<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), 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, 1996
TO THE STOCKHOLDERS OF
AMC ENTERTAINMENT INC.:
The Annual Meeting of Stockholders of AMC Entertainment Inc. will be held at
the Independence Commons 20 Theatres, 19200 East 39th Street, Independence,
Missouri. The meeting will be held on November 14, 1996, 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,
[LOGO]
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 14, 1996
------------------------
TO THE STOCKHOLDERS OF AMC ENTERTAINMENT INC.:
The Annual Meeting of Stockholders of AMC Entertainment Inc. (the "Company")
will be held at the Independence Commons 20 Theatres, 19200 East 39th Street,
Independence, Missouri. The meeting will be held on Thursday, November 14, 1996,
at 11:00 a.m. local time for the following purposes:
1. To elect a Board of Directors for the upcoming year;
2. To consider and vote upon a proposal to ratify the appointment of
Coopers & Lybrand L.L.P. as independent public accountants for the
Company for the fiscal year ending April 3, 1997;
3. To consider and vote upon proposed amendments to the AMC Entertainment
Inc. 1994 Stock Option and Incentive Plan; and
4. To transact such other business as may properly come before the meeting.
The close of business on October 11, 1996, 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, 1996.
By order of the Board of Directors
[LOGO]
Nancy L. Gallagher
Vice President and Secretary
Kansas City, Missouri
October 18, 1996
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 14, 1996, at the Independence Commons 20
Theatres, 19200 East 39th Street, Independence, Missouri. This Proxy Statement
and the accompanying proxy are being mailed to stockholders on or about October
18, 1996.
The Board of Directors of the Company has established October 11, 1996, 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 the record date, the Company had outstanding 6,549,489 shares of Common Stock
and 11,157,000 shares of Class B Stock. On all matters other than the election
of Directors, the shares of Common Stock and Class B Stock shall vote together
as if a single class, with each outstanding share of Common Stock having one
vote per share and each outstanding share of Class B Stock having ten votes per
share.
Properly executed and dated proxies which are received by the Company prior
to the Annual Meeting of Stockholders will be voted in accordance with the
instructions thereon. If a proxy is received with no instructions given with
respect to the matters to be acted upon, the shares represented by the proxy
will be voted (i) for the election of the nominees to the Company's Board of
Directors designated below, (ii) for the ratification of the appointment of
Coopers & Lybrand L.L.P. as independent public accountants of the Company for
the fiscal year ending April 3, 1997, and (iii) for the approval of the proposed
amendments to the AMC Entertainment Inc. 1994 Stock Option and Incentive Plan
described herein. A proxy may be revoked at any time by written notice to such
effect received by the Secretary of the Company before the proxy is voted at the
Annual Meeting of Stockholders, by delivery to the Company of a subsequently
dated proxy or by a vote cast in person at the Annual Meeting of Stockholders by
written ballot.
The election of directors is determined by a plurality of the votes cast.
Votes that are withheld will be excluded entirely from the vote and will have no
effect. A favorable vote of a majority (based on voting power of shares) of the
shares of Common Stock and Class B Stock voted in person or by proxy at the
Annual Meeting of Stockholders is required for each of the proposals described
in this Proxy Statement. Abstentions and broker non-votes are not counted in the
calculation of the vote, except that abstentions will be counted and have the
same effect as votes against Proposal 3.
2
<PAGE>
A proxy confers discretionary authority with respect to the voting of the
shares represented thereby on any other business that may properly come before
the meeting and any adjournments thereof. The Board of Directors is not aware
that any such other business is to be presented for action at the meeting and
does not itself intend to present any such other business. However, if any such
other business does come before the meeting, shares represented by proxies given
pursuant to this solicitation will be voted by the persons named in the proxy in
accordance with their best judgment. A proxy also confers discretionary
authority on the persons named therein to approve minutes of last year's Annual
Meeting of Stockholders, to vote on matters incident to the conduct of the
meeting and to vote on the election of any person as director if a nominee
herein named should decline or become unable to serve as a director for any
reason. The cost of the solicitation of proxies will be paid by the Company.
1. ELECTION OF DIRECTORS
Directors are elected annually, and each holds office until such director's
successor is duly elected and qualified or until such director's earlier
resignation or removal. The by-laws of the Company have been amended to provide
that, effective as of November 14, 1996, the full Board of Directors will
consist of seven (7) members. It is anticipated that seven (7) directors will be
elected at the meeting. Five (5) 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 should decline
or shall become unable to serve as a director for any reason, it is intended
that the persons named in the proxy will vote for a substitute who will be
designated by the Board of Directors.
3
<PAGE>
DIRECTORS AND NOMINEES FOR DIRECTORS
The Company's Directors and nominees for Directors are as follows:
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED OR
NAME AGE(1) POSITIONS APPOINTED
- -------------------- ----------- ------------------------------------------------ ---------------
<S> <C> <C> <C>
Stanley H. Durwood 76 Chairman of the Board, Chief Executive Officer, 1983
President and Director
Philip M. Singleton 50 Executive Vice President, Chief Operating 1992
Officer and Director
Peter C. Brown 38 Executive Vice President, Chief Financial 1992
Officer and Director
Charles J. Egan, Jr. 64 Director 1986
Paul E. Vardeman 66 Director 1983
William T. Grant, II 46 Nominee for Director N/A
John P. Mascotte 57 Nominee for Director N/A
</TABLE>
- -------------------
(1)As of September 26, 1996.
American Multi-Cinema, Inc. ("AMC") is a wholly owned subsidiary of the
Company. The primary business of AMC is the operation of multi-screen motion
picture theatres. There are no family relationships between any Director or any
Executive Officer of the Company. At each Annual Meeting of Stockholders, the
Company intends to nominate as directors to be elected by the holders of Common
Stock individuals who are not officers or employees of the Company or its
subsidiaries but who may be incumbent directors.
NOMINEES FOR DIRECTORS
TO BE ELECTED BY HOLDERS OF CLASS B STOCK
Mr. Stanley H. Durwood has served as a Director of the Company from its
organization on June 14, 1983, and of AMC since August 2, 1968. Mr. Durwood has
served as Chairman of the Board of the Company and AMC since February 1986, and
has served as Chief Executive Officer of the Company since June 1983, and of AMC
since February 20, 1986. Mr. Durwood served as President of the Company (i) from
June 1983 through February 20, 1986, (ii) from May 1988 through June 1989, and
(iii) was elected President of the Company on October 6, 1995. Mr. Durwood
served as President of AMC (i) from August 2, 1968 through February 20, 1986,
(ii) from May 13, 1988 through November 8, 1990, and (iii) was elected President
of AMC on October 6, 1995. Mr. Durwood is a graduate of Harvard University.
Mr. 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,
4
<PAGE>
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.
Mr. Peter C. Brown has served as a Director of the Company and AMC since
November 12, 1992. Mr. Brown has served as Executive Vice President of the
Company and AMC since August 3, 1994, and as Chief Financial Officer of the
Company and AMC since November 14, 1991. Mr. Brown served as Senior Vice
President of the Company and AMC from November 14, 1991, until his appointment
as Executive Vice President in August 1994. Mr. Brown served as Treasurer of the
Company and AMC from September 28, 1992, through September 19, 1994. Prior to
November 14, 1991, Mr. Brown served as a consultant to the Company from October
1990 to October 1991. Mr. Brown is a graduate of the University of Kansas.
Mr. Charles J. Egan, Jr., has served as a Director of the Company and AMC
since October 30, 1986. Mr. Egan is Vice President and General Counsel of
Hallmark Cards, Incorporated, which is primarily engaged in the business of
greeting cards and related social expressions products, Crayola crayons and the
production of movies for television. Mr. Egan also serves as a member of the
Board of Trustees, Treasurer and Chairman of the Finance Committee of the Kansas
City Art Institute. 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 is a director, officer
and shareholder in the law firm of Polsinelli, White, Vardeman & Shalton, P.C.,
Kansas City, Missouri and has been associated with such law firm 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.
TO BE ELECTED BY HOLDERS OF COMMON STOCK
Mr. William T. Grant, II is Chairman of the Board, President, Chief
Executive Officer and a Director of LabONE, Inc. and Chairman of the Board,
Chief Executive Officer and a Director of Seafield Capital Corporation. Mr.
Grant served as President of Seafield Capital Corporation from 1990 to 1993, at
which time he became Chairman of the Board of Seafield Capital Corporation.
LabONE, Inc. provides risk appraisal laboratory testing services to the
insurance industries in the United States and Canada and is a subsidiary of
Seafield Capital Corporation. Seafield Capital Corporation is a holding company
whose subsidiaries operate primarily in the healthcare and insurance services
areas. Mr. Grant also serves on the board of directors of Commerce Bancshares,
Inc., Kansas City Power & Light Company, Business Men's Assurance Company of
America and Response Oncology, Inc. Mr. Grant holds a B.A. degree from the
University of Kansas and an M.B.A. degree from the Wharton School of Finance at
the University of Pennsylvania.
Mr. John P. Mascotte is Chairman of the Board of Johnson & Higgins of
Missouri, Inc., a privately held insurance broker. Mr. Mascotte is also
currently a consultant to the First District, African Methodist Episcopal Church
and is Chairman of the Heart of America 1996 United Way General Campaign. Prior
thereto, Mr. Mascotte served as Chairman of the Board and Chief Executive
Officer of The Continental Corporation, a large property-casualty insurer. Mr.
Mascotte also serves on the board of directors of Hallmark Cards, Incorporated,
Business Men's Assurance Company of America and American Home Products
Corporation. In addition, until earlier this year Mr. Mascotte served on the
board of directors of Chemical Banking Corporation.
5
<PAGE>
Mr. Mascotte holds B.S. degrees from St. Joseph's College, Rensselaer, Indiana,
and an LL.B. degree from the University of Virginia. Mr. Mascotte is also a
certified public accountant and a chartered life underwriter.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR WILLIAM T. GRANT, II AND
JOHN P. MASCOTTE AS DIRECTORS OF THE COMPANY.
DIRECTORS' MEETINGS AND COMMITTEES
The Company has a 52/53 week fiscal year ending on the Thursday closest to
the last day of March. The Company's last full fiscal year began on March 31,
1995, and ended on March 28, 1996 ("fiscal 1996").
The Board of Directors of the Company held three meetings and acted by
unanimous written consent to action 14 times in fiscal 1996. 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, Philip
M. Singleton and Peter C. Brown; the Audit Committee, composed of Messrs.
Charles J. Egan, Jr. and Paul E. Vardeman; the Compensation Committee, composed
of Messrs. Charles J. Egan, Jr. and Paul E. Vardeman; the Finance Committee,
composed of Messrs. Peter C. Brown, Charles J. Egan, Jr. and Paul E. Vardeman;
the Employee Benefits Committee, composed of Messrs. Philip M. Singleton and
Charles J. Egan, Jr.; and the Stock Option Committee, composed of Messrs.
Charles J. Egan, Jr. and Paul E. Vardeman.
The principal responsibility of the Executive Committee is to have and
exercise, between meetings of the Board of Directors, all powers and authorities
of the Board of Directors in the management of the business and affairs of the
Company to the full extent allowed by the General Corporation Law of the State
of Delaware. The Executive Committee held no formal meetings during fiscal 1996;
however, the Executive Committee frequently meets on an informal basis.
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, with
regard to the Company and its subsidiaries, (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, with regard to the Company and its
subsidiaries and (iv) approve all material transactions between the Company or
its subsidiaries and Durwood, Inc. or other related parties. The Audit Committee
held six meetings during fiscal 1996.
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
6
<PAGE>
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 with respect to Executive
Officers' Compensation in connection with any filing under the Securities Act of
1933 or the Securities Exchange Act of 1934. The Compensation Committee held 34
meetings during fiscal 1996.
The Company does not have a nominating committee.
COMPENSATION OF DIRECTORS
Messrs. Charles J. Egan, Jr. and Paul E. Vardeman received annual cash
compensation of $20,000 each for their services as members of the Boards of
Directors of the Company and AMC and $24,000 each for their services as members
of the Audit Committees of the Company and AMC. The Board of Directors has also
authorized that Messrs. Egan and Vardeman be paid reasonable compensation for
their services as members of a special committee (the "Special Committee")
appointed to consider a proposed merger of the Company and Durwood, Inc. In
addition, Messrs. Egan and Vardeman received $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 1996, Messrs. Charles J. Egan, Jr. and Paul E. Vardeman each
received $30,000 for their services related to the Special Committee and
$115,100 and $106,100, respectively, for (i) services as members of the Boards
of Directors of the Company and AMC, (ii) attendance at Board of Directors
meetings, and (iii) other committee meetings of the Boards of Directors of the
Company or its subsidiaries.
The Board of Directors of the Company has adopted new fee arrangements to be
paid to its directors who are not employees of the Company or its subsidiaries
effective as of November 14, 1996. The directors' fees as of November 14, 1996,
will be as follows: each director will receive fees of $32,000 for service on
the Board of Directors and $4,000 for each committee of the Board on which he
serves, and, in addition, will receive $1,500 and $1,000, respectively, for each
Board and Board committee meeting which he attends.
7
<PAGE>
EXECUTIVE OFFICERS
The Company's and its subsidiaries' Executive Officers are as follows:
<TABLE>
<CAPTION>
YEARS ASSOCIATED(1)
NAME AGE(1) POSITIONS WITH COMPANY
- ------------------------- ----------- ------------------------------------- ----------------------
<S> <C> <C> <C>
Stanley H. Durwood(2) 76 Chairman of the Board, Chief 50(3)
Executive Officer, President and
Director (the Company and AMC)
Philip M. Singleton(2) 50 Executive Vice President, Chief 21(3)
Operating Officer and Director (the
Company and AMC)
Peter C. Brown(2) 38 Executive Vice President, Chief 5
Financial Officer and Director (the
Company and AMC)
Richard T. Walsh 43 Senior Vice President (AMC) 20(3)
Richard J. King 47 Senior Vice President (AMC) 24(3)
Rolando B. Rodriguez 36 Senior Vice President (AMC) 21(3)
Richard L. Obert 57 Senior Vice President--Chief 7
Accounting and Information Officer
(the Company and AMC)
Charles P. Stilley 42 President (AMC Realty, Inc.) 15(3)
Richard M. Fay 47 President (AMC Film Marketing) 1
</TABLE>
- -------------------
(1)As of September 26, 1996.
(2)For biographical information of these Executive Officers, see "Directors
and Nominees for Directors."
(3)Includes years with the predecessor of the Company.
All current Executive Officers of the Company and its subsidiaries hold such
offices at the pleasure of the Board of Directors, subject, in the case of
Messrs. Durwood, Singleton, Brown and Fay, to rights under their respective
employment agreements.
Mr. Richard T. Walsh has served as Senior Vice President in charge of
operations for the West Division of AMC since July 1, 1994. Previously, Mr.
