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FORM 10 - K/A-1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: DECEMBER 31, 1996
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 1-9454
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CINEPLEX ODEON CORPORATION
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(Exact name of Registrant as specified in its charter)
Ontario, Canada Non-Resident Alien
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1303 Yonge Street, Toronto, Ontario M4T 2Y9
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(Address of principal executive offices) (Postal Code)
416-323-6600
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(Registrant's telephone number
including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of each exchange on which registered:
COMMON SHARES NEW YORK STOCK EXCHANGE
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TORONTO STOCK EXCHANGE
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Securities registered pursuant to Section 12(g) of the Act:
None
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Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X or No
---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-K or any amendment to this
Form 10-K (X)
As of February 20, 1997, Cineplex Odeon Corporation (the Corporation) had
103,334,157 Common Shares without par value, outstanding and the aggregate
market value of the Common Shares (based on the last sale price of such stock as
reported by the New York Stock Exchange for February 20, 1997) held by
nonaffiliates on such date was approximately U.S. $83,230,000. All officers,
directors and more than 5% shareholders of the registrant have been deemed
"affiliates" for the purpose of calculating such aggregate market value. The
registrant does not represent that such person, or any of them, would be deemed
"affiliates" of the registrant for any other purpose of the United States
Federal Securities Laws.
EXPLANATORY NOTE
The Corporation hereby files this Amendment to its Annual Report on Form 10-K
for the fiscal year ended December 31, 1996 to furnish information required by
Items 10, 11, 12 and 13 that was previously omitted pursuant to paragraph G(3)
of the General Instructions to Form 10-K. Unless otherwise noted all amounts are
in Canadian dollars.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
(a) DIRECTORS
The following table sets forth certain information concerning the directors of
the Corporation as of April 22, 1997.
RUDOLPH P. BRATTY, Q.C............. Mr. Bratty has been a partner in the law
(Age 65) firm of Bratty & Partners, Toronto,
since May 1985. Mr. Bratty has also been
President of Cedarland Properties Ltd.,
a real estate development company, since
1972. Mr. Bratty is a director of The
Toronto Sun Publishing Corporation and
Canada Trust. Mr. Bratty has been a
director of the Corporation since April
1980.
JOHN H. DANIELS.................... Mr. Daniels has been Chairman of the
(Age 70) Board of the Daniels Group, a real
estate development and investment
company, since August 1982. Mr. Daniels
has been a director of the Corporation
since January 1980.
BRUCE L. HACK*..................... Mr. Hack has been Executive Vice
(Age 48) President, Finance of Universal Studios,
Inc. since September, 1995. Mr. Hack
served as Business Planning Re-
Engineering Co-Leader of The Seagram
Company Ltd. and Vice President,
Strategic Planning and Business
Development of Joseph E. Seagram & Sons,
Inc. from June 1994 to September 1995.
He served as Chief Financial Officer and
Senior Vice President, Finance and MIS
of Tropicana Products, Inc. from
September 1991 to June 1994, and as
Senior Vice President, Finance and
Business Development of the Seagram
Beverage Group during 1991. Mr. Hack was
Executive Vice President, Finance and
Administration of the Seagram Beverage
Company in 1990 and from 1987 to 1990
he served as Vice President, Sales and
Distributor Planning of the House of
Seagram. Mr. Hack has been a director of
the Corporation since August 1995.
ELLIS JACOB........................ Mr. Jacob has been Executive Vice-
(Age 43) President and Chief Financial Officer of
the Corporation since December 1989.
From February 1989 to December 1989, he
served as Senior Vice-President and Chief
Financial Officer; from October 1987 to
February 1989 he served as Vice-President
Finance and Corporate Controller.
Mr. Jacob is a director of Alliance
Communications Corporation. Mr. Jacob has
been a director of the Corporation since
June 1990.
ALLEN KARP......................... Mr. Karp has been President and Chief
(Age 56) Executive Officer of the Corporation
since June 1990. He served as President
and Chief Operating Officer from
December 1989 to June 1990. Mr. Karp was
Senior Executive Vice-President of the
Corporation from July 1986 to December
1989 and President, North American
Theatres Division of the Corporation
from August 1988 to December 1989.
Mr. Karp is a director of Alliance
Communications Corporation and Speedy
Muffler King Inc. Mr. Karp has been a
director of the Corporation since May
1987.
THE HONOURABLE E. LEO KOLBER....... Senator Kolber was appointed Chairman of
(Age 68) the Board of the Corporation on
December 1, 1989. He has been a Member of
the Senate of Canada since December 1983.
From October 1987 to September 1993,
Senator Kolber was Chairman of Claridge
Inc. Senator Kolber is a director of The
Seagram Company Ltd. and The Toronto-
Dominion Bank. Senator Kolber has been a
director of the Corporation since
December 1989.
CHRISTOPHER J. MCGURK*............. Mr. McGurk has been Chief Operating
(Age 40) Officer of Universal Pictures, a
division of Universal Studios, Inc.
since November 1996. From October 1994
to August 1996, Mr. McGurk was President
of the Walt Disney Motion Pictures
Group. He served as Executive Vice
President and Chief Financial Officer of
the Walt Disney Studios from June 1990
to September 1994. Mr. McGurk has been a
director of the Corporation since
November 1996.
ANDREW J. PARSONS.................. Mr. Parsons has been Senior Vice-
(Age 47) President and Chief Financial Officer of
Claridge Inc. since July 1990.
Mr. Parsons has been a director of the
Corporation since August 1990.
ERIC W. PERTSCH*................... Mr. Pertsch has been President and a
(Age 54) director of Universal Studios Canada
Ltd., a wholly-owned subsidiary of
Universal Studios, Inc. since August
1996. From January 1990 to August 1996,
Mr. Pertsch served as Vice-President,
Finance and Administration, and a
director of Universal Studios Canada
Ltd. In addition, since April 1989,
Mr. Pertsch has been President of
Universal Studios Filmed Entertainment
Canada Inc., a wholly-owned subsidiary of
Universal Studios, Inc. and President of
Universal Studios Home Video Canada and
Universal Pay Television Canada,
divisions of Universal Studios Canada
Ltd. Mr. Pertsch has been a director of
the Corporation since May 1988.
ROBERT RABINOVITCH................. Mr. Rabinovitch has been Executive Vice-
(Age 54) President and Chief Operating Officer of
Claridge Inc. since July 1990. Mr.
Rabinovitch has been a director of the
Corporation since December 1989.
Mr. Rabinovitch is a director of CBCI
Telecom Inc.
JAMES D. RAYMOND................... Mr. Raymond has been a private investor
(Age 72) since March 1990. Mr. Raymond was
President of Claridge Inc. from October
1987 to March 1990. Mr. Raymond is
Chairman of the Board and a director of
Canadian 88 Energy Corporation and
Agritek Bio Ingredients Corporation.
Mr. Raymond is a director of Campbell
Resources Inc., Denbridge Capital
Corporation and Yorbeau Resources Inc.
Mr. Raymond has been a director of the
Corporation since November 1983.
HOWARD L. WEITZMAN*................ Mr. Weitzman has been Executive Vice
(Age 57) President, Corporate Operations of
Universal Studios, Inc. since September
1995. Mr. Weitzman was one of the
managing partners of the law firm of
Katten Muchin Zavis & Weitzman, Los
Angeles, from March 1991 to September
1995. From 1986 to 1991 he was one of
the managing partners of the law firm of
Wyman Bautzer, Los Angeles. Mr. Weitzman
has been a director of the Corporation
since November 1995.
* Messrs. Hack, McGurk, Pertsch and Weitzman are nominees of Universal.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During 1996, the board of directors of the Corporation met eight times.
Mr. Weitzman did not attend at least 75% of the meetings of the board of
directors. In addition, Mr. Lynwood Spinks, who resigned as a director on
November 12, 1996, did not attend 75% of the meetings of the board of
directors up to the date of his resignation.
The Executive Committee exercises the powers of the board of directors and
the management and direction of the business and affairs of the Corporation
between meetings of the board of directors. The Executive Committee is currently
comprised of three members of the board of directors, being Messrs. Karp,
Rabinovitch and Weitzman. In 1996, it held 11 meetings.
