance or by
reason of the death of the Grantee or pursuant to a qualified domestic relations
order as defined by the Code or Title I of the Employment Retirement Income
Security Act, or the rules thereunder.
2.25 "TAX DATE" means the date on which the amount of tax to be withheld
with respect to an Option or Stock Award is determined.
2.26 "TERM" means the period during which a particular Option may be
exercised or the period during which the conditions and/or restrictions placed
on an Award are in effect.
2.27 "WINDOW PERIOD" means a period beginning on the third business day
following the date of release of a quarterly or annual summary statement of
sales and earnings of the Company and ending on the twelfth business day
following such date.
3. ADMINISTRATION OF THE PLAN
3.1 The Plan shall be administered by the Committee.
3.2 The Committee shall have plenary authority, subject to provisions of
the Plan, to: (a) determine when and to whom Awards shall be granted; (b)
determine the form of each Award, its Term, the number of Shares covered by it,
if any, the participation by a Grantee in other plans, and any other terms or
conditions of each such Award, including the time and conditions of exercise or
vesting; (c) determine whether Awards will be granted singly or in combination
or tandem; (d) determine the performance goals, if any, that will be applicable
to the Award and eliminate or reduce an Award otherwise payable that is based on
performance goals; (e) accelerate the vesting, exercise, or payment of an Award
when such action(s) would be in the best interests of the Company; and (f) take
any and all other action it deems necessary or advisable for the proper
operation or administration of the Plan. The Committee also shall have the
authority to grant Awards in replacement of Awards previously granted under the
Plan or any other plan of the Company or a Subsidiary. The Committee's actions
in making Awards and fixing their size, Term, and other terms and conditions
shall be final and conclusive on all persons.
3.3 The Committee shall have the sole responsibility for construing and
interpreting the Plan, for establishing (and amending) such rules and
regulations as it deems necessary or desirable for the proper administration of
the Plan, and for resolving all questions arising under the
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Plan. Any decision or action taken by the Committee arising out of or in
connection with the construction, administration, interpretation and effect of
the Plan and of its rules and regulations shall, to the extent permitted by law,
be within its absolute discretion, except as otherwise specifically provided
herein, and shall be conclusive and binding upon all Grantees, all Successors,
and any other person, whether that person is claiming under or through any
Grantee or otherwise.
3.4 The Committee may designate one of its members as Chairman. It shall
hold its meetings at such times and places as it may determine. All
determinations of the Committee shall be made by a majority of its members. Any
determination reduced to writing and signed by all members shall be fully as
effective as if it had been made by a majority vote at a meeting duly called and
held. The Committee may make such rules and regulations for the conduct of its
business as it shall deem advisable.
3.5 The Committee, in its discretion, may delegate its authority and duties
under the Plan to the Chief Executive Officer and/or to other senior officers of
the Company under such conditions and/or limitations as the Committee may
establish; provided, however, that only the Committee may establish performance
goals and select and grant Awards to Grantees who are subject to Section 16 of
the Exchange Act.
3.6 Service on the Committee shall constitute service as a Director, so
that the members of the Committee shall be entitled to indemnification and
reimbursement as Directors pursuant to its Bylaws and to any agreements between
the Company and its Directors providing for indemnification.
3.7 The Committee shall regularly inform the Board as to its actions with
respect to all Awards under the Plan and the terms and conditions of such Awards
in a manner, at such times, and in such form as the Board may reasonably
request.
4. ELIGIBILITY
Awards may be made under the Plan to employees who are corporate or field
executives or senior managers, including executive officers of the Company and
its Subsidiaries, and other managers, including field and theatre managers.
Officers shall be employees for this purpose, whether or not they also are
Directors. A Director who is not an employee shall not be eligible to receive an
Award. Awards may be made to eligible employees whether or not they have
received prior Awards under the Plan or under any previously adopted plan, and
whether or not they are participants in other benefit plans of the Company, AMC
or any other Subsidiary.
5. SHARES SUBJECT TO PLAN; LIMITATIONS
5.1 The Company hereby reserves 1,000,000 Shares, for issuance in
connection with Awards under the Plan, subject to adjustment under Section 20.