Walsh served as Vice President in charge of operations for the Central Division
of AMC from June 10, 1992, and as Vice President in charge of operations for the
Midwest Division of AMC from December 1, 1988.
Mr. Richard J. King has served as Senior Vice President in charge of
operations for the Northeast Division of AMC since January 4, 1995. Previously,
Mr. King served as Vice President in charge of operations for the Northeast
Division of AMC from June 10, 1992, and as Vice President in charge of
operations for the Southwest Division of AMC from October 30, 1986.
Mr. Rolando B. Rodriguez has served as Senior Vice President in charge of
operations for the South Division of AMC since April 2, 1996. Previously, Mr.
Rodriguez served as Vice President and
8
<PAGE>
South Division Operations Manager of AMC from July 1, 1994, as Assistant South
Division Operations Manager of AMC from February 12, 1993, as South Division
Senior Operations Manager from March 29, 1992, and as South Division Operations
Manager from August 6, 1989.
Mr. Richard L. Obert has served as Senior Vice President - Chief Accounting
and Information Officer of the Company and AMC since November 9, 1995, and prior
thereto served as Vice President and Chief Accounting Officer of the Company and
AMC from January 9, 1989.
Mr. Charles P. Stilley has served as President of AMC Realty, Inc., a wholly
owned subsidiary of AMC, since February 9, 1993, and prior thereto served as
Senior Vice President of AMC Realty, Inc. from March 3, 1986.
Mr. Richard M. Fay has served as President-AMC Film Marketing, a division of
AMC, since September 8, 1995. Previously, Mr. Fay served as Senior Vice
President and Assistant General Sales Manager of Sony Pictures from 1994 until
joining AMC. From 1991 to 1994, Mr. Fay served as Vice President and Head Film
Buyer for the eastern division of United Artists Theatre Circuit, Inc.
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 28, 1996, March
30, 1995 and March 31, 1994, respectively.
9
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ---------------
------------------------------------------------ AWARDS-
OTHER(1) SECURITIES ALL(2)
ANNUAL UNDERLYING OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS COMPENSATION OPTIONS/SARS(#) COMPENSATION
- --------------------------- ----------- --------- --------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stanley H. Durwood 1996 $ 492,634 $ 275,000 N/A -- $ --
Chief Executive 1995 452,088 108,949 N/A 22,500 --
Officer 1994 436,800 263,400 N/A -- --
Philip M. Singleton 1996 285,311 154,000 N/A -- 4,686
Chief Operating 1995 273,247 64,149 N/A 4,500 4,663
Officer 1994 264,142 153,600 $ 51,930 150,000 59,564
Peter C. Brown 1996 257,439 137,500 N/A -- 4,726
Chief Financial 1995 234,836 55,433 N/A 4,500 4,657
Officer 1994 227,016 135,000 N/A 150,000 4,675
Richard T. Walsh 1996 207,204 80,000 N/A 2,250 4,620
Senior Vice President 1995 200,855 35,500 217,112 -- 63,464
1994 170,982 66,000 N/A 30,000 3,400
Frank T. Stryjewski(3) 1996 192,209 74,000 N/A 2,250 4,620
Senior Vice President 1995 189,840 43,000 N/A -- 4,716
1994 171,098 74,250 N/A 30,000 3,400
</TABLE>
- -------------------
(1)N/A denotes not applicable. The fiscal year which began on April 1, 1994
and ended March 30, 1995 ("fiscal 1995") includes a lump sum payment and gross
up of taxes on moving expenses totaling $209,408 of Mr. Richard T. Walsh. The
fiscal year which began on April 2, 1993 and ended on March 31, 1994 ("fiscal
1994") includes gross up of taxes of $43,285 on moving expenses of Mr. Philip M.
Singleton. For the years presented, excluding Mr. Richard T. Walsh in 1995 and
Mr. Philip M. Singleton in 1994, perquisites and other personal benefits did not
exceed the lesser of $50,000 or 10% of total annual salary and bonus.
(2)For fiscal 1996, All Other Compensation includes the Company's
contributions under AMC's 401(k) Plan and the Executive Savings Plan, both of
which are defined contribution plans, in the aggregate amount of $4,686 for Mr.
Philip M. Singleton, $4,726 for Mr. Peter C. Brown, $4,620 for Mr. Richard T.
Walsh and $4,620 for Mr. Frank T. Stryjewski. For fiscal 1995, All Other
Compensation includes AMC's contributions to such plans in the amount of $4,663
for Mr. Philip M. Singleton, $4,657 for Mr. Peter C. Brown, $4,786 for Mr.
Richard T. Walsh and $4,716 for Mr. Frank T. Stryjewski. In addition, moving
expense for Mr. Richard T. Walsh is included in the amount of $58,678. For
fiscal 1994, the totals include AMC's contributions to such plans in the amount
of $4,708 for Mr. Philip M. Singleton, $4,675 for Mr. Peter C. Brown, $3,400 for
Mr. Richard T. Walsh and $3,400 for Mr. Frank T. Stryjewski. In addition, moving
expense for Mr. Philip M. Singleton is included in the amount of $54,856.
(3)Mr. Frank T. Stryjewski resigned from AMC effective April 18, 1996.
10
<PAGE>
(4)As of March 28, 1996, the named Executive Officers held performance
shares awards under the Company's 1994 Stock Option and Incentive Plan entitling
them to receive shares of the Company's Common Stock at the end of a three-year
period from the date of grant upon satisfaction of performance goals. See
"Long-Term Incentive Plan." The number of shares issuable to each such person
(and the value of such shares as of March 28, 1996) under awards in effect as of
March 28, 1996, upon attainment of threshold, target and maximum performance
goals is as follows: Threshold -- Mr. Stanley H. Durwood - 30,000 shares
($723,750); Mr. Philip M. Singleton - 6,000 shares ($144,750); Mr. Peter C.
Brown - 6,000 shares ($144,750); Mr. Richard T. Walsh - 3,000 shares ($72,375);
and Mr. Frank T. Stryjewski - 3,000 shares ($72,375); Target -- Mr. Stanley H.
Durwood - 45,000 shares ($1,085,625); Mr. Philip M. Singleton - 9,000 shares
($217,125); Mr. Peter C. Brown - 9,000 shares ($217,125); Mr. Richard T. Walsh -
4,500 shares ($108,563) and Mr. Frank T. Stryjewski - 4,500 shares ($108,563);
Maximum -- Mr. Stanley H. Durwood - 90,000 shares ($2,171,250); Mr. Philip M.
Singleton - 18,000 shares ($434,250); Mr. Peter C. Brown - 18,000 shares
($434,250); Mr. Richard T. Walsh - 9,000 shares ($217,125); and Mr. Frank T.
Stryjewski - 9,000 shares ($217,125). Mr. Frank T. Stryjewski resigned from AMC
effective April 18, 1996. The performance shares held by Mr. Stryjewski were
subsequently canceled.
OPTION GRANTS
The following table provides certain information concerning individual
grants of stock options made during the last completed fiscal year under the AMC
Entertainment Inc. 1994 Stock Option and Incentive Plan (the "Incentive Plan")
to each of the named Executive Officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION --------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- --------------------- --------------- ---------------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Stanley H. Durwood... -- -- $ -- -- $ -- $ --
Philip M.
Singleton........... -- -- -- -- -- --
Peter C. Brown....... -- -- -- -- -- --
Richard T. Walsh..... 2,250 9.70% 14.50 06/27/05 20,520 51,998
Frank T.
Stryjewski(1)....... 2,250 9.70% 14.50 06/27/05 20,520 51,998
</TABLE>
- -------------------
(1)Mr. Frank T. Stryjewski resigned from AMC effective April 18, 1996. The
options granted to Mr. Stryjewski in fiscal 1996 have expired unexercised.
The stock options granted during the fiscal year ended March 28, 1996, are
eligible for exercise based upon a vesting schedule. After the first anniversary
of the grant date, 50% of the options will be eligible for exercise. After the
second anniversary of the grant date, all options are
11
<PAGE>
fully vested. Vesting of options will accelerate upon the occurrence of an
optionee's death, disability or retirement, or upon termination of employment
within one year after the occurrence of certain change in control events. The
Compensation Committee of the Board of Directors of the Company may permit
accelerated exercise of options if certain extraordinary events occur, such as a
merger or liquidation of the Company, the sale of substantially all of the
assets of the Company, a subsidiary or a division, or a change in control of the
Company. With the consent of the Compensation Committee, optionees may satisfy
tax withholding obligations by electing to have shares otherwise issuable upon
exercise of an option withheld.
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to the named Executive
Officers, concerning the exercise of options during the last fiscal year and
unexercised options held as of March 28, 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS/SARS VALUE OF
AT FY-END(#) UNEXERCISED
EXERCISABLE/ IN-THE-MONEY
SHARES UNEXERCISABLE OPTIONS/SARS AT FY-
ACQUIRED VALUE ---------------------- END($) EXERCISABLE/
NAME ON EXERCISE REALIZED SHARES PRICE UNEXERCISABLE
- -------------------------------------------------------------- ----------- -------- ------------- ------- -------------------
<S> <C> <C> <C> <C> <C>
Stanley H. Durwood............................................ -- -- 11,250/11,250 $11.750 $ 139,219/$139,219
Philip M. Singleton........................................... -- -- 75,000/75,000 9.250 1,115,625/1,115,625
2,250/2,250 11.750 27,844/27,844
Peter C. Brown................................................ -- -- 75,000/75,000 9.250 1,115,625/1,115,625
2,250/2,250 11.750 27,844/27,844
Richard T. Walsh.............................................. -- -- 15,000/15,000 9.375 221,250/221,250
0/2,250 14.500 0/21,656
Frank T. Stryjewski(1)........................................ -- -- 15,000/15,000 9.375 221,250/221,250
0/2,250 14.500 0/21,656
</TABLE>
- -------------------
(1)Mr. Frank T. Stryjewski resigned from AMC effective April 18, 1996. The
unexercisable options outstanding as of March 28, 1996, have expired
unexercised.
LONG-TERM INCENTIVE PLAN
The following table provides certain information concerning shares
("Performance Shares") issuable under performance stock awards approved by the
Compensation Committee during the last completed fiscal year for each of the
named Executive Officers.
12
<PAGE>
LONG-TERM INCENTIVE PLANS-AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF(1) PERFORMANCE OR ESTIMATED FUTURE PAYOUT UNDER
SHARES, UNITS OTHER PERIOD NON-STOCK PRICE-BASED PLANS
OR OTHER UNTIL MATURATION ---------------------------------------------
NAME RIGHTS(#) OR PAYOUT THRESHOLD(#) TARGET(#) MAXIMUM(#)
- ---------------------- --------------- ----------------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Stanley H. Durwood.... -- -- -- -- --
Philip M. Singleton... -- -- -- -- --
Peter C. Brown........ -- -- -- -- --
Richard T. Walsh...... 9,000 3 years 3,000 4,500 9,000
Frank T.
Stryjewski(2)........ 9,000 3 years 3,000 4,500 9,000
</TABLE>
- -------------------
(1)Maximum
(2)Mr. Frank T. Stryjewski resigned from AMC effective April 18, 1996. The
performance shares for Mr. Stryjewski were subsequently canceled.
The foregoing table shows the number of Performance Shares issuable to a
participant at the end of a three-year performance period ending April 2, 1998
(the "Performance Period") at Threshold, Target and Maximum levels of
performance.
A participant's eligibility to receive up to one-half of the maximum number
of Performance Shares issuable under an award is based upon changes in the
"private market value per share" of the Company's Common Stock ("PMVPS") over
the Performance Period. PMVPS is determined on a fully diluted basis (assuming
full exercise of all outstanding shares of the Company's preferred stock, Class
B stock, options and other rights to acquire shares of Common Stock), based on a
multiple of theatre EBITDA (theatre EBITDA is Consolidated EBITDA less National
Cinema Network, Inc. EBITDA), plus the book value of National Cinema Network,
Inc., plus cash and equivalents, investments and investments in other long-term
assets, less corporate borrowings, capitalized lease obligations and the
carrying value of minority interests. EBITDA is earnings before interest, taxes,
depreciation and amortization. National Cinema Network, Inc. is a subsidiary of
the Company.
A participant's eligibility to receive up to the remaining one-half of the
maximum number of Performance Shares issuable under an award is based upon
changes in "total return to stockholders" ("TRS"), which is measured by
increases in the market value of an investment in shares of Common Stock of the
Company, assuming reinvestment of any dividends received.
PMVPS and TRS are referred to individually and collectively herein as
"Performance Criterion" and "Performance Criteria," respectively.
Such Performance Criteria will be measured against changes in the Standard
and Poor's 500 Index ("S&P 500") over the Performance Period. Required
achievement levels over the Performance Period for both PMVPS and TRS are as set
forth below:
Maximum-2,000 basis points higher than the percentage change in the S&P 500
over the Performance Period;
Target-750 basis points higher than the percentage change in the S&P 500
over the Performance Period;
13
<PAGE>
Threshold-No difference between the percentage change in the S&P 500 and the
percentage change in the Performance Criterion over the Performance Period.
Generally, no shares will be issued with respect to the Company's
performance over the Performance Period as measured by a Performance Criterion
if such performance does not at least meet the Threshold achievement level over
the Performance Period. If the Company's performance as so measured by a
Performance Criterion falls between the Threshold and Target achievement levels,
the number of Performance Shares issuable under an Award with respect to that
Performance Criterion will be determined to the nearest whole number of shares,
so that the actual Award will be at the same percentage between the Threshold
and Target award levels as the actual achievement level falls between the
Threshold and Target achievement levels. Similarly, if the Company's performance
falls between Target and Maximum achievement levels, the number of Performance
Shares will be determined to the nearest whole number of shares, so that the
actual award will be at the same percentage between the Target and Maximum award
levels as the actual achievement level falls between the Target and Maximum
levels. In no event will the number of Performance Shares issuable under an
Award with respect to a Performance Criterion exceed the number of Performance
Shares issuable upon attaining the Maximum achievement level over the
Performance Period with respect to such Performance Criterion.
The right to receive Performance Shares will be accelerated and such
Performance Shares issued, based on the achievement levels of the Performance
Criteria measured to the date of termination, in the event of a participant's
death, disability or retirement, or termination of employment within one year
after the occurrence of certain change of control events. The Compensation
Committee of the Board of Directors of the Company may waive performance goals
if certain extraordinary events occur, such as a merger or liquidation of the
Company, the sale of substantially all of the assets of the Company, a
subsidiary or a division, or a change in control of the Company.
With the consent of the Compensation Committee, a Grantee may satisfy his
tax withholding obligations by electing to have Performance Shares otherwise
issuable withheld.
Until Performance Shares are issued, participants have no dividend or voting
rights with respect to Performance Shares.