The Corporation is required by applicable law to have an Audit Committee
comprised of at least three directors, of whom at least two must be neither
officers nor employees of the Corporation or its affiliates. Messrs. Daniels,
Hack, Parsons and Pertsch are currently members of the Audit Committee. The
Audit Committee meets with the financial officers of the Corporation and the
independent auditors to review financial reporting matters, the system of
internal accounting controls and the overall audit plan and examines the
quarterly and year-end financial statements before their presentation to the
board of directors. The auditors of the Corporation are entitled to notice of
and to attend all meetings of the Audit Committee. In 1996, the Audit Committee
met four times.
The Compensation Committee's function is to establish, review and approve
compensation arrangements with the Chief Executive Officer and certain executive
officers of the Corporation and to review and comment upon compensation
arrangements for all other officers of the Corporation. The Compensation
Committee is currently comprised of three members of the board of directors,
being Messrs. Bratty, Rabinovitch and Weitzman. The Compensation Committee held
one meeting in 1996.
The Stock Option Committee is comprised of three members of the board of
directors, each of whom is a disinterested member of the board of directors
within the meaning of the Corporation's amended and restated employee stock
option plan (the "Stock Option Plan"). Messrs. Bratty, Rabinovitch and
Weitzman are the current members of this committee. The Stock Option Committee
has been authorized to grant, to eligible participants under the Stock Option
Plan, stock options with respect to the maximum number of Common Shares
permitted by the plan, all in accordance with and subject to the terms and
conditions of such plan. The Stock Option Committee met once during 1996.
Effective June 6, 1996, the Corporation created a Corporate Governance
Committee consisting of Messrs. Bratty, Rabinovitch and Weitzman. This committee
will, among other functions, have responsibility for nominating and reviewing
nominees to the board of directors and making recommendations in the area of
corporate governance and in the practices of the board of directors. The
Corporate Governance Committee did not meet in 1996.
(b) EXECUTIVE OFFICERS
Reference is made to the information with respect to executive officers of
the Corporation set forth in Part I of this Annual report on Form 10-K
immediately following Item 4 - Submission of Matters to a Vote of Security
Holders.
ITEM 11. EXECUTIVE COMPENSATION
The following information relates to the compensation received by the
Corporation's Chief Executive Officer, and each of the Corporation's next four
highly compensated executive officers for each of the three most recently
completed financial years (collectively, the Named Executive Officers). Unless
otherwise noted all amounts are in Canadian dollars.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------ ------------
ALL OTHER
NAME AND POSITION SALARY BONUS OPTIONS COMPENSATION
YEAR ($) ($) (#) ($)
----- ---------- ---------- ------------ -------------------
ALLEN KARP.................. 1996 750,000 (e) 215,000 4,771,500(f) 23,500(a)
President and Chief 1995 750,000 (e) 215,000 --- 25,500(a)
Executive Officer 1994 620,000 215,000 1,500,000 22,000(a)
ELLIS JACOB................. 1996 355,000 (e) 110,000 2,374,150(g) 10,650(b)
Executive Vice-President and 1995 355,000 (e) 110,000 --- 7,375(b)
Chief Financial Officer 1994 295,000 110,000 750,000 5,800(b)
ROBERT TOKIO................ 1996 355,000 (e) 110,000 2,449,150(h) 10,650(b)
Executive Vice-President 1995 355,000 (e) 90,000 --- 7,375(b)
1994 295,000 95,000 750,000 5,800(b)
MICHAEL MCCARTNEY (c)....... 1996 272,800 68,200 500,000(i) ---
Senior Vice-President, 1995 235,688 69,320 25,000 ---
Head Film Buyer 1994 220,672 48,272 35,000 ---
MICHAEL HERMAN (d).......... 1996 250,000 65,000 1,000,000(j) 7,050(b)
Executive Vice-President, 1995 235,000 55,000 --- 5,250(b)
Corporate Affairs and 1994 210,000 55,000 250,000 4,200(b)
Secretary
NOTES:
(a) Amount represents the Corporation's contribution to a defined
contribution pension plan (1996 --- $13,500, 1995 --- $15,500, 1994 ---
$12,000) and the cost of term life insurance paid by the Corporation
($10,000).
(b) Amount represents the Corporation's contribution to a defined contribution
pension plan.
(c) Mr. McCartney was Senior Vice-President, Film, U.S. from December 1, 1991
to October 31, 1995. Effective November 1, 1995 Mr. McCartney was promoted
to Senior Vice-President, Head Film Buyer. Mr. McCartney's compensation is
paid in U.S. funds. Amounts have been converted for presentation purposes
in this report at exchange rates of $1.3640 in 1996, $1.3864 in 1995 and
$1.3792 in 1994, representing the average exchange rates during those
years.
(d) Mr. Herman was Senior Vice President, Corporate Affairs and Secretary of
the Corporation from May 1, 1992 to December 31, 1994. Effective
January 1, 1995, Mr. Herman was promoted to Executive Vice-President,
Corporate Affairs and Secretary of the Corporation.
(e) The compensation of Messrs. Karp, Jacob and Tokio is set in U.S. funds and
converted into Canadian funds according to a formula set out in their
respective employment agreements.
(f) Includes 2,171,500 options which were cancelled and re-issued during 1996.
(g) Includes 1,178,150 options which were cancelled and re-issued during 1996.
(h) Includes 1,253,150 options which were cancelled and re-issued during 1996.
(i) Includes 125,000 options which were cancelled and re-issued during 1996.
(j) Includes 400,000 options which were cancelled and re-issued during 1996.
Allen Karp entered into an employment agreement with the Corporation dated
July 4, 1996, as amended December 6, 1996, which provides for an annual base
salary and certain employee benefits, as well as such bonuses as may be
determined in the sole discretion of the Board of Directors of up to 100% of
base salary. Messrs. Jacob and Tokio entered into employment agreements with
the Corporation dated December 6, 1996 which provide for an annual base salary
and certain employee benefits, as well as such bonuses as may be determined in
the sole discretion of the Board of Directors of up to 100% of base salary. The
agreements amend and restate the employment agreements of Messrs. Karp, Jacob
and Tokio dated December 1, 1994, provide for a minimum annual base salary of
U.S. $550,000, U.S. $260,000 and U.S. $260,000 respectively and renew
automatically, unless notice is given otherwise, for consecutive periods of one
year after the initial terms expire on January 1, 2001.
Each of such employment agreements provides that the Corporation may
provide written notice of non-renewal at any time during the first six months of
the last year of the agreement. If the Corporation provides such notice, Mr.
Karp, Jacob or Tokio, as the case may be, is entitled to a termination payment
upon the expiry of the agreement in an amount equal to two times the average of
the sum of his annual base salary and any annual bonus paid or payable during
the three
immediately preceding calendar years (the "Termination Payment"), less the base
salary paid to him from the date of such notice to the expiry of the agreement,
together with any compensation previously deferred and not yet paid.
Each of such employment agreements also provides that the Corporation may
provide written notice of non-renewal on a date which is on or before one year
prior to the expiry of the agreement. In such event, the Corporation may also
elect to terminate the employment of Mr. Karp, Jacob or Tokio as of the date
which is one year prior to the expiry of the agreement. If the Corporation gives
such notice of non-renewal but does not terminate immediately such employee's
employment, the employee is entitled to a termination payment upon the expiry of
the agreement in an amount equal to his then annual base salary, together with
any compensation previously deferred and not yet paid by the Corporation. If
the Corporation provides such notice and elects to terminate such employee's
employment as of the date which is one year prior to the expiry of the
agreement, the employee is entitled to a termination payment in an amount equal
to the Termination Payment, together with any compensation previously deferred
and not yet paid.
