<PAGE>
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:
------------------------------------------------------------------------
<PAGE>
[LOGO]
AMC ENTERTAINMENT INC.
106 West 14th Street
Kansas City, Missouri 64105
October 18, 1994
TO THE STOCKHOLDERS OF
AMC ENTERTAINMENT INC.:
The Annual Meeting of Stockholders of AMC Entertainment Inc. will be held at
the Ward Parkway 12 Theatres, 8600 Ward Parkway, Kansas City, Missouri. The
meeting will be held on Thursday, November 10, 1994, 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
<PAGE>
[LOGO]
AMC ENTERTAINMENT INC.
106 West 14th Street
Kansas City, Missouri 64105
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 10, 1994
---------------------
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 12 Theatres, 8600 Ward Parkway, Kansas City,
Missouri. The meeting will be held on Thursday, November 10, 1994, 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 as independent public accountants for the Company for
the fiscal year ending March 30, 1995;
3. To consider and vote upon a proposal to approve 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 7, 1994, 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 28, 1994.
By order of the Board of
Directors
Nancy L. Gallagher
Secretary
Kansas City, Missouri
October 14, 1994
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
<PAGE>
[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 10, 1994, at the Ward Parkway 12 Theatres, 8600
Ward Parkway, Kansas City, Missouri. This Proxy Statement and the accompanying
proxy are being mailed to stockholders on or about October 18, 1994.
The Board of Directors of the Company has established October 7, 1994, 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 15, 1994, the Company had outstanding 5,302,630 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 as independent public accountants of the Company for the
fiscal year ending March 30, 1995, and (iii) for the approval of the AMC
Entertainment Inc. 1994 Stock Option and Incentive Plan. A proxy may be revoked
at any time before being voted 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 AMC
Entertainment Inc. 1994 Stock Option and Incentive Plan, abstentions and broker
non-votes will not be counted in determining whether any matter has been
approved.
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 the 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
<PAGE>
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 provide that the full Board
of Directors consists of six (6) members. It is anticipated that six (6)
directors will be elected at the meeting. Four (4) 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:
<TABLE>
<CAPTION>
NAME AGE(1) POSITIONS
- - ----------------- ------ --------------------------------------------------
<S> <C> <C>
Stanley H. 74 Chairman of the Board, Chief Executive Officer and
Durwood Director
Edward D. Durwood 45 President, Vice Chairman of the Board and Director
Peter C. Brown 36 Executive Vice President, Chief Financial Officer
and Director
Philip M. 48 Executive Vice President, Chief Operating Officer
Singleton and Director
Charles J. Egan, 62
Jr. Director
Paul E. Vardeman 64 Director
<FN>
- - -------------------
(1)at September 30, 1994
</TABLE>
With the exception of Mr. Egan, who became a Director on October 30, 1986,
and Messrs. Brown and Singleton, who each became a Director on November 12,
1992, all incumbent directors set forth above have served as directors of the
Company since its inception in 1983.
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, except that Mr. Edward D. Durwood, President,
Vice Chairman of the Board and a Director of the Company and AMC, is the son of
Mr. Stanley H. Durwood. 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
<PAGE>
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. In February 1986,
he became Chairman of the Board of the Company and AMC. Mr. Durwood served as
President of the Company from June 1983 through February 20, 1986 and from May
1988 through June 1989. Mr. Durwood has served as Chief Executive Officer of the
Company since June 1983 and of AMC since February 20, 1986. He also served as
President of AMC from August 2, 1968 through February 20, 1986 and from May 13,
1988 through November 8, 1990. Mr. Durwood is a graduate of Harvard University.
Mr. Edward D. Durwood has served as President and Vice Chairman of the Board
of the Company since June 29, 1989 and of AMC since November 8, 1990. Mr.
Durwood has served as a Director of the Company since June 14, 1983 and of AMC
since November 26, 1980. Mr. Durwood served as Vice President of the Company
from June 14, 1983 through February 6, 1989, and of AMC from May 5, 1981 through
February 6, 1989, at which time Mr. Durwood became Executive Vice President of
both companies. Mr. Durwood holds undergraduate and M.B.A. degrees from the
University of Kansas.
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, and as Vice President of DJS Inverness & Co., an
investment banking firm located in New York City, from November 1987 to October
1990. 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, cable
television 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.
4
<PAGE>
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 2,
1993 and ended on March 31, 1994 ("fiscal 1994").