DEFINED BENEFIT RETIREMENT AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS
AMC sponsors a defined benefit retirement plan (the "Retirement Plan") which
provides benefits to certain employees of AMC and its subsidiaries based upon
years of credited service and the highest consecutive five-year average annual
remuneration for each participant. For purposes of calculating benefits, average
annual compensation is limited by Section 401(a)(17) of the Internal Revenue
Code, and is based upon wages, salaries and other amounts paid to the employee
for personal services, excluding certain special compensation. A participant
earns a vested right to an accrued benefit upon completion of five years of
vesting service.
AMC also sponsors a Supplemental Executive Retirement Plan to provide the
same level of retirement benefits that would have been provided under the
Retirement Plan had the federal tax law not been changed in the Omnibus Budget
Reconciliation Act of 1993, which reduced the amount of compensation which can
be taken into account in a qualified retirement plan from $235,840 (in 1993),
the old limit, to $150,000 (in 1995 and 1996).
14
<PAGE>
The following table shows the total estimated annual pension benefits
(without regard to minimum benefits) payable to a covered participant under
AMC's Retirement Plan and the Supplemental Executive Retirement Plan, assuming
retirement in calendar 1996 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 $250,000 in 1996.
<TABLE>
<CAPTION>
HIGHEST CONSECUTIVE YEARS OF CREDITED SERVICE
FIVE YEAR AVERAGE -----------------------------------------------------
ANNUAL COMPENSATION 15 20 25 30 35
- -------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$125,000.................................... $ 17,716 $ 23,621 $ 29,527 $ 35,432 $ 41,337
$150,000.................................... $ 21,466 $ 28,621 $ 35,777 $ 42,932 $ 50,087
$175,000.................................... $ 25,216 $ 33,621 $ 42,027 $ 50,432 $ 58,837
$200,000.................................... $ 28,966 $ 38,621 $ 48,277 $ 57,932 $ 67,587
$225,000.................................... $ 32,716 $ 43,621 $ 54,527 $ 65,432 $ 76,337
$250,000.................................... $ 36,466 $ 48,621 $ 60,777 $ 72,932 $ 85,087
</TABLE>
As of December 31, 1995, the years of credited service under the Retirement
Plan for each of the named Executive Officers were: Mr. Philip M. Singleton, 22
years; Mr. Peter C. Brown, 5 years; Mr. Richard T. Walsh, 21 years; and Mr.
Frank T. Stryjewski(1), 17 years. The final amount distributed to Mr. Stanley H.
Durwood in fiscal 1995 from the Company's Retirement Plan was $42,067, and was
not included in the Summary Compensation Table. In addition, the benefit Mr.
Stanley H. Durwood accrued under the Supplemental Executive Retirement Plan was
$18,724 in fiscal 1996 and is not included in the Summary Compensation Table.
(1) Mr. Frank T. Stryjewski resigned from AMC effective April 18, 1996.
AMC has determined to establish a Supplemental Retirement Plan ("SRP") with
an effective date of March 29, 1996 for the benefit of officers who from time to
time may be designated as eligible participants by the Board of Directors. The
SRP is a non-qualified deferred compensation plan designed to provide an
unfunded retirement benefit for an eligible participant in an amount equal to
(i) sixty percent (60%) of his or her average compensation (including paid and
deferred incentive compensation) during the last three full years of employment
or, for a participant who has reached age 65 at March 29, 1996, the average of
such participant's compensation earned during the last three full years of
employment, readjusted annually, less (ii) the sum of (A) such participant's
benefits under the Retirement Plan and Social Security, and (B) the amount of a
straight life annuity commencing at age 65 attributable to AMC's contributions
under the Supplemental Executive Retirement Plan, the 401(k) Savings Plan, the
Non-qualified Deferred Compensation Plan and the Executive Savings Plan. The
base amount in clause (i) will be reduced on a pro rata basis if the participant
completes fewer than twenty-five (25) years of service. The SRP benefit vests
upon the Participant's attainment of age 55 or completion of fifteen (15) years
of service, whichever is later, and may commence to a vested participant
retiring on or after age 55 (who has participated in the plan for 5 years) on an
actuarially reduced basis (6 2/3% for each of the first five years by which
commencement precedes age 65 and an additional 3 1/3% for each year by which
commencement precedes age 60). Benefits commence at age 65 whether or not the
participant continues to be employed by AMC. Benefits payable upon total and
permanent disability are not reduced by reason of early commencement.
Participants become fully vested in their rights under the SRP if their
employment is terminated without cause or as a result of a change in
15
<PAGE>
control, as defined in the SRP. No death, disability or retirement benefit is
payable prior to a participant's early retirement date or prior to the date any
severance payments to which the participant is entitled cease.
Presently, Mr. Stanley H. Durwood, Mr. Philip M. Singleton and Mr. Peter C.
Brown have been designated as eligible to participate in the SRP. The amount
payable to Mr. Durwood with respect to fiscal 1997 under the SRP is estimated at
approximately $300,000. The estimated annual amounts that Mr. Singleton and Mr.
Brown will be eligible to receive under the SRP at age 65 are $199,000 and
$207,000 respectively; such amounts are based on certain assumptions respecting
their future compensation amounts and the amounts of AMC contributions under
other plans, and actual amounts received by such individuals under the SRP may
be different than those estimated.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
Mr. Stanley H. Durwood has an employment agreement with the Company and AMC
dated January 26, 1996 retaining him as Chairman, Chief Executive Officer and
President. It provides for an annual base salary of no less than $500,000, plus
payments and awards under the Company's Executive Incentive Program ("EIP"), the
Company's 1994 Stock Option and Incentive Plan and other bonus plans in effect
for Executive Officers at a level reflecting his position, plus such other
amounts as may be paid under any other compensatory arrangement as determined in
the sole discretion of the Compensation Committee. Mr. Durwood's current annual
base salary is $510,000. The Company has also agreed to use its best efforts to
provide Mr. Durwood up to $5,000,000 in life insurance and to pay the premiums
thereon and taxes resulting from such payment. Mr. Durwood's employment
agreement has a term of three years and is automatically extended one year on
its anniversary date, January 26, so that as of such date each year the
agreement has a three-year term. The employment agreement is terminable without
severance if he engages in intentional misconduct or a knowing violation of law
or breaches his duty of loyalty to the Company. The agreement also is terminable
(i) by Mr. Durwood, in the event of the Company's breach, and (ii) by the
Company, without cause or in the event of Mr. Durwood's death or disability, in
each case with severance payments equal to three times the sum of his annual
base salary in effect at the time of termination plus the average of annual
incentive or discretionary cash bonuses paid during the three fiscal years
preceding the year of termination. The Company may elect to pay such severance
payments in monthly installments over a period of three years or in a lump sum
after discounting such amount to its then present value. The aggregate amount
payable under this employment agreement, assuming termination with severance
occurred as of September 26, 1996, was approximately $1,923,000.
Messrs. Philip M. Singleton and Peter C. Brown each have employment
agreements with AMC dated September 26, 1994, providing for annual base salaries
of no less than $266,000 and $227,000, respectively, and bonuses resulting from
the EIP or other bonus arrangement, if any, as determined from time to time at
the sole discretion of the Compensation Committee upon the recommendation of the
Chairman of the Board. The current annual base salaries of Messrs. Singleton and
Brown are $285,700 and $255,000, respectively. 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
16
<PAGE>
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 if Mr. Stanley H. Durwood shall
fail to control 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
as of September 26, 1996, was approximately $994,000.
Mr. Richard M. Fay has an employment agreement with AMC dated April 16,
1996, which provides for an annual base salary of $275,000 and, in the first
year of the employment agreement, an additional $50,000 for costs associated
with relocation. Mr. Fay's current annual base salary is $275,000. Mr. Fay is
also eligible to receive payments resulting from the EIP or other bonus
arrangement, if any, as determined from time to time in the sole discretion of
the Compensation Committee of the Board of Directors of AMC upon the
recommendation of the Chief Executive Officer of AMC. The employment agreement
has a term of three years, from September 8, 1995 through September 7, 1998. The
employment agreement terminates without severance upon Mr. Fay's resignation,
death or disability as defined in his employment agreement, or upon AMC's good
faith determination that Mr. Fay has been dishonest or has committed a breach of
trust respecting AMC. AMC may terminate the employment agreement at any time,
with severance payments in an amount equal to, at AMC's option, either (i) Mr.
Fay's base salary per month in effect at the time of termination, payable over
the remaining term of his employment, or (ii) the net present value of the
monthly payments described in (i) above, payable within 30 days of the date of
termination. Any severance payable to Mr. Fay shall be reduced by any wages,
compensation or income, cash or otherwise, received by Mr. Fay from sources
other than AMC during the remaining term of his employment agreement following
the date of termination. The aggregate amount payable under this employment
agreement, assuming termination with severance occurred as of September 26,
1996, was approximately $505,000.
As permitted by the Incentive Plan, stock options and Performance Share
awards granted to participants thereunder provide for acceleration upon the
termination of employment within one year after the occurrence of certain change
in control events, whether such termination is voluntary or involuntary, or with
or without cause. See "Option Grants" and "Long-Term Incentive Plan." In
addition, the Compensation Committee may permit acceleration upon the occurrence
of certain extraordinary transactions which may not constitute a change of
control.
AMC 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 pay is paid for an involuntary
termination due to substandard performance. For an eligible employee who is
17
<PAGE>
exempt from the FLSA overtime pay requirements, severance pay is discretionary
(at the Department Head/Supervisor level), but will not be less than the amount
that would be paid to a nonexempt eligible employee.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
THE REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS SHALL NOT
BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY
REFERENCE THIS PROXY STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933
OR UNDER THE SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THAT THE
COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT
OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
The Compensation Committee of the Boards of Directors of the Company and AMC
(the "Committee") is composed of two independent non-employee directors. The
Committee is responsible for developing the executive compensation strategy of
the Company and its subsidiaries and monitoring its implementation. In carrying
out its responsibilities, the Committee, among other things, reviews the
policies of comparable companies and consults with an independent compensation
consulting firm.
The following is a summary of the Committee's activities through the fiscal
year ended March 28, 1996.
COMPENSATION POLICY. The Company's executive compensation policy has five
overall objectives:
- To align the interests of Executive Officers and employees with those of
the Company and its stockholders.
- To link compensation to the performance of the Company as well as to the
individual contribution of each Executive Officer.
- To maintain total direct compensation (salary plus annual incentive plus
equity based compensation) rather than total annual cash compensation
(salary plus annual incentive) at rates that are at the third quartile of
compensation levels of comparable companies. Because of the relatively
small number of motion picture exhibition companies, this comparison has
included companies engaged in other businesses.
- To increase the alignment of the interests of executives and employees
with stockholder interests by providing a compensation package for
executives and employees that includes an appropriate portion of equity
based compensation. See "Stock Incentives."
- To compensate executives at a level which is competitive in the
marketplace so that the Company can continue to attract, motivate and
retain executives with outstanding abilities.
The Committee has begun to shift its philosophy away from total annual cash
compensation (salary plus annual incentive) and towards total direct
compensation (salary plus annual incentive plus equity based compensation). The
Committee intends that total direct compensation, when performance is at target
levels, will be set at the third quartile of the total direct compensation
market for comparable companies.
ANNUAL BASE SALARY. The annual base salary of the Company's Executive
Officers was reviewed and approved by the Committee. Annual base salaries for
the Company's Executive
18
<PAGE>
Officers are determined with reference to a "position rate" for each of the
Executive Officers. The position rate is determined by evaluating the
responsibilities of the position and comparing it with that of similar positions
in comparable companies as well as companies generally.
For fiscal 1996, the Committee approved percentage increases in annual base
salary for the top five most highly compensated Executive Officers that were in
the aggregate slightly lower than the third quartile of total annual cash
compensation of comparable companies. The Committee approved substantial
percentage increases in annual base salary for three of the five most highly
compensated Executive Officers; the other two received no increase in annual
base salary. The increases in annual base salaries for the three Executive
Officers were due primarily to their increased responsibilities with regard to
the Company's international efforts beginning in fiscal 1995. Two of these
Executive Officers also received promotions and other expanded responsibilities.
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. For fiscal 1996, the Committee determined that
the performance criteria for the annual incentive cash bonus would be based upon
a combination of two components; i.e., a company component and a division
component, if relevant to the participant. For fiscal 1996, the company
component was divided into two factors: (i) achievement of an EBITDA (earnings
before interest, taxes, depreciation and amortization) target and (ii) the
number of new screens added to the theatre circuit. The EBITDA target had a 65%
weighting, with the number of new screens carrying a 35% weight to achieve a
payout under the EIP. The division component, which applies to division and film
office participants, was based upon achievement of a Division Operating Income
("DOI") target. DOI was defined as operating income less general and
administrative expenses and extraordinary expenses.
The Company achieved the maximum level of its established targets for both
of the company component factors (EBITDA and new screens added to the theatre
circuit) in fiscal 1996. Two of the Company's three divisions also achieved the
maximum levels of the division components. The Committee reviewed and approved
annual cash incentive bonuses reflecting the maximum attainment levels of the
performance criteria relating to the company component and division components
(where applicable). In the instance of the division that did not achieve maximum
attainment of its division target, the annual cash incentive bonus was ratably
reduced.
In addition, the Committee determined that the members of the Executive
Committee were to be awarded an additional five percent of their annual base
salary amounts in recognition of the superior financial results achieved by the
Company in fiscal 1996.
STOCK INCENTIVES. At the Company's Annual Meeting of Stockholders held on
November 10, 1994, the Company's stockholders approved the AMC Entertainment
Inc. 1994 Stock Option and Incentive Plan (the "Incentive Plan"). Subsequently,
certain amendments to the Incentive Plan were approved by the stockholders.
Consistent with the Committee's policy of aligning the interests of its
executives with those of the stockholders, the Committee intends to use the
Incentive Plan to incorporate equity based awards into the ongoing compensation
package for executives and employees.
In March and June 1995, the Company made certain performance based stock
awards (the "Performance Shares") and grants of non-qualified stock options (the
"Stock Options") to certain
19
<PAGE>
Executive Officers and other employees. The Performance Shares may be issuable
to a participant at the end of a three-year performance period ending April 2,
1998. A participant's eligibility to receive the maximum number of Performance
Shares issuable under an award is based one-half upon increases in "total return
to stockholders" ("TRS") and one-half upon increases in the "private market
value per share" ("PMVPS"). The amount of the award is based, in each case, on
the extent to which increases in TRS or PMVPS exceed the increases over the same
time period in the Standard and Poor's 500 Index. See "Long-Term Incentive
Plan."
Hypothetically, if the Performance Shares were based only on performance for
fiscal 1996 rather than a full three-year period through fiscal 1998,
participants in the Incentive Plan would have earned the maximum number of
Performance Shares attainable based upon the TRS measurement and would have
earned no Performance Shares based upon the PMVPS measurement, resulting in a
participant's earning Performance Shares at a target level of performance.
However, because the Performance Shares are not issuable until the end of a
three-year performance period ending April 2, 1998, no Performance Shares under
the Incentive Plan have been earned and none have been issued.
