SCHEDULE 14A INFORMATION

 

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Amendment No.      )

 

Filed by the Registrant þ

 

Filed by a Party other than the Registrant o

 

Check the appropriate box:

 

o  Preliminary Proxy Statement

o  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

þ  Definitive Proxy Statement

o  Definitive Additional Materials

o  Soliciting Material Pursuant to Rule 14a-12

 

LIONS GATE ENTERTAINMENT CORP.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIONS GATE ENTERTAINMENT CORP.

 

 

 

 

 

NOTICE OF ANNUAL GENERAL MEETING
OF SHAREHOLDERS
To Be Held December 14, 2010

 

 

 

 

 

To Our Shareholders:

 

You are invited to attend the Annual General Meeting of Shareholders (the “Annual Meeting”) of Lions Gate Entertainment Corp. (“Lionsgate” or the “Company”), which will be held on Tuesday, December 14, 2010, beginning at 10:00 a.m., local time, at the SLS Hotel, 465 S. La Cienega Boulevard, Los Angeles, California 90048. At the Annual Meeting, shareholders will act on the following matters:

 

1. Elect 12 directors, each for a term of one year or until their successors are duly elected and qualified;

 

2. Re-appoint Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending March 31, 2011 and authorize the Company’s Audit Committee to determine the remuneration to be paid to Ernst & Young LLP; and

 

3. Transact such further and other business as may properly come before the meeting and any continuations, adjournments or postponements thereof.

 

Shareholders will also receive the audited consolidated financial statements of the Company for the fiscal year ended March 31, 2010, together with the auditor’s report thereon. Shareholders of record at 5:00 p.m. (Eastern Standard Time) on November 12, 2010 are entitled to vote at the meeting or any continuations, adjournments or postponements thereof. It is expected that these materials first will be mailed to shareholders on or about November 20, 2010.

 

Registered shareholders unable to attend the Annual Meeting in person are requested to read the enclosed proxy statement and the proxy card that accompany this notice and to complete, sign, date and deliver the proxy card, together with the power of attorney or other authority, if any, under which it was signed (or a notarized certified copy thereof) to IVS Associates, Inc. (“IVS Associates”), Attn: Lionsgate Proxy Tabulation, 1925 Lovering Avenue, Wilmington, Delaware, 19806, via facsimile at 302-369-8486, or via the Internet at www.ivselection.com/lionsgate. Subject to the discretion of the Chairman of the Annual Meeting, to be effective, proxies must be received by IVS Associates not later than 10:00 a.m. (Pacific Standard time) on Friday, December 10, 2010 or, if the Annual Meeting is adjourned or postponed, not later than 48 hours (excluding Saturdays, Sundays and holidays) before the time of the adjourned or postponed Annual Meeting, or any further adjournment or postponement thereof, subject to discretion of the Chairman of such adjourned or postponed meeting.

 

If you are not a registered shareholder, please refer to the accompanying proxy statement for information on how to vote your shares.

 

By Order of the Board of Directors,

Jon Feltheimer

Chief Executive Officer and Co-Chairman of the Board

 

Vancouver, British Columbia

November 19, 2010

 

 

 

 

In accordance with our security procedures, all persons attending the Annual Meeting will be required to present picture identification.

 

TABLE OF CONTENTS

2010 ANNUAL GENERAL MEETING OF SHAREHOLDERS
OF
LIONS GATE ENTERTAINMENT CORP.

 

 

PROXY STATEMENT

 

 

This proxy statement is part of a solicitation of proxies by the Board of Directors (the “Board”) and management of Lions Gate Entertainment Corp. (“Lionsgate” or the “Company”) and contains information relating to our annual general meeting of shareholders (the “Annual Meeting”) to be held on Tuesday, December 14, 2010, beginning at 10:00 a.m., local time, at the SLS Hotel, 465 S. La Cienega Boulevard, Los Angeles, California 90048, and to any continuations, adjournments or postponements thereof. All dollar figures contained in this proxy statement are U.S. dollars, unless otherwise indicated. The notice of the Annual Meeting, this proxy statement and the enclosed proxy card first will be mailed to shareholders on or about November 20, 2010.

 

What is the purpose of the Annual Meeting?