During the Plan no Grantee may receive Options to acquire more than 325,000
Shares, Stock Awards entitling the Grantee to receive more than 150,000 Shares
or cash awards aggregating more than $2 million under Performance Units. During
any 12 month period no Grantee may receive Options to acquire more than 65,000
Shares or cash awards aggregating more than $400,000 under Performance Units. No
Grantee may receive a Stock Award or Awards entitling the Grantee to receive
free of conditions more than 30,000 Shares with respect to any 12 month period,
but determined on an annualized basis so that more than 30,000 Shares may be
received at one time free of conditions with respect to a performance period
exceeding 12 months in duration.
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5.2 Any Shares related to Awards which (a) terminate by expiration,
forfeiture, cancellation or otherwise without the issuance of such Shares, or
(b) are settled in cash in lieu of Shares, shall be available again for grant
under the Plan, provided the Participant received no other benefits of ownership
of such Award other than voting rights, if any. Notwithstanding the foregoing,
no Shares which are used by a Participant for the full or partial payment to the
Company of the purchase price of Shares upon exercise of an Option, or for any
withholding taxes due as a result of such exercise, may become available for
Awards under the Plan. The Shares available for issuance under the Plan may be
authorized and unissued shares or treasury shares.
6. GRANTING OF OPTIONS
6.1 Subject to the terms of the Plan, the Committee may from time to time
grant Options to persons eligible under Section 4 above and shall designate such
Options as ISOs or NQSOs.
6.2 Pursuant to Code Section 422 and applicable regulations, an Option
shall not be deemed to be an ISO to the extent that the aggregate Fair Market
Value, as determined on the date or dates of grant, of Shares with respect to
which such ISO is exercisable for the first time by any individual during any
calendar year (under all stock option incentive plans of the Company or a
Subsidiary) exceeds $100,000. ISOs which first become exercisable during a
calendar year shall be taken into account in the order granted. Options that
exceed the $100,000 limit shall be treated as NQSOs.
6.3 The purchase price of each Share subject to Option shall be fixed by
the Committee, provided the purchase price for Shares subject to an Option shall
not be less than 100% of the Fair Market Value of the Shares on the date the
Option is granted.
6.4 Notwithstanding Section 6.3 above, pursuant to Code Section 422 and
applicable regulations, the minimum purchase price of an ISO shall be 110% of
the Fair Market Value of the Shares on the date the ISO is granted with respect
to Grantees who at the time of Award are deemed to own 10% or more of the voting
power of the Company's outstanding Shares.
6.5 Each Option shall expire and all rights to purchase Shares thereunder
shall cease on the date fixed by the Committee.
6.6 Notwithstanding Section 6.5 above, pursuant to Code Section 422 and
applicable regulations, an ISO shall expire and all rights to purchase Shares
thereunder shall cease no later than the fifth anniversary of the date on which
the ISO was granted with respect to Grantees who at the time of Award are deemed
to own 10% or more of the voting power of the Company, and no later than the
tenth anniversary of the date on which the ISO was granted with respect to other
Grantees.
6.7 No Option shall become exercisable prior to the expiration of six
months after the date of its grant, unless otherwise determined by the Committee
or permitted by the Plan, and, subject to the limitations in the Plan, each
Option shall be exercisable for the number of Shares fixed by the Committee.
7. STOCK AWARDS
7.1 The Committee may grant eligible employees Stock Awards which shall
entitle Grantees to receive Shares in the future for no cash consideration and
which may be subject to such
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terms, conditions and restrictions, if any, as the Committee may deem
appropriate, including, without limitation, satisfaction of performance goals,
restrictions on transferability and continued employment.
7.2 Subject to provisions of the Plan permitting acceleration, the receipt
of Shares under Stock Awards granted to persons subject to Section 16 of the
Exchange Act will be conditioned on the attainment <#>by the Company or a
Subsidiary or a division</#> during a performance period of performance goals
established by the Committee based on criterion described in Section 9.