In addition, annual Stock Options will be granted, if annual performance
measurement thresholds are met, at the end of each fiscal year for a three-year
period. A participant's eligibility to be granted the maximum number of Stock
Options attainable is also based one-half upon increases in TRS and one-half
upon increases in PMVPS. The amount of the grant is based, in each case, on the
extent to which increases in TRS or PMVPS exceed the increases over the same
time period in the Standard and Poor's 500 Index.
For fiscal 1996, participants in the Incentive Plan earned the maximum
number of Stock Options attainable based upon the TRS measurement and earned no
Stock Options based upon the PMVPS measurement, resulting in grants to
participants at a target level of performance. Subsequent to the end of the
fiscal year, the Committee reviewed, approved and granted Stock Options,
pursuant to the terms and conditions of the Incentive Plan, to the plan
participants.
CEO COMPENSATION. The Committee determined that retaining Mr. Stanley H.
Durwood's services is in the best interests of the Company due to Mr. Durwood's
vision, innovation, knowledge and experience in the development and current
leadership position of the Company in the motion picture exhibition industry. As
a result, the Committee recommended to the Board of Directors that Mr. Durwood
be requested to enter into an Employment Agreement (the "Agreement") with the
Company and American Multi-Cinema, Inc. ("AMC") on the basis of Mr. Durwood's
willingness to continue to exercise his capabilities on behalf of the Company,
AMC and their subsidiaries. The Agreement was executed in fiscal 1996 and
employs Mr. Durwood as Chief Executive Officer of the Company and AMC, with Mr.
Durwood continuing to serve as President and Chairman of the Board of the
Company and AMC. See "Employment Contracts, Termination of Employment and Change
in Control Arrangements."
Mr. Durwood's fiscal 1996 annual base salary and annual incentive cash bonus
were reviewed and approved by the Committee. See "ANNUAL BASE SALARY" and
"ANNUAL INCENTIVE CASH BONUS." Mr. Durwood's increase in annual base salary was
substantial due to his increased responsibilities with regard to the Company's
international efforts beginning in fiscal 1995. Mr. Durwood's annual incentive
cash bonus was equivalent to fifty-five percent of his annual base salary, the
maximum attainable under the provisions of the EIP, five percent of which bonus
was discretionary. The
20
<PAGE>
Committee awarded the discretionary portion of Mr. Durwood's annual incentive
cash bonus based on a subjective assessment, primarily as a result of superior
financial results in fiscal 1996 and the continued success of the Company's
growth strategy.
Mr. Durwood also participated in the Incentive Plan and, as a result of
superior financial results in fiscal 1996, was granted, subsequent to the end of
the fiscal year, Stock Options for 22,500 shares of the Company's common stock.
See "STOCK INCENTIVES." Additionally, the Committee, based upon its subjective
assessment, awarded, subsequent to the end of the fiscal year, Stock Options for
42,500 shares of the Company's common stock to Mr. Durwood (bringing the total
Stock Option grants to Mr. Durwood to the maximum allowable award in a twelve
month period, or 65,000 shares) in recognition of superior financial results in
fiscal 1996 and the continued success of the Company's growth strategy.
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 Company's executive compensation programs so that compensation
received pursuant to the compensation programs 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
programs. In any event, the Committee anticipates that, in most instances,
treatment under Section 162(m) of the Code will not be an issue because
generally no Executive Officer's compensation will exceed $1,000,000 in any one
year.
COMPENSATION COMMITTEE
Charles J. Egan, Jr.
Paul E. Vardeman
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Executive Committee recommended to the Compensation Committee for its
review and approval the annual base salaries of Executive Officers other than
the named Executive Officers. The members of the Executive Committee were
Messrs. Stanley H. Durwood, Philip M. Singleton and Peter C. Brown.
Mr Paul E. Vardeman, a member of the Compensation Committe, is a director,
officer and shareholder of Polsinelli, White, Vardeman & Shalton, P.C. During
the last fiscal year, a subsidiary of AMC retained Polsinelli, White, Vardeman &
Shalton, P.C. to provide certain legal services.
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.
21
<PAGE>
The following line graph compares the yearly percentage change in the
cumulative total stockholder return on the Company's Common Stock with the
cumulative total return on the Standard and Poor's Corporation Composite 500
Index and with a selected peer group of three companies engaged in the motion
picture exhibition industry, for the period of five fiscal years commencing
March 28, 1991, and ending March 28, 1996. The comparison assumes $100 was
invested on March 28, 1991, in the Company's Common Stock and in each of the
foregoing indices, and further assumes the reinvestment of dividends.
The peer group companies selected by the Company are Carmike Cinemas, Inc.,
Cineplex Odeon Corporation and GC Companies, Inc. This peer group differs
slightly from the peer group presented in last year's proxy statement (the
"former peer group") in that GC Companies, Inc.'s predecessor, Harcourt General,
Inc., now is not included for the period prior to its spin-off of GC Companies,
Inc. The Company believes the present peer group composed of other motion
picture exhibition companies offers a better comparison by excluding the other
lines of business engaged in by Harcourt General, Inc. prior to its spin-off of
GC Companies, Inc.
With respect to the former peer group index, the peer group companies for
1992 and fiscal 1993 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 were Carmike Cinemas, Inc., Cineplex Odeon Corporation, Harcourt
General, Inc. and GC Companies, Inc. To calculate the return for Harcourt
General, Inc. for fiscal 1994, the Company added to the value of each share of
Harcourt General, Inc., one-tenth of the value of a share of GC Companies, Inc.
stock as of March 31, 1994. For fiscal 1995 and 1996, the peer group companies
were Carmike Cinemas, Inc., Cineplex Odeon Corporation and GC Companies, Inc.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AMC PEER GROUP S&P 500 FORMER PEER GROUP
<S> <C> <C> <C> <C>
1991 100 100 100 100
1992 78 90 111 102
1993 168 56 127 131
1994 232 97 134 148
1995 253 85 151 171
1996 514 85 199 172
</TABLE>
22
<PAGE>
LEGAL PROCEEDINGS
The following paragraphs summarize significant litigation and proceedings to
which the Company is a party.
IN RE: AMC SHAREHOLDER DERIVATIVE LITIGATION, CHANCERY COURT FOR NEW CASTLE
COUNTY, DELAWARE (CIVIL ACTION NO. 12855). On February 15, 1995, the court
ordered the consolidation of two derivative actions filed against four directors
of the Company, Messrs. Stanley H. Durwood, Edward D. Durwood, Paul E. Vardeman
and Charles J. Egan, Jr., and one of its former directors, Mr. Phillip Ean
Cohen. The two cases were originally filed on January 27, 1993, by Mr. Scott C.
Wallace and on April 16, 1993, by Mr. James M. Bird, respectively. On December
8, 1994, the court, pursuant to a stipulation by the parties, entered an order
approving Mr. Wallace's withdrawal as a derivative plaintiff, granting the
motion for intervention filed by Mr. Philip J. Bogosian, Auginco, Mr. Norman M.
Werther and Ms. Ellen K. Werther, and authorizing the filing of the intervenors'
complaint. The intervenors' complaint includes substantially the same
allegations as the Wallace and Bird complaints. The two actions, as
consolidated, are referred to below as the "Derivative Action."
In the Derivative Action, plaintiffs allege breach of fiduciary duties of
care, loyalty and candor, mismanagement, constructive fraud and waste of assets
in connection with, among other allegations, the provision of film licensing,
accounting and financial services by American Associated Enterprises, a
partnership beneficially owned by Mr. Stanley H. Durwood and members of his
family, to the Company, certain other transactions with affiliates of the
Company, termination payments to a former officer of the Company, certain
transactions between the Company and National Cinema Supply Corporation, and a
fee paid by a subsidiary of the Company to Mr. Cohen in connection with a
transaction between the Company and TPI Entertainment, Inc. The Derivative
Action seeks unspecified money damages and equitable relief and costs, including
reasonable attorney's fees.
On February 9, 1995, the defendants filed a motion to dismiss the Derivative
Action. Discovery has been stayed pending resolution of the motion to dismiss.
On October 10, 1996, counsel for the parties in the Derivative Action
entered into a Stipulation and Agreement of Compromise and Settlement (the
"Settlement Agreement") providing for, among other things (i) the discharge of
claims against the defendants, (ii) the nomination of two additional outside
directors to serve on the Company's Board of Directors and the voting of the
shares owned by Durwood family members for such nominees in the same proportion
as votes cast by all stockholders not affiliated with the Company, its directors
and officers, (iii) the sale by members of the Durwood family in an underwritten
secondary offering (which will only be made by means of a prospectus) of 3
million shares of the Company's common stock within 12 months after consummation
of the proposed merger referred to below, and (iv) the payment by defendants of
an aggregate of approximately $1.3 million to persons who were holders of the
Company's common stock on January 2, 1996, other than the defendants, Durwood,
Inc. or members of the Durwood family.
The obligation to nominate the additional outside directors would continue
for three years, and during this time such directors would be empowered to
approve (i) certain transactions between the Company and members of the Durwood
family and (ii) together with either of the directors who presently serves on
the Company's Audit Committee, all other related-party transactions with certain
other affiliates of the Company.
The Settlement Agreement will require court approval and is conditioned
upon, among other things, the consummation of a proposed merger between the
Company and Durwood, Inc., which is presently being negotiated.
23
<PAGE>
SECURITY OWNERSHIP OF BENEFICIAL OWNERS
The following table sets forth certain information as of September 26, 1996,
with respect to beneficial owners of five percent or more of any class of the
Company's voting securities:
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY PERCENT
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OF CLASS
- --------------- -------------------------------------------- ----------------- -------------
<S> <C> <C> <C>
Common Stock Durwood, Inc.(1) 2,641,951(2) 40.3%(2)
106 West 14th Street
Kansas City, MO 64105
Stanley H. Durwood(1) 2,653,351(2)(3) 40.4%(2)
106 West 14th Street
Kansas City, MO 64105
Brian H. Durwood(1) 2,641,951(2) 40.3%(2)
655 N.W. Altishan Place
Beaverton, OR 97006
Edward D. Durwood(1) 2,641,951(2) 40.3%(2)
3001 West 68th Street
Shawnee Mission, KS 66208
Peter J. Durwood(1) 2,641,951(2) 40.3%(2)
666 West End Avenue
New York, NY 10025
Thomas A. Durwood(1) 2,641,951(2) 40.3%(2)
P.O. Box 7208
Rancho Santa Fe, CA 92067
Elissa D. Grodin(1) 2,641,951(2) 40.3%(2)
187 Chestnut Hill Road
Wilton, CT 06897
Carol D. Journagan(1) 2,641,951(2) 40.3%(2)
1323 Granite Creek Drive
Blue Springs, MO 64015
Sandler Capital Management 285,500(4) 4.4%
767 5th Avenue
New York, NY 10153
The Equitable Companies Incorporated 615,424(5) 8.6%(5)
787 Seventh Avenue
New York, NY 10019
Ryback Management Corporation 1,684,865(6) 20.5%(6)
7711 Carondelet Ave.
St. Louis, MO 63105
Class B Stock Durwood, Inc.(1) 11,157,000(2) 100.0%
106 West 14th Street
Kansas City, MO 64105
</TABLE>
- -------------------
(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
24
<PAGE>
the outstanding capital stock of Durwood, Inc. ("DI"). American Associated
Enterprises ("AAE"), a Missouri limited partnership of which Mr. Stanley H.
Durwood is the limited partner and his six children, Mr. Edward D. Durwood, Mrs.
Carol D. Journagan, Mr. Thomas A. Durwood, Mrs. Elissa D. Grodin, Mr. Brian H.
Durwood and Mr. Peter J. Durwood, are the general partners, holds approximately
25% of the voting power of DI's outstanding capital stock. Mr. Stanley H.
Durwood is the sole director of DI and is Chairman of the Board, Chief Executive
Officer, President and a Director of the Company and AMC.
Mr. Durwood has sole voting power over the shares of the Company held by DI
but may be deemed to share investment power with respect to such shares with his
children. As reported in the Schedule 13-D's filed by Mr. Durwood and DI and by
Mr. Durwood's children and AAE, Mr. Durwood and his children have entered into
an agreement (the "family agreement") expressing their intention to pursue
certain transactions to dissolve AAE and to cause shares of the Company held by
DI to be distributed to members of the Durwood family through a merger of DI
into the Company. Thereafter, the family intends to sell 3,000,000 shares of
Common Stock in a public offering which will be made only by means of a
prospectus. If the proposed transactions are consummated, Mr. Durwood will
retain approximately 4.5 million shares (or 100%) of the Company's Class B Stock
and each of his children will retain approximately 1,000,000 shares (aggregating
approximately 47.5%) of the Company's Common Stock. Based on voting shares
outstanding as of September 26, 1996, the shares to be retained by Mr. Durwood
will represent approximately 77.4% of the combined voting power of the Company's
voting stock. However, provisions of the family agreement could result in an
adjustment pursuant to which Mr. Durwood would deliver additional shares to his
children. The proposed transactions are subject to negotiation of a definitive
merger agreement with the Company and approval of such agreement by the holders
of a majority of the shares of Common Stock voting thereon, other than members
of the Durwood family and certain other affiliates of the Company.
(2)The shares of Class B Stock owned of record by DI and beneficially owned
by members of the Durwood family as indicated in footnote (1) above are
convertible into Common Stock on a share for share basis. The number and
percentage of shares of Common Stock shown as beneficially owned do not give
effect to the conversion option. Were all the shares of Class B Stock converted,
there would be 17,706,489 shares of Common Stock outstanding, of which DI would
own of record 13,798,951, or 78% of the outstanding shares of Common Stock.
(3)The shares of Common Stock shown as beneficially owned by Mr. Stanley H.
Durwood also included 150 shares owned by him directly and 11,250 shares subject
to presently exercisable stock options.
(4)As reported by Sandler Capital Management on Schedule 13D dated March 7,
1996.
(5)This is the number of shares of Common Stock that would be obtained upon
conversion of the Company's $1.75 Cumulative Convertible Preferred Stock
reported as owned by The Equitable Companies Incorporated in Amendment No. 1 to
Schedule 13G dated February 9, 1996.
(6)This is the number of shares of Common Stock that would be obtained upon
conversion of the Company's $1.75 Cumulative Convertible Preferred Stock
reported as owned by Ryback Management Corporation in Amendment No. 1 to
Schedule 13G dated January 25, 1996.