 

At the Annual Meeting, shareholders will act upon the matters outlined in the accompanying notice of meeting, including the election of directors. In addition, after the formal portion of the meeting, the Company’s management will report on the Company’s performance during fiscal 2010 and respond to appropriate questions from shareholders.

 

Who is entitled to vote at the Annual Meeting?

 

Only shareholders of record of the Company’s common shares (NYSE: LGF) at 5:00 p.m. (Eastern Standard Time) on November 12, 2010 (the “Record Date”) are entitled to receive notice of the Annual Meeting and to vote the common shares that they held on that date at the Annual Meeting, or any continuations, adjournments or postponements of the Annual Meeting. Each outstanding common share entitles its holder to cast one vote on each matter to be voted upon. As of the Record Date, 136,694,840 common shares were outstanding and entitled to vote and held by approximately 912 shareholders of record.

 

Each shareholder has the right to appoint a person or company to represent the shareholder other than the persons designated in the form of proxy.

 

Who can attend and vote at the Annual Meeting?

 

Only registered shareholders of the Company or the persons they appoint as their proxies are permitted to attend and vote at the Annual Meeting. Most shareholders of the Company are “non-registered” shareholders (“Non-Registered Shareholders”) because the shares they own are not registered in their names but are, instead, registered in the name of the brokerage firm, bank or trust company through which they purchased the shares. Shares beneficially owned by a Non-Registered Shareholder are registered either: (i) in the name of an intermediary (an “Intermediary”) that the Non-Registered Shareholder deals with in respect of the shares of the Company (Intermediaries include, among others, banks, trust companies, securities dealers or brokers and trustees or administrators of self-administered Registered Retirement Savings Plans, Registered Retirement Income Funds, Registered Education Savings Plans and similar plans); or (ii) in the name of a clearing agency (such as The Canadian Depository for Securities Limited or The Depository Trust & Clearing Corporation) of which the Intermediary is a participant. In accordance with applicable securities law requirements, the Company will have distributed copies of the notice of Annual Meeting, this proxy statement and the proxy card (collectively, the “Meeting Materials”) to the clearing agencies and Intermediaries for distribution to Non-Registered Shareholders.

Intermediaries are required to forward the Meeting Materials to Non-Registered Shareholders unless a Non-Registered Shareholder has waived the right to receive them. Intermediaries often use service companies to forward the Meeting Materials to Non-Registered Shareholders. Generally, Non-Registered Shareholders who have not waived the right to receive Meeting Materials will either:

 

(i) be given a voting instruction form which is not signed by the Intermediary and which, when properly completed and signed by the Non-Registered Shareholder and returned to the Intermediary or its service company, will constitute voting instructions (often called a “voting instruction form”) which the Intermediary must follow. Typically, the voting instruction form will consist of a one-page printed form. Sometimes, instead of the one-page pre-printed form, the voting instruction form will consist of a regular printed proxy form accompanied by a page of instructions which contains a removable label with a bar code and other information. In order for the form of proxy to validly constitute a voting instruction form, the Non-Registered Shareholder must remove the label from the instructions and affix it to the form of proxy, properly complete and sign the form of proxy and submit it to the Intermediary or its service company in accordance with the instructions of the Intermediary or its service company; or

 

(ii) be given a form of proxy which has already been signed by the Intermediary (typically by a facsimile, stamped signature), which is restricted to the number of shares beneficially owned by the Non-Registered Shareholder but which is otherwise not completed by the Intermediary. Because the Intermediary has already signed the form of proxy, this form of proxy is not required to be signed by the Non-Registered Shareholder when submitting the proxy. In this case, the Non-Registered Shareholder who wishes to submit a proxy should properly complete the form of proxy and deposit it with the Company, c/o IVS Associates, Inc., Attn: Lionsgate Proxy Tabulation, 1925 Lovering Avenue, Wilmington, Delaware, 19806, via facsimile at 302-369-8486.

 

In either case, the purpose of these procedures is to permit Non-Registered Shareholders to direct the voting of the shares of the Company they beneficially own. Should a Non-Registered Shareholder who receives one of the above forms wish to vote at the Annual Meeting in person (or have another person attend and vote on behalf of the Non-Registered Shareholder), the Non-Registered Shareholder should request a legal proxy from their Intermediary. Instructions for obtaining legal proxies may be found on the voting instruction form. If you have any questions about voting your Shares, please call MacKenzie Partners, Inc. at 1-800-322-2885 (toll-free) or 212-929-5500 (collect) or e-mail lionsgate@mackenziepartners.com.

