Cineplex Odeon Corporation
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE is hereby given that the Annual Meeting of Shareholders (the
"Meeting") of CINEPLEX ODEON CORPORATION (the "Corporation") will be held
at Cineplex Odeon Varsity Cinemas, 55 Bloor Street West, Second Level,
Toronto, Ontario, on Thursday June 26, 1997, at the hour of 12:00 noon
(Toronto time) for the following purposes:
1. To receive the annual report of the Corporation, the
financial statements of the Corporation contained therein as at
and for the year ended December 31, 1996, and a report of the
auditors thereon.
2. To elect directors.
3. To appoint KPMG, Chartered Accountants, as independent
auditors for fiscal 1997.
4. To authorize the directors to fix the remuneration of the
auditors.
5. To transact such further and other business as may properly
come before the Meeting or any adjournment or adjournments
thereof.
DATED the 26th day of May, 1997.
BY ORDER OF THE
BOARD
Michael Herman
Secretary
NOTE: Shareholders who are unable to be present in person at the Meeting
are requested to fill in, date, sign and return, in the envelope provided
for that purpose, the form of proxy accompanying this Notice. In order to
be voted, proxies must be received by the Corporation, c/o its Registrar
and Transfer Agent, Montreal Trust Company of Canada, Stock Transfer
Department, 151 Front Street West, 8th Floor, Toronto, Ontario M5J 2N1 by
no later than 5:00 p.m. (Toronto time) on Tuesday June 24, 1997 or, in the
case of any adjournment of the Meeting, by no later than 5:00 p.m. (Toronto
time) on the second business day immediately preceding the date of such
adjourned Meeting. A Management Information Circular and form of proxy
accompany this Notice.
CINEPLEX ODEON CORPORATION
1303 YONGE STREET
TORONTO, ONTARIO
M4T 2Y9
SOLICITATION OF PROXIES
This Management Information Circular is furnished in connection with
the solicitation by the management of Cineplex Odeon Corporation (the
"Corporation") of proxies to be used at the Annual Meeting of Common and
Subordinate Restricted Voting Shareholders of the Corporation (the
"Meeting") to be held on Thursday June 26, 1997, at 12:00 noon (Toronto
time) at Cineplex Odeon Varsity Cinemas, 55 Bloor Street West, Second
Level, Toronto, Ontario, and at any adjournments thereof, for the purposes
set forth in the accompanying Notice of Meeting. It is expected that the
solicitation will be primarily by mail. Proxies may also be solicited
personally by officers or employees of the Corporation at nominal cost.
Management of the Corporation has also retained ADP Independent Investor
Communications Corporation ("ADP") to assist in the solicitation of proxies
from shareholders. The estimated fee payable to ADP for such services is
$750. The cost of solicitation by management will be borne by the
Corporation. This Management Information Circular and the accompanying
proxy are expected to be first mailed to shareholders on or about May 26,
1997.
Unless otherwise indicated, information contained herein is given as
of May 14, 1997. Management knows of no matters to come before the Meeting
other than the matters referred to in the accompanying Notice of Meeting.
Unless otherwise indicated, all dollar figures contained herein are stated
in Canadian currency.
APPOINTMENT AND REVOCATION OF PROXIES
The persons named in the enclosed form of proxy are directors and/or
officers of the Corporation. A shareholder desiring to appoint some other
person to attend, act and vote for him or her and on his or her behalf at
the Meeting and at any adjournments thereof may do so either by inserting
such person's name in the blank space provided in the form of proxy or by
completing another proper form of proxy and, in either case, delivering the
completed proxy to the Corporation, c/o Montreal Trust Company of Canada,
the Registrar and Transfer Agent of the Corporation, at 151 Front Street
West, 8th Floor, Toronto, Ontario M5J 2N1, Attention: Stock Transfer
Department, or returning it by mail in the envelope provided for that
purpose, in either case so that it is received by Montreal Trust Company of
Canada at the above-noted office by no later than 5:00 p.m. (Toronto time)
on Tuesday June 24, 1997 or, in the case of any adjournment of the Meeting,
by no later than 5:00 p.m. (Toronto time) on the second business day
immediately preceding the date of such adjourned Meeting.
The proxy must be signed by the shareholder or by his or her attorney
authorized in writing, as his or her name appears on the Corporation's
register of shareholders. If the shareholder is a corporation, the proxy
must be executed by an officer or attorney thereof duly authorized.
In addition to revocation in any other manner permitted by law, a
proxy given pursuant to this solicitation may be revoked by instrument in
writing executed by the shareholder or by his or her attorney authorized in
writing or, if the shareholder is a corporation, by an officer or attorney
thereof duly authorized, and deposited either:
(i) at the registered office of the Corporation at any time up
to and including the last business day preceding the day of the
Meeting, or any adjournments thereof, at which the proxy is to be
used; or
(ii) with the chairman of such Meeting on the day of the Meeting
or any adjournments thereof.
Upon either of such deposits, the proxy is revoked.
EXERCISE OF DISCRETION BY PROXIES
The persons named in the enclosed form of proxy will vote or withhold
from voting the shares in respect of which they are appointed on any ballot
that may be called for in accordance with the direction of the shareholders
appointing them. In the absence of such direction, such shares will be
voted FOR all of the matters referred to in items (a) to, and including,
(c) in the accompanying proxy, all as stated under the appropriate headings
in this Management Information Circular.
The enclosed form of proxy confers discretionary authority upon the
persons named therein with respect to amendments or variations to matters
identified in the Notice of Meeting and with respect to other matters which
may properly come before the Meeting. As of the date of this Management
Information Circular, management of the Corporation knows of no such
amendments, variations or other matters to come before the Meeting.
However, if any such amendments, variations or other matters not now known
to management of the Corporation should properly come before the Meeting,
the shares represented by the proxies hereby solicited will be voted
thereon in accordance with the best judgment of the person or persons
voting such proxies.
ANNUAL REPORT
The consolidated financial statements of the Corporation for the
fiscal year ended December 31, 1996 and the auditors' report thereon will
be placed before the shareholders.
VOTING SHARES
On May 14, 1997, the Corporation had outstanding 103,352,282 common
shares ("Common Shares") and 73,446,426 Subordinate Restricted Voting
Shares ("SRV Shares"). Universal Studios, Inc. ("Universal"), formerly MCA
INC., a diversified entertainment company, is the only holder of SRV
Shares.
At all meetings of shareholders, each Common Share entitles the
registered holder thereof to one vote, which may be given in person or by
proxy. Shares represented at the Meeting in person or by proxy will be
counted toward the existence of a quorum notwithstanding their abstention
or non-vote on certain matters in accordance with Ontario law. Abstentions
and non-votes with respect to a particular proposal will not be counted
toward the total number of votes cast, however, in determining whether such
proposal receives the necessary approval.
Other than with respect to the election of directors (discussed
below), the holders of SRV Shares are currently entitled, as a class, to
the lesser of: (i) one vote less than one vote per share for each issued
and outstanding SRV Share, and (ii) one vote less than the result obtained
by dividing by two the difference between (a) the total number of votes
attached to issued and outstanding "voting securities" of the Corporation,
and (b) three times the number of votes attached to "Universal stocks". For
purposes of the Articles of the Corporation, "voting securities" excludes
SRV Shares but includes Common Shares and "Universal stocks" means all
voting securities owned by Universal, its subsidiaries, associates,
affiliates, their respective directors and officers and the associates and
affiliates of such directors and officers, other than voting securities
owned by any person who is on or after April 29, 1996 a director or officer
of The Seagram Company Ltd. ("Seagram") or a subsidiary thereof (other than
Universal and its subsidiaries) or by any associate (other than Seagram or
any affiliate of Seagram) of any such person.
Universal, the sole holder of SRV Shares, has, pursuant to the
Articles of the Corporation, the right to nominate a maximum number of
directors proportionate to its share ownership of the Corporation, provided
that it may not nominate more than: (i) four candidates for election to the
board of directors, if the number of directors of the Corporation is 15, or
(ii) one-third of the number of candidates for election to the board of
directors (rounded down to the nearest whole number), if the number of
directors of the Corporation is other than 15. The number of candidates
that Universal may nominate at any particular meeting of shareholders is,
however, reduced by the number of individuals nominated by management of
the Corporation at the particular meeting at the request of Universal.
All shareholders, including Universal, are entitled to exercise one
vote for each share owned by them with respect to those candidates
nominated by Universal for election to the board of directors (or proposed
for nomination by management of the Corporation at the request of
Universal). Pursuant to the Articles of the Corporation, Universal is not
entitled to vote any of its SRV Shares for any other nominees.
The record date for the purpose of determining the shareholders
entitled to receive notice of the Meeting (the "Record Date") has been
fixed as May 14, 1997. In accordance with the provisions of the Business
Corporations Act (Ontario) (the "Act"), the Corporation will prepare a list
of shareholders as at the close of business on the Record Date. In
accordance with the voting rights attaching to the Common Shares and the
SRV Shares as outlined above, each shareholder named in the list will be
entitled to vote, on all resolutions put forth at the Meeting for which
such shareholder is entitled to vote, the shares shown opposite his or her
name on the said list, except to the extent that: (i) the shareholder has
transferred any of his or her shares after the Record Date; and (ii) the
transferee of those shares produces properly endorsed share certificates or
otherwise establishes that he or she owns the shares and demands, not later
than 10 days before the Meeting, that his or her name be included in the
list of shareholders before the Meeting, in which case the transferee will
be entitled to vote his or her shares at the Meeting. The failure of a
shareholder to receive the Notice of Meeting does not deprive him or her of
the right to vote at the Meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table (together with the notes thereto) sets forth
certain information as of May 14, 1997 with respect to those persons known
to the Corporation to be the beneficial owners of, or who exercise control
or direction over, five percent or more of each class of the Corporation's
securities, all directors and nominees, the executive officers named in the
Summary Compensation Table contained herein and all directors and executive
officers as a group.
Name of Beneficial Owner Number of Common Percentage
Shares of
Beneficially Owned Class
or
over which Control
or
Direction is
Exercised
The Honourable E. Leo Kolber 3,578,092 3.23
Allen Karp 3,101,142 2.80
Rudolph P. Bratty 426,036 *
John H. Daniels 323,265 *
Bruce L. Hack 0 0
Ellis Jacob 1,282,400 1.16
Christopher McGurk 0 0
Brian C. Mulligan 0 0
Andrew J. Parsons 20,000 *
Eric W. Pertsch 400 *
Robert Rabinovitch 10,000 *
James D. Raymond 1,707,369 1.54
Howard L. Weitzman 0 0
Charles R. Bronfman 3,409,924 3.08
The Charles Rosner Bronfman Family Trust 35,918,429 32.40
Robert Tokio 1,603,240 1.45
Michael D. McCartney 170,331 *
Michael Herman 517,500 *
All directors and executive officers as a 13,629,049 12.29
group (19 persons)
* Indicates beneficial ownership or control of less than 1.0% of the
outstanding Common Shares.