7.3 At the time of grant of a Stock Award, the Grantee shall receive
written evidence of the Award in such form as may be approved by the Committee
but shall not be entitled to issuance or delivery of a stock certificate
evidencing the Shares covered by the Award until the Committee
certifies that performance goals have been met and the lapse of any restrictions
that may have been imposed pursuant to the Award. Upon the attainment of such
goals and the lapse of any restrictions, a certificate or certificates
representing the number of Shares covered by the Award, free and clear of all
restrictions, shall be issued and registered in the name of, and delivered to,
the Grantee.
7.4 Unless otherwise determined by the Committee or provided in the Plan,
no Shares may be issued under Restricted Stock Awards unless the Grantee remains
employed by the Company or a Subsidiary for one year after the date of the
Award.
8. PERFORMANCE UNITS
8.1 The Committee may grant Awards in the form of Performance Units.
8.2 Amounts payable under a Performance Unit may be payable at a specified
date or dates or upon attaining performance conditions. Subject to provisions of
the Plan permitting acceleration, a Performance Unit granted to persons subject
to Section 16 of the Exchange Act will be conditioned on the attainment <#>by
the Company or a Subsidiary or a division</#> during a performance period of
performance goals established by the Committee based on criteria described in
Section 9.
9. PERFORMANCE GOALS
Performance Stock and Performance Unit Awards made to persons subject to
Section 16 of the Exchange Act shall be based on performance goals established
by the Committee <#>prior to</#> not later than 90 days after the start of a
performance period of 12 months duration or longer with respect to which such an
Award is made. <#>After the start of a performance period</#> The Committee may
not increase the compensation payable under an Award that is otherwise due upon
attainment of a performance goal. The Committee shall certify that the
performance goals have been achieved before payment of any such Award.
Performance goals established by the Committee shall be based upon, as the
Committee deems appropriate, one or more of the following business criteria: (i)
Company or Subsidiary EBITDA (earnings before interest, taxes, depreciation and
amortization); (ii) Company or Subsidiary earnings or earnings per Share; (iii)
public market prices of Shares; (iv) division operating income, or "DOI"
(operating income less general and administrative expenses and extraordinary
expenses); (v) division level EBITDA (DOI less national film, home office and
international general and administrative expenses plus capitalized lease
adjustments; (vi) private market value of Shares on a fully-diluted basis
(assuming full exercise of all outstanding shares of preferred stock, Class B
stock, options and other rights to acquire Shares), based on a constant multiple
of theatre level EBITDA (Company EBITDA less National Cinema Network, Inc.
EBITDA), plus the book value of National Cinema Network, Inc.,
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cash, cash equivalents and investments and investments in other long-term
assets, less corporate borrowings, capitalized lease obligations and the
carrying value of minority interests in other long-term liabilities; (vii)
return to stockholders, measured by increases in the market value of an
investment in Shares, assuming reinvestment of dividends received; and (viii)
return on assets within a participant's span of responsibility; and the
Committee may, in its discretion, determine whether an Award will be paid under
any one or more of such business criteria. In setting performance goals, such
criteria may be measured against one or more of the following: (i) the prior
year or years' performance of the Company, a Subsidiary, or a division or other
operations-based unit or span of a participant's responsibility; (ii) the
performance of a broad-based group of stock such as, but not limited to, the
Standard and Poor's 500 Index <#>with risk profiles similar to the Company's</#>
and; (iii) the performance of a peer group of two or more companies. Such
performance goals may be (but need not be) different for each performance
period. The Committee may set different (or the same) goals for different
Grantees and for different Awards, and performance goals may include standards
for minimum attainment, target attainment, and maximum attainment. In all cases,
however, performance goals shall include a minimum performance standard below
which no part of the relevant Award will be earned.
10. NON-TRANSFERABILITY OF RIGHTS
No Award, no rights under any Award, and no payment under the Plan shall be
assignable or transferable otherwise than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Code or Title I of the Employment Retirement Income Security Act, or the
rules thereunder, and the rights and the benefits of any such Award may be
exercised during the lifetime of the Grantee only by his or her guardian or
legal representative or Successor.