25
<PAGE>
BENEFICIAL OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth certain information as of September 26, 1996
with respect to beneficial ownership by Directors and Executive Officers of the
Company's Common Stock and Class B Stock. The amounts set forth below include
the vested portion of 495,500 shares of Common Stock subject to options under
the Company's 1983 and 1984 Stock Option Plans and the 1994 Incentive Plan held
by Executive Officers. Unless otherwise indicated, the persons named are
believed to have sole voting and investment power over the shares shown as
beneficially owned by them.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
TITLE OF CLASS NAME OF BENEFICIAL OWNER OWNERSHIP CLASS
- --------------- -------------------------------------------- ------------------- -----------
<S> <C> <C> <C>
Common Stock Stanley H. Durwood 2,653,351(1)(2) 40.4%
Philip M. Singleton 130,750(2) 2.0%
Peter C. Brown 114,750(2) 1.7%
Richard T. Walsh 23,675(2) *
Paul E. Vardeman 300 *
All Directors and Executive Officers as a 2,961,119(2) 43.2%
group (11 persons, including the individuals
named above)
Class B Stock Stanley H. Durwood 11,157,000(1) 100.0%
</TABLE>
- -------------------
*Less than one percent.
(1)See Notes 1 and 2 under "Security Ownership of Beneficial Owners." Mr.
Stanley H. Durwood has sole voting power over the shares held by DI but may be
deemed to share investment power with respect to such shares with his children.
The shares of Common Stock shown as beneficially owned by Mr. Stanley H. Durwood
also include 150 shares owned by him directly and 11,250 shares subject to
presently exercisable stock options.
(2)Includes shares subject to presently exercisable options to purchase
Common Stock under the Company's 1983 and 1984 Stock Option Plans and the 1994
Incentive Plan, as follows: Mr. Stanley H. Durwood - 11,250 shares; Mr. Philip
M. Singleton - 114,750 shares; Mr. Peter C. Brown - 114,750 shares; Mr. Richard
T. Walsh - 23,625; and all Executive Officers as a group 300,750 shares.
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. 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
26
<PAGE>
that no Forms 5 were required, the Company believes that during fiscal 1996 its
Executive Officers, Directors and greater-than-10% beneficial owners complied
with all Section 16(a) filing requirements applicable to them.
CERTAIN TRANSACTIONS
Since its formation, the Company and AMC have been members 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 the sole Director of DI and Chairman of the Board, Chief Executive
Officer, President and a Director of the Company and AMC. There have been
transactions involving the Company or its subsidiaries and the DI affiliated
group in prior years. The Company intends to ensure that all transactions with
DI or other related parties are fair, reasonable and in the best interests of
the Company. In that regard, the Audit Committees of the Boards of Directors of
the Company and AMC review all material proposed transactions between the
Company and DI or other related parties to determine that, in their best
business judgment, such transactions meet that standard. The Audit Committees
consist of Messrs. 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 March 31, 1995 or involve receivables that remain outstanding as of
September 26, 1996.
Certain corporate departments of AMC perform general and administrative
services for DI and its subsidiaries. AMC charged DI and its subsidiaries
$116,000 for such services for fiscal 1996.
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.
The largest balance owed by DI and its subsidiaries to AMC since the beginning
of fiscal 1996 was $795,000. As of September 26, 1996, DI and its subsidiaries
owed AMC $2,700.
Ms. Marjorie D. Grant, a Vice President of AMC and the sister of Mr. Stanley
H. Durwood, has an employment agreement with the Company providing for an annual
base salary of no less than $110,000, an automobile and, at the sole discretion
of the Chief Executive Officer of the Company, a year-end bonus. Ms. Grant's
current annual base salary is $110,000. Ms. Grant's employment agreement,
executed July 1, 1996, terminates on June 30, 1999, or upon her death or
disability. The agreement provides that in the event Mr. Stanley H. Durwood
fails to control the management of the Company by reason of its sale, merger or
consolidation, or because of his death or disability, or for any other reason,
then the Company and Ms. Grant would each have the option to terminate the
agreement. In such event, the Company would pay to Ms. Grant in cash a sum equal
to the aggregate cash compensation, exclusive of bonus, to the end of the term
of her employment under the agreement, after discounting such amount to its then
present value using a discount rate equal to the prime rate of interest
published in THE WALL STREET JOURNAL on the date of termination. The aggregate
amount payable under the employment agreement, assuming termination by reason of
a change of control and payment in a lump sum as of September 26, 1996, was
approximately $270,000.
Since July 1992, Mr. Jeffery W. Journagan, a son-in-law of Mr. Stanley H.
Durwood, has been employed by a subsidiary of the Company. Mr. Journagan's
current salary is approximately $75,000 and he received a bonus for fiscal 1996
in the amount of $21,600.
27
<PAGE>
AMC loaned $200,000 in January 1987 to Mr. Donald P. Harris, one of the
named Executive Officers in fiscal 1995, in connection with the purchase of his
principal residence. The employment of Mr. Harris by the Company or its
affiliates ceased effective as of October 1, 1995. Mr. Harris paid AMC $110,249,
the remaining amount of the principal and accrued interest on the loan, on
October 1, 1995. The largest principal amount outstanding on the note during
fiscal 1996 was $200,000.
The Company and Mr. Edward D. Durwood entered into an Agreement and General
Release effective October 5, 1995, pursuant to which Mr. Durwood was terminated
as President, Vice Chairman of the Board and Director of the Company and AMC
upon the recommendation of the Compensation Committee without cause with the
consent of the Company's Board of Directors. The Company paid Mr. Durwood
$498,398 in severance. The Agreement and General Release also provides for
mutual releases between the Company and Mr. Durwood.
AMC and Mr. Donald P. Harris entered into an Agreement and Release effective
October 1, 1995, pursuant to which Mr. Harris resigned as President - AMC Film
Marketing, Inc. AMC paid Mr. Harris $467,850 in severance. Mr. Harris paid AMC
$110,249, the remaining amount of the principal and accrued interest on a loan
he had previously received from AMC. The Agreement and Release also provides for
mutual releases between AMC and Mr. Harris.
In November, 1995, AMC purchased the principal residence of Mr. Richard M.
Fay, an Executive Officer, for $500,000. AMC is currently marketing the
residence and intends to sell it.
During fiscal 1996, the Company retained Polsinelli, White, Vardeman &
Shalton, P.C., of which Mr. Vardeman, a director of the Company and AMC, is a
director, officer and shareholder, to provide certain legal services to a
subsidiary of AMC.
For a description of certain employment agreements between the Company and
Messrs. Stanley H. Durwood, Philip M. Singleton, Peter C. Brown and Richard M.
Fay, see "Employment Contracts, Termination of Employment and Change in Control
Arrangements."
FEDERAL INCOME TAXES
DI and the Company entered into an agreement dated July 1, 1983, pursuant to
which, so long as DI and the Company filed a consolidated federal income tax
return, the Company paid to DI the amount of tax that would be payable
calculated as if the Company filed a separate consolidated federal income tax
return for such period and all prior taxable periods; provided, however, that if
such return reflected a refund due to the Company, DI was obligated to pay the
Company an amount equal to such refund when and if the consolidated group is
able to realize the Company's tax benefit in the future. Due to the Company's
issuance of the $1.75 Cumulative Convertible Preferred Stock on March 3, 1994,
the Company is no longer eligible to file a consolidated federal income return
with DI. The agreement still applies to all tax years for which DI and the
Company previously filed a consolidated federal income tax return.
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors recommends that the stockholders ratify the
appointment of Coopers & Lybrand L.L.P. as independent public accountants to
audit the financial statements of the Company for the fiscal year ending April
3, 1997. Representatives of Coopers & Lybrand L.L.P.
28
<PAGE>
are expected to be present at the Annual Meeting of Stockholders, and if
present, will have the opportunity to make a statement if they wish, and are
expected to be available to respond to appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF
COOPERS & LYBRAND L.L.P. AS INDEPENDENT PUBLIC ACCOUNTANTS TO AUDIT THE
FINANCIAL STATEMENTS OF THE COMPANY FOR THE FISCAL YEAR ENDING APRIL 3, 1997.
3. AMENDMENTS TO 1994 STOCK OPTION AND INCENTIVE PLAN
GENERAL
The Board of Directors recommends to the stockholders for their approval and
adoption the Proposed Amendments (as such term is defined below) to the AMC
Entertainment Inc. 1994 Stock Option and Incentive Plan (as heretofore amended,
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
Proposed Amendments. Abstentions will be counted in the tabulation of votes cast
on the Proposed Amendments and will have the same effect as negative votes.
Broker non-votes will not be counted in determining whether the Proposed
Amendments are approved.
The Company's Executive Officers and directors, other than Messrs. Charles
J. Egan, Jr. and Paul E. Vardeman, and, if they are elected, Messrs. William T.
Grant, II and John P. Mascotte, are eligible to participate in the Incentive
Plan and certain of them are expected to receive Awards based on the Proposed
Amendments. Therefore, such Executive Officers and directors may be deemed to
have an interest in the Proposed Amendments.
Set forth below are summaries of the Proposed Amendments and of the
Incentive Plan, after giving effect to the Proposed Amendments. THE COMPLETE
TEXT OF THE INCENTIVE PLAN, SHOWING THE CHANGES MADE BY THE PROPOSED AMENDMENTS,
IS SET FORTH AS EXHIBIT A TO THIS PROXY STATEMENT. THE FOLLOWING SUMMARY OF THE
MATERIAL FEATURES OF THE INCENTIVE PLAN AND THE PROPOSED AMENDMENTS DOES NOT
PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO EXHIBIT
A. Capitalized terms not otherwise defined herein shall have the same meanings
set forth in Exhibit A.
THE PROPOSED AMENDMENTS
The Board of Directors has approved the amendment of Sections 2.19, 2.24,
3.2, 5.1, 10, 11.1, 12, 19, 20.1, 22.2 and 24 of the Incentive Plan and the
deletion of Sections 2.27 and 22.3 thereof (collectively, the "Proposed
Amendments"). The Proposed Amendments were recommended to the Board by the
Compensation Committee of the Company's Board of Directors (the "Committee"),
which is responsible for the administration of the Incentive Plan. Certain of
these changes require stockholder approval under the provisions of the Incentive
Plan because they may be deemed to materially increase benefits to participants.
Certain changes also require stockholder approval under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), and regulations
thereunder, because they involve material terms of performance goals, as defined
by such regulations.
29
<PAGE>
The changes to Sections 2.19, 2.24, 10, 19 and 22.2 effected by the Proposed
Amendments and the deletion of Sections 2.27 and 22.3 arise from recent
amendments to Rule 16b-3 promulgated under the Securities Exchange Act of 1934
(the "Exchange Act"), as a result of which certain existing restrictions in the
Incentive Plan are no longer required under Rule 16b-3. If the Proposed
Amendments are approved, outstanding Awards will be deemed amended accordingly
without further action required by the Company or recipients.
Under existing Sections 2.24 and 10, Awards are not transferrable except by
will or the laws of descent or distribution or pursuant to a qualified domestic
relations order. If the Proposed Amendments are approved, other transfers may be
made with the prior approval of the Committee. Presently the Committee has not
determined under what circumstances it would permit an Award to be transferred
to a recipient, but seeks to amend the Plan so that it will have the flexibility
permitted by the recent amendments to Rule 16b-3.
The existing provisions of Sections 22.2 and 22.3 permit participants who
receive Stock Awards or who exercise Stock Options to satisfy their tax
withholding obligations by electing to surrender to the Company a portion of the
Shares that they would otherwise receive under their Award. The election is
subject to Committee disapproval, must be irrevocable, and if made by an officer
generally must either be made six months in advance of the applicable Tax Date
or during a Window Period, as defined in the Incentive Plan. As a result of the
amendments to Rule 16b-3, these limitations on exercise are no longer required,
and the Proposed Amendments will eliminate all of them except that provision is
retained for Committee approval of such elections. This power may be exercised
on a case-by-case or other basis, at the time an Award is made or upon exercise,
as determined by the Committee.
Section 19 of the Incentive Plan currently provides that no amendments will
be made to the Plan which require stockholder approval under Rule 16b-3. As
amended, Rule 16b-3 no longer requires stockholder approval of Plan amendments,
and in lieu of the existing requirement the Company proposes that Section 19 be
modified so that no changes requiring stockholder approval under Section 162(m)
of the Code will be made without such approval. This change is consistent with
the existing philosophy of the Committee. Under current regulations promulgated
under the Code, changes to the material terms of the Incentive Plan, including
the employees eligible to participate, the business criteria upon which
performance goals might be based and the maximum amount of compensation payable
to an employee under the Incentive Plan if performance goals are met, must be
approved by stockholders for performance based compensation to qualify under
Section 162(m) of the Code. See "Federal Income Tax Consequences of the
Incentive Plan - Limitation on Deductibility."
The changes to Sections 3.2, 11.1, 12 and 24 and certain of the changes to
Section 5.1 of the Incentive Plan effected by the Proposed Amendments result
from the desire of the Compensation Committee to introduce a performance based
deferred compensation program under the Incentive Plan in fiscal year 1998
utilizing Performance Units. Awards under this program would be paid in cash,
subject to the satisfaction by the Company over a 12 month or longer performance
period of performance goals established by the Committee. Notwithstanding that
the performance goals are met, Awards under this program would not vest (except
in the event of involuntary termination without cause, death, disability
retirement or upon the occurrence of certain change in control events) until
recipients reach age 55 and have at least 15 years of service with the Company.
Prior to commencement of the applicable performance period with respect to which
such a Performance Unit Award is made, participants will be permitted to elect
to defer payment
30
<PAGE>
of the Award to some date after the date of vesting, provided (i) there may be
only one payment per Performance Unit Award, (ii) between ages 55 and 65, only
one Award can be paid each year, (iii) Awards earned after 65 will be paid when
earned, if then vested, (iv) any deferred amount not paid prior to age 75 will
be paid at age 75, and (v) Awards will be paid in lump sum upon termination
without cause, upon a change in control or death, and, at the discretion of the
Committee, upon disability or early retirement.
If one of the proposed performance based deferred compensation Performance
Unit Awards is earned through satisfaction of performance goals, it would earn
interest at the prime rate from the date the performance goal is satisfied until
paid. However, the amount paid (including interest) to an employee under an
Award could not exceed the Incentive Plan's limitation for cash Awards under
Performance Units granted during any 12 month period.
To facilitate the proposed performance based deferred compensation program,
the Company proposes to amend Section 5.1 of the Incentive Plan so that the
limitation on cash Awards applies to the amount of cash Awarded under
Performance Units granted during a 12 month period, instead of to the amount of
cash received during such period. As proposed, the limitation in Section 5.1
would apply to interest earned during the deferral period. In connection with
the proposed program, the Company also proposes to amend Section 5.1 by raising
the annual and aggregate Incentive Plan limits for cash amounts from $400,000
and $2,000,000, respectively, to $800,000 and $2,500,000, respectively. This
change results primarily from the inclusion of interest earned during a deferral
period on Performance Unit Awards. This change also will facilitate using the
Incentive Plan for other annual incentive cash awards that are consistent with
the Company's compensation policy.
