IMAX.NYSEImax CORP
DEF 14A: IMAX Corporation Announces Annual General Meeting and Proxy Statement
Sentiment:
Proxy Statement
IMAX Corporation's 2023 was a strong year, with revenue and global box office numbers reaching near record levels, and shareholders are invited to attend the 2024 Annual General Meeting to vote on key proposals.
Delay expectedThe document mentions the delay in the release of several highly-anticipated film titles as a result of the Hollywood writers and actors strikes throughout 2023 coupled with an uncertainty regarding production delays impacting 2024.
Better than expectedThe company's full-year Adjusted EPS grew nearly a dollar to 94 cents in 2023, up from 6 cents the year prior.The company achieved growth of 25% or greater across Revenue, Gross Margin, and Adjusted EBITDA.The company's operating cash flow more than tripled to $59 million, up from $17 million the year prior.The company installed 128 IMAX systems worldwide, up 40% over 2022.The company signed 129 systems for the full year, more than two and a half times the year prior.
Summary
- IMAX Corporation had a strong year in 2023, with significant growth in revenue and global box office.
- The company delivered one of its strongest years in history, driven by a robust content portfolio including Oppenheimer and Taylor Swift: The ERAs Tour.
- IMAX signed agreements for 129 new and upgraded systems worldwide, the most ever outside of North America and China.
- Dune: Part Two has vastly over indexed in the IMAX network, delivering more than 20% of the film's global box office to date.
- The company expects to program more than 100 unique IMAX experiences in 2024, expanding into local language blockbusters, documentaries, music, gaming, and live experiences.
- The Annual General Meeting of Shareholders will be held on June 6, 2024, via live audio webcast.
- Shareholders will vote on the election of directors, appointment of auditors, and an advisory vote on executive compensation.
- The Board of Directors recommends voting FOR the election of directors, appointment of auditors, and approval of executive compensation.
Sentiment
Score: 8
Explanation: The document presents a positive outlook for IMAX, highlighting strong financial performance and strategic initiatives. The tone is optimistic and confident, reflecting the company's success and future potential.
Positives
- IMAX achieved its highest grossing year ever at the North American box office.
- IMAX achieved its highest grossing year ever for local language films.
- The company's technology is embraced by more of the world's top filmmakers than ever.
- The company is rolling out prototypes of its next generation IMAX film cameras to meet growing filmmaker demand.
Risks
- The Proxy Circular and Proxy Statement contains forward-looking statements, including those regarding anticipated growth and trends in our businesses and markets, industry outlooks, market share, technology transitions, strategies and financial performance, our development of new products, technologies and capabilities, and other statements that are not historical fact, and actual results could differ materially.
- Risk factors that could cause actual results to differ are set forth in the Risk Factors section of, and elsewhere in, our annual report for the fiscal year ended December 31, 2023 on Form 10-K and other filings with the Securities and Exchange Commission.
Future Outlook
Overall, the year ahead holds great promise for IMAX, and we are focused on growing and evolving our global business while delivering strong returns for our shareholders.
Management Comments
- 2023 was an excellent year for IMAX one in which the Company further established itself among the most consistent winners in global media and entertainment.
- We continue to be a leading global platform for entertainment and events thanks to our brand, unique technology, asset-lite business model, and our ever-evolving platform.
- Increasingly, the IMAX value proposition is as much about content creation as it is content delivery.
- Filmmakers, studios, and artists recognize that creating with IMAX technology for the IMAX platform is an increasingly vital creative pathway to commercial success.
Industry Context
IMAX's box office recovery from the COVID-19 pandemic has significantly outpaced that of conventional cinema, demonstrating its resilience and unique value proposition in the entertainment industry.
Comparison to Industry Standards
- Despite industry strikes impacting the fourth quarter, IMAX Global Box Office in 2023 increased 2% over its pre-pandemic, 2017 to 2019 average.
- This compares to a -21% decline in box office for exhibitors worldwide over the same period, based on estimates by Gower Street Analytics.