11. DEATH, DISABILITY, RETIREMENT AND OTHER TERMINATION
OF EMPLOYMENT
11.1 Subject to the terms of the Plan, the Committee may make such
provisions concerning exercise or lapse of Awards upon the Grantee's death,
disability, retirement, or other termination of employment as it shall in its
discretion determine, provided that:
(a) except as provided in paragraph (b) below, no provision shall
permit an ISO to be exercised after the date three months following
the Grantee's termination of employment,
(b) no provision shall permit an Option to be exercised after the date
which is twelve months following a Grantee's death or disability,
(c) no provision shall permit a NQSO to be exercised after the date
which is three years following the Grantee's retirement from the
Company or a Subsidiary,
(d) except as provided in paragraphs (b) and (c) above, no provision
shall permit a NQSO to be exercised after the date which is six
months following a Grantee's termination of employment,
(e) except as provided in paragraph (f) below or as permitted by
Sections 12 or 20, all Stock Awards and Performance Units shall be
canceled and forfeited if a Grantee's employment is terminated, and
(f) in the event of Grantee's death, disability or retirement, the
Grantee (or his Successor) shall be entitled immediately to be
issued a certificate or certificates for all of the
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Shares represented by his Stock Award(s) and to be paid amounts due under
Performance Unit awards, free and clear of all performance goal requirements and
restrictions, based in each case on the extent to which performance goals have
been achieved, measured through the date of termination.
For purposes of this Section 11, the term "disability" shall mean "long term
disability", as defined in the AMC Long Term Disability Plan, or any comparable
plan of the Company or AMC, or, if there is no such plan, the inability of the
Grantee to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or to last for a continuous period of not less than twelve months as
determined by the Committee based on the opinion of a qualified physician (or
other medical certificate) and other evidence acceptable to the Committee, and
the term "retirement" shall mean "normal retirement" or, with the approval of
the Committee, "early retirement" pursuant to the applicable terms of the AMC
Defined Benefit Retirement Plan or any comparable plan of the Company or a
Subsidiary covering a Grantee.
11.2 Unless the Committee determines otherwise, Options which pursuant to
their terms are exercisable following termination of a Grantee's employment:
(a) may be exercised only to the extent exercisable upon the date such
employment terminates, if such termination is other than by reason
of the Grantee's death, disability or retirement, and
(b) shall be accelerated if not yet vested and shall be exercisable in
full, free and clear of all restrictions, if such termination is by
reason of the Grantee's death, disability or retirement.
11.3 Transfers of employment between the Company and a Subsidiary, or
between Subsidiaries, shall not constitute termination of employment for
purposes of any Award. The Committee may specify in the terms and conditions of
an Award whether any authorized leave of absence or absence for military or
governmental service or for any other reason shall constitute a termination of
employment for purposes of the Award and the Plan.
12. PROVISIONS RELATING TO CHANGE IN CONTROL
The Committee may provide, at the time of an Award or thereafter, that if a
Change of Control Event occurs or if termination results from such Change of
Control Event, (a) any restrictions on Stock Awards shall lapse immediately and
(b) outstanding Options shall become exercisable immediately. The Committee may
also waive, at the time of an Award or thereafter, the satisfaction of
performance goals with respect to Performance Stock Awards and Performance Units
upon the occurrence of a Change in Control Event or upon termination resulting
from a Change in Control Event, and authorize the issuance of Shares represented
by Stock Awards or the payment of amounts under Performance Unit Awards, based
in each case on the extent to which performance goals have been achieved,
measured through the date a Change in Control Event or termination resulting
therefrom occurs.
13. WRITING EVIDENCING AWARDS
Each Award granted under the Plan shall be evidenced by a writing which may,
but need not, be in the form of an agreement to be signed by the Grantee. The
writing shall set forth the nature and size of the Award, its Term, the other
terms and conditions thereof, other than those set forth in the Plan, and such
other information as the Committee directs. Acceptance of, or receipt of the
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benefits of, an Award by the Grantee shall be conclusively presumed to be assent
to the terms and conditions set forth therein, whether or not the writing is in
the form of an agreement to be signed by the Grantee.
14. EXERCISE OF RIGHTS UNDER AWARDS
14.1 A person entitled to exercise an Option may do so by delivery of a
written notice to that effect specifying the number of Shares with respect to
which the Option is being exercised and any other information the Committee may
prescribe.
