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SEC Filings

10-Q
CINEMARK HOLDINGS, INC. filed this Form 10-Q on 05/09/2018
Entire Document
 

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

 

As of March 31, 2018, the Company had no plans to retire any shares of treasury stock.

Restricted Stock – During the three months ended March 31, 2018, the Company granted 260,019 shares of restricted stock to employees. The fair value of the restricted stock granted was determined based on the market value of the Company’s common stock on the date of grant, which was $39.03 per share. The Company assumed forfeiture rates ranging from 0% to 10% for the restricted stock awards. Certain of the restricted stock awards vest over two years and certain awards vest over four years. The recipients of restricted stock are entitled to receive non-forfeitable dividends and to vote their respective shares, however, the sale and transfer of the restricted shares is prohibited during the restriction period.

Below is a summary of restricted stock activity for the three months ended March 31, 2018:

 

 

 

Shares of

 

 

Weighted

Average

 

 

 

Restricted

 

 

Grant Date

 

 

 

Stock

 

 

Fair Value

 

Outstanding at January 1, 2018

 

 

650,581

 

 

$

35.81

 

Granted

 

 

260,019

 

 

$

39.03

 

Vested

 

 

(202,341

)

 

$

29.45

 

Forfeited

 

 

(11,303

)

 

$

37.96

 

Outstanding at March 31, 2018

 

 

696,956

 

 

$

38.82

 

Unvested restricted stock at March 31, 2018

 

 

696,956

 

 

$

38.82

 

 

 

 

March 31,

 

 

 

2018

 

 

2017

 

Compensation expense recognized during the period

 

$

2,375

 

 

$

2,127

 

Fair value of restricted shares that vested during the period

 

$

7,807

 

 

$

6,013

 

Income tax benefit recognized upon vesting of restricted stock     awards

 

$

1,399

 

 

$

1,972

 

 

As of March 31, 2018, the estimated remaining unrecognized compensation expense related to unvested restricted stock awards was $20,005 and the weighted average period over which this remaining compensation expense will be recognized is approximately two years.

Restricted Stock Units – During the three months ended March 31, 2018, the Company granted restricted stock units representing 224,602 hypothetical shares of common stock 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”) during the two fiscal year periods ending December 31, 2019 based on a formula utilizing a multiple of Adjusted EBITDA subject to certain adjustments as specified by the Compensation Committee prior to the grant date. 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. If the IRR for the two-year period is at least 7%, which is the threshold, one-third of the maximum restricted stock units vest. If the IRR for the two-year period is at least 9.5%, which is the target, two-thirds of the maximum restricted stock units vest. If the IRR for the two-year period is at least 13%, which is the maximum, 100% of the maximum restricted stock units vest. Grantees are eligible to receive a ratable portion of the common stock issuable if the IRR is within the targets previously noted. Further, as an example, if the Company achieves an IRR equal to 11%, 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 restricted stock units granted during 2018 will vest subject to an additional two-year service requirement and will be paid in the form of common stock if the participant continues to provide services through February 2022, which is the fourth anniversary of the grant date. Restricted stock unit award participants are eligible to receive dividend equivalent payments from the grant date if, and at the time that, the restricted stock unit awards vest.  

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