Universal (in which Seagram owns an 80% indirect interest)
beneficially owns 73,446,426 SRV Shares, being 100% of such class.
Universal does not hold any other shares of the Corporation. The address of
Universal is 100 Universal City Plaza, Universal City, California, 91608,
U.S.A. The Articles of the Corporation provide that if SRV Shares are
transferred by Universal to a third party (except in very limited
circumstances), such shares will be automatically converted on transfer
into Common Shares, on a share-for-share basis.
Based on the most recent publicly available information related to
Seagram: (i) descendants of the late Samuel Bronfman and trusts established
for their benefit (the "Bronfman Trusts") beneficially owned, directly or
indirectly, an aggregate of 133,554,577 of the then outstanding common
shares of Seagram ("Seagram Shares"), constituting approximately 36.02% of
the then outstanding Seagram Shares, which amount includes the
approximately 14.65% of the then outstanding Seagram Shares owned by trusts
established for the benefit of Charles R. Bronfman and his descendants,
including, without limitation, the Charles Rosner Bronfman Family Trust
(the "Trust"), (ii) Charles R. Bronfman owned directly 1,002,760 Seagram
Shares, constituting approximately 0.27% of the then outstanding Seagram
Shares, and (iii) pursuant to two voting trust agreements, Charles R.
Bronfman served as the voting trustee for approximately 32.57% of the then
outstanding Seagram Shares and a voting trustee for approximately 2.83% of
the then outstanding Seagram Shares, which shares are beneficially owned by
the Bronfman Trusts and certain other entities.
(1) Includes 2,728,718 Common Shares owned directly and 774,374 Common
Shares owned by 3096475 Canada Inc., a corporation wholly owned by
Senator Kolber. Also includes 75,000 Common Shares beneficially owned
by Senator Kolber's wife, as to which he disclaims beneficial
ownership.
(2) Includes 17,142 Common Shares which are beneficially owned by the
Allen and Sharon Karp Trust, as to which Mr. Karp disclaims beneficial
ownership, and 3,084,000 Common Shares which relate to options
exercisable within 60 days of May 14, 1997.
(3) Does not include 73,446,426 SRV Shares owned by Universal. Messrs.
Hack, McGurk, Mulligan, Pertsch and Weitzman, officers of Universal or
its affiliates, disclaim beneficial ownership of all shares owned by
Universal.
(4) This number relates solely to options exercisable within 60 days of
May 14, 1997.
(5) All of the Common Shares are owned by 131382 Canada Inc., a
corporation wholly owned by Mr. Parsons.
(6) All of the Common Shares are beneficially owned by Mr. Rabinovitch's
wife, as to which he disclaims beneficial ownership.
(7) Includes 1,515,888 Common Shares owned directly and 157,200 Common
Shares owned by Rayjad Investments Inc., a corporation wholly owned by
Mr. Raymond. Also includes 34,281 Common Shares owned by Feejay
Corporation Canada Ltd., a corporation owned by Mr. Raymond and
members of his family, as to which Mr. Raymond disclaims beneficial
ownership.
(8) The address of such shareholder is 1170 Peel Street, 8th Floor,
Montreal, Quebec, H3B 4P2, Canada.
(9) Includes 99,266 Common Shares beneficially owned by Mr. Bronfman's
wife, as to which Mr. Bronfman disclaims beneficial ownership.
(10) Of this number, 1,584,400 Common Shares relate to options exercisable
within 60 days of May 14, 1997.
(11) Of this number, 167,031 Common Shares relate to options exercisable
within 60 days of May 14, 1997.
(12) Of this number, 7,522,255 Common Shares relate to options exercisable
within 60 days of May 14, 1997.
No other persons are known to the Corporation to beneficially own or
exercise control or direction over more than five percent of any class of
shares of the Corporation.
Section 16(a) of the SECURITIES EXCHANGE ACT OF 1934, as amended,
requires the Corporation's directors and executive officers, and persons
who beneficially own more than ten percent of a registered class of the
Corporation's equity securities, to file with the Securities Exchange
Commission initial reports of ownership and reports of changes in ownership
of Common Shares and other equity securities of the Corporation. To the
Corporation's knowledge, based solely on review of the copies of such
reports furnished to the Corporation (and written representations that no
other reports were required), all Section 16(a) filing requirements
applicable to its executive officers, directors and greater than ten
percent beneficial owners were complied with, except that Mr. Michael
McCartney filed a Form 5 in January of 1997, disclosing ownership of 3,300
Common Shares of the Corporation acquired by him several years prior to
becoming an insider, which he inadvertently failed to report in his initial
Form 3 filed in June 1996.
ELECTION OF DIRECTORS
A majority of the board of directors and of every committee of
directors must be residents of Canada within the meaning given to such term
in the Act. In addition, not less than two-thirds of the directors of the
Corporation must be Canadians within the meaning given to such term in the
Investment Canada Act.
The Articles of the Corporation currently provide that the board of
directors of the Corporation consists of not less than eight and not more
than twenty-five directors. The number of directors has been fixed by the
board of directors at twelve.
In accordance with the Articles of the Corporation, Universal, as the
sole holder of SRV Shares, is entitled to nominate four candidates to the
board of directors, unless such individuals are nominated by management of
the Corporation at the request of Universal, as described under the heading
"Voting Shares". Management of the Corporation has indicated that it will
nominate for election to the board of directors the twelve individuals
referred to below including, at the request of Universal, the four
individuals noted as nominees of Universal, in each case to serve until the
date of the next annual meeting of shareholders or until his or her
successor is elected or appointed. All such persons presently serve as
directors of the Corporation, except for Mr. Brian C. Mulligan.
Universal is entitled to one vote for each SRV Share held by it for
each of the four individuals it has instructed management of the
Corporation to nominate, being Messrs. Hack, Mulligan, Pertsch and
Weitzman. Holders of Common Shares are entitled to one vote per share in
respect of all nominees (See "Voting Shares"). In the election of
directors, the twelve nominees receiving the highest number of affirmative
votes of the shares present or represented and voting on the election of
directors at the Meeting shall be elected as directors. Each director will
hold office until the expiration of his or her term or until his or her
successor is duly elected, unless his or her office is earlier vacated.
Proxies conferring authority to vote for the election of those
individuals to be nominated by management will be voted FOR the election of
all the proposed nominees in the absence of directions from the
shareholders granting such proxies to withhold from voting for one or more
proposed nominee(s). Management does not contemplate that any of the
proposed nominees will be unable to serve as a director, but, if that
should occur for any reason prior to the Meeting, the form of proxy
accompanying this Management Information Circular confers the right on the
persons named in the proxy, in their discretion, to vote for another
nominee.
Set forth below is the name of each person proposed to be nominated
for election to the board of directors at the Meeting, all other positions
and offices with the Corporation now held by him or her and his or her
principal occupation or employment at present and for at least the five
preceding years.
Rudolph P. Bratty, Mr. Bratty has been a partner in the law firm of
Q.C. Bratty & Partners, Toronto, since May 1985.
(Age 65) Mr. Bratty has also been President of Cedarland
Properties Ltd., a real estate development company,
since 1972. Mr. Bratty is a director of The Toronto
Sun Publishing Corporation and Canada Trust.
Mr. Bratty has been a director of the Corporation
since April 1980.
John H. Daniels Mr. Daniels has been Chairman of the Board of the
(Age 70) Daniels Group, a real estate development and
investment company, since August 1982. Mr. Daniels
has been a director of the Corporation since
January 1980.
Bruce L. Hack* Mr. Hack has been Executive Vice President, Finance
(Age 48) of Universal since September 1995. Mr. Hack served
as Business Planning Re-Engineering Co-Leader of
Seagram and Vice President, Strategic Planning and
Business Development of Joseph E. Seagram &
Sons, Inc. from June 1994 to September 1995. He
served as Chief Financial Officer and Senior Vice
President, Finance and MIS of Tropicana
Products, Inc. from September 1991 to June 1994, and
as Senior Vice President, Finance and Business
Development of the Seagram Beverage Group during
1991. Mr. Hack was Executive Vice President, Finance
and Administration of the Seagram Beverage Company
in 1990 and from 1987 to 1990 he served as Vice
President, Sales and Distributor Planning of the
House of Seagram. Mr. Hack has been a director of
the Corporation since August 1995.
Ellis Jacob Mr. Jacob has been Executive Vice-President and
(Age 43) Chief Financial Officer of the Corporation since
December 1989. From February 1989 to December 1989,
he served as Senior Vice-President and Chief
Financial Officer of the Corporation; from October
1987 to February 1989 he served as Vice-President
Finance and Corporate Controller of the Corporation.
Mr. Jacob is a director of Alliance Communications
Corporation. Mr. Jacob has been a director of the
Corporation since June 1990.
Allen Karp Mr. Karp has been President and Chief Executive
(Age 56) Officer of the Corporation since June 1990. He
served as President and Chief Operating Officer of
the Corporation from December 1989 to June 1990.
Mr. Karp was Senior Executive Vice-President of the
Corporation from July 1986 to December 1989 and
President, North American Theatres Division of the
Corporation from August 1988 to December 1989.
Mr. Karp is a director of Alliance Communications
Corporation and Speedy Muffler King Inc. Mr. Karp
has been a director of the Corporation since May
1987.
The Honourable E. Leo Senator Kolber was appointed Chairman of the Board
Kolber of the Corporation on December 1, 1989. He has been
(Age 68) a Member of the Senate of Canada since December
1983. From October 1987 to September 1993, Senator
Kolber was Chairman of Claridge Inc. Senator Kolber
is a director of Seagram and The Toronto-Dominion
Bank. Senator Kolber has been a director of the
Corporation since December 1989.
Brian C. Mulligan* Mr. Mulligan has been Senior Vice President,
(Age 37) Corporate Development and Strategic Planning, of
Universal since January 1997. From late 1995 to
January 1997, Mr. Mulligan served as Vice President
of Corporate Development of Universal and earlier in
1995 he served as Vice President, Corporate Finance
of Universal. Mr. Mulligan served as Controller,
Corporate Finance of Universal from 1991 to 1995.
From 1987 to 1990, Mr. Mulligan was a Senior Manager
in the Entertainment Specialty Practice Unit of
Price Waterhouse.
Andrew J. Parsons Mr. Parsons has been Senior Vice-President and Chief
(Age 47) Financial Officer of Claridge Inc. since July 1990.
Mr. Parsons has been a director of the Corporation
since August 1990.
Eric W. Pertsch* Mr. Pertsch has been President and a director of
(Age 54) Universal Studios Canada Ltd., a wholly-owned
subsidiary of Universal since August 1996. From
January 1990 to August 1996, Mr. Pertsch served as
Vice-President, Finance and Administration, and a
director of Universal Studios Canada Ltd. In
addition, since April 1989, Mr. Pertsch has been
President of Universal Studios Filmed Entertainment
Canada Inc., a wholly-owned subsidiary of Universal
and President of Universal Studios Home Video Canada
and Universal Pay Television Canada, divisions of
Universal Studios Canada Ltd. Mr. Pertsch has been a
director of the Corporation since May 1988.