If the employment agreement of Mr. Karp, Jacob or Tokio is terminated as a
result of a material breach by the Corporation, the employee is entitled to a
termination payment equal to the greater of (i) the most recent bonus awarded
and the base salary then being paid which would have otherwise been paid from
the date of termination of employment to the expiry date of the agreement, and
(ii) two times the annual base salary then being paid plus the most recent
annual bonus awarded. In addition, the employee will be entitled to any
compensation previously deferred and not yet paid by the Corporation. If,
however, any compensation previously deferred and not yet paid plus the
Aggregate Compensation (as herein defined) which would have been paid to him
from the date of termination of employment to the expiry date of the agreement
is greater than the aforesaid amount, then that is the termination payment to
which the employee is entitled.
If the employment agreement of Mr. Karp, Jacob or Tokio by any of them is
terminated following the occurrence of certain events involving a material
change in the operations of the Corporation or a change of control of the
Corporation (a "Material Change"), the employee is entitled to a termination
payment equal to the greater of (i) the base salary then being paid to him which
would otherwise have been paid from the date of termination of employment to the
expiry date of the agreement, and (ii) effectively between two and two and
one-half times the annual base salary then being paid plus the most recent
annual bonus awarded, as well as any compensation deferred and not yet paid by
the Corporation.
In addition, with respect to Mr. Karp's agreement only, the Corporation
may terminate Mr. Karp's employment on not less than six months' notice at
any time during the term of the agreement. If the Corporation provides such
notice, Mr. Karp is entitled to a termination payment in an amount equal to
the average of his annual base salary and any bonus paid or payable in the
immediately preceding three calendar years (the "Aggregate Compensation")
which would have otherwise been paid to Mr. Karp from the date of termination
of his employment to the expiry date of the agreement plus an amount equal to
one times the Aggregate Compensation, as well as any compensation previously
deferred and not yet paid by the Corporation.
As well, subject to any required regulatory approvals, if the Corporation
terminates the employment of Mr. Karp, Jacob or Tokio for any reason or if any
of them terminates his employment due to a Material Change, all stock options
previously granted to such employee, other than his Performance-Based Options
(as hereinafter defined), shall immediately vest and the employee shall remain
entitled to exercise any vested and unexercised stock options, including his
Performance-Based Options, previously granted to him at any time until the
expiration of the full term of the exercise period of each of such options.
Michael Herman entered into an employment agreement with the Corporation
dated December 6, 1996 which provides for an annual base salary and certain
employee benefits, as well as such bonuses as may be determined in the sole
discretion of the board of directors of up to 100% of base salary. Mr. Herman's
agreement is effective as of January 1, 1996, and provides for a minimum annual
base salary of $250,000, and renews automatically, unless notice is given
otherwise, for consecutive periods of one year after the initial term expires on
January 1, 1999.
Mr. Herman's employment agreement provides that the Corporation may provide
written notice of non-renewal on the date which is not later than six months
prior to the expiry of the agreement. If the Corporation provides such notice,
Mr. Herman is entitled to a termination payment in an amount equal to his annual
base salary as well as any compensation previously deferred and not yet paid by
the Corporation.
If Mr. Herman's employment agreement is terminated as a result of a
material breach by the Corporation, he is entitled to a termination payment
equal to the greater of (i) the most recent bonus awarded and base salary then
being paid which would have otherwise been paid from the date of termination of
employment to the expiry date of the agreement, and (ii) one and one-half times
the annual base salary then being paid plus the most recent annual bonus
awarded. In addition, Mr. Herman will be entitled to any compensation previously
deferred and not yet paid by the Corporation.
If Mr. Herman terminates his employment agreement following a Material
Change, he is entitled to a termination payment equal to the greater of (i) the
base salary then being paid to him which would have otherwise been paid from the
date of termination of employment to the expiry date of the agreement, and (ii)
effectively between one and one-half and two times the annual base salary then
being paid to him plus the most recent annual bonus awarded, as well as any
compensation deferred and not yet paid by the Corporation.
As well, subject to any required regulatory approvals, if the Corporation
terminates Mr. Herman's employment for any reason or Mr. Herman terminates his
employment due to a Material Change, Mr. Herman would be entitled to exercise
any vested and unexercised stock options previously granted to him at any time
until the expiration of the full term of the exercise period of each of such
options.
Michael McCartney entered into an employment agreement with the Corporation
dated September 15, 1995, as amended January 22, 1997. The agreement provides
for an annual base salary and certain employee benefits, as well as such bonuses
as may be determined in the sole discretion of the board of directors. Effective
January 1, 1997, the agreement provides for a minimum annual base salary of U.S.
$225,000. The agreement expires December 31, 1998.
OPTION GRANTS TABLE
OPTION GRANTS DURING YEAR ENDED DECEMBER 31, 1996
Potential Realizable Value at Assumed
Annual Rates of Stock Price
Individual Grants Appreciation for Option Term
------------------------------------------------------------------ --------------------------------------
% of Total Market Value of
Options Granted Exercise Securities
Options Granted to Employees in Price Underlying Options 5% 10%
Name (#) Fiscal Year ($/Share) on the Date of Grant Expiration Date ($) ($)
- ---- --- ----------- -------- -------------------- --------------- --- ---
ALLEN KARP. . . . . 2,600,000(a) 17.47 1.868 1.868 April 17, 2006 3,054,415 7,740,488
561,500(b) 3.77 1.868 1.868 Oct. 15, 2001 356,720 809,276
110,000(b) 0.74 1.868 1.868 Nov. 6, 2002 83,651 194,942
1,500,000(b) 10.08 1.868 1.868 Dec. 17, 2004 1,544,822 3,804,969
ELLIS JACOB . . . . 1,196,000(c) 8.04 1.868 1.868 April 17, 2006 1,405,031 3,560,625
353,150(b) 2.37 1.868 1.868 Oct. 15, 2001 224,356 508,987
75,000(b) 0.50 1.868 1.868 Nov. 6, 2002 57,035 132,915
750,000(b) 5.04 1.868 1.868 Dec. 17, 2004 772,411 1,902,485
ROBERT TOKIO. . . . 1,196,000(c) 8.04 1.868 1.868 April 17, 2006 1,405,031 3,560,625
353,150(b) 2.37 1.868 1.868 Oct. 15, 2001 224,356 508,987
75,000(b) 0.50 1.868 1.868 Dec. 25, 2001 47,647 108,096
75,000(b) 0.50 1.868 1.868 Nov. 6, 2002 57,035 132,915
750,000(b) 5.04 1.868 1.868 Dec. 17, 2004 772,411 1,902,485
MICHAEL MCCARTNEY . 375,000(d) 2.52 1.868 1.868 April 17, 2006 440,541 1,116,417
44,000(b) 0.30 1.868 1.868 Oct. 15, 2001 27,953 63,416
5,500(b) 0.04 1.868 1.868 Dec. 25, 2001 3,494 7,927
15,500(b) 0.10 1.868 1.868 Nov. 18, 2003 13,824 33,111
35,000(b) 0.24 1.868 1.868 Dec. 17, 2004 36,046 88,783
25,000(b) 0.17 1.868 1.868 Sept. 12, 2005 29,369 74,428
MICHAEL HERMAN . . 600,000(e) 4.03 1.868 1.868 April 17, 2006 704,865 1,786,267
100,000(b) 0.67 1.868 1.868 May 2, 2002 63,530 144,128
25,000(b) 0.17 1.868 1.868 Nov. 6, 2002 19,012 44,305
25,000(b) 0.17 1.868 1.868 Nov. 18, 2003 22,297 53,406
250,000(b) 1.68 1.868 1.868 Dec. 17, 2004 257,470 634,162
NOTES:
(a) Included is this grant are 750,000 Performance-Based Options (See
Compensation Committee Report). Of the remaining balance 350,000 vest
immediately and 50% of the remainder vest immediately with the remaining
balance vesting over a four year period.
(b) Represents options granted upon cancellation of options in respect of an
equal number of Common Shares previously granted. Re-issued options
retain their cumulative vesting rights from the date of original issue of
the cancelled options.
(c) Included is this grant are 387,000 Performance-Based Options. Of the
remaining balance 422,000 vest immediately and the remainder vest
over a four year period.
(d) Included is this grant are 234,375 Performance-Based Options. Of the
remaining balance 37,500 vest immediately with the remainder vesting
over a four year period.