 

A Non-Registered Shareholder may revoke a voting instruction form or a waiver of the right to receive Meeting Materials and to vote which has been given to an Intermediary at any time by written notice to the Intermediary, provided that an Intermediary is not required to act on a revocation of a voting instruction form or of a waiver of the right to receive Meeting Materials and to vote which is not received by the Intermediary in a timely manner in advance of the Annual Meeting.

 

What constitutes a quorum?

 

A quorum is necessary to hold a valid meeting of shareholders. The presence at the Annual Meeting, in person or by proxy, of two holders of the Company’s common shares outstanding on the Record Date who, in the aggregate, hold at least 10% of the issued common shares of the Company entitled to vote at the Annual Meeting, will constitute a quorum.

 

How do I vote at the Annual Meeting?

 

If you complete and properly sign the accompanying proxy card and return it to the Company, it will be voted as you direct. Registered shareholders that are unable to attend the Annual Meeting in person are requested to read this proxy statement and accompanying proxy card and to complete, sign and date the proxy card, and to return it, together with the power of attorney or other authority, if any, under which it was signed or a notarized certified copy thereof, to IVS Associates, Inc., Attn: Lionsgate Proxy Tabulation, 1925 Lovering Avenue, Wilmington, Delaware, 19806, via facsimile at 302-369-8486, or via the Internet at www.ivselection.com/lionsgate. Subject to the discretion of the Chairman of the Annual Meeting, to be effective, proxies must be received by IVS Associates not later than 10:00 a.m. (Pacific Standard Time) on Friday, December 10, 2010 or, if the Annual Meeting is adjourned or postponed, not later than 48 hours (excluding Saturdays, Sundays and holidays) before the time of the

adjourned or postponed Annual Meeting, or any further adjournment or postponement thereof, subject to discretion of the Chairman of such adjourned or postponed meeting.

 

“Street name” shareholders who wish to vote at the Annual Meeting will need to obtain a proxy or voting instruction form from the institution that holds their shares. See Who can attend and vote at the Annual Meeting? above.

 

At the Annual Meeting, one or more representatives from IVS Associates, Inc., an independent, third-party company, shall be appointed to act as scrutineers. These scrutineers will determine the number of common shares represented at the Annual Meeting, the existence of a quorum and the validity of proxies, will count the votes and ballots, if required, and will determine and report the results to the Company.

 

If you are a registered shareholder but do not wish to, or cannot, attend the Annual Meeting in person, you can appoint someone who will attend the Annual Meeting and act as your proxy holder to vote in accordance with your instructions by striking out the printed names of the proposed management nominees on the accompanying proxy card and inserting the name of such other person in the blank space provided therein for that purpose. To vote your shares, your proxy must attend the Annual Meeting. If you do not fill a name in the blank space in the enclosed form of proxy, the persons named in the form of proxy are appointed to act as your proxy holder. Those persons are directors and/or officers of the Company.

 

Can I change my vote after I return my proxy card?

 

Yes. Even after you have submitted your proxy, you may change your vote by depositing a duly executed proxy bearing a later date in the manner and within the time described above. See How do I vote at the Annual Meeting? above. You may also revoke a previously deposited proxy (i) by an instrument in writing that is received at the registered office of the Company at any time up to and including 10:00 a.m. (Pacific Standard Time) on Friday, December 10, 2010 or, if the Annual Meeting is adjourned or postponed, the last business day before the day set for the adjourned meeting, or any further adjournment or postponement thereof, (ii) by an instrument in writing provided to the Chairman of the Annual Meeting at the Annual Meeting or any adjournment thereof, or (iii) in any other manner permitted by law. The powers of the proxy holders will be suspended if you attend the Annual Meeting in person and so request, although attendance at the Annual Meeting will not by itself revoke a previously granted proxy.

 

Is my vote confidential?

 

Proxy instructions, ballots and voting tabulations that identify individual shareholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within the Company or to third parties, except:

 

 

Occasionally, shareholders provide written comments on their proxy cards, which may be forwarded to the Company’s management and the Board.

