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SEC Filings

10-K
CINEMARK HOLDINGS, INC. filed this Form 10-K on 02/27/2015
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Table of Contents

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

 

least one-third of the restricted stock units vest. If the IRR for the defined measurement period is at least 10.5%, which is the target, at least two-thirds of the restricted stock units vest. If the IRR for the defined measurement period is at least 12.5%, which is the maximum, at least 100% of the restricted stock units vest. Further, as an example, if the Company achieves an IRR equal to 11.5%, the number of restricted stock units that shall vest will be greater than the target but less than the maximum number that would have vested had the Company achieved the highest IRR. All payouts of restricted stock units that vest will be subject to an additional service requirement and will be paid in the form of common stock if the participant continues to provide services through the fourth anniversary of the grant date.

At the time of each of the restricted stock unit grants, the Company assumes the IRR level to be reached for the defined measurement period will be the mid-point IRR level in determining the amount of compensation expense to record for such grants. If and when additional information becomes available to indicate that something other than the mid-point IRR level will be achieved, the Company adjusts compensation expense on a prospective basis over the remaining service period. The fair value of the restricted stock unit awards granted during 2014 was determined based on the market value of the Company’s common stock on the date of grant, which was $28.54 per share. The Company assumed forfeiture rates ranging from 0% to 5% for the restricted stock unit awards. Restricted stock unit award participants are eligible to receive dividend equivalent payments if and at the time the restricted stock unit awards vest.

Below is a table summarizing the potential number of shares that could vest under restricted stock unit awards granted during the years ended December 31, 2012, 2013 and 2014 at each of the three levels of financial performance (excluding forfeitures):

 

     Granted During the Year Ended December 31,  
     2012      2013      2014  
     Number
of
     Value
at
     Number
of
     Value
at
     Number
of
     Value
at
 
     Units      Grant      Units      Grant      Units      Grant  

at IRR of at least 8.5%

     50,981       $ 1,103         38,366       $ 1,129         65,832       $ 1,879   

at IRR of at least 10.5%

     101,974       $ 2,206         76,741       $ 2,259         131,683       $ 3,758   

at IRR of at least 12.5%

     152,955       $ 3,308         115,107       $ 3,389         197,515       $ 5,637   

Below is a summary of activity for restricted stock unit awards for the periods indicated:

 

     Year Ended December 31,  
     2012      2013      2014  

Number of restricted stock unit awards that vested during the period

     196,051         295,751         395,751   

Fair value of restricted stock unit awards that vested during the period

   $ 4,400       $ 8,723       $ 11,420   

Accumulated dividends paid upon vesting of restricted stock unit awards

   $ 600       $ 939       $ 1,352   

Income tax benefit recognized upon vesting of restricted stock unit awards

   $ 1,848       $ 3,663       $ 4,796   

Compensation expense recognized during the period

   $ 4,433       $ 4,148       $ 3,284   

As of December 31, 2014, the Company had restricted stock units outstanding that represented a total 573,584 hypothetical shares of common stock, net of actual cumulative forfeitures of 42,207 units, assuming the maximum IRR of at least 12.5% is achieved for all of the outstanding restricted stock unit awards.

As of December 31, 2014, the remaining unrecognized compensation expense related to the outstanding restricted stock unit awards was $4,803, which assumes the high-point IRR level will be achieved for the 2011 grants, an IRR of approximately 11.1% will be achieved for the 2012 grants and the mid-point IRR level will be achieved for the 2013 grants. The weighted average period over which this remaining compensation expense will be recognized is approximately two years.

 

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