(e) Included is this grant are 240,000 Performance-Based Options. Of the
remaining balance 120,000 vest immediately with the remainder vesting
over a four year period.
The following table sets forth, in respect of the Named Executive Officers,
details of the exercises of stock options during the financial year ended
December 31, 1996 and the financial year-end number and value of unexercised
options on an aggregate basis:
AGGREGATED OPTION EXERCISES DURING YEAR ENDED DECEMBER 31, 1996 AND
YEAR-END OPTION VALUE AT DECEMBER 31, 1996
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT DECEMBER 31, 1996 AT DECEMBER 31, 1996
SHARES ACQUIRED VALUE (#) ($)
---------------------- ----------------------
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- ---- ---------------- ---------- ---------------------- ----------------------
ALLEN KARP --- --- 2,709,000/2,062,500 222,138/169,125
ELLIS JACOB 227,000 279,304 1,094,900/1,052,250 89,782/86,285
ROBERT TOKIO --- --- 1,396,900/1,052,250 114,546/86,285
MICHAEL MCCARTNEY --- --- 148,156/351,844 12,149/28,851
MICHAEL HERMAN --- --- 448,750/551,250 36,798/45,203
COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
OVERVIEW AND PHILOSOPHY
All members of the Compensation Committee and Stock Option Committee
(collectively, "the Committees") are independent, non-employee directors. It
is the Compensation Committee's function to establish, review and approve
compensation arrangements for the Chief Executive Officer, and certain other
executive officers, and to review and comment upon compensation arrangements for
all other officers of the Corporation. As part of this process, the Compensation
Committee reviews the compensation of executive officers of industry competitors
whose information is made public, but does not survey any particular index such
as The Toronto Stock Exchange's Communication and Media Index.
Section 162(m) of the INTERNAL REVENUE CODE OF 1986, as amended from time
to time, generally limits the corporate deduction in respect of amounts paid to
a corporation's executive officers, unless certain requirements are met. Since
the Corporation is a Canadian corporation, the limitation of the corporate
deduction under Section 162(m) does not apply, except with respect to the
compensation paid to Mr. Michael McCartney. The salary and other compensation
paid to Mr. McCartney as part of his 1996 compensation would not be eligible for
exemption from the general rule in Section 162(m); however, the salary and other
compensation paid to Mr. McCartney in 1996 did not exceed U.S. $1,000,000, the
threshold beyond which the corporate deduction is limited. The Compensation
Committee will continue to review its compensation arrangements in light of
Section 162(m).
The objectives of the Corporation's executive compensation program are to:
(1) Support the achievement of desired corporate performance.
(2) Provide compensation that is both competitive within the industry and
which will attract and retain superior talent and reward performance.
(3) Align the executive officers' interests with those of the shareholders.
EXECUTIVE OFFICER COMPENSATION PROGRAM
The Corporation's executive officer compensation program is comprised of
three key elements: base salary, discretionary annual cash incentive
compensation and long-term compensation in the form of stock options.
Subject to the provisions of applicable employment agreements, base salary
levels for the Corporation's executive officers are determined primarily as a
result of a subjective assessment of the nature of the position and the
contribution of each executive officer. In addition, consideration is given to
the experience and tenure of each executive officer.
The determination of the amount of funds available for the cash incentive
compensation program is based upon a subjective assessment of the Corporation's
overall performance. In determining each individual executive officer's cash
incentive compensation, the Compensation Committee takes into account the area
of responsibility of each executive and a subjective assessment of the
performance of that area in the most recent fiscal year.
The Stock Option Plan is the Corporation's long-term incentive plan for
executive officers. The Stock Option Plan is administered by the Stock Option
Committee which consists of the same directors as the Compensation Committee.
The primary objective of the plan is to align executive and shareholder
long-term interests by attempting to create a direct link between executive pay
and shareholder return. In addition, this plan enables executives to develop and
maintain a significant and long-term ownership position in the Corporation.
Under the plan, all options that have been issued to eligible participants have
been issued at an option price not less than the market value of the Common
Shares on the last business day preceding the date of the grant. The Stock
Option Committee reviews each executive officer individually and determines any
such grant of stock options based on a subjective review of each individual
executive officer's contribution and performance throughout the year. When
determining both whether to grant stock options and the number of stock options
to be granted to each individual executive officer, the Stock Option Committee
also considers the number of stock options previously granted to each
individual, although it does not target any specific number of stock options
which should be held by any individual. In 1996, following the completion of the
Corporation's issuance of 25,000,000 Common Shares to the public (the "Public
Offering"), 24,242,181 Subordinate Restricted Voting Shares to Universal and
12,124,454 Common Shares to the Trust, shareholders of the Corporation, at the
annual and special meeting of shareholders, approved a resolution of the Stock
Option Committee authorizing an increase in the number of Common Shares
available for issuance under the Stock Option Plan to 17,646,716 Common Shares.
The Stock Option Committee believes that this increase in the number of Common
Shares available for issuance under the Stock Option Plan benefits the
Corporation because the Committee considers the ability to continue to award
stock options to officers and full-time employees necessary in order for the
Corporation to continue to be competitive in the North American motion picture
theatre exhibition industry through attracting, retaining and motivating
qualified senior management and other employees. The increase in the number of
Common Shares available for issuance under the Stock Option Plan provides the
Corporation with the flexibility it requires for this purpose.
In order to further the objectives of the Corporation to attract, retain
and motivate qualified senior management and other employees, and in order to
provide participants under the Stock Option Plan with an opportunity to
participate in long-term growth in shareholder value, contemporaneously with the
completion of the Public Offering, the Stock Option Committee determined that:
(i) the exercise prices of certain of the issued and outstanding stock options
should be amended to be the same as the price of the shares issued pursuant to
the Public Offering, being $1.868 per Common Share, and (ii) the expiry dates of
certain of the issued and outstanding stock options should be extended to the
date which is 10 years from the date of the grant of such options.
In order to accomplish the foregoing, the Stock Option Committee approved:
(i) an amendment of the exercise prices of outstanding stock options issued
under the Stock Option Plan to purchase a total of 1,180,989 Common Shares held
by non-senior officers and employees of the Corporation to $1.868 per Common
Share, and (ii) an extension of the expiry dates of outstanding stock options
issued under the Stock Option Plan to purchase a total of 737,744 Common Shares
held by non-senior officers and employees of the Corporation to the date which
is 10 years from the date of the original grant of such stock options. The Stock
Option Committee also approved, with the approval of the shareholders of the
Corporation at the annual and special meeting of shareholders: (i) an amendment
of the exercise prices of outstanding stock options issued under the Stock
Option Plan to purchase a total of 5,679,000 Common Shares held by senior
officers of the Corporation to $1.868 per Common Share, and (ii) an extension of
the expiry dates of outstanding stock options issued under the Stock Option Plan
to purchase a total of 2,019,000 Common Shares held by senior officers of the
Corporation to the date which is 10 years from the date of the original grant of
such stock options (See Schedule A). Upon completion of the Public Offering,
the Stock Option Committee approved the granting of options to purchase
8,019,020 Common Shares at a price of $1.868 per Common Share to participants
under the Stock Option Plan. Of such number, options to purchase 6,788,800
Common Shares were issued to senior officers of the Corporation.
The Stock Option Committee also determined that certain of the options
issued to purchase Common Shares should be conditional upon the Corporation
meeting certain annual performance financial targets in the five years
following the granting of such options ("Performance-Based Options"). The
Performance-Based Options vest 20% per year on the date on which the
Corporation announces its year end financial results if the performance
financial target for such year is met. Of the options to acquire 8,019,020
Common Shares issued in 1996, options to acquire 2,593,244 Common Shares are
Performance-Based Options, including options to acquire 2,294,775 Common
Shares issued to senior officers of the Corporation. The performance
financial target set in respect of the Performance-Based Options was not
met in 1996 with the result that none of the Performance-Based Options have
yet vested. If, in future years, the Corporation exceeds the performance
financial targets set for such years, the excess may be carried back to a
previous year in which the target was not met, to enable the options granted
in respect of such previous year to then vest.