 

What is the Board of Directors’ recommendations?

 

The enclosed proxy is solicited on behalf of the Board and management. Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of the Board set forth with the description of each item in this proxy statement.

 

The Board recommends a vote:

 

 

The Board does not know of any other matters that may be brought before the Annual Meeting, nor does it foresee or have reason to believe that the proxy holders will have to vote for substitute or alternate board nominees. If any other matter should properly come before the Annual Meeting or any nominee is not available for election, the proxy holders will vote as recommended by the Board or, if no recommendation is given, in accordance with their best judgment.

 

What vote is required to approve each item?

 

In order to be approved, the proposals included in this proxy statement — for the election of each of the nominated directors (Proposal 1) and the re-appointment of Ernst & Young LLP as our independent registered public accounting firm (Proposal 2) — each requires the affirmative vote of a majority of the votes cast by holders of the Company’s common shares present or represented by proxy at the Annual Meeting. Abstentions and broker non-votes will not be counted in determining the number of shares necessary for approval of any item.

 

Who pays for the preparation of this proxy statement?

 

The Company will pay the cost of preparing, assembling and mailing this proxy statement, notice of the Annual Meeting and enclosed proxy card. In addition to the use of mail, the Company’s employees and advisors may solicit proxies personally and by telephone. The Company’s employees will receive no compensation for soliciting proxies other than their regular salaries. The Company may request banks, brokers and other custodians, nominees and fiduciaries to forward copies of the proxy materials to their principals and to request authority for the execution of proxies, and the Company may reimburse those persons for their expenses incurred in connection with these activities. The Company will compensate only independent third-party agents that are not affiliated with the Company but who solicit proxies. We have retained MacKenzie Partners, Inc., a third-party solicitation firm, to solicit proxies on our behalf and we will pay all costs and expenses associated with retaining MacKenzie Partners, Inc., which are estimated to approximately $150,000.

 

May I propose actions for consideration at next year’s annual general meeting of shareholders?

 

Yes. Under U.S. laws, for your proposal to be considered for inclusion in the proxy statement for next year’s annual meeting, we must receive your written proposal no later than July 23, 2011. You should also be aware that your proposal must comply with U.S. Securities and Exchange Commission (the “SEC”) regulations regarding inclusion of shareholder proposals in company-sponsored proxy materials. Shareholder proposals submitted as per the Business Corporations Act (British Columbia) (the “BC Act”) to be presented at the next annual general meeting of shareholders must be received by our Corporate Secretary at our registered office no later than June 13, 2011, and must comply with the requirements of the BC Act.

 

If the date of the 2011 annual meeting is advanced or delayed by more than 30 days from the date of the 2010 annual meeting, under U.S. laws, shareholder proposals intended to be included in the proxy statement for the 2011 annual meeting must be received by us within a reasonable time before we begin to print and mail the proxy statement for the 2011 annual meeting. Upon any determination that the date of the 2011 annual meeting will be advanced or delayed by more than 30 days from the date of the 2010 annual meeting, we will disclose the change in the earliest practicable Quarterly Report on Form 10-Q.

 

SEC rules also govern a company’s ability to use discretionary proxy authority with respect to shareholder proposals that were not submitted by the shareholders in time to be included in the proxy statement. In the event a shareholder proposal is not submitted to us prior to October 3, 2011, the proxies solicited by the Board for the 2011 annual meeting of shareholders will confer authority on the proxyholders to vote the shares in accordance with the recommendations of the Board if the proposal is presented at the 2011 annual meeting of shareholders without any discussion of the proposal in the proxy statement for such meeting. If the date of the 2011 annual meeting is advanced or delayed more than 30 days from the date of the 2010 annual meeting, then the shareholder proposal must have been submitted to us within a reasonable time before we mail the proxy statement for the 2011 annual meeting.

Who can I contact if I have questions?

 

Shareholders who have questions about deciding how to vote should contact their financial, legal or professional advisors. For any queries referencing information in this proxy statement or in respect of voting your shares, please call MacKenzie Partners, Inc. at 1-800-322-2885 (toll-free) or 212-929-5500 (collect) or e-mail lionsgate@mackenziepartners.com.