Robert Rabinovitch Mr. Rabinovitch has been Executive Vice-President
(Age 54) and Chief Operating Officer of Claridge Inc. since
July 1990. Mr. Rabinovitch is a director of CBCI
Telecom Inc. and has been a director of the
Corporation since December 1989.
James D. Raymond Mr. Raymond has been a private investor since March
(Age 72) 1990. Mr. Raymond was President of Claridge Inc.
from October 1987 to March 1990. Mr. Raymond is
Chairman of the Board and a director of Canadian 88
Energy Corporation and Agritek Bio Ingredients
Corporation. Mr. Raymond is a director of Campbell
Resources Inc., Denbridge Capital Corporation and
Yorbeau Resources Inc. Mr. Raymond has been a
director of the Corporation since November 1983.
Howard L. Weitzman* Mr. Weitzman has been Executive Vice President,
(Age 57) Corporate Operations of Universal since September
1995. Mr. Weitzman was one of the managing partners
of the law firm of Katten Muchin Zavis & Weitzman,
Los Angeles, from March 1991 to September 1995. From
1986 to 1991 he was one of the managing partners of
the law firm of Wyman Bautzer, Los Angeles.
Mr. Weitzman has been a director of the Corporation
since November 1995.
* Messrs. Hack, Mulligan, Pertsch and Weitzman are nominees of
Universal.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During 1996, the board of directors of the Corporation met eight
times. Mr. Weitzman did not attend at least 75% of the meetings of the
board of directors. In addition, Mr. Lynwood Spinks, who resigned as a
director on November 12, 1996, did not attend at least 75% of the meetings
of the board of directors up to the date of his resignation.
The Executive Committee exercises the powers of the board of directors
and the management and direction of the business and affairs of the
Corporation between meetings of the board of directors. The Executive
Committee is currently comprised of three members of the board of
directors, being Messrs. Karp, Rabinovitch and Weitzman. In 1996, it held
11 meetings.
The Corporation is required by applicable law to have an Audit
Committee comprised of at least three directors, of whom at least two must
be neither officers nor employees of the Corporation or its affiliates.
Messrs. Daniels, Hack, Parsons and Pertsch are currently members of the
Audit Committee. The Audit Committee meets with the financial officers of
the Corporation and its independent auditors to review financial reporting
matters, the system of internal accounting controls and the overall audit
plan and examines the quarterly and year-end financial statements before
their presentation to the board of directors. The auditors of the
Corporation are entitled to notice of and to attend all meetings of the
Audit Committee. In 1996, the Audit Committee met four times.
The Compensation Committee's function is to establish, review and
approve compensation arrangements with the Chief Executive Officer and
certain executive officers of the Corporation and to review and comment
upon compensation arrangements for all other officers of the Corporation.
The Compensation Committee is currently comprised of three members of the
board of directors, being Messrs. Bratty, Rabinovitch and Weitzman. The
Compensation Committee held one meeting in 1996.
The Stock Option Committee is comprised of three members of the board
of directors, each of whom is a disinterested member of the board of
directors within the meaning of the Corporation's amended and restated
employee stock option plan (the "Stock Option Plan"). Messrs. Bratty,
Rabinovitch and Weitzman are the current members of this committee. The
Stock Option Committee has been authorized to grant, to eligible
participants under the Stock Option Plan, stock options with respect to the
maximum number of Common Shares permitted by the Plan, all in accordance
with and subject to the terms and conditions of the Plan. The Stock Option
Committee met once during 1996.
Effective June 6, 1996, the Corporation created a Corporate Governance
Committee consisting of Messrs. Bratty, Rabinovitch and Weitzman. This
committee has, among other functions, the responsibility for nominating and
reviewing nominees to the board of directors and making recommendations in
the area of corporate governance and in the practices of the board of
directors. The Corporate Governance Committee did not meet in 1996.
STATEMENT OF CORPORATE GOVERNANCE PRACTICE
In 1994, The Toronto Stock Exchange Committee on Corporate Governance
in Canada proposed guidelines for effective corporate governance (the "TSE
Report"). The Toronto Stock Exchange has adopted as a listing requirement
the disclosure by each listed company incorporated in Canada, on an annual
basis, of its approach to corporate governance with respect to the specific
guidelines set out in the TSE Report. This requirement has been approved
and is effective for fiscal years ending on or after June 30, 1995. The
following describes the Corporation's approach to corporate governance in
relation to the guidelines contained in the TSE Report.
Guideline 1
The board of directors (for the purposes hereof, the "Board") should
explicitly assume responsibility for stewardship of the Corporation and
specifically for:
a. adoption of a strategic plan
Comment:
The Board has explicitly and implicitly assumed responsibility for the
stewardship of the Corporation. Senior management is required to maintain
an ongoing evaluation of its strategic plan and to report to the Board. In
addition, on an annual basis, the Board reviews and approves a three year
plan developed by management. The plan includes financial resource
requirements as well as strategic direction encompassing technologies,
market analysis and geographic expansion.
b. identification of principal risks and implementation of risk
management systems
Comment:
Senior management is actively involved in identifying and attempting
to minimize risks to the Corporation. The principal operating risk to the
Corporation is the availability of successful film product. The Board is
regularly updated with respect to the relative success of the Corporation's
box office performance as well as trends and developments applicable to the
industry and/or the Corporation. The Audit Committee meets on a quarterly
basis and areas of financial risk are addressed during such meetings. Any
areas of concern identified by the Audit Committee are reported to the
Board for further consideration.
c. succession planning and monitoring senior management
Comment:
The Corporation has employment contracts with seven key members of its
senior management team. Organizational structure is reviewed by the Board
and the capabilities and performance of key management are assessed on an
annual basis.
d. communications policy
Comment:
The Board has put structures in place to ensure effective
communication between the Corporation, its shareholders and the public. The
annual financial statements, quarterly financial statements, information
circulars and press releases on major developments are all submitted to the
Board or the Executive Committee for approval prior to their release. In
addition, the Corporation's Executive Vice President, Marketing and
Communications is responsible for the Corporation's investor relations
programme.
e. integrity of internal control and management information systems
Comment:
Through the Audit Committee, the Board has a means of assessing the
strength of the Corporation's internal control and management information
systems. The Audit Committee meets with the Corporation's external auditors
on a quarterly basis.
Guidelines 2 and 3
A majority of the directors should be "unrelated". An unrelated
director is independent of management and is free from any interest in any
business or other relationship which could, or could reasonably be
perceived to, materially interfere with the director's ability to act with
a view to the best interests of the Corporation, other than interests and
relationships arising from shareholding.
Comment:
The Board currently consists of twelve members, six of whom are
"unrelated". Messrs. Karp and Jacob, two of the nominees proposed for
election to the Board, are related within the meaning of the TSE Report as
they are members of management. Messrs. Hack, Mulligan, Pertsch and
Weitzman (the "Universal Nominees") are employees of Universal or its
subsidiaries. Universal has certain ongoing normal course business
relationships with the Corporation. Such activities are conducted on an
arm's length basis and are not considered material to Universal's business
as a whole. Although the Board does not believe that the business
relationship between the Corporation and Universal materially interferes
with the ability of the Universal Nominees to act with a view to the best
interests of the Corporation, the Board has determined to treat the
Universal Nominees as "related" directors within the meaning of the TSE
Report.
Guideline 4
The Board should appoint a nominating committee composed exclusively
of outside directors with responsibility for proposing new nominees to the
Board and assessing directors on an ongoing basis.
Comment:
The Board established a Corporate Governance Committee on June 6,
1996. The members of the Corporate Governance Committee are Messrs. Bratty,
Rabinovitch and Weitzman, all of whom are outside directors. This Committee
has, among other functions, the responsibility for nominating and reviewing
nominees to the Board.
Guideline 5
The Board should implement a process for assessing the effectiveness
of the Board as a whole, its committees and the contribution of individual
directors.
Comment:
The Corporate Governance Committee is responsible for assessing the
effectiveness of the Board, its committees or individual members.
Guideline 6
The Corporation should provide an education and orientation program
for new recruits to the Board.
Comment:
The Corporation does not have a formal orientation program for new
directors. However, new Board members do meet in a series of informal and
formal meetings with members of senior management and are provided with
detailed materials concerning the exhibition industry and the business and
management of the Corporation.
Guideline 7
The Board should examine its size to ensure that it facilitates
effective decision making.
Comment:
The Board has considered its size with a view to the impact of size
upon its effectiveness and has concluded that at this time 12 directors is
the appropriate number required to carry out duties effectively while
maintaining a diversity of views and experience.
Guideline 8
The Board should review the adequacy and form of compensation of
directors to ensure that it reflects the responsibilities and risks
involved.
Comment:
Currently, senior management periodically makes recommendations to the
Board concerning the compensation of directors. The Corporation does not
allow non-executive directors to participate in the Stock Option Plan, nor
does it require directors to hold shares in the Corporation. The Corporate
Governance Committee has, as part of its mandate, the review of directors'
compensation on a regular basis.
Guideline 9
Committees of the Board should be composed of outside directors a
majority of whom are unrelated.
Comment:
With the exception of the Executive Committee, all current committees
of the Board are comprised entirely of outside directors. The Executive
Committee includes Mr. Karp, the President and Chief Executive Officer of
the Corporation, and Mr. Weitzman who is considered related. The Audit
Committee includes Messrs. Pertsch and Hack, who are considered related.
The Corporate Governance Committee is comprised entirely of outside
directors and only Mr. Weitzman is a related director.
Guideline 10
The Board should assume responsibility for corporate governance
issues.
Comment:
The Corporate Governance Committee's mandate includes the
responsibility for making recommendations to the Board in the area of
corporate governance and in the practices of the Board.
Guideline 11
The Board and the CEO together should develop position descriptions
for the Board and the CEO, involving the definition of the limits to
management's responsibilities. In addition, the Board should approve, or
develop with the CEO, the CEO's objectives.
Comment:
The Corporation does not have specific mandates for its Board members
as any matters which have not been delegated specifically to senior
management or a committee of the Board are the responsibility of the Board
as a whole. The Board has not developed a formal position, description or
mandate for the CEO nor specific written corporate objectives which the CEO
is responsible for meeting; however, there is regular discussion between
the Board, the Executive Committee, the Compensation Committee, the
Chairman and the CEO with respect to the performance of the CEO and senior
management in achieving the Corporation's strategic objectives as jointly
determined by the Board and management. The Compensation Committee also
considers the performance of the CEO in reviewing any changes to the CEO's
employment terms and compensation and generally reviews the performance of
other senior managers with the CEO during each financial year.
Guideline 12
The Board should have appropriate structures and procedures to ensure
that it can function independently of management.
Comment:
The Board functions independently of management because a majority of
the members of the Board are not involved in the management of the
Corporation. In addition, the Chairman of the Board is not a member of
management. The Corporate Governance Committee monitors the independence of
the Board on an ongoing basis.