- The document compares IMAX's CEO three-year realizable compensation and TSR performance to its compensation comparator group, including companies like Ambarella, Dolby, and Lions Gate Entertainment.
- The document notes that IMAX fell slightly outside the zone of alignment for realizable pay and TSR performance, largely due to the impact of the COVID-19 pandemic and the Hollywood strikes.
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Share Ownership Guidelines | Updated Share Ownership Guidelines, increasing the directors' minimum shareholding requirement from 300% to 400% of the annual retainer and the CEO's from 400% to 500% of base salary. | 2023 | Aligns directors' and executives' interests with those of shareholders. |
| Clawback Policy | Approved a new Clawback Policy, replacing the prior policy adopted in February 2020. The new policy, which complies with the applicable listing standards, applies to current and former executive officers and requires the Company to claw back awards of cash and equity incentive compensation that is earned, granted or vested based on the attainment of a financial reporting measure, which includes TSR. | 2023 | Provides the ability to recoup incentive compensation in case of financial restatements. |
| Audit Committee Charter | Updated Audit Committee charter to formally adopt responsibilities associated with the oversight of cybersecurity and other information technology risks. | 2023 | Enhances oversight of cybersecurity and data privacy risks. |
| Governance Committee Charter | Updated Governance Committee charter to formally incorporate oversight responsibility of ESG matters into its charter. | 2023 | Enhances oversight of ESG matters. |
Related Party Transactions
- Mr. Douglas is our largest individual shareholder, holding approximately 16.98% of our Common Shares as of April 8, 2024. However, the Board of Directors has determined that, notwithstanding Mr. Douglas shareholdings, he has neither a direct nor indirect material interest in any transactions with the Company.
- Mr. MacMillan is the ultimate controlling shareholder in Blue Ant, a media company which he co-founded in 2011. Prior to February 8, 2024, Blue Ant owned 70% of Beach House. On January 13, 2023, CICG, Beach House, and the Company entered into an agreement to co-finance a documentary film, The Elephant Odyssey . The total budget for the film is approximately $2.6 million, of which CICG is responsible for $0.3 million or 10%. The Company and Beach House have agreed to finance $1.7 million or 75% and $0.6 million or 25% of the remaining budget, respectively. As of December 31, 2023, the Company has made payments of $1.0 million under the agreement. The Board of Directors determined that the transaction didn't constitute a material relationship between Mr. MacMillan and the Company. On February 8, 2024, Blue Ant sold 100% of its interest in Beach House.
Stakeholder Impact
- Shareholders are encouraged to participate in the Annual General Meeting and vote on key proposals.
- The company's performance and strategic initiatives are designed to deliver strong returns for shareholders.
- The company is committed to operating its business in a responsible and sustainable manner, supporting human rights, and reducing its environmental impact.
- The company is committed to supporting organizations with deep roots in the communities we operate in and partnering with on-the-ground community organizations who are dedicated to creating a positive impact on marginalized, underserved, or otherwise disadvantaged communities.
Next Steps
- Shareholders are encouraged to vote on the proposals outlined in the proxy statement.
- The company will continue to focus on growing and evolving its global business while delivering strong returns for its shareholders.
- The Governance Committee of the Board has an ongoing dialogue with senior management regarding succession planning for the CEO and NEOs, and succession and contingency planning will be an integral part of the Board's annual strategy meeting in June.
- The Compensation Committee will review with an independent outside consultant the optimal ratio between RSUs and PSUs as well as the weight of market value-based PSUs to balance shareholder value creation and the ability to effectively recruit and retain executives.
- Our Compensation Committee will review and consider further increases in the share ownership requirements for our directors and executives.
- The Compensation Committee considers shareholder feedback in determining the performance metrics for future compensation cycles.
- The Compensation Committee will take the shareholder feedback into account in determining the performance measures for future NEO compensation.