 

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to Be Held on December 14, 2010

 

The notice of the Annual Meeting, this proxy statement and the enclosed proxy card will be mailed to shareholders on or about November 20, 2010. Our proxy statement and fiscal 2010 Annual Report to Shareholders will also be available in the Investors/Governance Documents section on our website at www.lionsgate.com.

 

 

 

 

NO PERSON IS AUTHORIZED ON BEHALF OF THE COMPANY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS WITH RESPECT TO THE PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING, OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS PROXY STATEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION AND/OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED, AND THE DELIVERY OF THIS PROXY STATEMENT SHALL, UNDER NO CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.

 

 

 

 

Our registered and head office is located at 1055 West Hastings Street, Suite 2200, Vancouver, British Columbia V6E 2E9, and our telephone number there is (877) 848-3866. Our principal executive offices and our head office is located at 2700 Colorado Avenue, Suite 200, Santa Monica, California 90404, and our telephone number there is (310) 449-9200. Our website is located at www.lionsgate.com. Website addresses referred to in this proxy statement are not intended to function as hyperlinks, and the information contained on our website is not a part of this proxy statement. As used in this proxy statement, unless the context requires otherwise, the terms “we,” “us,” “our” and the “Company” refer to Lions Gate Entertainment Corp. and its subsidiaries.

 

 

 

 

The date of this proxy statement is November 19, 2010

 

The following table presents certain information about beneficial ownership of our common shares as of November 12, 2010 by each person (or group of affiliated persons) who is known by us to own beneficially more than 5% of our common shares. Except as indicated in the footnotes to this table, the persons named in the table have sole voting and dispositive power with respect to all common shares shown as beneficially owned by them, subject to community property laws, where applicable.

 

 

 

 

The following table presents certain information about beneficial ownership of our common shares as of November 12, 2010 by (i) each current director, nominee for director and current executive officer, and (ii) all current directors and executive officers as a group. Except as indicated in the footnotes to this table, the persons named in the table have sole voting and dispositive power with respect to all common shares shown as beneficially owned by them, subject to community property laws, where applicable. Except for common shares in brokerage accounts, which may, from time to time (and up to a maximum of 10,000 common shares), together with other securities in the account, serve as collateral for margin loans made in such accounts, no shares reported as beneficially owned have been pledged as security for any loan or indebtedness.

 

 

 

 

Nominees for Directors

 

Upon the recommendation of the Nominating & Corporate Governance Committee, the 12 persons named below have been nominated for election as directors. Each nominee, if elected at the Annual Meeting, will serve until our 2011 Annual General Meeting of Shareholders, or until his or her successor is duly elected or appointed, unless his or her office is earlier vacated in accordance with our Articles or applicable law.

 

Mr. Tobin, a current director of the Company, will not stand for re-election at the Annual Meeting. Mr. Tobin will, however, continue to serve as a member of the Board until the date of the Annual Meeting. Frank Giustra, a director nominee, has been nominated by the Board to replace Mr. Tobin, if elected at the Meeting.

 

The nominees have consented to serve on the Board and the Board has no reason to believe that they will not serve if elected. However, if any of them should become unavailable to serve as a director, and if the Board has designated a substitute nominee, the persons named as proxies will vote for this substitute nominee. There are no family relationships among the nominees for directors or executive officers of the Company. Ages are as of November 1, 2010.

 

Norman Bacal

Age: 54

Director Since: December 2004

Business Experience: Mr. Bacal has been a partner with the law firm of Heenan Blaikie LLP since 1987, and has been co-managing partner of the firm since 1997. Heenan Blaikie LLP serves as the Company’s outside Canadian counsel.

Qualifications: Mr. Bacal is considered a leading expert in taxation issues related to the Canadian and international entertainment industry. Mr. Bacal is also recognized as one of the country’s best entertainment lawyers in the Guide to the Leading 500 Lawyers in Canada published by Lexpert/American Lawyer, the Guide to the Top 100 Industry Specialists in Canada, Lexpert/Thomson Canada, and was selected by his peers to be included in the 2010 edition of The Best Lawyers in Canada (Woodward/White). This experience, coupled with his representation of the entertainment industry before the Finance Committee of the House of Commons, positions him as an invaluable advisor in the Company’s deliberations.