The Board of Directors of the Company held nine meetings and acted by
unanimous written consent to action seven times in fiscal 1994. 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, Edward
D. 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. Edward D. Durwood, Peter C. Brown,
Charles J. Egan, Jr. and Paul E. Vardeman; the Employee Benefits Committee,
composed of Messrs. Edward D. Durwood, Philip M. Singleton and Charles J. Egan,
Jr.; and the Stock Option Committee, composed of Messrs. Stanley H. Durwood,
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 1994.
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 seven meetings during fiscal 1994.
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 five meetings during
fiscal 1994.
The Company does not have a nominating committee.
5
<PAGE>
COMPENSATION OF DIRECTORS
Beginning in fiscal 1994, the Executive Committee of the Board of Directors
of the Company approved revised compensation arrangements for Messrs. Charles J.
Egan and Paul E. Vardeman. The annual cash compensation to be paid to Messrs.
Egan and Vardeman was $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 will each be 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 1994, Messrs. Charles J. Egan, Jr. and Paul E. Vardeman received
compensation of $85,400 and $78,200, respectively, for (i) services as a member
of the Board 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:
<TABLE>
<CAPTION>
NAME AGE(1) POSITION
- - -------------------------------- --------- --------------------------------------------------
<S> <C> <C>
Stanley H. Durwood(2) 74 Chairman of the Board, Chief Executive Officer and
Director (the Company and AMC)
Edward D. Durwood(2) 45 President, Vice Chairman of the Board and Direc-
tor (the Company and AMC)
Peter C. Brown(2) 36 Executive Vice President, Chief Financial Officer
and Director (the Company and AMC)
Philip M. Singleton(2) 48 Executive Vice President, Chief Operating Officer
and Director (the Company and AMC)
Donald P. Harris 44 President-AMC Film Marketing, Inc.
Earl C. Voelker, Jr. 49 Senior Vice President (AMC)
Frank T. Stryjewski 37 Senior Vice President (AMC)
Richard T. Walsh 41 Senior Vice President (AMC)
Richard J. King 45 Vice President (AMC)
Richard L. Obert 55 Vice President and Chief Accounting Officer (the
Company and AMC)
E. David Seal 52 President--AMC Entertainment International, Inc.
Charles P. Stilley 40 President--AMC Realty, Inc.
<FN>
-------------------
(1)at September 30, 1994.
(2)For biographical information of these Executive Officers, see
"Directors and Nominees for Directors."
</TABLE>
6
<PAGE>
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, (ii) Mr. Philip M. Singleton, Executive Vice
President, Chief Operating Officer and a Director of the Company and AMC, and
(iii) Mr. E. David Seal, President of AMC Entertainment International, Inc., a
wholly owned subsidiary of AMC, to rights under their respective employment
agreements.
Mr. Donald P. Harris has served as President of AMC Film Marketing, Inc., a
wholly owned subsidiary of AMC, since April 18, 1989, and prior thereto served
as Vice President of AMC Film Marketing, Inc. from November 26, 1980.
Mr. Earl C. Voelker, Jr. has served as Senior Vice President in charge of
operations for the Northeast Division of AMC since June 10, 1992. Prior thereto,
Mr. Voelker served as Vice President in charge of operations for the Northeast
Division of AMC from April 30, 1979.
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 Vice President in charge of operations for
the Northeast Division of AMC since June 10, 1992. Previously, Mr. King served
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. E. David Seal has served as President of AMC Entertainment
International, Inc., a wholly owned subsidiary of AMC, since December 9, 1992.
Prior thereto, Mr. Seal served as a consultant and subsequently as a Vice
President of a Durwood, Inc. subsidiary from August 30, 1990. Previously, Mr.
Seal served as a diplomat with the U.S. Department of State.
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.