During 1996, the Corporation entered into new employment agreements with
certain of its senior officers. These employment agreements amended certain of
the terms of existing agreements, including amounts payable to such employees
upon the occurrence of a Material Change. These new employment agreements
reflect the Corporation's publicly stated position that the motion picture
theatre exhibition industry is currently in a period of rapid expansion that may
result in consolidation through mergers and acquisitions within the foreseeable
future. To ensure that senior management remains motivated and focused, and to
protect and enhance the best interests of the Corporation and its shareholders,
the Compensation Committee determined that it was appropriate, to maintain sound
and vital management, to revise the employment agreements of such senior
officers.
In evaluating the performance and setting the compensation of executive
officers, the Compensation Committee has taken particular note of the
significant challenges that faced the Corporation and the efforts undertaken by
the executive officers to strengthen and consolidate the financial and
operational position of the Corporation within the film exhibition industry. The
Compensation Committee has also taken into account, when reviewing executive
officer performance and compensation, the consistent commitment displayed by the
executive officers to the long-term success of the Corporation.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Karp's base salary in fiscal 1996 was $750,000. Mr. Karp's annual cash
incentive in 1995 was $215,000. In addition, Mr. Karp was granted options to
acquire 2,600,000 Common Shares under the Corporation's long term incentive
plan, of which options to acquire 750,000 Common Shares are Performance-Based
Options.
The Committees, in establishing Mr. Karp's base salary, annual cash
incentive, and long-term incentive in the form of stock options, made a
subjective assessment of his accomplishments in 1996, including continuing
recognition for his efforts towards achieving the Corporation's major strategic
goals, establishing the Corporation as a leader in the film exhibition industry
notwithstanding financial constraints, and his efforts in positioning the
Corporation to aggressively and successfully pursue major strategic expansion.
Compensation Committee and Stock Option Committee:
Rudolph P. Bratty, Q.C.
Robert Rabinovitch
Howard L. Weitzman
DIRECTOR COMPENSATION
Effective January 1, 1994, the Corporation authorized the payment of fees
to independent directors consisting of an annual retainer of $5,000, a fee of
$1,000 per board meeting for attending in person, $1,500 for a chairman
attending committee meetings in person and $750 per committee meeting for
attending in person. If an independent director attends either a board or
committee meeting by way of telephone, such director receives $250 for the
meeting. For purposes of director compensation, the independent directors are
Messrs. Bratty, Daniels and Raymond.
On May 15, 1989, the Corporation entered into indemnity agreements with
each of those individuals who were then directors, in which the Corporation
extended to each such director the same form of entitlement to indemnification
as was then, and is now, contained in the Corporation's general by-law, except
that the Corporation agreed to extend to such
directors, whether or not they then hold such office, such broader entitlement
to indemnification as it may subsequently provide to all of its directors.
COMPENSATION PURSUANT TO PLANS
STOCK OPTION PLAN
Under the terms of the Stock Option Plan, the number of Common Shares that
may be available for issuance may not exceed in the aggregate 17,646,716, or
such greater number of Common Shares as may be determined by the board of
directors and approved by the shareholders and by any relevant stock exchange or
regulatory authority.
The board of directors may delegate any or all of its authority with
respect to the administration of the Stock Option Plan to a committee consisting
of not less than three members of the board of directors, all of whom are not
eligible to participate in the Stock Option Plan. The board of directors has
delegated authority with respect to the administration of the Stock Option Plan
to the Stock Option Committee. (See "Meetings of the Board of Directors and
Committees".)
Only officers and full-time employees of the Corporation and its
affiliates, associates and subsidiaries are eligible to receive options under
the Stock Option Plan. As at April 22, 1997, the approximate number of eligible
participants under the Stock Option Plan was 129. Non-employee directors of the
Corporation are not eligible to participate in the Stock Option Plan. Options
granted under the Stock Option Plan are not assignable or transferable, other
than by will or the applicable laws of succession.
The Stock Option Committee has discretion to determine the vesting schedule
and duration of individual options granted pursuant to the Stock Option Plan,
but the duration may not exceed 10 years. To date, certain of the options
provide for immediate vesting while others provide for 25% cumulative vesting
each year commencing six months to one year following the grant of the options
(subject to the additional conditions imposed on Performance-Based Options noted
under "Compensation Committee and Stock Option Committee Report on Executive
Compensation"). The exercise price for each Common Share purchased under the
Stock Option Plan may not be less than the closing sale price of the Common
Shares of the Corporation on The Toronto Stock Exchange or the New York Stock
Exchange on the trading day immediately preceding the date of the grant. In the
event that the Common Shares did not trade on such trading day, the exercise
price may not be less than the average of the bid and ask prices in respect of
such shares at the close of trading on such trading day. To date, the
Corporation has consistently granted options exercisable at not less than the
current market price.
The Corporation's standard form stock option agreement provides that, upon
a sale by the Corporation of substantially all of its assets or properties, or
if an offeror is entitled to acquire all of the remaining shares of the
Corporation held by dissenting offerees pursuant to the provisions of the Act,
all options automatically become 100% vested and immediately exercisable (except
that only 75% of Performance-Based Options in respect of the financial year not
completed at such time and any subsequent financial years vest and become
immediately exercisable). In addition, the Stock Option Plan provides that if an
offer to purchase all of the Common Shares is made by a third party or in the
event of a proposed amalgamation, plan of arrangement, issuer bid or
reorganization, the Corporation may, in its discretion, require the acceleration
of the vesting and expiry dates of the outstanding stock options (subject to the
same 75% restriction in respect of Performance-Based Options).
The Stock Option Committee, without further action on the part of the
shareholders of the Corporation, may amend or terminate the Stock Option Plan,
provided that no such action may materially and adversely affect the rights
under any stock options earlier granted to a participant under the Stock Option
Plan without the consent of the participant. Any such amendment shall, if
required, be subject to any approvals required under applicable law or under the
applicable rules of any stock exchange on which the Common Shares are listed and
posted for trading. All amendments to the terms of Stock Option Plan must be
approved by the shareholders of the Corporation if the amendment would: (i)
materially increase the benefits accruing to participants under the Stock Option
Plan, (ii) increase the number of securities which may be issued under the Stock
Option Plan, or (iii) materially modify the requirements as to eligibility for
participation in the Stock Option Plan.
PENSION PLANS
The Corporation has two pension plans covering employees of the
Corporation, being the Cineplex Odeon Corporation Employee Pension Plan (the
''Canadian Plan'') and the Cineplex Odeon Corporation U.S. Employees' Pension
Plan (the "U.S. Plan").
THE CANADIAN PLAN
The Corporation amended the Canadian Plan effective January 1, 1993 by
converting it from a defined benefit plan into a defined contribution plan.
Benefits accrued under the defined benefit plan were frozen at the time of
conversion. Effective January 1, 1993, all executive officers resident in Canada
are covered by the Canadian Plan.
THE U.S. PLAN
An employee is eligible to participate in the U.S. Plan upon satisfaction
of certain age and service requirements. The monthly pension amount to be
received by an employee under the U.S. Plan is based on the average of the
participant's earnings during the sixty consecutive months of employment that
produced the highest average pay during his participation in the plan ("Pension
Base Pay") and years of benefit service and is integrated based upon an
employee's covered compensation.
In the case of normal retirement at age 65, subject to certain limits, the
benefit is equal to approximately 1 1/4% of the Pension Base Pay multiplied by
up to a maximum of 35 years of service.
A participant has a vested interest in his or her "accrued benefit" upon
completion of 5 years of vesting service. The U.S. Plan also provides that once
an employee has attained the age of 55 and has accumulated at least 10 years of
service, he or she may retire and may commence receiving a pension from the U.S.
Plan immediately. If the pension benefit payments commence before the age of 65,
the monthly pension amount paid to such employee will be reduced based on such
employee's age at retirement. If a participant retires prior to the age of 65,
the participant may also be entitled to a supplemental pension payable monthly
prior to age 65.