Two changes to Section 11 are necessary to effect the proposed performance
based deferred compensation program. Under the existing provisions, termination
of employment without cause results in forfeiture of a Performance Unit, and a
proposed amendment to Section 11(e) is necessary to prevent forfeiture of a
Performance Unit in such event. As indicated above, the intent of the Committee
is that in such instances a recipient's rights in a performance based deferred
compensation Performance Unit Award will vest and payment will be made on a
lump-sum basis (assuming the performance goals for the Award are met before
termination).
In addition, under the existing provisions of the Incentive Plan, amounts
due under Performance Units are payable upon death, disability or retirement,
based on the extent to which performance goals have been met, measured through
the date of termination. The change to Section 11.1(f) is sought to give the
Committee greater flexibility in developing Performance Unit Awards, so that
retirement is not an automatic vesting event without 15 years of service and so
that upon retirement, performance-based deferred compensation Performance Unit
Awards will not automatically be paid in a lump sum when a participant has made
another payment election.
The changes to Sections 3.2, 12 and 24 of the Incentive Plan effected by the
Proposed Amendments are conforming amendments resulting from the intention to
have such provisions apply to Performance Units as well as Stock Awards. Thus,
pursuant to the Proposed Amendments, the Committee is given express power to
determine the amount of such Awards; under Section 12, restrictions on such
Awards will lapse upon occurrence of a Change of Control Event; and under
Section 24, such Awards as to which all restrictions have lapsed will not be
subject to forfeiture even if the participant is terminated for cause.
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<PAGE>
The change to Section 20.1 of the Incentive Plan effected by the Proposed
Amendments is intended to permit the Committee to modify performance objectives
to prevent dilution or enlargement of Awards in the event of changes in the
corporate structure or shares of the Company. This authority complements the
Committee's existing authority to make changes in the number of Shares covered
by Awards in such events.
DESCRIPTION OF THE INCENTIVE PLAN (AFTER GIVING EFFECT TO PROPOSED AMENDMENTS)
GENERAL
The Incentive Plan permits three basic types of Awards: (i) grants of stock
options which are either incentive stock options ("ISOs") as defined by Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), or non-ISOs
("Non-Qualified Stock Options"), (ii) grants of stock Awards ("Stock Awards"),
which may be either performance stock Awards ("Performance Stock Awards") or
restricted stock Awards ("Restricted Stock Awards"), and (iii) performance unit
Awards ("Performance Units").
Under the Incentive Plan, the Committee is authorized to grant ISOs,
Non-Qualified Stock Options and Stock Awards entitling recipients to receive up
to an aggregate of 1,000,000 shares of the Company's 66 2/3 CENTS par value
Common Stock, in accordance with the Plan, without further authorization from
the stockholders. The Committee is also authorized to make Awards of Performance
Units, which are payable only in cash and are valued by reference to designated
criteria, other than shares of Common Stock, which may be established by the
Committee. Under the Incentive Plan as modified by the Proposed Amendments, no
grantee may receive under the Incentive Plan 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 Performance Units for cash Awards
aggregating more than $2.5 million, and during any 12 month period, no grantee
may receive options to acquire more than 65,000 shares of Common Stock or
Performance Units for cash Awards aggregating more than $800,000. 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 during a performance period of 12 months' duration or
more of one or more performance goals as established by the Committee not later
than 90 days after the start of each performance period with respect to which
such an Award is made. The Committee must certify that the performance goals
have been achieved before payment of any such Award. Performance goals
established by the Committee shall be based upon, as the Committee deems
appropriate, one or more of the following business criteria: (i) Company or
subsidiary EBITDA (earnings before interest, taxes, depreciation and
amortization); (ii) Company or subsidiary earnings or earnings per share; (iii)
public market prices of Shares; (iv) division operating income, or "DOI"
(operating income less general and administrative expenses and extraordinary
expenses); (v) division level EBITDA (DOI less national film, home office and
international general and administrative expenses plus capitalized lease
adjustments); (vi) private market value of Shares on a fully-diluted basis
(assuming full exercise of all outstanding shares of preferred stock, Class B
stock, options and other rights to acquire Shares), based on a constant multiple
of theatre level EBITDA (Company EBITDA less
32
<PAGE>
National Cinema Network, Inc. EBITDA), plus the book value of National Cinema
Network, Inc., cash, cash equivalents and investments and investments in other
long-term assets, less corporate borrowings, capitalized lease obligations and
the carrying value of minority interests; (vii) return to stockholders, measured
by increases in the market value of an investment in Shares, assuming
reinvestment of dividends received; and (viii) return on assets within a
participant's span of responsibility. The Committee may, in its discretion,
determine whether an Award will be paid under any one or more of the business
criteria. In setting performance goals, such criteria may be measured against
one or more of the following: (i) the prior year's or years' performance of the
Company, a subsidiary, a division or other operations-based unit or span of a
participant's responsibility; (ii) the performance of a broad based group of
stocks such as, but not limited to, the Standard and Poor's 500 Index; and (iii)
the performance of a peer group of two or more companies. Such performance goals
may be, but need not be, different for each performance period.
The Committee may set different (or the same) goals for different grantees
and for different Awards, and performance goals may include standards for
threshold (minimum) attainment, target attainment and maximum attainment. In all
cases, however, performance goals include a threshold (minimum) performance
standard below which no part of the relevant Award will be earned. The Committee
may reduce the amount of, or eliminate, a performance goal based Award that
would otherwise be payable but may not increase the compensation payable under
an Award otherwise due upon attainment of a performance goal.
ELIGIBILITY
Employees of the Company or its subsidiaries who are corporate or field
executives or senior managers, including Executive Officers, and other managers,
including field and theatre managers, are eligible for Awards under the
Incentive Plan. All officers of the Company are considered employees for this
purpose whether or not they are also directors. Directors who are not also
employees, however, are not eligible for Awards under the Incentive Plan. Awards
may be made without regard to prior Awards made under the Incentive Plan or any
other plan or participation in any other benefit plan of the Company or its
subsidiaries. Presently there are approximately 45 officers (including three
directors) and approximately 350 other employees of the Company and its
subsidiaries eligible to participate in the Incentive Plan.
AWARDS MADE AND PRESENTLY PROPOSED UNDER INCENTIVE PLAN
PAST AWARDS. The following tables provide certain information concerning
Performance Shares and Non-Qualified Stock Options awarded to date under the
Incentive Plan to (i) each of the persons identified in the Summary Compensation
Table, (ii) all current executive officers of
33
<PAGE>
the Company as a group, (iii) all current directors and nominees for director
who are not executive officers, as a group, (iv) all current employees,
including officers who are not executive officers, as a group, and (v)
associates of directors, executive officers and nominees for director, as a
group.
<TABLE>
<CAPTION>
PERFORMANCE
OR OTHER ESTIMATED FUTURE PAYOUT
PERIOD OF (NUMBER OF SHARES)
NUMBER OF MATURATION OR -----------------------------------------
NAME SHARES(1)(2) PAYOUT(3) THRESHOLD(#) TARGET(#) MAXIMUM(#)
- ------------------------------- ----------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Stanley H. Durwood............. 90,000 1996-98 30,000 45,000 90,000
Philip M. Singleton............ 18,000 1996-98 6,000 9,000 18,000
Peter C. Brown................. 18,000 1996-98 6,000 9,000 18,000
Richard T. Walsh............... 9,000 1996-98 3,000 4,500 9,000
Frank T. Stryjewski(4)......... 0 -- 0 0 0
All current executive officers,
as a group..................... 153,000 1996-98 51,000 76,500 153,000
Current directors and nominees
for director who are not
executive officers, as a
group.......................... 0 -- 0 0 0
All current employees who are
not executive officers, as a
group.......................... 39,000 1996-98 13,000 19,500 39,000
Associates of directors,
executive officers and nominees
for director, as a group....... 0 -- 0 0 0
</TABLE>
- -------------------
(1)Maximum
(2)The Performance Share Awards shown in the table are based on return to
stockholders and private market value per share. The actual number of shares
received by participants under such Awards will be based on changes in such
criteria over the performance period as measured against changes in the Standard
and Poor's 500 Index over such period. For a more detailed description of the
conditions which must be met before shares may be received under the Performance
Share Awards referred to in the preceding table, see "Long-Term Incentive Plan."
(3)Fiscal Years.
(4)When his employment with AMC ceased, Awards made under the Incentive Plan
to this individual lapsed unexercised and are therefore not included in this
table.
34
<PAGE>
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER ANNUAL RATES OF
OF SECURITIES STOCK PRICE APPRECIATION
UNDERLYING EXERCISE OR FOR OPTION TERM
OPTIONS/SARS BASE EXPIRATION ------------------------
NAME GRANTED(#)(1) PRICE($/SH) DATE 5%($) 10%($)
- ------------------------ -------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Stanley H. Durwood...... 22,500 $ 11.750 03/29/05 $ 166,265 $ 421,414
42,500 24.500 04/03/06 654,842 1,659,753
22,500 26.375 05/16/06 373,213 945,939
Philip M. Singleton..... 4,500 11.750 03/29/05 33,253 84,283
4,500 26.375 05/16/06 74,643 189,188
Peter C. Brown.......... 4,500 11.750 03/29/05 33,253 84,283
4,500 26.375 05/16/06 74,643 189,188
Richard T. Walsh........ 2,250 14.500 06/28/05 20,518 52,004
2,250 26.375 05/16/06 37,321 94,594
Frank T.
Stryjewski(2)........... 0 -- -- -- --
All current executive
officers, as a group.... a-31,500 a-11.750 a-03/29/05 a- 232,771 a- 589,980
b- 7,500 b-14.500 b-06/28/05 b- 68,394 b- 173,348
c-42,500 c-24.500 c-04/03/06 c- 654,842 c-1,659,753
d-39,000 d-26.375 d-05/16/06 d- 646,903 d-1,639,629
Current directors and
nominees for director
who are not executive
officers, as a group.... 0 -- -- -- --
All current employees
who are not executive
officers, as a group.... a-11,250 a-14.500 a-06/28/05 a-102,591 a-260,023
b-11,250 b-26.375 b-05/16/06 b-186,606 b-472,971
Associates of directors,
executive officers and
nominees for director,
as a group.............. 0 -- -- -- --
</TABLE>
- -------------------
(1)For a summary of the vesting provisions of the options granted, see
"Option Grants."
(2)Because his employment with AMC ceased, options granted to this
individual expired unexercised and are therefore not included in the table.
PROPOSED AWARDS. As part of a three year program, the Committee presently
intends to grant additional performance based Non-Qualified Stock Options to
certain employees of the Company and its subsidiaries. These grants may be made
annually based on the Company's performance against annual goals for fiscal
years 1997 through 1998. Presently it is anticipated that the performance goals
and business criteria that will be used in determining the amount of options to
be granted under this component of the program for fiscal 1997 will be the same
as those that the Committee has used to grant Performance Shares. See "Long-Term
Incentive Plan".
35
<PAGE>
However, unlike the Performance Shares, which will be Awarded based upon
performance over the entire three year period, any such option grants that are
made will be based on annual performance for a fiscal year.
The following table shows the threshold, target and maximum number of
options which the Committee presently intends to grant with respect to fiscal
1997 under the Incentive Plan to (i) each of the persons currently in the
Company's employ identified in the Summary Compensation Table, (ii) all current
executive officers of the Company, as a group, (iii) all current directors and
nominees for director who are not executive officers, as a group, (iv) all
current employees, including officers who are not executive officers, as a
group, and (v) associates of directors, executive officers and nominees for
directors, as a group. However, the Committee may determine to grant different
amounts or types of Awards to participants under the Incentive Plan, or to base
such Awards on different performance goals or business criteria, or to make no
Awards, and participants will have no rights under any such Awards until they
are made by the Committee.
<TABLE>
<CAPTION>
PRESENTLY ESTIMATED NUMBER
OF PERFORMANCE-BASED
OPTIONS WHICH MAY BE
GRANTED FOR FISCAL 1997
-----------------------------------
NAME THRESHOLD TARGET MAXIMUM
- ------------------------------------------------------------ ----------- --------- -----------
<S> <C> <C> <C>
Stanley H. Durwood.......................................... 15,000 22,500 45,000
Philip M. Singleton......................................... 3,000 4,500 9,000
Peter C. Brown.............................................. 3,000 4,500 9,000
Richard T. Walsh............................................ 1,500 2,250 4,500
All current executive officers, as a group.................. 29,000 43,500 87,000
Current directors and nominees for director who are not
executive officers, as a group.............................. 0 0 0
All current employees who are not executive officers, as a
group....................................................... 11,500 17,250 34,500
Associates of directors, executive officers and nominees for
director, as a group........................................ 0 0 0
</TABLE>
As indicated above, if the Proposed Amendments are approved the Committee
intends to implement for fiscal year 1998 a performance based deferred
compensation program for certain executive officers utilizing performance based
deferred compensation Performance Unit Awards. Eligibility to receive an Award
under this program will be based on satisfaction over a 12 month performance
period of threshold, target or maximum performance goals based on Company
EBITDA. Awards at each level will be based on a percentage of the recipient's
base salary. Awards earned will not vest until the participant reaches 55 and
has 15 years of service with the Company. Vested amounts which are deferred will
be paid as the participant elects, at any time after reaching age 55 and before
age 75, provided, that (i) there may be only one payment per Performance Unit
Award, (ii) Awards earned after age 65 will be paid when earned, if then vested,
(iii) all deferred amounts not previously paid will be paid at age 75, and (iv)
Awards will be paid in a lump sum upon termination without cause, upon certain
change in control events or upon death, and, in the Committee's discretion, upon
disability or early retirement. Interest will be credited annually to deferred
amounts based on the average prime rate in effect during the year, provided that
the amount paid to an employee with respect to Performance Unit Awards
(including any such interest) granted under the Incentive Plan during any 12
month period may not exceed the Incentive Plan limitations of $800,000, or $2.5
million in the aggregate for all such Awards.
36
<PAGE>
The following table shows the threshold, target and maximum value of
performance based deferred compensation Performance Units which the Committee
presently intends to grant with respect to fiscal 1998 under the Incentive Plan
to Messrs. Stanley H. Durwood, Philip M. Singleton and Peter C. Brown. No other
Performance Unit Awards are presently intended, although the Committee may
determine to grant different amounts or types of Awards to participants under
the Incentive Plan, or to base such Awards on different performance goals or
business criteria, or to make no Awards, and participants will have no rights
under any such Awards until they are made by the Committee.
<TABLE>
<CAPTION>
VALUE OF
PERFORMANCE UNIT AWARDS
UPON SATISFACTION OF
PERFORMANCE GOALS(1) VALUE AT AGES 55 AND 65(2)
----------------------------------- ----------------------------------
NAME THRESHOLD TARGET MAXIMUM THRESHOLD TARGET MAXIMUM
- -------------------------- ----------- --------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Stanley H. Durwood........ $ 35,062 $ 70,125 $ 105,187 N/A N/A N/A
Philip M. Singleton....... 19,641 39,283 58,925 $ 26,971/ $ 53,942/ $ 80,913/
59,590 119,180 178,770
Peter C. Brown............ 17,531 35,062 52,593 $ 62,324/ $ 124,649/ $ 186,973/
137,699 275,399 413,098
</TABLE>
- -------------------
(1)Base salaries for fiscal 1998 have not been determined. Values are based
on annual base salaries in effect for fiscal 1997.