Guideline 13
Establish an Audit Committee, comprising all non-management directors,
with a specifically defined mandate. The Audit Committee should have direct
communication channels with external auditors.
Comment:
The Corporation's Audit Committee is comprised entirely of
non-management directors. The Audit Committee meets on at least a quarterly
basis with representatives of management and the Corporation's external
auditors for the express purpose of reviewing the Corporation's quarterly
and annual financial statements.
Guideline 14
The Board should enable directors to engage outside advisers at the
Corporation's expense when appropriate, subject to the approval of a
committee of the Board.
Comment:
In appropriate circumstances, individual members of the Board are
permitted to retain outside advisers at the Corporation's expense. Approval
for such engagement is required from the Corporate Governance Committee.
EXECUTIVE COMPENSATION
The following information relates to the compensation received by the
Corporation's Chief Executive Officer and each of the Corporation's next
four highest compensated executive officers for each of the three most
recently completed financial years (collectively, the "Named Executive
Officers"). Unless otherwise noted, all amounts are in Canadian dollars.
Summary Compensation Table
<TABLE>
<CAPTION>
Name and Position Year Salary Bonus Options All Other
($) ($) (#) Compensation
($)
Annual Long Term
Compensat Compensation
ion Awards
<S> <C> <C> <C> <C> <C>
Allen Karp 1996 750,000(E) 215,000 4,771,500(F) 23,500(A)
President and Chief Executive 1995 750,000(E) 215,000 _ 25,500(A)
Officer
1994 620,000 215,000 1,500,000 22,000(A)
Ellis Jacob 1996 355,000(E) 110,000 2,374,150(G) 10,650(B)
Executive Vice-President and 1995 355,000(E) 110,000 _ 7,375(B)
Chief Financial Officer 1994 295,000 110,000 750,000 5,800(B)
Robert Tokio 1996 355,000(E) 110,000 2,449,150(H) 10,650(B)
Executive Vice-President 1995 355,000(E) 90,000 _ 7,375(B)
1994 295,000 95,000 750,000 5,800(B)
Michael McCartney(C) 1996 272,800 68,200 500,000(I) _
Senior Vice-President, 1995 235,688 69,320 25,000 _
Head Film Buyer 1994 220,672 48,272 35,000 _
Michael Herman(D) 1996 250,000 65,000 1,000,000(J) 7,050(B)
Executive Vice-President, 1995 235,000 55,000 _ 5,250(B)
Corporate Affairs and Secretary 1994 210,000 55,000 250,000 4,200(B)
</TABLE>
Notes:
(A) Amount represents the Corporation's contribution to a defined
contribution pension plan (1996 _ $13,500, 1995 _ $15,500, 1994 _
$12,000) and the cost of term life insurance paid by the Corporation
($10,000).
(B) Amount represents the Corporation's contribution to a defined
contribution pension plan.
(C) Mr. McCartney was Senior Vice-President, Film, U.S. from December 1,
1991 to October 31, 1995. Effective November 1, 1995, Mr. McCartney
was promoted to Senior Vice-President, Head Film Buyer.
Mr. McCartney's compensation is paid in U.S. funds. Amounts have been
converted for presentation purposes in this report at exchange rates
of $1.3640 in 1996, $1.3864 in 1995 and $1.3792 in 1994, representing
the average exchange rates during those years.
(D) Mr. Herman was Senior Vice President, Corporate Affairs and Secretary
of the Corporation from May 1, 1992 to December 31, 1994. Effective
January 1, 1995, Mr. Herman was promoted to Executive Vice-President,
Corporate Affairs and Secretary of the Corporation.
(E) The compensation of Messrs. Karp, Jacob and Tokio is set in U.S. funds
and converted into Canadian funds according to a formula set out in
their respective employment agreements.
(F) Includes 2,171,500 options which were repriced downward during 1996.
(G) Includes 1,178,150 options which were repriced downward during 1996.
(H) Includes 1,253,150 options which were repriced downward during 1996.
(I) Includes 125,000 options which were repriced downward during 1996.
(J) Includes 400,000 options which were repriced downward during 1996.
Employment Agreements
Allen Karp entered into an employment agreement with the Corporation
dated July 4, 1996, as amended on December 6, 1996, which provides for an
annual base salary and certain employee benefits, as well as such bonuses
as may be determined in the sole discretion of the board of directors of up
to 100% of base salary. Messrs. Jacob and Tokio entered into employment
agreements with the Corporation dated December 6, 1996 which provide for an
annual base salary and certain employee benefits, as well as such bonuses
as may be determined in the sole discretion of the board of directors of up
to 100% of base salary. The agreements amend and restate the employment
agreements of Messrs. Karp, Jacob and Tokio dated December 1, 1994, provide
for a minimum annual base salary of U.S. $550,000, U.S. $260,000 and
U.S. $260,000 respectively and renew automatically, unless notice is given
otherwise, for consecutive periods of one year after the initial terms
expire on January 1, 2001.
Each of such employment agreements provides that the Corporation may
provide written notice of non-renewal at any time during the first six
months of the last year of the agreement. If the Corporation provides such
notice, Mr. Karp, Jacob or Tokio, as the case may be, is entitled to a
termination payment upon the expiry of the agreement in an amount equal to
two times the average of the sum of his annual base salary and any annual
bonus paid or payable during the three immediately preceding calendar years
(the "Termination Payment"), less the base salary paid to him from the date
of such notice to the expiry of the agreement, together with any
compensation previously deferred and not yet paid.
Each of such employment agreements also provides that the Corporation
may provide written notice of non-renewal on a date which is on or before
one year prior to the expiry of the agreement. In such event, the
Corporation may also elect to terminate the employment of Mr. Karp, Jacob
or Tokio as of the date which is one year prior to the expiry of the
agreement. If the Corporation gives such notice of non-renewal but does not
terminate immediately such employee's employment, the employee is entitled
to a termination payment upon the expiry of the agreement in an amount
equal to his then annual base salary, together with any compensation
previously deferred and not yet paid by the Corporation. If the
Corporation provides such notice and elects to terminate such employee's
employment as of the date which is one year prior to the expiry of the
agreement, the employee is entitled to a termination payment in an amount
equal to the Termination Payment, together with any compensation previously
deferred and not yet paid.
If the employment agreement of Mr. Karp, Jacob or Tokio is terminated
as a result of a material breach by the Corporation, the employee is
entitled to a termination payment equal to the greater of (i) the most
recent bonus awarded and the base salary then being paid which would have
otherwise been paid from the date of termination of employment to the
expiry date of the agreement, and (ii) two times the annual base salary
then being paid plus the most recent annual bonus awarded. In addition,
the employee will be entitled to any compensation previously deferred and
not yet paid by the Corporation. If, however, any compensation previously
deferred and not yet paid plus the Aggregate Compensation (as hereinafter
defined) which would have been paid to him from the date of termination of
employment to the expiry date of the agreement is greater than the
aforesaid amount, then that is the termination payment to which the
employee is entitled.
If the employment agreement of Mr. Karp, Jacob or Tokio is terminated
by any of them following the occurrence of certain events involving a
material change in the operations of the Corporation or a change of control
of the Corporation (a "Material Change"), the employee is entitled to a
termination payment equal to the greater of (i) the base salary then being
paid to him which would otherwise have been paid from the date of
termination of employment to the expiry date of the agreement, and
(ii) effectively between two and two and one-half times the annual base
salary then being paid plus the most recent annual bonus awarded, as well
as any compensation deferred and not yet paid by the Corporation.
In addition, with respect to Mr. Karp's agreement only, the
Corporation may terminate Mr. Karp's employment on not less than six
months' notice at any time during the term of the agreement. If the
Corporation provides such notice, Mr. Karp is entitled to a termination
payment in an amount equal to the average of his annual base salary and any
bonus paid or payable in the immediately preceding three calendar years
(the "Aggregate Compensation") which would have otherwise been paid to Mr.
Karp from the date of termination of his employment to the expiry date of
the agreement plus an amount equal to one times the Aggregate Compensation,
as well as any compensation previously deferred and not yet paid by the
Corporation.
As well, subject to any required regulatory approvals, if the
Corporation terminates the employment of Mr. Karp, Jacob or Tokio for any
reason or if any of them terminates his employment due to a Material
Change, all stock options previously granted to such employee, other than
his Performance-Based Options (as hereinafter defined), shall immediately
vest and the employee shall remain entitled to exercise any vested and
unexercised stock options, including his Performance-Based Options,
previously granted to him at any time until the expiration of the full term
of the exercise period of each of such options.
Michael Herman entered into an employment agreement with the
Corporation dated December 6, 1996 which provides for an annual base salary
and certain employee benefits, as well as such bonuses as may be determined
in the sole discretion of the board of directors of up to 100% of base
salary. Mr. Herman's agreement is effective as of January 1, 1996, and
provides for a minimum annual base salary of $250,000, and renews
automatically, unless notice is given otherwise, for consecutive periods of
one year after the initial term expires on January 1, 1999.
Mr. Herman's employment agreement provides that the Corporation may
provide written notice of non-renewal on the date which is not later than
six months prior to the expiry of the agreement. If the Corporation
provides such notice, Mr. Herman is entitled to a termination payment in an
amount equal to his annual base salary as well as any compensation
previously deferred and not yet paid by the Corporation.
If Mr. Herman's employment agreement is terminated as a result of a
material breach by the Corporation, he is entitled to a termination payment
equal to the greater of (i) the most recent bonus awarded and base salary
then being paid which would have otherwise been paid from the date of
termination of employment to the expiry date of the agreement, and (ii) one
and one-half times the annual base salary then being paid plus the most
recent annual bonus awarded. In addition, Mr. Herman will be entitled to
any compensation previously deferred and not yet paid by the Corporation.
If Mr. Herman terminates his employment agreement following a Material
Change, he is entitled to a termination payment equal to the greater of
(i) the base salary then being paid to him which would have otherwise been
paid from the date of termination of employment to the expiry date of the
agreement, and (ii) effectively between one and one-half and two times the
annual base salary then being paid to him plus the most recent annual bonus
awarded, as well as any compensation deferred and not yet paid by the
Corporation.
As well, subject to any required regulatory approvals, if the
Corporation terminates Mr. Herman's employment for any reason or Mr. Herman
terminates his employment due to a Material Change, Mr. Herman would be
entitled to exercise any vested and unexercised stock options previously
granted to him at any time until the expiration of the full term of the
exercise period of each of such options.
Michael McCartney entered into an employment agreement with the
Corporation dated September 15, 1995, as amended January 22, 1997. The
agreement provides for an annual base salary and certain employee benefits,
as well as such bonuses as may be determined in the sole discretion of the
board of directors. Effective January 1, 1997, the agreement provides for a
minimum annual base salary of U.S.$225,000. The agreement expires December
31, 1998.