The U.S. Plan contains disability and death benefit provisions. The
disability provision entitles the vested participant to a special monthly
disability benefit commencing at the normal retirement date if the participant
remains disabled until age 65. No disability benefits are payable if the
participant has less than 10 years of vesting service. Death benefits, and the
amount thereof, are payable depending on the participant's vesting status and
age at death.
Michael McCartney has been a member of the U.S. Plan since October 1,1987.
In 1996, Mr. McCartney's covered compensation was U.S. $150,000.
The following table shows annual gross benefits payable to participants in the
U.S. Plan, upon retirement at their normal retirement dates, in straight life
annuity amounts:
PENSION PLAN TABLE
YEARS OF SERVICE
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
PENSION BASE PAY 5 10 15 20 25 30 35
- ---------------- --------- --------- --------- --------- --------- --------- ---------
($ U.S.) ($ U.S.) ($ U.S.) ($ U.S.) ($ U.S.) ($ U.S.) ($ U.S.) ($ U.S.)
$25,000 $1,225.00 $2,450.00 $3,675.00 $4,900.00 $6,125.00 $7,350.00 $8,575.00
50,000 2,450.00 4,900.00 7,350.00 9,800.00 12,250.00 14,700.00 17,150.00
75,000 4,032.73 8,065.46 12,098.20 16,130.93 20,163.66 24,196.39 28,229.12
100,000 5,970.23 11,940.46 17,910.70 23,880.93 29,851.16 35,821.39 41,791.62
125,000 7,907.73 15,815.46 23,723.20 31,630.93 39,538.66 47,446.39 55,354.12
150,000 9,845.23 19,690.46 29,535.70 39,380.93 49,226.16 59,071.39 68,916.62
NOTE:
(A) For Plan Years commencing 1994 and beyond, U.S. law prohibits annual
compensation used to determine Pension Base Pay from exceeding U.S.
$150,000.
PERFORMANCE GRAPH
Set forth below is a graph showing the five year cumulative total return of
the Common Shares of the Corporation as compared with The Toronto Stock Exchange
(TSE) 300 Index and The Toronto Stock Exchange Communication and media Index.
The graph assumes $100 was invested on December 31, 1991 in the Corporation's
Common Shares and each of the indexes and assumes reinvestment of dividends
where applicable.
[Insert Graph]
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table (together with the notes thereto) sets forth certain
information as of April 22, 1997 with respect to those persons known to the
Corporation to be the beneficial owners of, or who exercise control or direction
over, five percent or more of each class of the Corporation's securities, all
directors and nominees, the executive officers named in the Summary Compensation
Table contained herein and all directors and executive officers as a group.
NUMBER OF COMMON SHARES
BENEFICIALLY OWNED OR
OVER WHICH CONTROL OR PERCENTAGE OF
NAME OF BENEFICIAL OWNER DIRECTION IS EXERCISED CLASS
- ------------------------ ------------------------ -------------
The Honourable E. Leo Kolber . . . . . . 3,578,092 (1) 3.45
Allen Karp . . . . . . . . . . . . . . . 3,101,142 (2) 2.99
Rudolph P. Bratty. . . . . . . . . . . . 426,036 *
John H. Daniels. . . . . . . . . . . . . 323,265 *
Bruce L. Hack. . . . . . . . . . . . . . 0 (3) 0
Ellis Jacob. . . . . . . . . . . . . . . 1,282,400 (4) 1.24
Andrew J. Parsons. . . . . . . . . . . . 20,000 (5) *
Eric W. Pertsch. . . . . . . . . . . . . 400 (3) *
Robert Rabinovitch . . . . . . . . . . . 10,000 (6) *
James D. Raymond . . . . . . . . . . . . 1,707,369 (7) 1.64
Christopher McGurk . . . . . . . . . . . 0 (3) 0
Howard L. Weitzman . . . . . . . . . . . 0 (3) 0
Charles R. Bronfman(8) . . . . . . . . . 3,409,924 (9) 3.29
The Charles Rosner Bronfman
Family Trust(8). . . . . . . . . . . . . 35,918,429 34.60
Robert Tokio . . . . . . . . . . . . . . 1,603,240 (10) 1.54
Michael McCartney. . . . . . . . . . . . 170,331 (4) *
Michael Herman . . . . . . . . . . . . . 517,500 (4) *
All directors and executive
officers as a group (19 persons) . . . . 13,629,049 (11) 13.13
* Indicates beneficial ownership or control of less than 1.0% of the
outstanding Common Shares.
Universal (in which Seagram owns an 80% indirect interest) beneficially
owns 73,446,426 SRV Shares, being 100% of such class. Universal does not hold
any other shares of the Corporation. The address of Universal is 100 Universal
City Plaza, Universal City, California, 91608, U.S.A. The Articles of the
Corporation provide that if SRV Shares are transferred by Universal to a third
party (except in very limited circumstances), such shares will be automatically
converted on transfer into Common Shares, on a share-for-share basis.
Based on publicly available information related to Seagram, as of March 31,
1996: (i) descendants of the late Samuel Bronfman and trusts established for
their benefit (the "Bronfman Trusts") beneficially owned, directly or
indirectly, an aggregate of 133,844,823 of the then outstanding common shares of
Seagram ("Seagram Shares"), constituting approximately 35.78% of the then
outstanding Seagram Shares, which amount includes the approximately 15.59% of
the then outstanding Seagram Shares owned by trusts established for the benefit
of Charles R. Bronfman and his descendants, including, without limitation, the
Trust, (ii) Charles R. Bronfman owned directly 302,760 Seagram Shares,
constituting approximately 0.08% of the then outstanding Seagram Shares, and
(iii) pursuant to two voting trust agreements, Charles R. Bronfman served as the
voting trustee for approximately 32.6% of the then outstanding Seagram Shares
and a voting
trustee for approximately 3.3% of the then outstanding Seagram Shares, which
shares are beneficially owned by the Bronfman Trusts and certain other entities.
(1) Includes 2,728,718 Common Shares owned directly and 774,374 Common Shares
owned by 3096475 Canada Inc., a corporation wholly owned by Senator
Kolber. Also includes 75,000 Common Shares beneficially owned by Senator
Kolber's wife, as to which he disclaims beneficial ownership. Does not
include 35,918,429 Common Shares owned by the Trust, of which Senator
Kolber is one of six trustees and as to which he disclaims beneficial
ownership.
(2) Includes 17,142 Common Shares which are beneficially owned by the Allen
and Sharon Karp Trust, as to which Mr. Karp disclaims beneficial
ownership, and 3,084,000 Common Shares which relate to options exercisable
within 60 days of April 22, 1997.
(3) Does not include 73,446,426 SRV Shares owned by Universal. Messrs. Hack,
Pertsch, McGurk and Weitzman, officers of Universal or its affiliates,
disclaim beneficial ownership of all shares owned by Universal.
(4) This number relates solely to options exercisable within 60 days of April
22, 1997.
(5) All of the Common Shares are owned by 131382 Canada Inc., a corporation
wholly owned by Mr. Parsons.
(6) All of the Common Shares are beneficially owned by Mr. Rabinovitch's wife,
as to which he disclaims beneficial ownership.
(7) Includes 1,515,888 Common Shares owned directly and 157,200 Common Shares
owned by Rayjad Investments Inc., a corporation wholly owned by Mr.
Raymond. Also includes 34,281 Common Shares owned by Feejay Corporation
Canada Ltd., a corporation owned by Mr. Raymond and members of his family,
as to which Mr. Raymond disclaims beneficial ownership.
(8) The address of such shareholder is 1170 Peel Street, 8th Floor, Montreal,
Quebec, H3B 4P2, Canada.
(9) Includes 99,266 Common Shares beneficially owned by Mr. Bronfman's wife, as
to which Mr. Bronfman disclaims beneficial ownership. Does not include
35,918,429 Common Shares owned by the Trust, of which Mr. Bronfman is one
of six trustees and a beneficiary.
(10) Of this number, 1,584,400 Common Shares relate to options exercisable
within 60 days of April 22, 1997.