7
<PAGE>
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 31, 1994, April
1, 1993 and April 2, 1992.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------------------------------- ALL(1)(2)
OTHER ANNUAL(1) OPTIONS/(1) OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS COMPENSATION SARS(#) COMPENSATION
- - -------------------------------------------------- ----------- -------- -------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Stanley H. Durwood 1994 $436,800 $263,400 N/A -- --
Chief Executive Officer 1993 420,004 141,800 N/A -- --
1992 420,004 -- N/A N/A N/A
Edward D. Durwood 1994 277,338 155,200 N/A 200,000 $ 4,674
President 1993 269,742 122,900 N/A -- 6,626
1992 266,357 -- N/A N/A N/A
Donald P. Harris 1994 281,326 106,000 N/A 45,000 4,497
President--AMC Film 1993 272,931 66,000 N/A -- 5,661
Marketing, Inc. 1992 245,550 20,000 N/A N/A N/A
Philip M. Singleton 1994 264,142 153,600 $51,930 150,000 59,564
Chief Operating Officer 1993 244,466 100,000 N/A -- 45,249
1992 202,433 -- N/A N/A N/A
Peter C. Brown 1994 227,016 135,000 N/A 150,000 4,675
Chief Financial Officer 1993 199,331 107,200 N/A -- 13,579
1992 128,471 -- N/A N/A N/A
<FN>
-------------------
(1)N/A denotes not applicable. In accordance with the transitional
provisions of the revised rules for executive compensation adopted by the
Securities and Exchange Commission (the "Commission"), amounts of Other
Annual Compensation and All Other Compensation are excluded for fiscal
1992. Fiscal 1994 includes gross up of taxes relating to moving expense in
the amount of $43,285 to Mr. Philip M. Singleton. For fiscal 1994 and 1993,
excluding Mr. Philip M. Singleton, perquisites and other personal benefits
did not exceed the lesser of $50,000 or 10% of total annual salary and
bonus.
(2)For fiscal 1994, All Other Compensation includes the Company's and
its subsidiaries' contributions to a defined contribution savings plan, the
401(k) 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 and its subsidiaries' contributions to the 401(k) 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
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
addition, moving expense is included in fiscal 1993 in the amount of
$38,835 for Mr. Singleton and $6,320 for Mr. Brown and medical continuation
coverage payments to a previous employer are included for Mr. Brown in the
amount of $2,130.
</TABLE>
OPTION/EXERCISES AND HOLDINGS
The following table provides certain information concerning individual
grants of stock options made during the last completed fiscal year to each of
the named Executive Officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
OPTIONS/ ANNUAL RATES OF STOCK
SARS GRANTED PRICE APPRECIATION
OPTIONS/ TO EMPLOYEES FOR OPTION TERM
SARS IN FISCAL EXERCISE OR EXPIRATION ------------------------
NAME GRANTED YEAR BASE PRICE DATE 5%($) 10%($)
- - ------------------------------ -------- ------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Stanley H. Durwood............ -- -- -- -- -- --
Edward D. Durwood............. 200,000 27.6% $9.375 6-24-03 $1,179,180 $2,988,260
Donald P. Harris.............. 45,000 6.2% 9.375 6-24-03 265,316 672,359
Philip M. Singleton........... 150,000 20.7% 9.250 6-13-03 872,595 2,211,315
Peter C. Brown................ 150,000 20.7% 9.250 6-13-03 872,595 2,211,315
</TABLE>
The grants of stock options during the current fiscal year are eligible for
exercise based upon a vesting schedule. After the first anniversary of the grant
date, 25% of the shares will be eligible for exercise. Each year thereafter an
additional 25% becomes available until the fourth year anniversary when all
options are fully vested.
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 the fiscal year ended March 31, 1994:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF
OPTIONS SARS UNEXERCISED
AT FY-END(#) IN-THE-MONEY
EXERCISABLE/UNEXERCISABLE OPTIONS AT
SHARES ACQUIRED VALUE -------------------------- FISCAL YEAR
NAME ON EXERCISE REALIZED SHARES PRICE END
- - --------------------------- ----------------- ----------- --------------- --------- --------------
<S> <C> <C> <C> <C> <C>
Stanley H. Durwood......... -- -- -- -- --
Edward D. Durwood.......... -- -- 0/200,000 $ 9.375 $ 250,000
Donald P. Harris........... 10,500 $ 32,959 12,000/0 4.670 71,460
-- -- 0/45,000 9.375 56,250
Philip M. Singleton........ 7,500 7,031 0/150,000 9.250 206,250
Peter C. Brown............. -- -- 0/150,000 9.250 206,250
</TABLE>
9
<PAGE>
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 ($8,994 in 1993). 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 PLAN
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 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. The Company
intends to adopt a supplemental 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).
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 a supplemental retirement plan, assuming retirement in
calendar 1994 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
$242,280 in 1994.