Option Grants Table
Option Grants During Year Ended December 31, 1996
<TABLE>
<CAPTION>
Name Options % of Total Exercis Market Expiration 5% 10%
Granted Options e Price Value of Date ($) ($)
(#) Granted to ($/Shar Securitie
Employees e) s
in Fiscal Underlyin
Year g Options
on the
Date of
Grant
Individual Potential Realizable Value at Assumed Annual Rates of
Grants Stock Price Appreciation for Option Term
<S> <C> <C> <C> <C> <C> <C>
Allen Karp 2,600,000 17.47 1.868 1.868 April 17, 3,054,415 7,740,488
2006
561,500 3.77 1.868 1.868 Oct. 15, 356,720 809,276
2001
110,000 0.74 1.868 1.868 Nov. 6, 83,651 194,942
2002
1,500,000 10.08 1.868 1.868 Dec. 17, 1,544,822 3,804,969
2004
Ellis Jacob 1,196,000 8.04 1.868 1.868 April 17, 1,405,031 3,560,625
2006
353,150 2.37 1.868 1.868 Oct. 15, 224,356 508,987
2001
75,000 0.50 1.868 1.868 Nov. 6, 57,035 132,915
2002
750,000 5.04 1.868 1.868 Dec. 17, 772,411 1,902,485
2004
Robert Tokio 1,196,000 8.04 1.868 1.868 April 17, 1,405,031 3,560,625
2006
353,150 2.37 1.868 1.868 Oct. 15, 224,356 508,987
2001
75,000 0.50 1.868 1.868 Dec. 25, 47,647 108,096
2001
75,000 0.50 1.868 1.868 Nov. 6, 57,035 132,915
2002
750,000 5.04 1.868 1.868 Dec. 17, 772,411 1,902,485
2004
Michael McCartney 375,000 2.52 1.868 1.868 April 17, 440,541 1,116,417
2006
44,000 0.30 1.868 1.868 Oct. 15, 27,953 63,416
2001
5,500 0.04 1.868 1.868 Dec. 25, 3,494 7,927
2001
15,500 0.10 1.868 1.868 Nov. 18, 13,824 33,111
2003
35,000 0.24 1.868 1.868 Dec. 17, 36,046 88,783
2004
25,000 0.17 1.868 1.868 Sept. 12, 29,369 74,428
2005
Michael Herman 600,000 4.03 1.868 1.868 April 17, 704,865 1,786,267
2006
100,000 0.67 1.868 1.868 May 2, 63,530 144,128
2002
25,000 0.17 1.868 1.868 Nov. 6, 19,012 44,305
2002
25,000 0.17 1.868 1.868 Nov. 18, 22,297 53,406
2003
250,000 1.68 1.868 1.868 Dec. 17, 257,470 634,162
2004
</TABLE>
Notes:
(A) Included is this grant are 750,000 Performance-Based Options (See
"Executive Officer Compensation Program"). Of the remaining balance,
525,000 vest immediately and the remainder vest over a four year
period.
(B) Represents options repriced in respect of an equal number of Common
Shares previously granted. Re-priced options retain their cumulative
vesting rights from the date of original issue of the cancelled
options.
(C) Included is this grant are 387,000 Performance-Based Options. Of the
remaining balance, 422,000 vest immediately and the remainder vest
over a four year period.
(D) Included is this grant are 234,375 Performance-Based Options. Of the
remaining balance, 37,500 vest immediately with the remainder vesting
over a four year period.
(E) Included is this grant are 240,000 Performance-Based Options. Of the
remaining balance, 120,000 vest immediately with the remainder vesting
over a four year period.
The following table sets forth, in respect of the Named Executive
Officers, details of the exercises of stock options during the financial
year ended December 31, 1996 and the financial year-end number and value of
unexercised options on an aggregate basis:
Aggregated Option Exercises During Year Ended December 31, 1996 and
Year-End Option Value at December 31, 1996
<TABLE>
<CAPTION>
Name Shares Value Exercisable/ Exercisable/
Acquired Realized Unexercisable Unexercisable
on Exercise ($)
(#)
Number of Value of
Unexercised Options Unexercised
at December 31, 1996 In-the-Money
(#) Options
at December 31,
1996
($)
<S> <C> <C> <C> <C>
Allen Karp _ _ 2,709,000/2,062,500 222,138/169,125
Ellis Jacob 227,000 279,304 1,094,900/1,052,250 89,782/86,285
Robert Tokio _ _ 1,396,900/1,052,250 114,546/86,285
Michael McCartney _ _ 148,156/351,844 12,149/28,851
Michael Herman _ _ 448,750/551,250 36,798/45,203
</TABLE>
Compensation Committee And Stock Option Committee Report On Executive
Compensation
Overview and Philosophy
All members of the Compensation
Committee and Stock Option Committee (collectively, "the Committees") are
independent, non-employee directors. It is the Compensation Committee's
function to establish, review and approve compensation arrangements for the
Chief Executive Officer and certain other executive officers, and to review
and comment upon compensation arrangements for all other officers of the
Corporation. As part of this process, the Compensation Committee reviews
the compensation of executive officers of industry competitors whose
information is made public, but does not survey any particular index such
as The Toronto Stock Exchange's Communication and Media Index.
Section 162(m) of the INTERNAL REVENUE CODE OF 1986, as amended from
time to time, generally limits the corporate deduction in respect of
amounts paid to a corporation's executive officers, unless certain
requirements are met. Since the Corporation is a Canadian corporation, the
limitation of the corporate deduction under Section 162(m) does not apply,
except with respect to the compensation paid to Mr. Michael McCartney. The
salary and other compensation paid to Mr. McCartney as part of his 1996
compensation would not be eligible for exemption from the general rule in
Section 162(m); however, the salary and other compensation paid to Mr.
McCartney in 1996 did not exceed U.S. $1,000,000, the threshold beyond
which the corporate deduction is limited. The Compensation Committee will
continue to review its compensation arrangements in light of Section
162(m).
The objectives of the Corporation's executive compensation program are
to:
(1) support the achievement of desired corporate performance;
(2) provide compensation that is both competitive within the industry and
which will attract and retain superior talent and reward performance;
and
(3) align the executive officers' interests with those of the
shareholders.
Executive Officer Compensation Program
The Corporation's executive officer compensation program is comprised
of three key elements: base salary, discretionary annual cash incentive
compensation and long-term compensation in the form of stock options.
Subject to the provisions of applicable employment agreements, base
salary levels for the Corporation's executive officers are determined
primarily as a result of a subjective assessment of the nature of the
position and the contribution of each executive officer. In addition,
consideration is given to the experience and tenure of each executive
officer.
The determination of the amount of funds available for the cash
incentive compensation program is based upon a subjective assessment of the
Corporation's overall performance. In determining each individual executive
officer's cash incentive compensation, the Compensation Committee takes
into account the area of responsibility of each executive and a subjective
assessment of the performance of that area in the most recent fiscal year.
The Stock Option Plan is the Corporation's long-term incentive plan
for executive officers. The Stock Option Plan is administered by the Stock
Option Committee which consists of the same directors as the Compensation
Committee. The primary objective of the plan is to align executive and
shareholder long-term interests by attempting to create a direct link
between executive pay and shareholder return. In addition, this Plan
enables executives to develop and maintain a significant and long-term
ownership position in the Corporation. Under the Plan, all options that
have been issued to eligible participants have been issued at an option
price not less than the market value of the Common Shares on the last
business day preceding the date of the grant. The Stock Option Committee
reviews each executive officer individually and determines any such grant
of stock options based on a subjective review of each individual executive
officer's contribution and performance throughout the year. When
determining both whether to grant stock options and the number of stock
options to be granted to each individual executive officer, the Stock
Option Committee also considers the number of stock options previously
granted to each individual, although it does not target any specific number
of stock options which should be held by any individual. In 1996, following
the completion of the Corporation's issuance of 25,000,000 Common Shares to
the public (the "Public Offering"), 24,242,181 SRV Shares to Universal and
12,124,454 Common Shares to the Charles Rosner Bronfman Trust, shareholders
of the Corporation, at the annual and special meeting of shareholders held
on June 6, 1996, approved a resolution of the Stock Option Committee
authorizing an increase in the number of Common Shares available for
issuance under the Stock Option Plan to 17,646,716 Common Shares. The Stock
Option Committee believes that this increase in the number of Common Shares
available for issuance under the Stock Option Plan benefits the Corporation
because the Committee considers the ability to continue to award stock
options to officers and full-time employees necessary in order for the
Corporation to continue to be competitive in the North American motion
picture theatre exhibition industry through attracting, retaining and
motivating qualified senior management and other employees. The increase in
the number of Common Shares available for issuance under the Stock Option
Plan provides the Corporation with the flexibility it requires for this
purpose.
In order to further the objectives of the Corporation to attract,
retain and motivate qualified senior management and other employees, and in
order to provide participants under the Stock Option Plan with an
opportunity to participate in long-term growth in shareholder value,
contemporaneously with the completion of the Public Offering, the Stock
Option Committee determined that: (i) the exercise prices of certain of the
issued and outstanding stock options should be amended to be the same as
the price of the shares issued pursuant to the Public Offering, being
$1.868 per Common Share, and (ii) the expiry dates of certain of the issued
and outstanding stock options should be extended to the date which is 10
years from the date of the grant of such options.
In order to accomplish the foregoing, the Stock Option Committee
approved: (i) an amendment of the exercise prices of outstanding stock
options issued under the Stock Option Plan to purchase a total of 1,180,989
Common Shares held by non-senior officers and employees of the Corporation
to $1.868 per Common Share, and (ii) an extension of the expiry dates of
outstanding stock options issued under the Stock Option Plan to purchase a
total of 737,744 Common Shares held by non-senior officers and employees of
the Corporation to the date which is 10 years from the date of the original
grant of such stock options. The Stock Option Committee also approved, with
the approval of the shareholders of the Corporation at the annual and
special meeting of shareholders held on June 6, 1996, (i) an amendment of
the exercise prices of outstanding stock options issued under the Stock
Option Plan to purchase a total of 5,679,000 Common Shares held by senior
officers of the Corporation to $1.868 per Common Share, and (ii) an
extension of the expiry dates of outstanding stock options issued under the
Stock Option Plan to purchase a total of 2,019,000 Common Shares held by
senior officers of the Corporation to the date which is 10 years from the
date of the original grant of such stock options (See Schedule A attached
hereto for a complete list of all repricing of stock options in respect of
all persons who were executive officers at any time in any year in which a
repricing occurred). Upon completion of the Public Offering, the Stock
Option Committee approved the granting of options to purchase 8,019,020
Common Shares at a price of $1.868 per Common Share to participants under
the Stock Option Plan. Of such number, options to purchase 6,788,800 Common
Shares were issued to senior officers of the Corporation.