(11) Of this number, 7,522,255 Common Shares relate to options exercisable
within 60 days of April 22, 1997.
No other persons are known to the Corporation to beneficially own or
exercise control or direction over more than five percent of any class of shares
of the Corporation.
Section 16(a) of the SECURITIES EXCHANGE ACT OF 1934, as amended, requires
the Corporation's directors and executive officers, and persons who beneficially
own more than 10% of a registered class of the Corporation's equity securities,
to file with the Securities Exchange Commission initial reports of ownership and
reports of changes in ownership of Common Shares and other equity securities of
the Corporation. To the Corporation's knowledge, based solely on review of the
copies of such reports furnished to the Corporation (and written representations
that no other reports were required), all Section 16(a) filing requirements
applicable to its executive officers, directors and greater than 10% beneficial
owners were complied with, except that Mr. Michael D. McCartney filed a Form 5
in January of 1997, disclosing ownership of 3,300 Common Shares of the
Corporation acquired by him several years prior to becoming an insider, which he
inadvertently failed to report in his initial Form 3 filed in June, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
INTERESTS OF INSIDERS IN MATERIAL TRANSACTIONS
In connection with the Corporation's sale of its remaining 51% interest in
the Film House Partnership to The Rank Organization PLC ("Rank"), the
Corporation agreed to provide, without cost, on-screen advertisements of
Universal Studios, Florida and Universal Studios, California until March 2000.
Universal Studios, Florida, a motion picture and
television theme amusement park, is a joint venture between Universal and Rank.
Universal Studios, California, a motion picture and television theme amusement
park, is owned by Universal.
In fiscal 1996, in the ordinary course of its business, the Corporation
paid an aggregate of approximately U.S. $20,631,000 in film licensing fees to
Universal or subsidiaries thereof. The addresses of Universal is 100 Universal
City Plaza, Universal City, California, 91608, U.S.A. A Canadian division of the
Corporation provides certain video distribution services to Universal pursuant
to which, during 1996, Universal paid the Corporation approximately U.S.
$666,000.
The Corporation has, since 1984, participated in a joint venture with a
group of investors which developed a theatre complex at the southwest corner of
Yonge and Eglinton Streets in Toronto. The investor group, in which each of
Messrs. Kolber and Raymond, both of whom are directors of the Corporation,
and/or associates of such persons, has a minority interest, contributed
$3,250,000 of the total financing required to complete the project and are
entitled to repayment thereof, together with interest thereon, and to ongoing
participation in the revenue derived from the project. During fiscal 1996 this
investor group received $667,943 from the Corporation. The address of the
investor group is c/o Richer, Sorkin & Associates Inc., 625 Dorchester Blvd.
West, Suite 1600, Montreal, Quebec, H3B 1R2.
In September 1990, the Corporation sold its interest in Universal City
Cinemas, an 18-screen multiplex located in Universal City, California to
Universal. The Corporation has been retained to manage the theatre on a
long-term basis for a fee based upon three percent of gross revenue plus three
percent of net cash flow from the multiplex. The total fee earned during 1996
was U.S. $646,749.
On March 28, 1996 the Corporation completed, in Canada and the United
States, a sale to the public of 25,000,000 Common Shares of the Corporation
at a price of $1.868 per share ($1.375 (U.S) per share). Concurrent with the
closing of this offering of shares to the public, pursuant to an agreement
dated March 19, 1996, Universal and the Trust purchased 24,242,181 SRV Shares
and 12,121,454 Common Shares, respectively, at the same price as the offering
price to the public.
SCHEDULE A
Length of Original
Market Price of Exercise Price at Option Term
Options Stock at Time of Time of Remaining at Date of
Repriced or Repricing or Repricing or New Exercise Repricing or
Amended Amendment Amendment Price Amendment
Name Date (#) ($) ($) ($) (DAYS)
- ---- ---- ------- --------- --------- ----- ---------
ALLEN KARP 13 May 88 35,000* 10.750 15.250 11.000 1,039
President and Chief 13 May 88 120,000* 10.750 17.250 11.000 1,074
Executive Officer 5 Apr 90 35,000* 5.750 11.000 5.750 347
5 Apr 90 120,000* 5.750 11.000 5.750 382
27 Mar 91 350,000* 4.300 8.375 4.300 1,346
14 Oct 91 155,000* 3.950 5.750 3.950 1,270
14 Oct 91 45,000* 3.950 5.250 3.950 1,641
14 Oct 91 250,000* 3.950 4.300 3.950 1,627
5 Nov 92 350,000* 2.450 4.300 2.500 1,239
5 Nov 92 561,500* 2.450 3.950 2.500 1,440
16 Apr 96 671,500 1.868 2.500 1.868 151
16 Apr 96 1,500,000 1.868 3.400 1.868 3,134
ELLIS JACOB 13 May 88 11,000* 10.750 19.500 11.000 1,607
Executive 5 Apr 90 29,000* 5.750 14.000 5.750 1,597
Vice-President and 5 Apr 90 11,000* 5.750 11.000 5.750 915
Chief Financial Officer 27 Mar 91 35,000* 4.300 8.375 4.300 1,346
14 Oct 91 75,000* 3.950 5.750 3.950 1,270
14 Oct 91 40,000* 3.950 5.250 3.950 1,641
14 Oct 91 200,000* 3.950 4.300 3.950 1,627
5 Nov 92 35,000* 2.450 4.300 2.500 1,239
5 Nov 92 353,150* 2.450 3.950 2.500 1,440
16 Apr 96 428,150 1.868 2.500 1.868 151
16 Apr 96 750,000 1.868 3.400 1.868 3,134
ROBERT TOKIO 5 Apr 90 50,000* 5.750 14.875 5.750 1,315
Executive 5 Apr 90 10,000* 5.750 12.750 5.750 1,671
Vice-President 27 Mar 91 35,000* 4.300 8.375 4.300 1,346
14 Oct 91 85,000* 3.950 5.750 3.950 1,270
14 Oct 91 30,000* 3.950 5.250 3.950 1,641
14 Oct 91 200,000* 3.950 4.300 3.950 1,627
5 Nov 92 35,000* 2.450 4.300 2.500 1,239
5 Nov 92 353,150* 2.450 3.950 2.500 1,440
16 Apr 96 75,000 1.868 2.260 1.868 253
16 Apr 96 428,150 1.868 2.500 1.868 151
16 Apr 96 750,000 1.868 3.400 1.868 3,134
MICHAEL MCCARTNEY 13 May 88 6,000* 10.750 16.375 11.000 1,228
Senior Vice-President, 5 Apr 90 6,000* 5.750 11.000 5.750 536
Head Film Buyer 14 Oct 91 13,500* 3.950 5.750 3.950 1,270
14 Oct 91 11,500* 3.950 5.250 3.950 1,641
5 Nov 92 44,000* 2.450 3.950 2.500 1,440
16 Apr 96 5,500 1.868 2.260 1.868 253
16 Apr 96 44,000 1.868 2.500 1.868 151
16 Apr 96 15,500 1.868 4.000 1.868 946