Residence: Toronto, Canada

 

Michael Burns

Age: 52

Director Since: August 1999

Position with the Company: Mr. Burns has been our Vice Chairman since March 2000.

Business Experience: Mr. Burns served as Managing Director and Head of the Office at Prudential Securities Inc.’s Los Angeles Investment Banking Office from 1991 to March 2000.

Other Directorships: Mr. Burns is the Chairman and a co-founder of Novica.com, a private company, a director of Next Point, Inc., a private company of which the Company owns a 42% interest (“Break.com”), a director of TV Guide Entertainment Group, LLC, a private company of which the Company owns a 51% interest, and a member of the Board of Visitors of the John E. Anderson Graduate School of Management at the University of California at Los Angeles.

Qualifications: Since 1999, Mr. Burns has joined with Mr. Feltheimer in building the Company into the leading next generation filmed entertainment studio with annual revenue of approximately $1.6 billion in fiscal 2010. Through an accomplished career specialized in raising equity within the media and entertainment industry, Mr. Burns brings important business and financial expertise to the Board in its deliberations on complex transactions and other financial matters. Additionally, Mr. Burns’ extensive knowledge of and history with the Company, his financial and investment banking expertise, his in-depth understanding of our industry, his connections in the business community and relationships with our shareholders, makes Mr. Burns an invaluable advisor to the Board.

Residence: Los Angeles, California

Arthur Evrensel

Age: 52

Director Since: September 2001

Position with the Company: Mr. Evrensel is Chairman of the Compensation Committee of the Board.

Business Experience: Mr. Evrensel has been a partner with the law firm of Heenan Blaikie LLP since 1992.

Qualifications: Mr. Evrensel is a leading counsel in entertainment law relating to television and motion picture development, production, financing and distribution, as well as in the areas of new media and video game law. Mr. Evrensel is recognized as one of Canada’s leading entertainment lawyers in the Guide to the Leading 500 Lawyers in Canada published by Lexpert/American Lawyer since 2002, the Euromoney Legal Media Group’s Guide to the World’s Leading Technology, Media & Telecommunications Lawyers since 2005, and in The Best Lawyers in Canada (Woodward/White) since its inception. This expertise, along with his in-depth understanding of our industry and his network in the business and entertainment community provide meaningful leadership for the Board.

Residence: North Vancouver, Canada

 

Jon Feltheimer

Age: 59

Director Since: January 2000

Position with the Company: Mr. Feltheimer has been Co-Chairman of the Board since June 2005, and our Chief Executive Officer since March 2000.

Business Experience: Mr. Feltheimer worked for Sony Pictures Entertainment from 1991 to 1999, serving as Founder and President of TriStar Television from 1991 to 1993, as President of Columbia TriStar Television from 1993 to 1995, and as President of Columbia TriStar Television Group and Executive Vice President of Sony Pictures Entertainment from 1995 to 1999.

Other Directorships: Mr. Feltheimer is a director of Horror Entertainment, LLC, a private company of which the Company owns a 34.5% interest (“FEARnet”), and a director of TV Guide Entertainment Group, LLC.

Qualifications: Since 2000 and during Mr. Feltheimer’s tenure, the Company has grown into the leading next generation filmed entertainment studio through a combination of organic growth and accretive strategic acquisitions. As our Chief Executive Officer, Mr. Feltheimer provides a critical link to management’s perspective in Board discussions regarding the businesses and strategic direction of the Company. With over 25 years of experience in the entertainment industry, Mr. Feltheimer brings an unparalleled level of strategic and operational experience to the Board, as well as an in-depth understanding of our industry and invaluable relationships in the business and entertainment community.

Residence: Los Angeles, California

 

Frank Giustra

Age: 53

Position with Company: A director nominee, Mr. Giustra founded Lionsgate in 1997 and was its Chairman from 1997 to 2003.

Business Experience: In 1980, Mr. Giustra joined Yorkton Securities Inc., an investment banking firm, of which he became President in 1990, and from 1995 to December 1996, served as its Chairman and Chief Executive Officer. Since August 2007, Mr. Giustra has been the President and Chief Executive Officer of Fiore Financial Corporation (“Fiore”), a private boutique merchant banking firm focused on creating, financing, and launching investment opportunities in the natural resource sector. Fiore provides certain of its services exclusively to Endeavour Financial Corporation, of which Mr. Giustra was Chairman from January 2001 to August 2007.