The Stock Option Committee also determined that certain of the options
issued to purchase Common Shares should be conditional upon the Corporation
meeting certain annual performance financial targets in the five years
following the granting of such options ("Performance-Based Options"). The
Performance-Based Options vest 20% per year on the date on which the
Corporation announces its year end financial results if the performance
financial target for such year is met. Of the options to acquire 8,019,020
Common Shares issued in 1996, options to acquire 2,593,244 Common Shares
are Performance-Based Options, including options to acquire 2,294,775
Common Shares issued to senior officers of the Corporation. The performance
financial target set in respect of the Performance-Based Options was not
met in 1996 with the result that none of the Performance-Based Options have
yet vested. If, in future years, the Corporation exceeds the performance
financial targets set for such years, the excess may be carried back to a
previous year in which the target was not met to enable the options granted
in respect of such previous year to then vest.
During 1996, the Corporation entered into new employment agreements
with certain of its senior officers. These employment agreements amended
certain of the terms of existing agreements, including amounts payable to
such employees upon the occurrence of a Material Change. These new
employment agreements reflect the Corporation's publicly stated position
that the motion picture theatre exhibition industry is currently in a
period of rapid expansion that may result in consolidation through mergers
and acquisitions within the foreseeable future. To ensure that senior
management remains motivated and focused, and to protect and enhance the
best interests of the Corporation and its shareholders, the Compensation
Committee determined that it was appropriate, to maintain sound and vital
management, to revise the employment agreements of such senior officers.
See "Employment Agreements".
In evaluating the performance and setting the compensation of
executive officers, the Compensation Committee has taken particular note of
the significant challenges that faced the Corporation and the efforts
undertaken by the executive officers to strengthen and consolidate the
financial and operational position of the Corporation within the film
exhibition industry. The Compensation Committee has also taken into
account, when reviewing executive officer performance and compensation, the
consistent commitment displayed by the executive officers to the long-term
success of the Corporation.
Chief Executive Officer Compensation
Mr. Karp's base salary in fiscal 1996 was $750,000. Mr. Karp's annual
cash incentive in 1996 was $215,000. In addition, Mr. Karp was granted
options to acquire 2,600,000 Common Shares under the Corporation's long
term incentive plan, of which options to acquire 750,000 Common Shares are
Performance-Based Options.
The Committees, in establishing Mr. Karp's base salary, annual cash
incentive, and long-term incentive in the form of stock options, made a
subjective assessment of his accomplishments in 1996, including continuing
recognition for his efforts towards achieving the Corporation's major
strategic goals, establishing the Corporation as a leader in the film
exhibition industry notwithstanding financial constraints, and his efforts
in positioning the Corporation to aggressively and successfully pursue
major strategic expansion.
The members of the Compensation Committee and the Stock Option
Committee are:
Rudolph P. Bratty, Q.C.
Robert Rabinovitch
Howard L. Weitzman
Director Compensation
Effective January 1, 1994, the Corporation authorized the payment of
fees to independent directors consisting of an annual retainer of $5,000, a
fee of $1,000 per board meeting for attending in person, $1,500 for a
chairman attending committee meetings in person and $750 per committee
meeting for attending in person. If an independent director attends either
a board or committee meeting by way of telephone, such director receives
$250 for the meeting. For purposes of director compensation, the
independent directors are Messrs. Bratty, Daniels and Raymond.
On May 15, 1989, the Corporation entered into indemnity agreements
with each of those individuals who were then directors in which the
Corporation extended to each such director the same form of entitlement to
indemnification as was then, and is now, contained in the Corporation's
general by-law, except that the Corporation agreed to extend to such
directors, whether or not they then hold such office, such broader
entitlement to indemnification as it may subsequently provide to all of its
directors.
Compensation Pursuant to Plans
Stock Option Plan
Under the terms of the Stock Option Plan, the number of Common Shares
that may be available for issuance may not exceed in the aggregate
17,646,716, or such greater number of Common Shares as may be determined by
the board of directors and approved by the shareholders and by any relevant
stock exchange or regulatory authority.
The board of directors may delegate any or all of its authority with
respect to the administration of the Stock Option Plan to a committee
consisting of not less than three members of the board of directors, all of
whom are not eligible to participate in the Stock Option Plan. The board of
directors has delegated authority with respect to the administration of the
Stock Option Plan to the Stock Option Committee. See "Meetings of the Board
of Directors and Committees".
Only officers and full-time employees of the Corporation and its
affiliates, associates and subsidiaries are eligible to receive options
under the Stock Option Plan. As at May 14, 1997, the approximate number of
eligible participants under the Stock Option Plan was 129. Non-employee
directors of the Corporation are not eligible to participate in the Stock
Option Plan. Options granted under the Stock Option Plan are not assignable
or transferable, other than by will or the applicable laws of succession.
The Stock Option Committee has discretion to determine the vesting
schedule and duration of individual options granted pursuant to the Stock
Option Plan, but the duration may not exceed 10 years. To date, certain of
the options provide for immediate vesting while others provide for 25%
cumulative vesting each year commencing six months to one year following
the grant of the options (subject to the additional conditions imposed on
Performance-Based Options noted under "Compensation Committee and Stock
Option Committee Report on Executive Compensation"). The exercise price for
each Common Share purchased under the Stock Option Plan may not be less
than the closing sale price of the Common Shares of the Corporation on The
Toronto Stock Exchange or the New York Stock Exchange on the trading day
immediately preceding the date of the grant. In the event that the Common
Shares did not trade on such trading day, the exercise price may not be
less than the average of the bid and ask prices in respect of such shares
at the close of trading on such trading day. To date, the Corporation has
consistently granted options exercisable at not less than the current
market price.
The Corporation's standard form stock option agreement provides that,
upon a sale by the Corporation of substantially all of its assets or
properties, or if an offeror is entitled to acquire all of the remaining
shares of the Corporation held by dissenting offerees pursuant to the
provisions of the Act, all options automatically become 100% vested and
immediately exercisable (except that only 75% of Performance-Based Options
in respect of the financial year not completed at such time and any
subsequent financial years vest and become immediately exercisable). In
addition, the Stock Option Plan provides that if an offer to purchase all
of the Common Shares is made by a third party or in the event of a proposed
amalgamation, plan of arrangement, issuer bid or reorganization, the
Corporation may, in its discretion, require the acceleration of the vesting
and expiry dates of the outstanding stock options (subject to the same 75%
restriction in respect of Performance-Based Options).
The Stock Option Committee, without further action on the part of the
shareholders of the Corporation, may amend or terminate the Stock Option
Plan, provided that no such action may materially and adversely affect the
rights under any stock options earlier granted to a participant under the
Stock Option Plan without the consent of the participant. Any such
amendment shall, if required, be subject to any approvals required under
applicable law or under the applicable rules of any stock exchange on which
the Common Shares are listed and posted for trading. All amendments to the
terms of Stock Option Plan must be approved by the shareholders of the
Corporation if the amendment would: (i) materially increase the benefits
accruing to participants under the Stock Option Plan, (ii) increase the
number of securities which may be issued under the Stock Option Plan, or
(iii) materially modify the requirements as to eligibility for
participation in the Stock Option Plan.
Pension Plans
The Corporation has two pension plans covering employees of the
Corporation, being the Cineplex Odeon Corporation Employee Pension Plan
(the "Canadian Plan") and the Cineplex Odeon Corporation U.S. Employees'
Pension Plan (the "U.S. Plan").
The Canadian Plan
The Corporation amended the Canadian Plan effective January 1, 1993 by
converting it from a defined benefit plan into a defined contribution plan.
Benefits accrued under the defined benefit plan were frozen at the time of
conversion. Effective January 1, 1993, all executive officers resident in
Canada are covered by the Canadian Plan.
The U.S. Plan
An employee is eligible to participate in the U.S. Plan upon
satisfaction of certain age and service requirements. The monthly pension
amount to be received by an employee under the U.S. Plan is based on the
average of the participant's earnings during the sixty consecutive months
of employment that produced the highest average pay during his
participation in the plan ("Pension Base Pay") and years of benefit service
and is integrated based upon an employee's covered compensation.
In the case of normal retirement at age 65, subject to certain limits,
the benefit is equal to approximately 1 14% of the Pension Base Pay
multiplied by up to a maximum of 35 years of service.
A participant has a vested interest in his or her "accrued benefit"
upon completion of 5 years of vesting service. The U.S. Plan also provides
that once an employee has attained the age of 55 and has accumulated at
least 10 years of service, he or she may retire and may commence receiving
a pension from the U.S. Plan immediately. If the pension benefit payments
commence before the age of 65, the monthly pension amount paid to such
employee will be reduced based on such employee's age at retirement. If a
participant retires prior to the age of 65, the participant may also be
entitled to a supplemental pension payable monthly prior to age 65.
The U.S. Plan contains disability and death benefit provisions. The
disability provision entitles the vested participant to a special monthly
disability benefit commencing at the normal retirement date if the
participant remains disabled until age 65. No disability benefits are
payable if the participant has less than 10 years of vesting service. Death
benefits, and the amount thereof, are payable depending on the
participant's vesting status and age at death.
Michael McCartney has been a member of the U.S. Plan since October 1,
1987. In 1996, Mr. McCartney's covered compensation was U.S. $150,000.
The following table shows annual gross benefits payable to
participants in the U.S. Plan, upon retirement at their normal retirement
dates, in straight life annuity amounts:
Pension Plan Table
<TABLE>
<CAPTION>
Pension Base 5 10 15 20 25 30 35
Pay
Years of
Service
($ U.S.) ($ U.S.) ($ U.S.) ($ U.S.) ($ U.S.) ($ U.S.) ($ U.S.) ($ U.S.)
<S> <C> <C> <C> <C> <C> <C> <C>
$25,000 $1,225.00 $2,450.00 $3,675.00 $4,900.00 $6,125.00 $7,350.00 $8,575.00
50,000 2,450.00 4,900.00 7,350.00 9,800.00 12,250.00 14,700.00 17,150.00
75,000 4,032.73 8,065.46 12,098.20 16,130.93 20,163.66 24,196.39 28,229.12
100,000 5,970.73 11,940.46 17,910.70 23,880.83 29,851.16 35,821.39 41,791.62
125,000 7,907.73 15,815.46 23,723.20 31,630.93 39,538.66 47,446.39 55,354.12
150,000 9,845.23 19,690.46 29,535.70 39,380.93 49,226.16 59,071.39 68,916.62
Note:
(A) For Plan Years commencing 1994 and beyond, U.S. law prohibits annual
compensation used to determine Pension Base Pay from exceeding U.S.
$150,000.
</TABLE>
PERFORMANCE GRAPH
Set forth below is a graph showing the five year cumulative total
return of the Common Shares of the Corporation as compared with The Toronto
Stock Exchange (TSE) 300 Index and The Toronto Stock Exchange Communication
and Media Index. The graph assumes $100 invested on December 31, 1991 in
the Corporation's Common Shares and in each of the indexes and assumes
reinvestment of dividends.