<TABLE>
<CAPTION>
HIGHEST CONSECUTIVE YEAR OF CREDITED SERVICE
FIVE YEAR AVERAGE -----------------------------------------------------
ANNUAL COMPENSATION 15 20 25 30 35
- - -------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$125,000.................. $ 17,850 $ 23,800 $ 29,750 $ 35,700 $ 41,650
$150,000.................. $ 21,600 $ 28,800 $ 36,000 $ 41,400 $ 50,400
$175,000.................. $ 25,350 $ 33,800 $ 42,250 $ 50,700 $ 59,150
$200,000.................. $ 29,100 $ 38,800 $ 48,500 $ 58,200 $ 65,800
$225,000.................. $ 32,850 $ 43,800 $ 54,750 $ 65,700 $ 76,650
$242,280.................. $ 43,542 $ 47,256 $ 59,070 $ 70,884 $ 82,698
</TABLE>
At April 1, 1994, the years of credited service under the Retirement Plan
for each of the named Executive Officers were: Mr. Edward D. Durwood, 18 years;
Mr. Donald P. Harris, 16 years; Mr. Philip M. Singleton, 19 years; and Mr. Peter
C. Brown, 2 years. Because Mr. Stanley H. Durwood is age 74, he is receiving
minimum required distributions under this Plan pursuant to
10
<PAGE>
Section 401(a)(9) of the Internal Revenue Code, even though he is an active
employee. The amount distributed to Mr. Stanley H. Durwood in fiscal 1994 was
$43,595 and is not included in the Summary Compensation Table.
EXECUTIVE INCENTIVE PROGRAM
On November 15, 1993, the Compensation Committee of the Company's Board of
Directors approved the Executive Incentive Program (the "EIP") for corporate and
field executives and senior management, including Executive Officers. The EIP
was in effect for fiscal 1994. Participants must be employed at year-end to be
eligible for an award. Awards are pro-rated per complete quarter of employment.
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, 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 members of the
Executive Committee.
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.
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
11
<PAGE>
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 active 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"), an unfunded 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).
Under the Deferred Compensation Plan, participants in the Company's 401(k)
Plan who are making the maximum deferral thereunder and whose estimated annual
compensation will exceed $100,000 in 1994 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 1994 exceeds
$150,000 will have elective Deferred Compensation Plan deferrals of up to 4% of
their compensation in excess of $150,000 matched by the Company 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 1994 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 1994) and the amount of his 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. The company's maximum obligation under the Deferred
Compensation Plan for any one participant for 1994 is $1,620 (which would
probably have been incurred by the Company 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 the Company 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 the
12
<PAGE>
Company's creditors in the event of insolvency of the Company or any of its
affiliates. Unless the Company 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 upon the recommendation of the
Chairman of the Board. 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 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 30, 1994, was $910,669.
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.
13
<PAGE>
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 consults with
independent compensation consulting firms.
Following is a summary of the Committee's activities through the fiscal year
ended March 31, 1994.
COMPENSATION POLICY. The Company's and AMC's executive compensation policy
has five overall objectives:
- To align the interests of their Executive Officers and their employees
with those of the companies and the stockholders.
- To link compensation to the performance of the Company and AMC 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 and AMC can continue to attract, motivate
and retain executives with outstanding abilities.
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
members of the Executive Committee are determined with reference to a "position
rate" for each member of the Executive Committee. 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 1994 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, will be the component of
total annual cash compensation that achieves the
14
<PAGE>
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 exceed the
third quartile pay target or be substantially 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) company component, (ii) division component
and (iii) personal component. For fiscal 1994, 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
("DOI") Division Operating Income. DOI was defined as operating income less
general and administrative expenses and extraordinary expenses. The personal
component 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
Executive Committee. For members of the Executive Committee, the personal
component was determined by the Committee.
Early in fiscal 1994, the Committee reviewed and approved the
recommendations of the Executive Committee regarding the EBITDA and DOI targets
for fiscal 1994.
The bonuses awarded to the members of the Executive Committee for fiscal
1994 were reviewed and approved by the Committee. Because the Company achieved
superb financial results in fiscal 1994, substantially exceeding its EBITDA
target, the Committee decided to award bonuses to the members of the Executive
Committee in excess of the parameters of the EIP. The Committee does not
anticipate regularly awarding bonuses in excess of the parameters of the EIP but
may choose to do so in a year of superb financial performance. The additional
bonus amounts to the members of the Executive Committee resulted in total annual
cash compensation for fiscal 1994 above the third quartile pay target.