14.2 The notice of exercise shall be accompanied by payment in full of the
purchase price for any Shares to be purchased, with such payment being made in
cash, certified or bank cashier's check or money order or in Shares having a
Fair Market Value equivalent to the purchase price of such Shares to be
purchased, or a combination thereof. If approved by the Committee, payment of
the purchase price of an Option may also be made by Note, provided that unless
the Shares issued are treasury shares at least the par value of the Shares
issued shall be paid in cash or equivalent or Shares as provided above. The
Committee shall establish appropriate methods for accepting Shares and may
impose such conditions as it deems appropriate on the use of such Shares to
exercise an Option.
14.3 Upon exercise of an Option, or after grant of a Stock Award but before
a distribution of Shares in satisfaction thereof, the Grantee may request in
writing that the Shares to be issued in satisfaction of the Award be issued in
the name of the Grantee and another person as joint tenants with right of
survivorship or as tenants in common.
14.4 All notices or requests to the Company provided for herein shall be
delivered to the Secretary of the Company.
15. EFFECTIVE DATE AND DURATION OF THE PLAN AND DATE OF AWARD
15.1 The Plan shall become effective on November 10, 1994, provided any
Awards granted hereunder shall be subject to approval of any governmental body
having jurisdiction over the Company with respect to this Plan within the time
limits applicable to any such governmental approvals.
15.2 The Plan shall remain in effect until all Awards have been exercised
or satisfied in accordance herewith, but no Awards may be granted under the Plan
after the date of the first stockholders' meeting held in 1999 or December 31,
1999, whichever first occurs. The terms of any Award may be amended at any time
prior to the end of its Term in accordance with and subject to the limitations
of the Plan.
15.3 The date of an Award shall be the date on which the Committee's
determination to grant the same is final, or such later date as shall be
specified by the Committee in connection with its determination.
16. AMENDMENTS TO AWARDS
The Committee may at any time unilaterally amend or terminate and cash out
any unexercised or unpaid Award, whether earned or unearned, including, but not
by way of limitation, Awards earned but not yet paid, and/or substitute another
Award of the same or different type, to the extent it deems appropriate;
provided, however, that any amendment to (but not termination
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of) an outstanding Award which, in the opinion of the Committee, is materially
adverse to the Grantee, or any amendment or termination which, in the opinion of
the Committee, may subject the Grantee to liability under Section 16 of the
Exchange Act, shall require the Grantee's consent. It shall be conclusively
presumed that any adjustment for changes in capitalization as provided for
herein are not adverse to a Grantee.
17. STOCKHOLDER STATUS
No person shall have any rights as a stockholder by virtue of the grant of
an Award under the Plan, except with respect to Shares actually issued to that
person.
18. POSTPONEMENT OR NON-EXERCISE
The Company shall not be required to issue any certificate or certificates
for Shares upon the exercise of an Option or upon the vesting of a Stock Award
granted under the Plan prior to (a) the obtaining of any approval from any
governmental agency which the Company shall, in its sole discretion, determine
to be necessary or advisable, (b) the taking of any action in order to comply
with restrictions or regulations incident to the maintenance of a public market
for its Shares, and (c) the completion of any registration or other
qualification of such Shares under any state or Federal law or rulings or
regulations of any governmental body which the Company shall, in its sole
discretion, determine to be necessary or advisable. The Company shall not be
obligated by virtue of any terms and conditions of any Award or any provisions
of the Plan to recognize the exercise of an Option or to sell or issue shares in
violation of the Securities Act or the law of any government having jurisdiction
thereof. Any postponement or delay by the Company in recognizing the exercise of
any Option or in issuing any Shares under a Stock Award or otherwise hereunder
shall not extend the Term of an Option nor shorten the Term of any restriction
attached to any Stock Award and neither the Company nor its directors or
officers shall have any obligation or liability to the Grantee of an Award, to a
Successor or to any other person with respect to any Shares as to which the
Option shall lapse because of such postponement or as to which issuance under a
Stock Award was delayed.
19. TERMINATION, SUSPENSION OR MODIFICATION OF PLAN
The Board may terminate, suspend or modify the Plan at any time and in any
manner, provided, however, that without stockholder approval the Board will not
adopt an amendment that requires stockholder approval under Rule 16b-3.