CINEPLEX ODEON CORPORATION
Stock Price Performance
INTERESTS OF INSIDERS IN MATERIAL TRANSACTIONS
In connection with the Corporation's sale of its remaining 51%
interest in the Film House Partnership to The Rank Organization PLC
("Rank"), the Corporation agreed to provide, without cost, on-screen
advertisements of Universal Studios, Florida and Universal Studios,
California until March 2000. Universal Studios, Florida, a motion picture
and television theme amusement park, is a joint venture between Universal
and Rank. Universal Studios, California, a motion picture and television
theme amusement park, is owned by Universal.
In fiscal 1996, in the ordinary course of its business, the
Corporation paid an aggregate of approximately U.S. $20,631,000 in film
licensing fees to Universal or subsidiaries thereof. The address of
Universal is 100 Universal City Plaza, Universal City, California, 91608,
U.S.A. A Canadian division of the Corporation provides certain video
distribution services to Universal pursuant to which, during 1996,
Universal paid the Corporation approximately U.S.$666,000.
The Corporation has, since 1984, participated in a joint venture with
a group of investors which developed a theatre complex at the southwest
corner of Yonge and Eglinton Streets in Toronto. The investor group, in
which each of Messrs. Kolber and Raymond, both of whom are directors of the
Corporation, and/or associates of such persons, has a minority interest,
contributed $3,250,000 of the total financing required to complete the
project and are entitled to repayment thereof, together with interest
thereon, and to ongoing participation in the revenue derived from the
project. During fiscal 1996, this investor group received $667,943 from the
Corporation. The address of the investor group is c/o Richer, Sorkin &
Associates Inc., 625 Dorchester Blvd. West, Suite 1600, Montreal, Quebec,
H3B 1R2.
In September 1990, the Corporation sold its interest in Universal City
Cinemas, an 18-screen multiplex located in Universal City, California to
Universal. The Corporation has been retained to manage the theatre on a
long-term basis for a fee based upon three percent of gross revenue plus
three percent of net cash flow from the multiplex. The total fee earned
during 1996 was U.S. $646,749.
On March 28, 1996 the Corporation completed, in Canada and the United
States, a sale to the public of 25,000,000 Common Shares of the Corporation
at a price of $1.868 per share ($1.375 (U.S.) per share). Concurrent with
the closing of this offering of shares to the public, pursuant to an
agreement dated March 19, 1996, Universal and the Charles Rosner Bronfman
Trust purchased 24,242,181 SRV Shares and 12,121,454 Common Shares,
respectively, at the same price as the offering price to the public.
LIABILITY INSURANCE
The Act allows the Corporation to purchase and maintain insurance for
the benefit of its directors and officers against certain liabilities
incurred by them in their capacity as directors and officers. All premiums
with respect to such insurance are paid by the Corporation. The Corporation
maintains or has maintained, since the beginning of the 1996 fiscal year,
the following directors' and officers' liability insurance policies:
(a) for the period commencing April 16, 1995 and ending on April
16, 1996, coverage in respect of the Corporation and its
subsidiaries in the face amount of U.S. $20,000,000. There is no
individual director/officer deductible. In the event that the
subject directors or officers are indemnified by the Corporation,
the deductible amount is U.S. $250,000. The total premium payable
is U.S. $380,000. An additional premium of U.S. $61,250 is
payable for Employment Practices Liability Insurance Extension;
(b) for the period commencing April 16, 1996 and ending on April
16, 1997, coverage in respect of the Corporation and its
subsidiaries in the face amount of U.S. $25,000,000. There is no
individual director/officer deductible. In the event that the
subject directors or officers are indemnified by the Corporation,
the deductible amount is U.S. $250,000. The total premium payable
is U.S. $400,000. Employment Practices Liability coverage is
included in the above coverage; and
(c) for the period commencing April 16, 1997 and ending on April
16, 1998, coverage in respect of the Corporation and its
subsidiaries in the face amount of U.S. $30,000,000. There is no
individual director/officer deductible. In the event that the
subject directors or officers are indemnified by the Corporation,
the deductible amount is U.S. $150,000. The total premium payable
is U.S. $312,000. Employment Practices Liability coverage is
included in the above coverage.
APPOINTMENT OF AUDITORS
Unless such authority is withheld, the persons named in the
accompanying form of proxy intend to vote FOR the appointment of KPMG,
Chartered Accountants, Toronto, Ontario, as auditors of the Corporation to
hold office until the next annual meeting of shareholders and FOR the
resolution authorizing the board of directors to fix the remuneration of
the auditors. Representatives of KPMG are expected to be present at the
Meeting and to be available to respond to appropriate questions and to make
statements as they may desire. These resolutions require the approval of a
majority of the votes cast in person or by proxy by the shareholders who
vote in respect of the resolutions.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 1998 annual
meeting of shareholders must be received for inclusion in the Corporation's
management information circular for such meeting by April 8, 1998.
Shareholders submitting such proposals are requested to address them to the
Secretary, Cineplex Odeon Corporation, 1303 Yonge Street, Toronto, Ontario,
Canada M4T 2Y9.
AVAILABILITY OF CERTAIN DOCUMENTS
The Corporation shall provide to any person upon written request to
the Corporate Secretary of the Corporation at any time:
(i) one copy of the Annual Information Form of the
Corporation (being its Form 10-K) together with one copy of
any document, or the pertinent pages of any document
incorporated by reference therein;
(ii) one copy of the comparative financial statements
of the Corporation for its most recently completed fiscal
year together with the accompanying report of the auditors
and one copy of any interim financial statements of the
Corporation subsequent to the financial statements for its
most recently completed fiscal year end; and
(iii) one copy of the information circular of the
Corporation in respect of its most recent annual meeting of
shareholders that involved the election of directors or one
copy of any annual filing prepared in lieu of that
information circular, as appropriate,
provided that the Corporation may require the payment of a reasonable
charge if the request is made by a person who is not a security holder of
the Corporation. Written requests for a copy of the above documents should
be directed to the Investor Relations Department, Cineplex Odeon
Corporation, 1303 Yonge Street, Toronto, Ontario, Canada, M4T 2Y9.
The board of directors of the Corporation has approved the contents of
this Management Information Circular and its sending to the shareholders.
DATED the 26th day of May, 1997.
Michael Herman
Secretary
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Name Date Options Market Exercise New Length of
Repriced Price of Price Exercise Original
or Stock at at Time of Price Option Term
Amended Time Repricing ($) Remaining at
(#) of or Date
Repricing Amendment of Repricing
or ($) or Amendment
Amendment (Days)
($)
<S> <C> <C> <C> <C> <C> <C>
Allen Karp 13 May 88 35,000 * 10.750 15.250 11.000 1,039
President and 13 May 88 120,000 * 10.750 17.250 11.000 1,074
Chief
Executive 5 Apr 90 35,000 * 5.750 11.000 5.750 347
Officer
5 Apr 90 120,000 * 5.750 11.000 5.750 382
27 Mar 91 350,000 * 4.300 8.375 4.300 1,346
14 Oct 91 155,000 * 3.950 5.750 3.950 1,270
14 Oct 91 45,000 * 3.950 5.250 3.950 1,641
14 Oct 91 250,000 * 3.950 4.300 3.950 1,627
5 Nov 92 350,000 * 2.450 4.300 2.500 1,239
5 Nov 92 561,500 * 2.450 3.950 2.500 1,440
16 Apr 96 671,500 1.868 2.500 1.868 151
16 Apr 96 1,500,000 1.868 3.400 1.868 3,134
Ellis Jacob 13 May 88 11,000 * 10.750 19.500 11.000 1,607
Executive 5 Apr 90 29,000 * 5.750 14.000 5.750 1,597
Vice-Presiden
t
and Chief 5 Apr 90 11,000 * 5.750 11.000 5.750 915
Financial
Officer 27 Mar 91 35,000 * 4.300 8.375 4.300 1,346
14 Oct 91 75,000 * 3.950 5.750 3.950 1,270
14 Oct 91 40,000 * 3.950 5.250 3.950 1,641
14 Oct 91 200,000 * 3.950 4.300 3.950 1,627
5 Nov 92 35,000 * 2.450 4.300 2.500 1,239
5 Nov 92 353,150 * 2.450 3.950 2.500 1,440
16 Apr 96 428,150 1.868 2.500 1.868 151
16 Apr 96 750,000 1.868 3.400 1.868 3,134
Robert Tokio 5 Apr 90 50,000 * 5.750 14.875 5.750 1,315
Executive 5 Apr 90 10,000 * 5.750 12.750 5.750 1,671
Vice-Presiden
t
27 Mar 91 35,000 * 4.300 8.375 4.300 1,346
14 Oct 91 85,000 * 3.950 5.750 3.950 1,270
14 Oct 91 30,000 * 3.950 5.250 3.950 1,641
14 Oct 91 200,000 * 3.950 4.300 3.950 1,627
5 Nov 92 35,000 * 2.450 4.300 2.500 1,239
5 Nov 92 353,150 * 2.450 3.950 2.500 1,440
16 Apr 96 75,000 1.868 2.260 1.868 253
16 Apr 96 428,150 1.868 2.500 1.868 151
16 Apr 96 750,000 1.868 3.400 1.868 3,134
Michael 13 May 88 6,000 * 10.750 16.375 11.000 1,228
McCartney
Senior 5 Apr 90 6,000 * 5.750 11.000 5.750 536
Vice-Presiden
t,
Head Film 14 Oct 91 13,500 * 3.950 5.750 3.950 1,270
Buyer
14 Oct 91 11,500 * 3.950 5.250 3.950 1,641
5 Nov 92 44,000 * 2.450 3.950 2.500 1,440
16 Apr 96 5,500 1.868 2.260 1.868 253
16 Apr 96 44,000 1.868 2.500 1.868 151
16 Apr 96 15,500 1.868 4.000 1.868 946
16 Apr 96 35,000 1.868 3.400 1.868 3,134