STOCK INCENTIVES. The Stock Option Committee (consisting of Messrs. Stanley
H. Durwood, Charles J. Egan, Jr. and Paul E. Vardeman), consistent with the
Committee's policy of aligning the interests of its executives with those of the
stockholders, granted options to certain executives in fiscal 1994. The stock
options granted in fiscal 1994 were not part of an ongoing compensation program,
but rather were special grants intended to retain valued executives. The options
vest in annual increments of twenty five percent each if the optionee continues
to be an associate of the Company. The Committee intends to continue awarding
equity based incentives in the future when the Committee believes such awards
are merited, and thus, the Committee recommended to the Company's Board of
Directors the AMC Entertainment Inc. 1994 Stock Option and Incentive Plan to be
considered by the Company's stockholders at this meeting. This incentive plan
which stockholders are being asked to approve is intended to be used to
incorporate equity based awards into the ongoing compensation package for
executives and employees.
CEO COMPENSATION. Mr. Stanley H. Durwood's fiscal 1994 base salary and
annual incentive cash bonus was 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, except that Mr. Stanley H. Durwood was not eligible to
15
<PAGE>
receive stock options under the plans pursuant to which options were granted to
other Executive Officers in fiscal 1994. Mr. Stanley H. Durwood earned the
maximum amount of the Company component of his annual incentive cash bonus under
the EIP in an amount equal to forty percent of his base salary. The Committee
awarded Mr. Stanley H. Durwood an incentive with respect to the personal
component of the EIP equal to fifteen percent of his base salary and an
additional incentive in excess of the parameters of the EIP equal to
approximately five percent of his base salary. These portions of Mr. Stanley H.
Durwood's annual incentive cash bonus were subjectively assessed, based
primarily on the achievement of superior EBITDA, continued cost cutting and
efficiency goals, the successful completion of a convertible preferred stock
offering and the Company's best earnings in its eleven year history.
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
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 Officers' 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, Mr. Stanley H. Durwood, Chairman of the Board, Chief
Executive Officer and a Director of the Company and AMC, is a member of the
Company's Stock Option Committee and participated in deliberations concerning
Executive Officer compensation. See "Report of the Compensation Committee on
Executive Compensation."
16
<PAGE>
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 & 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 31,
1989 and ending March 31, 1994. The comparison assumes $100 was invested on
March 31, 1989 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 in fiscal 1993 for
comparison were Carmike Cinemas, Inc., Cineplex Odeon Corporation and Harcourt
General, Inc. 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.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AMC Peer S&P
<S> <C> <C> <C>
1989 100 100 100
1990 133 88 115
1991 100 86 127
1992 82 88 137
1993 177 113 153
1994 235 128 151
</TABLE>
17
<PAGE>
LEGAL PROCEEDINGS
The following is a summary of legal proceedings in which certain directors
have been named as parties adverse to the Company.
SCOTT C. WALLACE, DERIVATIVELY ON BEHALF OF NOMINAL DEFENDANT AMC
ENTERTAINMENT INC. V. STANLEY H. DURWOOD, ET AL., Chancery Court For New Castle
County, Delaware (Civil Action No. 12855). On January 27, 1993, plaintiff filed
a derivative action on behalf of AMC Entertainment Inc. against four of its
directors, Mr. Stanley H. Durwood, Mr. Edward D. Durwood, Mr. Paul E. Vardeman
and Mr. Charles J. Egan, Jr. (the "Wallace litigation"). AMC Entertainment Inc.
was named as a nominal defendant. The lawsuit alleges breach of fiduciary duties
of care, loyalty and candor, mismanagement and waste of assets in connection
with 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 and other transactions. The lawsuit seeks unspecified money damages, and
equitable relief and costs, including reasonable attorneys' fees.
JAMES M. BIRD, DERIVATIVELY ON BEHALF OF NOMINAL DEFENDANT AMC ENTERTAINMENT
INC. V. STANLEY H. DURWOOD, ET AL., Chancery Court For New Castle County,
Delaware (Civil Action No. 12939). On April 16, 1993, plaintiff filed a
derivative action on behalf of AMC Entertainment Inc. against four of its
directors, Mr. Stanley H. Durwood, Mr. Edward D. Durwood, Mr. Paul E. Vardeman
and Mr. Charles J. Egan, Jr., and one of its former directors, Mr. Phillip E.
Cohen (the "Bird litigation"). AMC Entertainment Inc. was named as a nominal
defendant. The lawsuit alleges many of the same claims that are alleged in the
Wallace litigation, as well as claims involving certain transactions with
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 lawsuit seeks unspecified money damages, and
equitable relief and costs, including reasonable attorneys' fees.