Key Dates
| Date | Description |
|---|---|
| March 1994 | Richard L. Gelfond became a director of IMAX. |
| May 1996 | Richard L. Gelfond served as Co-Chief Executive Officer. |
| June 1999 | Richard L. Gelfond served as Co-Chairman of the Company. |
| February 1, 2003 | Space Shuttle Columbia tragedy. |
| September 2003 | David W. Leebron became a director of IMAX. |
| July 2004 | David Leebron served as President of Rice University. |
| March 8, 2006 | Amendment agreement for Richard L. Gelfond's employment. |
| March 2006 | Dana Settle became a Partner and Co-Founder of Greycroft Partners. |
| April 2009 | Richard L. Gelfond became sole Chief Executive Officer of IMAX. |
| September 2010 | Eric A. Demirian became a director of IMAX. |
| June 2013 | Michael MacMillan became a director of IMAX. |
| July 2015 | Dana Settle became a director of IMAX. |
| May 27, 2015 | Richard L. Gelfond became Chairman and Non-Executive Director of IMAX China Holding, Inc. |
| October 2016 | Kevin Douglas became a director of IMAX. |
| December 18, 2017 | Robert D. Lister's employment agreement date. |
| April 2018 | Jennifer Wong served as the Chief Operating Officer of Reddit, Inc. |
| January 1, 2020 | First amendment to Richard L. Gelfond's employment agreement. |
| February 2020 | Prior Clawback policy adopted. |
| March 11, 2020 | First amendment to Robert D. Lister's employment agreement. |
| June 2021 | Darren Throop became Chairman of the Board of Directors and Steve R. Pamon became a director. |
| March 25, 2022 | IMAX's Credit Agreement date. |
| April 25, 2022 | Natasha Fernandes' employment agreement date. |
| May 1, 2022 | Natasha Fernandes became Chief Financial Officer. |
| September 19, 2022 | Second amendment to Richard L. Gelfond's employment agreement. |
| September 2022 | Michele Golden joined the Company as Executive Vice President and Global Chief People Officer. |
| November 14, 2022 | Daniel Manwaring's employment agreement date. |
| January 9, 2023 | Daniel Manwaring became Chief Executive Officer of IMAX China. |
| March 6, 2023 | Gail Berman and Jennifer Wong joined the Board. |
| October 20, 2023 | Second amendment to Robert D. Lister's employment agreement. |
| December 31, 2023 | End of fiscal year 2023. |
| January 25, 2024 | Schedule 13D/A filed jointly by Kevin Douglas, Michelle Douglas, James E. Douglas, III, K&M Douglas Trust, Irrevocable Descendant's Trust FBO Alexander James Douglas, Irrevocable Descendant's Trust FBO Amanda Anne Douglas, Irrevocable Descendant's Trust FBO Jake Edward Douglas, Irrevocable Descendant's Trust FBO Summer Jean Douglas, Douglas Survivors Trust Dated 1-29-1990, Kevin Douglas, Trustee, Celtic Financial LLC with the SEC. |
| February 7, 2024 | Schedule 13G filed by BlackRock, Inc. |
| February 8, 2024 | Blue Ant sold 100% of its interest in Beach House. |
| February 14, 2024 | Schedule 13G filed by Macquarie Group Limited, Macquarie Management Holdings, Inc., and Macquarie Investment Management Business Trust (Macquarie) and Nantahala Capital Management, LLC (Nantahala). |
| April 1, 2024 | Compliance with the Share Ownership Guidelines is assessed annually. |
| April 8, 2024 | Record date for the Annual General Meeting. |
| April 26, 2024 | Date of the Proxy Circular and Proxy Statement. |
| June 4, 2024 | Deadline for proxy submission. |
| June 6, 2024 | Annual General Meeting of Shareholders. |
| December 27, 2024 | Deadline for shareholder proposals for the 2025 Annual General Meeting (Exchange Act Rule 14a-8). |
| January 7, 2025 | Start of the period for shareholder proposals for the 2025 Annual General Meeting (CBCA). |
| March 8, 2025 | End of the period for shareholder proposals for the 2025 Annual General Meeting (CBCA). |
Keywords
IMAX, Shareholders, Annual General Meeting, Proxy Statement, Directors, Executive Compensation, Auditors, Box Office, Systems, Revenue
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