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SEC Filings

10-K
CINEMARK HOLDINGS, INC. filed this Form 10-K on 02/23/2018
Entire Document
 

CINEMARK HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

 

Below is a summary of restricted stock award activity recorded for the periods indicated.

 

 

 

Year Ended December 31,

 

 

 

2015

 

 

2016

 

 

2017

 

Compensation expense recognized during the period

 

$

9,600

 

 

$

8,250

 

 

$

8,384

 

Fair value of restricted shares that vested during the period

 

$

14,424

 

 

$

14,662

 

 

$

8,172

 

Income tax deduction upon vesting of restricted stock awards

 

$

3,823

 

 

$

5,555

 

 

$

2,667

 

 

As of December 31, 2017, the remaining unrecognized compensation expense related to these restricted stock awards was approximately $13,049. The weighted average period over which this remaining compensation expense will be recognized is approximately two years.

Restricted Stock Units — During the years ended December 31, 2015, 2016 and 2017, the Company granted restricted stock units representing 142,917, 253,661 and 175,634 hypothetical shares of common stock, respectively, to employees. The restricted stock units vest based on a combination of financial performance factors and continued service. The financial performance factors are based on an implied equity value concept that determines an internal rate of return (“IRR”) for a two year measurement period, as defined in the award agreement, based on a formula utilizing a multiple of Adjusted EBITDA subject to certain specified adjustments (as defined in the restricted stock unit award agreement). The financial performance factors for the restricted stock units have a threshold, target and maximum level of payment opportunity and vest on a prorata basis according to the IRR achieved by the Company during the performance period. As an example, if the Company achieves an IRR equal to 11.0% for the 2015 grant, 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.

The financial performance factors and respective vesting rates for each of the 2015, 2016 and 2017 grants are as follows:

 

 

 

Year Ended December 31,

 

 

Percentage of Shares Vesting

 

 

 

2015

 

 

2016

 

 

2017

 

 

 

 

 

Threshold IRR

 

7.5%

 

 

6.0%

 

 

7.0%

 

 

33.3%

 

Target IRR

 

9.5%

 

 

8.0%

 

 

9.5%

 

 

66.6%

 

Maximum IRR

 

11.5%

 

 

10.0%

 

 

13.0%

 

 

100.0%

 

 

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 Company assumed a forfeiture rate of 5% for the restricted stock unit awards granted during 2017. Restricted stock unit award participants are eligible to receive dividend equivalent payments if and at the time the restricted stock unit awards vest.  

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