No termination or suspension of the Plan shall adversely affect any right
acquired by any Grantee or any Successor under an Award granted before the date
of such termination or suspension except to the extent permitted in Section 16.
20. ADJUSTMENTS FOR CORPORATE CHANGES
20.1 In the event of a recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation, rights offering,
reorganization or liquidation, or any other change in the corporate structure or
shares of the Company, the Committee may (a) make such equitable adjustments,
designed to protect against dilution or enlargement, as it may deem appropriate
in the number and kind of Shares authorized by the Plan and, with respect to
outstanding Awards, in the number and kind of Shares covered thereby and in the
Option price, and (b) make such
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arrangements, which shall be binding upon the holders of unexpired Options and
outstanding Stock Awards, for the substitution of new Options or Stock Awards
for any unexpired Options or Stock Awards then outstanding under the Plan or for
the assumption of any such unexpired Options and outstanding Stock Awards.
20.2 In the event that the Company agrees (a) to sell or otherwise dispose
of all or substantially all of the Company's assets, or (b) to be wholly or
partially liquidated, or (c) to participate in a merger, consolidation or
reorganization, or (d) to sell or otherwise dispose of substantially all the
assets of, or a majority interest in, a Subsidiary or division, then the
Committee may determine that any and all Options granted under the Plan, in
situations involving an event described in clauses (a) through (c), and any and
all Options granted to employees of the affected Subsidiary or division, in
situations described in clause (d), shall be immediately exercisable in full,
and any and all Shares issuable pursuant to Stock Awards or cash payable under
Performance Units made under the Plan, in situations involving an event
described in clauses (a) through (c), and any and all Shares issuable pursuant
to Stock Awards or cash payable under Performance Units granted to employees of
the affected Subsidiary or division, in situations described in clause (d),
shall be immediately issuable or paid in full, as the case may be, based in each
case on the extent to which performance goals have been achieved to the date of
the event described in clause (a), (b), (c) or (d) above. The Committee may also
determine that any Options not exercised, and any Stock Awards or Performance
Units with respect to which any restrictions shall not have lapsed or conditions
shall not have been satisfied, prior to any such event, or within such period of
time thereafter (not to exceed 120 days) as the Committee shall determine, shall
terminate.
20.3 The grant of any Award pursuant to the Plan shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets or the business, assets or stock of a Subsidiary.
21. NON-UNIFORM DETERMINATION
The Committee's determination under the Plan including, without limitation,
determination of the persons to receive Awards, the form, amount and type of
Awards, the terms and provisions of Awards and the written material evidencing
such Awards, any amendments to the terms and provisions of any Awards, and the
granting or rejecting of applications for delivery of Shares need not be uniform
and may be made selectively among otherwise eligible employees whether or not
such employees are similarly situated.
22. TAXES
22.1 The Company may pay, withhold or require a Grantee to remit to it
amounts sufficient to satisfy the Company's federal, state, local or other tax
withholding obligations attributable to any Awards after giving notice to the
person entitled to receive such amount, and the Company may defer making payment
of any Award if any such tax, charge or assessment may be pending until
indemnified to its satisfaction.
22.2 Subject to the consent of the Committee, in connection with (a) the
exercise of a Non-Qualified Stock Option or (b) satisfaction of conditions
and/or lapse of restrictions on a Stock Award, a Grantee may make an irrevocable
election to tender back to the Company Shares received pursuant to (a) or (b),
having a Fair Market Value sufficient to satisfy all or part of the
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Company's total federal, state, local and other tax withholding obligations
associated with the transaction. Any such election shall be irrevocable and,
except with respect to elections incident to death, retirement, disability or
termination of employment, must be made by a Grantee prior to the Tax Date, by
delivering written notice to the Secretary of the Company together with such
information and documents as the Committee may prescribe. The Committee may
disapprove of any election, may suspend or terminate the right to make
elections, or may provide with respect to any Award under this Plan that the
right to make elections shall not apply to such Award.
22.3 If a Grantee is an officer of the Company and is subject to the
provisions of Section 16 of the Exchange Act, then an election to have Shares
withheld and any exercise of such right are subject to the following additional
restrictions:
(a) no exercise shall be made within six months of the grant of the
Award, unless made incident to death, retirement, disability or
termination of employment; and
(b) both the election and exercise must be made during a Window Period,
unless made incident to death, retirement, disability or
termination of employment, or the election must be made six months prior to the
Tax Date.