On August 20, 1993, the defendants filed motions to dismiss both the Wallace
litigation and the Bird litigation. On September 10, 1993, such defendants filed
motions to stay discovery pending the court's resolution of defendants' motions
to dismiss. On November 1, 1993, the court ordered that discovery be stayed in
the Wallace litigation and the Bird litigation pending resolution of the motions
to dismiss, except for discovery concerning the fitness of Mr. Wallace to serve
as a derivative plaintiff.
18
<PAGE>
SECURITY OWNERSHIP OF BENEFICIAL OWNERS
The following table sets forth certain information as of September 15, 1994,
with respect to beneficial owners of five percent or more of any class of the
Company's capital stock:
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
- - ------------------------------ --------------------------------------------- ------------------ ---------
<S> <C> <C> <C>
Common Stock.................. Durwood, Inc.(1) 2,641,951(2) 49.8%(2)
106 West 14th Street
Kansas City, MO 64105
Wells Fargo Institutional 268,947(3) 5.1%(4)
Trust Company, N.A.(3)
45 Fremont Street, 17th Floor
San Francisco, CA 94105
David L. Babson & Company, Inc.(5) 417,500(5) 7.9%(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 (on whose behalf Mr. Edward D. Durwood has
voting authority), holds approximately 25% of the voting power of DI's
outstanding capital stock. Mr. Stanley H. Durwood is Chairman of the Board,
Chief Executive Officer and a Director of the Company and AMC, and Mr. Edward D.
Durwood is President, Vice Chairman of the Board 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
16,459,630 shares of Common Stock outstanding, of which DI would hold 13,798,951
shares, or 84% of the outstanding Common Stock.
(3)As reported by Wells Fargo Institutional Trust Company, N.A., on
Schedule 13G dated February 2, 1994.
(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 5.1% of the outstanding shares of
Common Stock as of September 15, 1994.
(5)As reported by David L. Babson & Company, Inc. on Schedule 13G dated
January 25, 1994.
(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 7.9% of the outstanding shares of
Common Stock as of September 15, 1994.
(7)In the election of Directors, holders of Class B Stock are entitled to
elect four of the Company's six 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.
</TABLE>
19
<PAGE>
BENEFICIAL OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth certain information as of September 15, 1994
with respect to beneficial ownership by Directors and Executive Officers of the
Company's Common Stock and Class B Stock:
<TABLE>
<CAPTION>
NAME OF AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- - ------------------------------ --------------------------------------------- ----------------------- ---------
<S> <C> <C> <C>
Common Stock.................. Stanley H. Durwood 2,642,101(1) 49.8%
Edward D. Durwood 50,000(2) *
Paul E. Vardeman 300 *
Philip M. Singleton 57,500(2) 1.1
Peter C. Brown 37,500(2) *
Donald P. Harris 20,323(2) *
All Directors and Executive Officers as a
group (14 persons, including the individuals
named above) 2,869,704(2) 52.4%
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
Company's 1983 and 1984 Stock Option Plans, as follows: Mr. Edward D.
Durwood--50,000 shares; Mr. Philip M. Singleton--37,500 shares; Mr. Peter C.
Brown--37,500 shares; Mr. Donald P. Harris--11,250 shares; and all Executive
Officers as a group--173,750 shares. The options granted vest as to exercise
rights in 25% annual installments commencing twelve months after date of grant;
thus, options described above are one-fourth of the total options granted for
each optionee.
</TABLE>
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 $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. Specific due
dates for these reports have been established and the Company is required to
report in this Proxy Statement any failure to file by these dates during fiscal
1994. 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 1994 its Executive Officers,
Directors and greater-than-10% beneficial owners complied with all Section 16(a)
filing requirements applicable to them, except that (i) Mr. Donald P. Harris, an
Executive Officer of the
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Company, inadvertently filed a Form 4 for September 1993 approximately 12 days
past the required filing date; and (ii) Mr. Richard T. Walsh, an Executive
Officer of the Company, was discovered to have attributed to him (through his
wife's participation in an investment club composed of approximately ten
members) the purchase on March 4, 1994 of 55 shares of $1.75 Cumulative
Convertible Preferred Stock, which was reported on Form 5 in a timely manner.
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 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 interest 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. Vardeman and Egan, 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 2, 1993, or involve receivables that remain outstanding at September
15, 1994. 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
$196,000 for such services for fiscal 1994.
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 1994, the largest balance owed by DI and its subsidiaries to AMC was
$1,423,000. Of this amount, $843,000 consisted of AMC payments to DI under the
federal income tax sharing agreement between DI and AMC which was terminated on
March 3, 1994. As of March 31, 1994, DI and its subsidiaries owed AMC $85,000.