16 Apr 96 35,000 1.868 3.400 1.868 3,134
16 Apr 96 25,000 1.868 2.620 1.868 1,609
Length of Original
Market Price of Exercise Price at Option Term
Options Stock at Time of Time of Remaining at Date of
Repriced or Repricing or Repricing or New Exercise Repricing or
Amended Amendment Amendment Price Amendment
Name Date (#) ($) ($) ($) (DAYS)
- ---- ---- ------- --------- --------- ----- ---------
MICHAEL HERMAN 5 Nov 92 100,000* 2.450 3.300 2.500 1,639
Executive 16 Apr 96 125,000 1.868 2.500 1.868 151
Vice-President, 16 Apr 96 25,000 1.868 4.000 1.868 946
Corporate Affairs 16 Apr 96 250,000 1.868 3.400 1.868 3,134
and Secretary
IRWIN COHEN 13 May 88 10,000* 10.750 16.375 11.000 1,228
Executive 5 Apr 90 10,000* 5.750 11.000 5.750 536
Vice-President, 5 Apr 90 5,000* 5.750 11.000 5.750 1,210
Operation for 14 Oct 91 20,000* 3.950 5.750 3.950 1,270
North America 14 Oct 91 20,000* 3.950 5.250 3.950 1,641
5 Nov 92 44,000* 2.450 3.950 2.500 1,440
16 Apr 96 5,500 1.868 2.260 1.868 253
16 Apr 96 64,500 1.868 2.500 1.868 151
16 Apr 96 30,000 1.868 4.000 1.868 946
16 Apr 96 150,000 1.868 3.400 1.868 3,134
HOWARD LICHTMAN 13 May 88 5,000* 10.750 16.375 11.000 1,228
Executive 13 May 88 10,000* 10.750 18.250 11.000 1,527
Vice-President, 5 Apr 90 5,000* 5.750 11.000 5.750 536
Marketing and 5 Apr 90 10,000* 5.750 11.000 5.750 835
Communications 5 Apr 90 15,000* 5.750 11.000 5.750 1,210
27 Mar 91 30,000* 4.300 8.375 4.300 1,346
14 Oct 91 40,000* 3.950 5.750 3.950 1,270
14 Oct 91 25,000* 3.950 4.300 3.950 1,627
5 Nov 92 30,000* 2.450 4.300 2.500 1,239
5 Nov 92 77,200* 2.450 3.950 2.500 1,440
5 Nov 92 25,000* 2.450 3.450 2.500 1,680
16 Apr 96 6,000 1.868 2.260 1.868 253
16 Apr 96 102,200 1.868 2.500 1.868 151
16 Apr 96 200,000 1.868 3.400 1.868 3,134
STEPHEN BROWN 14 Oct 91 7,500* 3.950 5.750 3.950 1,270
Senior Vice-President, 14 Oct 91 17,500* 3.950 5.250 3.950 1,641
Treasury and Tax 5 Nov 92 27,500* 2.450 3.950 2.500 1,440
16 Apr 96 3,500 1.868 2.260 1.868 253
16 Apr 96 17,500 1.868 2.500 1.868 151
16 Apr 96 9,000 1.868 4.000 1.868 946
16 Apr 96 30,000 1.868 3.400 1.868 3,134
JIM VASSOS 14 Oct 91 12,500* 3.950 5.750 3.950 1,270
Senior Vice-President, 14 Oct 91 12,500* 3.950 5.250 3.950 1,641
Business Affairs 5 Nov 92 27,500* 2.450 3.950 2.500 1,440
and Planning 16 Apr 96 3,500 1.868 2.260 1.868 253
16 Apr 96 15,500 1.868 2.500 1.868 151
16 Apr 96 9,000 1.868 4.000 1.868 946
16 Apr 96 30,000 1.868 3.400 1.868 3,134
FORMER OFFICERS
Length of Original
Market Price of Exercise Price at Option Term
Options Stock at Time of Time of Remaining at Date of
Repriced or Repricing or Repricing or New Exercise Repricing or
Amended Amendment Amendment Price Amendment
Name Date (#) ($) ($) ($) (DAYS)
- ---- ---- ------- --------- --------- ----- ---------
GARTH DRABINSKY 13 May 88 300,000* 10.750 16.375 11.000 1,228
Former Chairman of the
Board, President and
Chief Executive Officer
MYRON GOTTLIEB 13 May 88 200,000* 10.750 16.375 11.000 1,228
Former Vice-Chairman
of the Board and Chief
Administrative Officer
NEIL BLATT 13 May 88 5,000* 10.750 16.375 11.000 1,228
Executive Vice- 13 May 88 7,500* 10.750 16.375 11.000 1,434
President, Film 5 Apr 90 5,000* 5.750 11.000 5.750 536
5 Apr 90 7,500* 5.750 11.000 5.750 742
5 Apr 90 5,000* 5.750 11.000 5.750 1,210
27 Mar 91 30,000* 4.300 8.375 4.300 1,346
14 Oct 91 35,000* 3.950 5.750 3.950 1,270
14 Oct 91 85,000* 3.950 5.250 3.950 1,641
14 Oct 91 150,000* 3.950 4.300 3.950 1,627
5 Nov 92 30,000* 2.450 4.300 2.500 1,239
5 Nov 92 302,700* 2.450 3.950 2.500 1,440
IRA MITCHELL 13 May 88 20,000* 10.750 21.250 11.000 1,105
Former Executive 13 May 88 7,500* 10.750 18.250 11.000 1,259
Vice-President, 13 May 88 7,500* 10.750 16.375 11.000 1,228
Real Estate Development,
U.S.
JERALD BANKS 13 May 88 60,000* 10.750 18.625 11.000 1,471
Former Senior Executive 13 May 88 60,000* 10.750 20.125 11.000 1,546
Vice-President,
Corporate Affairs &
Secretary
HAROLD KRAMER 13 May 88 3,000* 10.750 14.625 11.000 1,029
Former Senior 13 May 88 2,000* 10.750 16.375 11.000 1,228
Vice-President 13 May 88 5,000* 10.750 20.125 11.000 1,537
GERALD KISHNER 13 May 88 50,000* 10.750 18.875 11.000 1,559
Former Executive
Vice-President and
Chief Financial Officer
PETER MANDELL 13 May 88 7,000* 10.750 15.250 11.000 1,039
Former Senior 13 May 88 23,000* 10.750 17.250 11.000 1,074
Vice-President, 13 May 88 7,000* 10.750 16.375 11.000 1,228
General Counsel 5 Apr 90 7,000* 5.750 11.000 5.750 347
&Secretary 5 Apr 90 23,000* 5.750 11.000 5.750 382
5 Apr 90 7,000* 5.750 11.000 5.750 536
14 Oct 91 10,000* 3.950 5.750 3.950 1,270
14 Oct 91 37,000* 3.950 5.750 3.950 1,270
14 Oct 91 8,000* 3.950 5.250 3.950 1,641
FORMER OFFICERS
Length of Original
Market Price of Exercise Price at Option Term
Options Stock at Time of Time of Remaining at Date of
Repriced or Repricing or Repricing or New Exercise Repricing or
Amended Amendment Amendment Price Amendment
Name Date (#) ($) ($) ($) (DAYS)
- ---- ---- ------- --------- --------- ----- ---------
LYNDA FRIENDLY 13 May 88 3,000* 10.750 14.625 11.000 1,029
Former Executive 13 May 88 5,500* 10.750 16.375 11.000 1,228
Vice-President,
Marketing &
Communications
BARRY SILVER 13 May 88 3,000* 10.750 14.625 11.000 1,029
Former Executive 13 May 88 5,500* 10.750 16.375 11.000 1,228
Vice-President, 5 Apr 90 3,000* 5.750 11.000 5.750 337
Operations 5 Apr 90 5,500* 5.750 11.000 5.750 536
DAVID ALLEN 13 May 88 3,000* 10.750 14.625 11.000 1029
Former Executive 13 May 88 7,000* 10.750 16.375 11.000 1,228
Vice-President, Canada 5 Apr 90 3,000* 5.750 11.000 5.750 337
5 Apr 90 7,000* 5.750 11.000 5.750 536
5 Apr 90 10,000* 5.750 11.000 5.750 1,210
27 Mar 91 30,000* 4.300 8.375 4.300 1,346
14 Oct 91 20,000* 3.950 5.750 3.950 1,270
14 Oct 91 50,000* 3.950 4.300 3.950 1,627
ROBERT TOPOL 13 May 88 1,500* 10.750 14.625 11.000 1,029
Former Executive 13 May 88 3,000* 10.750 16.375 11.000 1,228
Vice-President 13 May 88 5,000* 10.750 16.750 11.000 1351
13 May 88 20,000* 10.750 18.875 11.000 1,502
* No such options remain outstanding
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Corporation has duly caused this amendment to its
Annual Report on Form 10-K to be signed on its behalf by the undersigned,
thereunto duly authorized.
CINEPLEX ODEON CORPORATION
By: /s/ Michael Herman
-------------------
Michael Herman
Executive Vice-President,
Corporate Affairs & Secretary