(2)Assumes a prime rate of 8.25% throughout the deferred period. The first
value for Messrs. Singleton and Brown is at age 55, when they become eligible
for early retirement, and the second value is at age 65. If Mr. Durwood receives
such an Award, he will be eligible for immediate payment upon satisfaction of
the performance goals because he has met the vesting requirements.
ADMINISTRATION
The Incentive Plan is administered by the Compensation Committee of the
Company's Board of Directors (the "Committee"), consisting of not fewer than two
members of the Board of Directors none of whom are employees of the Company or
any of its subsidiaries. No member of the Committee is eligible to receive an
Award under the Incentive Plan. The members of the Committee are appointed by
the Board of Directors and serve at the discretion of the Board of Directors.
See "Directors' Meetings and Committees."
The Committee has the sole, final and conclusive power to administer,
construe, and interpret the Incentive Plan and to make rules to implement the
provisions thereof. The Committee is authorized among other matters to determine
to whom Awards are to be granted, to designate the number of shares covered by
each Award, to fix the duration of Awards, to set the time or times at which
each Award may be exercised, to determine performance goals, if any, applicable
to an Award, to accelerate vesting, exercise or payment of an Award and to adopt
such other rules and regulations as it may deem appropriate for the
administration of the Incentive Plan. The Committee may grant Awards in
replacement of other Awards granted under the Incentive Plan or any other plan
of the Company or any of its subsidiaries. Any expenses of administration of the
Incentive Plan are borne by the Company.
37
<PAGE>
Service on the Committee constitutes service as a Director of the Company,
and members of the Committee are entitled to indemnification and reimbursement
as Directors of the Company, pursuant to its Bylaws and to any agreements
pursuant thereto between the Company and its Directors providing for
indemnification.
TYPES OF AWARDS UNDER THE INCENTIVE PLAN
STOCK OPTIONS. A stock option, which can be either an ISO or a
Non-Qualified Stock Option, is the right to purchase shares of the Company's
Common Stock at a set price for a period of time in the future. Under the
Incentive Plan, the purchase price of shares subject to any option must be at
least 100% of their fair market value on the date of grant. "Fair market value"
is defined in the Incentive Plan generally as the closing sales price of the
Company's Common Stock on the date the option is granted. As defined under the
Incentive Plan, the fair market value of a share of Common Stock on September
26, 1996 was $16 3/8.
The maximum period for exercise (i.e., term) of an ISO, with the exception
of any ISOs granted to a person owning more than 10% of the voting power of the
Company, is ten years from the date the option was granted. With regard to ISOs
granted to persons owning more than 10% of the voting power of the Company, the
minimum purchase price of shares is 110% of their fair market value on the date
of grant and the maximum term is five years. The term of Non-Qualified Stock
Options is left to the Committee's discretion.
The Committee can fix a shorter term for an ISO and can impose such other
terms and conditions on the grant of options as it chooses, consistent with the
Incentive Plan and with applicable laws and regulations which, with respect to
ISOs, limit the size of individual grants. Pursuant to federal tax law and
regulations in effect as of the date of this proxy statement, the aggregate fair
market value of the stock for which an employee's ISOs granted after 1986
becomes exercisable for the first time during any calendar year is limited to
$100,000. Options or portions of options that exceed this limit are treated as
Non-Qualified Stock Options.
Unless otherwise determined by the Committee or permitted by the Incentive
Plan, no option may be exercised until the expiration of six months following
the date of its grant.
STOCK AWARDS. A Stock Award is the grant of a right to receive shares of
Common Stock of the Company at a future date without the payment of cash, but
conditioned upon the observance or fulfillment of stated conditions. A Stock
Award may be either a "Performance Stock Award", under which the receipt of
shares will be conditioned upon the attainment of performance goals by the
Company, a subsidiary or a division during a performance period, or a
"Restricted Stock Award", under which the receipt of shares is conditioned on
the continued employment of the grantee or such other conditions as the
Committee may impose, or both. Under the Plan, subject to provisions permitting
acceleration, the receipt of shares by Executive Officers under Stock Awards
will be conditioned upon the attainment of one or more performance goals over a
performance period of 12 months' duration or longer. Unless otherwise determined
by the Committee and subject to the terms of the Plan, no shares may be issued
under Restricted Stock Awards unless the Grantee remains employed by the Company
or a subsidiary for a period of one year after the date of grant.
PERFORMANCE UNITS. A Performance Unit is an Award payable only in cash and
valued by reference to designated criteria, other than Common Stock, which will
be established by the
38
<PAGE>
Committee. Subject to provisions of the Incentive Plan permitting acceleration,
Performance Units granted to Executive Officers will be conditioned on the
attainment of one or more performance goals during a performance period of 12
months' duration or longer.
VESTING PROVISIONS; ACCELERATION.
The Committee may permit the accelerated exercise of stock options and the
lapse or waiver of restrictions and performance goals on Stock Awards and
Performance Units in the event certain transactions occur, such as a merger or
liquidation of the Company, the sale of substantially all the assets of the
Company, a subsidiary or a division, the sale of a majority interest in a
subsidiary, the change in control of the Company or termination of a grantee's
employment following a change in control. Similar provisions may apply in the
case of death, disability, retirement or other terminations. For example,
performance goal requirements and forfeitability restrictions on Stock Awards
lapse in the event of death, disability or retirement and if a performance based
Stock Award is accelerated upon the occurrence of such an event, the shares
deliverable under such an Award will be determined based on the extent to which
performance goals have been achieved through the date such termination or other
accelerating event occurs. In addition, the Committee may permit all outstanding
options held by a grantee to vest upon any termination of employment. Under the
Proposed Amendments, the Committee has broad discretion to determine the basis
of satisfying Performance Unit Awards upon termination of employment, death,
disability or retirement. However, except for vested Awards under the proposed
performance based deferred compensation provision, all benefits under the
Incentive Plan not yet received by a grantee automatically will terminate, on
termination of the grantee's employment for cause.
AWARDS 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 performance goals and
in the number and kind of shares subject to outstanding Awards and in the option
price. Unpurchased shares subject to an option that lapses or terminates without
exercise, shares subject to Stock Awards that are never issued because the
conditions of the Award are not fulfilled and shares related to Awards which are
settled in cash in lieu of shares, are available for future Awards. Shares
withheld by the Company pursuant to a withholding tax election, as described
below under "Withholding Taxes", and shares used to pay for the purchase price
of options, shall be deemed issued under the Incentive Plan.
EXERCISE OF RIGHTS UNDER AWARDS GRANTED
A person entitled to exercise an option under the Incentive Plan may do so
by notifying the Secretary of the Company in writing of the number of shares
with respect to which an option is being exercised. Such notice must be
accompanied by payment in full of the purchase price in the form of cash,
certified bank cashier's check or money order or shares of Company Common Stock
or a combination thereof having equivalent value. With the Committee's approval,
a grantee may pay the exercise price by delivering a promissory note to the
Company provided that, except when treasury shares are used to satisfy an option
exercise, at least the par value of the shares issued is paid in cash or
equivalents or shares of Common Stock as provided above.
39
<PAGE>
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 approved by the Committee.
TRANSFERABILITY
Unless approved by the Committee, 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, changes to the Incentive Plan which require stockholder
approval under Section 162(m) of the Code will not be made without such
approval.
The Committee may at any time unilaterally amend or terminate and cash out
any unexercised or unpaid Award, whether earned or unearned, including Awards
earned but not yet paid, and/or substitute another Award of the same or
different type, to the extent it deems appropriate; provided, that any amendment
to (but not termination of) an outstanding Award which, in the Committee's
opinion, is materially adverse to the grantee, or any amendment or termination
which, in the opinion of the Committee, may subject the grantee to liability
under Section 16 of the Exchange Act, shall require the grantee's consent.
FEDERAL INCOME TAX CONSEQUENCES OF THE INCENTIVE PLAN
Under the Code and Treasury regulations, as now in effect, the principal
federal income tax consequences of Awards under the Incentive Plan in the normal
operation thereof are as summarized below.
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
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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(b) 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 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. Regulations under
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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
Regulations thereunder, relating to performance goals so that compensation
received by affected Executive Officers under the Incentive Plan can qualify as
"performance based" assuming all other Code requirements are met at the time an
Award is made or paid. However, under certain circumstances it may not be
possible or practicable or in the Company's best interests for compensation
under the Incentive Plan to qualify under Section 162(m) of the Code, and the
Committee makes no representation that Awards will so qualify. The Committee
anticipates that in most instances treatment under Section 162(m) of the Code
will not be an issue because generally no Executive Officer's compensation will
exceed $1,000,000 in any one year.
The foregoing is only a general summary of the principal tax consequences to
the Company and the grantee from the grant of Awards and the exercise of options
under the Incentive Plan. The foregoing discussion is neither intended nor
offered as a complete summary or as a legal interpretation, and it does not
address any consequences other than Federal income tax consequences.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE
PROPOSED AMENDMENTS TO THE AMC ENTERTAINMENT INC. 1994 STOCK OPTION AND
INCENTIVE PLAN.
4. OTHER MATTERS TO COME BEFORE THE MEETING
No other matters are intended to be brought before the meeting by the
Company nor does the Company know of any matters to be brought before the
meeting by others. If, however, any other matters properly come before the
meeting, the persons named in the proxy will vote the shares represented thereby
in accordance with the judgment of management on any such matters.
Stockholders who wish to present proposals for action at the Annual Meeting
of Stockholders to be held in 1997 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 19,
1997, for consideration for inclusion in the next year's Proxy Statement and
proxy.
By order of the Board of Directors
[LOGO]
Nancy L. Gallagher
Vice President and 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 1996 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
SET FORTH BELOW IS THE TEXT OF THE AMC ENTERTAINMENT INC. 1994 STOCK OPTION
AND INCENTIVE PLAN, AS AMENDED TO DATE ( THE "INCENTIVE PLAN"), TOGETHER WITH
THE PROPOSED AMENDMENTS BEING SUBMITTED TO STOCKHOLDERS FOR THEIR APPROVAL AT
THE ANNUAL MEETING. PROPOSED DELETIONS FROM THE INCENTIVE PLAN ARE MARKED
THROUGH, AND PROPOSED ADDITIONS ARE UNDERLINED.
AMC ENTERTAINMENT INC.
1994 STOCK OPTION AND INCENTIVE PLAN, AS AMENDED
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.
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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.
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<*>,
as amended from time to time.</*>
2.20 "SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
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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 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<*>, and other transferees approved in
advance by the Committee.</*>
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 amount of the Award or</*>
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
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the authority to grant Awards in replacement of Awards previously granted under
the Plan or any other plan of the Company or a Subsidiary. The Committee's
actions in making Awards and fixing their size, Term, and other terms and
conditions shall be final and conclusive on all persons.
3.3 The Committee shall have the sole responsibility for construing and
interpreting the Plan, for establishing (and amending) such rules and
regulations as it deems necessary or desirable for the proper administration of
the Plan, and for resolving all questions arising under the Plan. Any decision
or action taken by the Committee arising out of or in connection with the
construction, administration, interpretation and effect of the Plan and of its
rules and regulations shall, to the extent permitted by law, be within its
absolute discretion, except as otherwise specifically provided herein, and shall
be conclusive and binding upon all Grantees, all Successors, and any other
person, whether that person is claiming under or through any Grantee or
otherwise.
3.4 The Committee may designate one of its members as Chairman. It shall
hold its meetings at such times and places as it may determine. All
determinations of the Committee shall be made by a majority of its members. Any
determination reduced to writing and signed by all members shall be fully as
effective as if it had been made by a majority vote at a meeting duly called and
held. The Committee may make such rules and regulations for the conduct of its
business as it shall deem advisable.
3.5 The Committee, in its discretion, may delegate its authority and duties
under the Plan to the Chief Executive Officer and/or to other senior officers of
the Company under such conditions and/or limitations as the Committee may
establish; provided, however, that only the Committee may establish performance
goals and select and grant Awards to Grantees who are subject to Section 16 of
the Exchange Act.
3.6 Service on the Committee shall constitute service as a Director, so
that the members of the Committee shall be entitled to indemnification and
reimbursement as Directors pursuant to its Bylaws and to any agreements between
the Company and its Directors providing for indemnification.
3.7 The Committee shall regularly inform the Board as to its actions with
respect to all Awards under the Plan and the terms and conditions of such Awards
in a manner, at such times, and in such form as the Board may reasonably
request.
4. ELIGIBILITY
Awards may be made under the Plan to employees who are corporate or field
executives or senior managers, including executive officers of the Company and
its Subsidiaries, and other managers, including field and theatre managers.
Officers shall be employees for this purpose, whether or not they also are
Directors. A Director who is not an employee shall not be eligible to receive an
Award. Awards may be made to eligible employees whether or not they have
received prior Awards under the Plan or under any previously adopted plan, and
whether or not they are participants in other benefit plans of the Company, AMC
or any other Subsidiary.
5. SHARES SUBJECT TO PLAN; LIMITATIONS
5.1 The Company hereby reserves 1,000,000 Shares, for issuance in
connection with Awards under the Plan, subject to adjustment under Section 20.
During the Plan no Grantee may receive Options to acquire more than 325,000
Shares, Stock Awards entitling the Grantee to receive more than 150,000 Shares
or cash awards aggregating more than <#>$2</#><*>$2.5</*> million under
Performance
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Units. During any 12 month period no Grantee may receive Options to acquire more
than 65,000 Shares or <*>Performance Units</*> <*>for</*> cash awards
aggregating more than <#>$400,000 under Performance Shares</#> <*>$800,000</*>.
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.
5.2 Any Shares related to Awards which (a) terminate by expiration,
forfeiture, cancellation or otherwise without the issuance of such Shares, or
(b) are settled in cash in lieu of Shares, shall be available again for grant
under the Plan, provided the Participant received no other benefits of ownership
of such Award other than voting rights, if any. Notwithstanding the foregoing,
no Shares which are used by a Participant for the full or partial payment to the
Company of the purchase price of Shares upon exercise of an Option, or for any
withholding taxes due as a result of such exercise, may become available for
Awards under the Plan. The Shares available for issuance under the Plan may be
authorized and unissued shares or treasury shares.
6. GRANTING OF OPTIONS
6.1 Subject to the terms of the Plan, the Committee may from time to time
grant Options to persons eligible under Section 4 above and shall designate such
Options as ISOs or NQSOs.