See "Federal Income Taxes."
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 $68,640.
AMC loaned $200,000 to Mr. Donald P. Harris, President-AMC Film Marketing,
Inc., in January 1987. This loan was evidenced by a promissory note bearing
interest at the rate of 6% per annum, provided for the payment of all principal
at maturity and was secured by a second Deed of Trust on Mr. Harris' residence
in Los Angeles County, California. The loan was made to Mr. Harris in connection
with the purchase of his principal residence. Principal on the note was due on
January 1, 1992, but the note has been extended to January 16, 1997. In
connection with the extension, the interest rate on the note was increased to
7.5%. The largest aggregate amount outstanding on the note during fiscal 1994
was $200,000. Interest is payable on the note annually and the principal amount
outstanding on the note as of September 15, 1994 was $200,000.
For a description of certain employment agreements between the Company and
Messrs. Peter C. Brown and Philip M. Singleton, see "Other Compensation Plans."
21
<PAGE>
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 file a consolidated federal income tax
return, the Company will pay 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 would have reflected a refund due to the Company, DI will 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.
The Company's issuance of the $1.75 Cumulative Convertible Preferred Stock
has caused DI and the Company to cease to be eligible to file consolidated
federal income tax returns on the date on which the Convertible Preferred was
issued. This event accelerated the payment of approximately $6.5 million of
federal income tax on intercompany gains which had been deferred for income tax
purposes. The agreement still applies to all tax years for which DI and the
Company 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 as independent public accountants to audit the
financial statements of the Company for the fiscal year ending March 30, 1995.
Representatives of Coopers & Lybrand 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.
On September 22, 1992, the Board of Directors of the Company, based upon the
recommendation of its Audit Committee, agreed to engage the accounting firm of
Coopers & Lybrand as independent public accountants to audit the Company's
financial statements for the fiscal year ended April 1, 1993, subject to
approval of the Company's stockholders. The firm of Deloitte & Touche, former
independent public accountants for the Company, was dismissed.
For the fiscal year ended April 2, 1992, and for the subsequent quarterly
period ended July 2, 1992, there were no disagreements with Deloitte & Touche on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of the former accountants, would have caused it to make
reference to the subject matter of the disagreements in connection with its
report.
Deloitte & Touche's report on the financial statements for the fiscal year
ended April 2, 1992 contained no adverse opinion or disclaimer of opinion and
was not qualified or modified as to uncertainty, audit scope or accounting
principles.
In connection with the Company's fiscal year ended April 2, 1992, and for
the subsequent quarterly period ended July 2, 1992, there was no consultation
with Coopers & Lybrand as to the application of accounting principles or the
type of audit opinion that might be rendered on the Company's financial
statements.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF
COOPERS & LYBRAND AS INDEPENDENT PUBLIC ACCOUNTANTS TO AUDIT THE FINANCIAL
STATEMENTS OF THE COMPANY FOR THE FISCAL YEAR ENDING MARCH 30, 1995.
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<PAGE>
3. AMC ENTERTAINMENT INC. 1994 STOCK OPTION AND
INCENTIVE PLAN PROPOSAL
GENERAL
The Board of Directors recommends to the stockholders for their approval and
adoption 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
Incentive Plan. Abstentions will be counted in the tabulation of votes cast on
the Incentive Plan and will have the same effect as negative votes. Broker
non-votes will not be counted in determining whether the Incentive Plan is
approved.
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").
If the Incentive Plan is approved, the Compensation Committee of the Board
of Directors will be 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 number of
shares of Common Stock issuable under the Incentive Plan constitutes
approximately six percent of the number of presently outstanding equity
securities of the Company having the right to vote generally in the election of
Directors. The Compensation Committee also will be authorized to make awards of
Performance Units, which will be payable only in cash and will be valued by
reference to designated criteria, other than shares of Common Stock, which may
be established by the Committee.
Under the Incentive Plan, 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 (the "Exchange Act") generally will be
based on the attainment by the Company or a subsidiary or a division thereof
during a performance period of 12 months' duration or more of one or more
performance goals as established by the Compensation Committee prior to the
start of each performance period with respect to which such an award is made.
The Compensation 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
23
<PAGE>
or subsidiary EBITDA (earnings before interest, taxes, depreciation and
amortization); (ii) Company or subsidiary earnings or earnings per share; (iii)
market prices of Company stock; (iv) division operating income, or "DOI"
(operating income less general and administrative expenses and extraordinary
expenses); or (v) division level EBITDA (DOI less national film, home office and
international general and administrative expenses plus capitalized lease
adjustments). The Compensation 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 or years' performance of the Company, a
subsidiary or a division; (ii) the performance of a broad based group of stocks
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 Compensation 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
Compensation 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.