22.4 If, pursuant to the provisions of the Code, the Tax Date of an Award
is deferred and a Grantee elects to have Shares withheld, the full number of
Option Shares or Stock Award Shares may be issued but the Grantee shall enter
into an agreement unconditionally obligating him or her to tender back to the
Company the proper number of Shares on the Tax Date.
23. NONCOMPETITION AND FORFEITURE PROVISION
If the Committee so determines, an Award may specify that a Grantee shall
forfeit all unexercised, unearned, and/or unpaid Awards, including, but not
limited to, Awards earned but not yet paid if, in the opinion of the Committee,
the Grantee, at any time during the period of Grantee's employment and for one
(1) year thereafter, without the written consent of the Committee, engages
directly or indirectly in any manner or capacity as principal, agent, partner,
officer, director, employee, or otherwise, in any business or activity
competitive with the business conducted by the Company, in the geographic area
in which the Company does business, or in any manner which is inimical to the
best interests of the Company.
24. TENURE
Nothing in the Plan or in any agreement entered into pursuant to the Plan
shall confer upon any participant the right to continue in the employment of the
Company or any Subsidiary or affect any right which the Company or Subsidiary
has to terminate the employment of such participant. An employee terminated for
cause, as determined by the Company, shall forfeit all of his rights under the
Plan, except as to Options already exercised and Stock Awards on which
restrictions have already lapsed.
25. APPLICATION OF PROCEEDS
The proceeds received by the Company from the sale of its Shares under the
Plan shall be used for general corporate purposes of the Company and its
Subsidiaries.
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26. OTHER ACTIONS
Nothing in the Plan shall be construed to limit the authority of the Company
to exercise its corporate rights and powers, including, by way of illustration
and not by way of limitation, the right to grant options or pay bonuses for
proper corporate purposes otherwise than under the Plan to any employee or any
other person, firm, corporation, association or other entity, or to grant
options to, or assume options of, any person in connection with the acquisition
by purchase, lease, merger, consolidation or otherwise, of all or any part of
the business and assets of any person, firm, corporation, association or other
entity.
27. GENDER AND NUMBER
Except when otherwise indicated by the context, words in the masculine
gender when used in the Plan shall include the feminine gender, the singular
shall include the plural, and the plural shall include the singular.
28. REQUIREMENTS OF LAW, GOVERNING LAW
The granting of Awards and the issuance of Shares shall be subject to all
applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required. The
Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Missouri.
29. EFFECT ON OTHER PLANS
Participation in this Plan shall not affect an employee's eligibility to
participate in any other benefit or incentive plan of the Company or a
Subsidiary. Any Awards made pursuant hereto shall not be used in determining the
benefits provided under any other plan of the Company or a Subsidiary unless
specifically provided therein.
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AMC ENTERTAINMENT INC.
106 West 14th Street - Kansas City, Missouri 64105
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Messrs. Stanley H. Durwood and Peter C. Brown,
jointly and severally, as Proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent and vote, as designated
below, all of the Common Stock of AMC Entertainment Inc. which the undersigned
is entitled to vote at the Annual Meeting of Stockholders to be held on November
9, 1995 and at any adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING PROPOSALS:
1. Election of Directors: / / FOR all nominees listed (except as marked to the contrary). / / WITHHOLD AUTHORITY to vote for the
nominees listed.
NOMINEES: Messrs. Charles J. Egan, Jr. and Paul E. Vardeman
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
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2. PROPOSAL TO ratify the appointment of Coopers & Lybrand L.L.P. as independent public accountants of the Company for the fiscal
year ending March 28, 1996.
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO approve the proposed amendments to the AMC Entertainment Inc. 1994 Stock Option and Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
4. In their discretion, the Proxies are authorized to vote on such other business as may properly come before the meeting.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1, 2 AND 3.
Please date and sign exactly as name appears. When shares are held by joint
tenants, both must sign. When signing as an attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Date , 1995
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Signature
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Signature (if held jointly)
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PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.