6.2 Pursuant to Code Section 422 and applicable regulations, an Option
shall not be deemed to be an ISO to the extent that the aggregate Fair Market
Value, as determined on the date or dates of grant, of Shares with respect to
which such ISO is exercisable for the first time by any individual during any
calendar year (under all stock option incentive plans of the Company or a
Subsidiary) exceeds $100,000. ISOs which first become exercisable during a
calendar year shall be taken into account in the order granted. Options that
exceed the $100,000 limit shall be treated as NQSOs.
6.3 The purchase price of each Share subject to Option shall be fixed by
the Committee, provided the purchase price for Shares subject to an Option shall
not be less than 100% of the Fair Market Value of the Shares on the date the
Option is granted.
6.4 Notwithstanding Section 6.3 above, pursuant to Code Section 422 and
applicable regulations, the minimum purchase price of an ISO shall be 110% of
the Fair Market Value of the Shares on the date the ISO is granted with respect
to Grantees who at the time of Award are deemed to own 10% or more of the voting
power of the Company's outstanding Shares.
6.5 Each Option shall expire and all rights to purchase Shares thereunder
shall cease on the date fixed by the Committee.
6.6 Notwithstanding Section 6.5 above, pursuant to Code Section 422 and
applicable regulations, an ISO shall expire and all rights to purchase Shares
thereunder shall cease no later than the fifth anniversary of the date on which
the ISO was granted with respect to Grantees who at the time of Award are deemed
to own 10% or more of the voting power of the Company, and no later than the
tenth anniversary of the date on which the ISO was granted with respect to other
Grantees.
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6.7 No Option shall become exercisable prior to the expiration of six
months after the date of its grant, unless otherwise determined by the Committee
or permitted by the Plan, and, subject to the limitations in the Plan, each
Option shall be exercisable for the number of Shares fixed by the Committee.
7. STOCK AWARDS
7.1 The Committee may grant eligible employees Stock Awards which shall
entitle Grantees to receive Shares in the future for no cash consideration and
which may be subject to such terms, conditions and restrictions, if any, as the
Committee may deem appropriate, including, without limitation, satisfaction of
performance goals, restrictions on transferability and continued employment.
7.2 Subject to provisions of the Plan permitting acceleration, the receipt
of Shares under Stock Awards granted to persons subject to Section 16 of the
Exchange Act will be conditioned on the attainment during a performance period
of performance goals established by the Committee based on criterion described
in Section 9.
7.3 At the time of grant of a Stock Award, the Grantee shall receive
written evidence of the Award in such form as may be approved by the Committee
but shall not be entitled to issuance or delivery of a stock certificate
evidencing the Shares covered by the Award until the Committee certifies that
performance goals have been met and the lapse of any restrictions that may have
been imposed pursuant to the Award. Upon the attainment of such goals and the
lapse of any restrictions, a certificate or certificates representing the number
of Shares covered by the Award, free and clear of all restrictions, shall be
issued and registered in the name of, and delivered to, the Grantee.
7.4 Unless otherwise determined by the Committee or provided in the Plan,
no Shares may be issued under Restricted Stock Awards unless the Grantee remains
employed by the Company or a Subsidiary for one year after the date of the
Award.
8. PERFORMANCE UNITS
8.1 The Committee may grant Awards in the form of Performance Units.
8.2 Amounts payable under a Performance Unit may be payable at a specified
date or dates or upon attaining performance conditions. Subject to provisions of
the Plan permitting acceleration, a Performance Unit granted to persons subject
to Section 16 of the Exchange Act will be conditioned on the attainment 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 not later than 90 days after the start of a performance period
of 12 months duration or longer with respect to which such an Award is made. 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
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appropriate, one or more of the following business criteria: (i) Company or
Subsidiary EBITDA (earnings before interest, taxes, depreciation and
amortization); (ii) Company or Subsidiary earnings or earnings per Share; (iii)
public market prices of Shares; (iv) division operating income, or "DOI"
(operating income less general and administrative expenses and extraordinary
expenses); (v) division level EBITDA (DOI less national film, home office and
international general and administrative expenses plus capitalized lease
adjustments; (vi) private market value of Shares on a fully-diluted basis
(assuming full exercise of all outstanding shares of preferred stock, Class B
stock, options and other rights to acquire Shares), based on a constant multiple
of theatre level EBITDA (Company EBITDA less National Cinema Network, Inc.
EBITDA), plus the book value of National Cinema Network, Inc., cash, cash
equivalents and investments and investments in other long-term assets, less
corporate borrowings, capitalized lease obligations and the carrying value of
minority interests in other long-term liabilities; (vii) return to stockholders,
measured by increases in the market value of an investment in Shares, assuming
reinvestment of dividends received; and (viii) return on assets within a
participant's span of responsibility; and the Committee may, in its discretion,
determine whether an Award will be paid under any one or more of such business
criteria. In setting performance goals, such criteria may be measured against
one or more of the following: (i) the prior year or years' performance of the
Company, a Subsidiary, or a division or other operations-based unit or span of a
participant's responsibility; (ii) the performance of a broad-based group of
stock such as, but not limited to, the Standard and Poor's 500 Index; and (iii)
the performance of a peer group of two or more companies. Such performance goals
may be (but need not be) different for each performance period. The Committee
may set different (or the same) goals for different Grantees and for different
Awards, and performance goals may include standards for minimum attainment,
target attainment, and maximum attainment. In all cases, however, performance
goals shall include a minimum performance standard below which no part of the
relevant Award will be earned.
10. NON-TRANSFERABILITY OF RIGHTS
<#>No</#> <*>Except for assignments made with the Committee's prior
approval, 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,
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(d) except as provided in paragraphs (b) and (c) above, no provision
shall permit a NQSO to be exercised after the date which is six
months following a Grantee's termination of employment,
(e) except as provided in paragraph (f) below or as permitted by
Sections 12 or 20, all Stock Awards <#>and Performance Units</#>
shall be canceled and forfeited if a Grantee's employment is terminated, and
(f) in the event of Grantee's death, disability or retirement, the
Grantee (or his Successor) shall be entitled immediately to be
issued a certificate or certificates for all of the Shares represented by his
Stock Award(s) <#>and to be paid amounts due under Performance Unit awards,</#>
free and clear of all performance goal requirements and restrictions, based in
each case on the extent to which performance goals have been achieved, measured
through the date of termination.
For purposes of this Section 11, the term "disability" shall mean "long term
disability", as defined in the AMC Long Term Disability Plan, or any comparable
plan of the Company or AMC, or, if there is no such plan, the inability of the
Grantee to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or to last for a continuous period of not less than twelve months as
determined by the Committee based on the opinion of a qualified physician (or
other medical certificate) and other evidence acceptable to the Committee, and
the term "retirement" shall mean "normal retirement" or, with the approval of
the Committee, "early retirement" pursuant to the applicable terms of the AMC
Defined Benefit Retirement Plan or any comparable plan of the Company or a
Subsidiary covering a Grantee.
11.2 Unless the Committee determines otherwise, Options which pursuant to
their terms are exercisable following termination of a Grantee's employment:
(a) may be exercised only to the extent exercisable upon the date such
employment terminates, if such termination is other than by reason
of the Grantee's death, disability or retirement, and
(b) shall be accelerated if not yet vested and shall be exercisable in
full, free and clear of all restrictions, if such termination is by
reason of the Grantee's death, disability or retirement.
11.3 Transfers of employment between the Company and a Subsidiary, or
between Subsidiaries, shall not constitute termination of employment for
purposes of any Award. The Committee may specify in the terms and conditions of
an Award whether any authorized leave of absence or absence for military or
governmental service or for any other reason shall constitute a termination of
employment for purposes of the Award and the Plan.
12. PROVISIONS RELATING TO CHANGE IN CONTROL
The Committee may provide, at the time of an Award or thereafter, that if a
Change of Control Event occurs or if termination results from such Change of
Control Event, (a) any restrictions on <#>Stock</#> Awards shall lapse
immediately and (b) outstanding Options shall become exercisable immediately.
The Committee may also waive, at the time of an Award or thereafter, the
satisfaction of performance goals with respect to Performance Stock Awards and
Performance Units upon the occurrence of a Change in Control Event or upon
termination resulting from a Change in Control Event, and authorize the issuance
of Shares represented by Stock Awards or the
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payment of amounts under Performance Unit Awards, based in each case on the
extent to which performance goals have been achieved, measured through the date
a Change in Control Event or termination resulting therefrom occurs.
13. WRITING EVIDENCING AWARDS
Each Award granted under the Plan shall be evidenced by a writing which may,
but need not, be in the form of an agreement to be signed by the Grantee. The
writing shall set forth the nature and size of the Award, its Term, the other
terms and conditions thereof, other than those set forth in the Plan, and such
other information as the Committee directs. Acceptance of, or receipt of the
benefits of, an Award by the Grantee shall be conclusively presumed to be assent
to the terms and conditions set forth therein, whether or not the writing is in
the form of an agreement to be signed by the Grantee.
14. EXERCISE OF RIGHTS UNDER AWARDS
14.1
A person entitled to exercise an Option may do so by delivery of a
written notice to that effect specifying the number of Shares with
respect to which the Option is being exercised and any other information the
Committee may prescribe.
14.2
The notice of exercise shall be accompanied by payment in full of the
purchase price for any Shares to be purchased, with such payment being
made in cash, certified or bank cashier's check or money order or in Shares
having a Fair Market Value equivalent to the purchase price of such Shares to be
purchased, or a combination thereof. If approved by the Committee, payment of
the purchase price of an Option may also be made by Note, provided that unless
the Shares issued are treasury shares at least the par value of the Shares
issued shall be paid in cash or equivalent or Shares as provided above. The
Committee shall establish appropriate methods for accepting Shares and may
impose such conditions as it deems appropriate on the use of such Shares to
exercise an Option.
14.3
Upon exercise of an Option, or after grant of a Stock Award but before a
distribution of Shares in satisfaction thereof, the Grantee may request
in writing that the Shares to be issued in satisfaction of the Award be issued
in the name of the Grantee and another person as joint tenants with right of
survivorship or as tenants in common.
14.4
All notices or requests to the Company provided for herein shall be
delivered to the Secretary of the Company.
15. EFFECTIVE DATE AND DURATION OF THE PLAN AND DATE OF AWARD
15.1
The Plan shall become effective on November 10, 1994, provided any Awards
granted hereunder shall be subject to approval of any governmental body
having jurisdiction over the Company with respect to this Plan within the time
limits applicable to any such governmental approvals.
15.2
The Plan shall remain in effect until all Awards have been exercised or
satisfied in accordance herewith, but no Awards may be granted under the
Plan after the date of the first stockholders' meeting held in 1999 or December
31, 1999, whichever first occurs. The terms of any Award may be amended at any
time prior to the end of its Term in accordance with and subject to the
limitations of the Plan.
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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
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</#>
<*>Section 162(m) of the Code</*>.
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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
<*>of the Exchange Act</*>.
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 performance goals and</*> in the number and
kind of Shares covered <#>thereby</#> <*>by Awards</*> 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, based in each
case on the extent to which performance goals have been achieved to the date of
the event described in clause (a), (b), (c) or (d) above. The Committee may also
determine that any Options not exercised, and any Stock Awards or Performance
Units with respect to which any restrictions shall not have lapsed or conditions
shall not have been satisfied, prior to any such event, or within such period of
time thereafter (not to exceed 120 days) as the Committee shall determine, shall
terminate.
20.3 The grant of any Award pursuant to the Plan shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets or the business, assets or stock of a Subsidiary.
21. NON-UNIFORM DETERMINATION
The Committee's determination under the Plan including, without limitation,
determination of the persons to receive Awards, the form, amount and type of
Awards, the terms and provisions of Awards and the written material evidencing
such Awards, any amendments to the terms and provisions of any Awards, and the
granting or rejecting of applications for delivery of Shares need not be uniform
and may be made selectively among otherwise eligible employees whether or not
such employees are similarly situated.
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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</#> <*>elect</*> 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, except with respect to elections incident to death,
retirement, disability or termination of employment, must be made by a Grantee
prior to the Tax Date,</#> <*>made by a Grantee</*> 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</#> <*>must
approve</*> any election, may suspend or terminate the right to make elections,
or may provide with respect to any Award under this Plan that the right to make
elections shall not apply to such Award. <#>
22.3
If a Grantee is an officer of the Company and is subject to the
provisions of Section 16 of the Exchange Act, then an election to have
Shares withheld and any exercise of such right are subject to the following
additional restrictions:
(a) no exercise shall be made within six months of the grant of the
Award, unless made incident to death, retirement, disability or
termination of employment; and
(b) both the election and exercise must be made during a Window Period,
unless made incident to death, retirement, disability or
termination of employment, or the election must be made six months prior to the
Tax Date.</#>
<#>22.4</#> <*>22.3</*> If, pursuant to the provisions of the Code, the Tax
Date of an Award is deferred and a Grantee elects to have Shares withheld, the
full number of Option Shares or Stock Award Shares may be issued but the Grantee
shall enter into an agreement unconditionally obligating him or her to tender
back to the Company the proper number of Shares on the Tax Date.
23. NONCOMPETITION AND FORFEITURE PROVISION
If the Committee so determines, an Award may specify that a Grantee shall
forfeit all unexercised, unearned, and/or unpaid Awards, including, but not
limited to, Awards earned but not yet paid if, in the opinion of the Committee,
the Grantee, at any time during the period of Grantee's employment and for one
(1) year thereafter, without the written consent of the Committee, engages
directly or indirectly in any manner or capacity as principal, agent, partner,
officer, director, employee, or otherwise, in any business or activity
competitive with the business conducted by the Company, in the geographic area
in which the Company does business, or in any manner which is inimical to the
best interests of the Company.
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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.
29. EFFECT ON OTHER PLANS
Participation in this Plan shall not affect an employee's eligibility to
participate in any other benefit or incentive plan of the Company or a
Subsidiary. Any Awards made pursuant hereto shall not be used in determining the
benefits provided under any other plan of the Company or a Subsidiary unless
specifically provided therein.
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AMC ENTERTAINMENT INC.
106 WEST 14TH STREET - KANSAS CITY, MISSOURI 64105
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Messrs. Stanley H. Durwood and Peter C. Brown,
jointly and severally, as Proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent and vote, as designated
below, all of the Common Stock of AMC Entertainment Inc. which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be
held on November 14, 1996 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 / /WITHHOLD AUTHORITY to
listed (except as marked to the contrary). vote for the nominees listed.
NOMINEES: Messrs. William T. Grant, II and John P. Mascotte
(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 L.L.P. as independent
public accountants of the Company for the fiscal year ending April 3, 1997.
/ /FOR / /AGAINST / /ABSTAIN
3. PROPOSAL TO approve the proposed amendments to the AMC Entertainment Inc.
1994 Stock Option and Incentive Plan as described in the accompanying
Proxy Statement.
/ /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" THE ELECTION OF THE NOMINEES NAMED AND "FOR" PROPOSALS 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___________________________________, 1996
Signature____________________________________
Signature (if held jointly)__________________
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