THE COMPLETE TEXT OF THE INCENTIVE PLAN IS SET FORTH AS EXHIBIT A TO THIS
PROXY STATEMENT. THE FOLLOWING SUMMARY OF THE MATERIAL FEATURES OF THE INCENTIVE
PLAN DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO EXHIBIT A.
ELIGIBILITY
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. 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. As of the date of this proxy statement, no decision
concerning the granting of awards to specific individuals has been made and the
amount of awards that may be made to any particular individual or group of
individuals is not determinable. Presently there are approximately 40 officers
(including four directors) and approximately 150 other employees of the Company
and its subsidiaries eligible to participate in the Plan.
ADMINISTRATION
The Incentive Plan is to be administered by the Compensation Committee of
the Company's Board (the "Committee"), consisting of not fewer than two members
of the Board 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 and
serve at the Board's discretion. 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
24
<PAGE>
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 will be borne
by the Company.
Service on the Committee shall constitute service as a Director of the
Company, so that members of the Committee shall be 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.
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 October 11,
1994 was $12.125.
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
Compensation Committee may impose, or both. Under the Plan, subject to
provisions permitting acceleration, the receipt of shares by Executive Officers
25
<PAGE>
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 by the Company, a
subsidiary or a division during a performance period of 12 months' duration or
longer.
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 or the change in control of the Company. 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. 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 award 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
26
<PAGE>
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.
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 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.
The Compensation 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
Compensation Committee's opinion, is materially adverse to the grantee, or any
amendment or termination which, in the opinion of the Compensation 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.
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<PAGE>
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
28
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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 Compensation 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 Officers' 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 AMC
ENTERTAINMENT INC. 1994 STOCK OPTION AND INCENTIVE PLAN.
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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 1995 should submit their proposals to the Company
at the address of the Company set forth on the first page of this Proxy
Statement. Proposals must be received by the Company no later than June 16,
1995, 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 1994 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.
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EXHIBIT A
TO PROXY STATEMENT
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.
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.
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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.
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
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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
3.1The Plan shall be administered by the Committee.
3.2The 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.
3.3The 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 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.
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3.4The 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.
3.5The 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.
3.6Service 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.
3.7The 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. 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
5.1The 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.
5.2Any 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
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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
6.1Subject 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.
6.2Pursuant 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.
6.3The 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.
6.4Notwithstanding 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.
6.5Each Option shall expire and all rights to purchase Shares thereunder
shall cease on the date fixed by the Committee.
6.6Notwithstanding 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.
6.7No 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
7.1The 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 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.
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7.2Subject 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.
7.3At 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.
7.4Unless 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
8.1The Committee may grant Awards in the form of Performance Units.
8.2Amounts 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 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) market prices of Shares; (iv) division operating
income, or "DOI" (operating income less general and administrative expenses and
extraordinary expenses); or (v) division level EBITDA (DOI less national film,
home office and international general and administrative expenses plus
capitalized lease adjustments); 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; (ii) the performance of a broad based group
of stocks 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
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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, all Stock Awards and
Performance Units shall be cancelled and forfeited if a Grantee's
employment is terminated, and
(f) in the event of the 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 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.
For purposes of this Section 12, 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.
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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 (a) any restrictions on Stock Awards shall lapse
immediately and (b) outstanding Options shall become exercisable immediately.
The Committee may also waive the satisfaction of performance goals with respect
to Performance Stock Awards and Performance Units upon the occurrence of a
Change in Control Event.
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
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.
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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 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
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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 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. The Committee
may also determine that any Options not exercised, and any Stock Awards or
Performance Units with respect to which any
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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
Company's total federal, state, local and other tax withholding obligations
associated with the transaction. Any such election shall be irrevocable and 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 Awards.
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 is subject
to the following additional restrictions:
(a) No election shall be made within six months of the grant of the
Award.
(b) The election must be made during a Window Period.
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.
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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.
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.
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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 Edward D.
Durwood, 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 10, 1994 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.)
- - --------------------------------------------------------------------------------
2. PROPOSAL TO ratify the appointment of Coopers & Lybrand as independent
public accountants of the Company for the fiscal year ending March 30, 1995.
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO approve 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)
<PAGE>
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 , 1994
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Signature
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Signature (if held jointly)
-------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