16 Apr 96 25,000 1.868 2.620 1.868 1,609
Michael Herman 5 Nov 92 100,000 * 2.450 3.300 2.500 1,639
Executive 16 Apr 96 125,000 1.868 2.500 1.868 151
Vice-Presiden
t,
Corporate 16 Apr 96 25,000 1.868 4.000 1.868 946
Affairs
and Secretary 16 Apr 96 250,000 1.868 3.400 1.868 3,134
Irwin Cohen 13 May 88 10,000 * 10.750 16.375 11.000 1,228
Executive 5 Apr 90 10,000 * 5.750 11.000 5.750 536
Vice-Presiden
t,
Operation for 5 Apr 90 5,000 * 5.750 11.000 5.750 1,210
North America 14 Oct 91 20,000 * 3.950 5.750 3.950 1,270
14 Oct 91 20,000 * 3.950 5.250 3.950 1,641
5 Nov 92 44,000 * 2.450 3.950 2.500 1,440
16 Apr 96 5,500 1.868 2.260 1.868 253
16 Apr 96 64,500 1.868 2.500 1.868 151
16 Apr 96 30,000 1.868 4.000 1.868 946
16 Apr 96 150,000 1.868 3.400 1.868 3,134
Howard 13 May 88 5,000 * 10.750 16.375 11.000 1,228
Lichtman
Executive 13 May 88 10,000 * 10.750 18.250 11.000 1,527
Vice-Presiden
t,
Marketing and 5 Apr 90 5,000 * 5.750 11.000 5.750 536
Communications 5 Apr 90 10,000 * 5.750 11.000 5.750 835
5 Apr 90 15,000 * 5.750 11.000 5.750 1,210
27 Mar 91 30,000 * 4.300 8.375 4.300 1,346
14 Oct 91 40,000 * 3.950 5.750 3.950 1,270
14 Oct 91 25,000 * 3.950 4.300 3.950 1,627
5 Nov 92 30,000 * 2.450 4.300 2.500 1,239
5 Nov 92 77,200 * 2.450 3.950 2.500 1,440
5 Nov 92 25,000 * 2.450 3.450 2.500 1,680
16 Apr 96 6,000 1.868 2.260 1.868 253
16 Apr 96 102,200 1.868 2.500 1.868 151
16 Apr 96 200,000 1.868 3.400 1.868 3,134
Stephen Brown 14 Oct 91 7,500 * 3.950 5.750 3.950 1,270
Senior 14 Oct 91 17,500 * 3.950 5.250 3.950 1,641
Vice-Presiden
t,
Treasury and 5 Nov 92 27,500 * 2.450 3.950 2.500 1,440
Tax
16 Apr 96 3,500 1.868 2.260 1.868 253
16 Apr 96 17,500 1.868 2.500 1.868 151
16 Apr 96 9,000 1.868 4.000 1.868 946
16 Apr 96 30,000 1.868 3.400 1.868 3,134
Jim Vassos 14 Oct 91 12,500 * 3.950 5.750 3.950 1,270
Senior 14 Oct 91 12,500 * 3.950 5.250 3.950 1,641
Vice-Presiden
t,
Business 5 Nov 92 27,500 * 2.450 3.950 2.500 1,440
Affairs and
Planning 16 Apr 96 3,500 1.868 2.260 1.868 253
16 Apr 96 15,500 1.868 2.500 1.868 151
16 Apr 96 9,000 1.868 4.000 1.868 946
16 Apr 96 30,000 1.868 3.400 1.868 3,134
Former Officers
Name Date Options Market Exercise New Length of
Repriced Price of Price at Exercise Original
or Amended Stock at Time of Price Option
(#) Time of Repricing ($) Term
Repricing or Remaining
or Amendment at Date
Amendment ($) of
($) Repricing
or
Amendment
(Days)
Garth Drabinsky 13 May 88 300,000 * 10.750 16.375 11.000 1,228
Former
Chairman of
the Board,
President and
Chief
Executive
Officer
Myron Gottlieb 13 May 88 200,000 * 10.750 16.375 11.000 1,228
Former Vice-
Chairman of
the Board and
Chief
Administrative
Officer
Neil Blatt 13 May 88 5,000 * 10.750 16.375 11.000 1,228
Former 13 May 88 7,500 * 10.750 16.375 11.000 1,434
Executive Vice- 5 Apr 90 5,000 * 5.750 11.000 5.750 536
President, 5 Apr 90 7,500 * 5.750 11.000 5.750 742
Film 5 Apr 90 5,000 * 5.750 11.000 5.750 1,210
27 Mar 91 30,000 * 4.300 8.375 4.300 1,346
14 Oct 91 35,000 * 3.950 5.750 3.950 1,270
14 Oct 91 85,000 * 3.950 5.250 3.950 1,641
14 Oct 91 150,000 * 3.950 4.300 3.950 1,627
5 Nov 92 30,000 * 2.450 4.300 2.500 1,239
5 Nov 92 302,700 * 2.450 3.950 2.500 1,440
Ira Mitchell 13 May 88 20,000 * 10.750 21.250 11.000 1,105
Former 13 May 88 7,500 * 10.750 18.250 11.000 1,259
Executive Vice- 13 May 88 7,500 * 10.750 16.375 11.000 1,228
President,
Real Estate
Development,
U.S.
Jerald Banks 13 May 88 60,000 * 10.750 18.625 11.000 1,471
Former Senior 13 May 88 60,000 * 10.750 20.125 11.000 1,546
Executive Vice-
President,
Corporate
Affairs &
Secretary
Harold Kramer 13 May 88 3,000 * 10.750 14.625 11.000 1,029
Former Senior 13 May 88 2,000 * 10.750 16.375 11.000 1,228
Vice-President 13 May 88 5,000 * 10.750 20.125 11.000 1,537
Gerald Kishner 13 May 88 50,000 * 10.750 18.875 11.000 1,559
Former
Executive Vice-
President and
Chief
Financial
Officer
Peter Mandell 13 May 88 7,000 * 10.750 15.250 11.000 1,039
Former Senior 13 May 88 23,000 * 10.750 17.250 11.000 1,074
Vice- 13 May 88 7,000 * 10.750 16.375 11.000 1,228
President, 5 Apr 90 7,000 * 5.750 11.000 5.750 347
General 5 Apr 90 23,000 * 5.750 11.000 5.750 382
Counsel & 5 Apr 90 7,000 * 5.750 11.000 5.750 536
Secretary 14 Oct 91 10,000 * 3.950 5.750 3.950 1,270
14 Oct 91 37,000 * 3.950 5.750 3.950 1,270
14 Oct 91 8,000 * 3.950 5.250 3.950 1,641
Lynda Friendly 13 May 88 3,000 * 10.750 14.625 11.000 1,029
Former 13 May 88 5,500 * 10.750 16.375 11.000 1,228
Executive Vice-
President,
Marketing &
Communications
Barry Silver 13 May 88 3,000 * 10.750 14.625 11.000 1,029
Former 13 May 88 5,500 * 10.750 16.375 11.000 1,228
Executive Vice- 5 Apr 90 3,000 * 5.750 11.000 5.750 337
President, 5 Apr 90 5,500 * 5.750 11.000 5.750 536
Operations
David Allen 13 May 88 3,000 * 10.750 14.625 11.000 1,029
Former 13 May 88 7,000 * 10.750 16.375 11.000 1,228
Executive Vice- 5 Apr 90 3,000 * 5.750 11.000 5.750 337
President, 5 Apr 90 7,000 * 5.750 11.000 5.750 536
Canada 5 Apr 90 10,000 * 5.750 11.000 5.750 1,210
27 Mar 91 30,000 * 4.300 8.375 4.300 1,346
14 Oct 91 20,000 * 3.950 5.750 3.950 1,270
14 Oct 91 50,000 * 3.950 4.300 3.950 1,627
Robert Topol 13 May 88 1,500 * 10.750 14.625 11.000 1,029
Former 13 May 88 3,000 * 10.750 16.375 11.000 1,228
Executive Vice- 13 May 88 5,000 * 10.750 10.750 11.000 1,351
President 13 May 88 20,000 * 10.750 18.875 11.000 1,502
</TABLE>
*No such options remain outstanding
<PAGE>
CINEPLEX ODEON CORPORATION
PROXY FOR HOLDERS OF COMMON SHARES
SOLICITED ON BEHALF OF MANAGEMENT
The undersigned shareholder of Cineplex Odeon Corporation (the "Corporation")
hereby appoints Allen Karp, or failing him, Ellis Jacob, or failing both of the
foregoing, Senator E. Leo Kolber, or instead of any of them
as proxy for the undersigned, with power of
substitution, to attend and act for and on behalf of the undersigned at the
Annual Meeting (the "Meeting") of shareholders of the Corporation to be held at
12 noon on Thursday June 26, 1997, at Cineplex Odeon Varsity Cinemas, 55 Bloor
Street West, Second Level, Toronto, Ontario, and at any adjournments thereof and
to vote, as directed below, all common shares in the capital of the Corporation
("Common Shares") which the undersigned would be entitled to vote if then
personally present:
(a) FOR or WITHHOLD FROM VOTING in the election of nominees
listed below as directors of the Corporation for a term of one
year. (A shareholder may withhold authority to vote for a
particular nominee(s) by lining through or otherwise striking out
the name(s) of the particular nominee(s) and checking the "For"
box.)
Rudolph P. Bratty, Q.C., John H. Daniels, Bruce L. Hack, Ellis Jacob, Allen
Karp, The Honourable E. Leo Kolber, Brian Mulligan, Andrew J. Parsons, Eric W.
Pertsch, Robert Rabinovitch, James D. Raymond and Howard L. Weitzman.
(b) FOR or WITHHOLD FROM VOTING in the appointment of KPMG, Chartered
Accountants, as independent auditors for fiscal 1997.
(c) FOR or WITHHOLD FROM VOTING on the resolution authorizing the
board of directors of the Corporation to fix the remuneration of the
auditors.
(d) In his or her discretion, with respect to any amendments or variations
to the matters hereinbefore specified, or on such further or other
business as may properly come before the Meeting or any adjournments
thereof.
The proxy named above will vote or withhold from voting the shares in respect of
which he or she is appointed on any ballot that may be called for in accordance
with the directions of the shareholder appointing him or her. In the absence of
such direction, such shares will be voted FOR the resolutions specified in
paragraphs (a) to, and including, (c) above on any ballot that may be called
for.
The undersigned hereby ratifies and confirms all that the said proxy may do by
virtue hereof, granting to the said proxy full power and authority to act for
and in the name of the undersigned at the said Meeting or at any adjournments
thereof, and hereby revokes any proxy or proxies heretofore given to vote,
attend or act with respect to the said shares.
This proxy is solicited on behalf of management and the shares represented by
this proxy will be voted or withheld from being voted, as stated above, in
accordance with the instructions of the undersigned on any ballot that may be
called for and, if the undersigned has specified a choice with respect to any
matter to be acted upon, the shares represented by this proxy shall be voted
accordingly at the Meeting and at any adjournments thereof. The undersigned has
the right to appoint a person to attend, vote and act for and on his or her
behalf at the Meeting or at any adjournments thereof other than the persons
named above and may exercise such right by inserting the name of his or her
nominee, who need not be a shareholder of the Corporation, in the blank space
provided above for the purpose, or by completing another proper form of proxy.
The undersigned hereby acknowledges receipt of the Notice of Meeting dated
May 26, 1997 and of the accompanying Management Information Circular.
DATED the day of , 1997.
Signature of Registered Shareholder or
Authorized Signing Officer
Name of Registered Shareholder (Please Print)
Please insert the date that the proxy is signed in the space provided. If the
date has not been inserted, this form of proxy is deemed to bear the date on
which it is mailed. Please sign exactly as your name appears on your share
certificates. If the shareholder is a corporation, this proxy must be executed
by an officer or attorney thereof duly authorized.
<PAGE>
PLEASE NOTE THAT
THE TIME OF
THE ANNUAL MEETING
HAS BEEN CHANGED
TO 12:00 NOON,
NOT 10:00 A.M. AS NOTED
IN THE ANNUAL REPORT