Other Directorships: Since July 2010, Mr. Giustra has been a member of the Board of Directors of Eacom Timber Corporation, a public company listed on the TSX Venture Exchange, and since July 2008, a director, a member of the Audit Committee and a member of the Compensation and Corporate Governance Committee of Gold Wheaton Gold Corp., a public company listed on the Toronto Stock Exchange. From February 2010 to September 2010, Mr. Giustra was a member of the Board of Directors of Crew Gold Corporation, a public company listed on the Toronto Stock Exchange; from October 2009 to September

2010, a member of the Board of Directors of Etruscan Resources Inc., a public company formerly listed on the Toronto Stock Exchange; from April 2007 to June 2008, a member of the Board of Directors of Peak Gold Ltd., a public company formerly listed on the TSX Venture Exchange; and from October 2005 to February 2007, a member of the Board of Directors of UrAsia Energy Ltd., a public company formerly listed on the TSX Venture Exchange. Mr. Giustra is also a member of the board of trustees of the William J. Clinton Foundation and International Crisis Group, and is a director of the Radcliffe Foundation. Mr. Giustra also sits on the Board of Streettohome Foundation. In June 2007, Mr. Giustra and Former President Bill Clinton launched the Clinton Giustra Sustainable Growth Initiative, which focuses on alleviating poverty in the developing world in partnership with the global mining community.

Qualifications: Mr. Giustra’s reputation and relationships with the investment community, which includes investment banks, commercial banks, and the largest institutional equity investors in the world, and his prior experience in the entertainment industry as the founder of the Company provide the requisite qualifications, skills, perspectives and experience that make him well qualified to serve on the Board.

Residence: Vancouver, Canada

 

Morley Koffman, Q.C.

Age: 80

Director Since: November 1997

Position with the Company: Mr. Koffman is a member of the Audit Committee of the Board, Chairman of the Nominating & Corporate Governance Committee of the Board and a member of the Special Committee of the Board.

Business Experience: Mr. Koffman is a lawyer with the firm of Koffman Kalef LLP, where he has practiced since 1993.

Other Directorships: From 1993 to 2009, Mr. Koffman was a director and Chairman of the Corporate Governance Committee of Ainsworth Lumber Co. Ltd., a public company listed on the Toronto Stock Exchange.

Qualifications: Mr. Koffman has considerable strength and experience as a corporate and commercial lawyer for the past 50 years. He has also been a director and member of audit committees and corporate governance committees of several public companies over his years of practice. Mr. Koffman’s legal background and knowledge of British Columbia law and long-time service on the Audit Committee and the Nominating & Corporate Governance Committee provide the Board with the perspective of an experienced lawyer who has evaluated operational and business issues similar to those facing the Company.

Residence: Vancouver, Canada

 

Harald Ludwig

Age: 56

Director Since: November 1997 to December 2004, June 2005

Position with the Company: Mr. Ludwig is Co-Chairman of the Board, Chairman of the Special Committee of the Board, Chairman of the Strategic Advisory Committee of the Board, and a member of the Compensation Committee of the Board.

Business Experience: Since 1985, Mr. Ludwig has served as President of Macluan Capital Corporation, a leveraged buy-out company.

Other Directorships: Mr. Ludwig is a director, a member of the Governance and Nominating Committee and Chairman of the Compensation Committee of West Fraser Timber Co. Limited, a public company listed on the Toronto Stock Exchange, and a director, Chairman of the Corporate Governance and Nominating Committee, a member of the Audit and Compensation Committees of Canadian Overseas Petroleum Limited, a public company listed on the TSX Venture Exchange, and a director of Prima Colombia Hardwood, Inc., a company listed on the TSX Venture Exchange. Additionally, from 2007 to 2009, Mr. Ludwig was a director of Third Wave Acquisition Corp., a company formerly listed on the American Stock Exchange.

Qualifications: With over 30 years of business and investment experience, and as a founding partner or private equity investor in a number of North American and international private equity firms, hedge funds,

mezzanine lenders, growth capital providers, distressed investment firms and real estate investment vehicles, Mr. Ludwig provides unique insight and valuable advice on business practices. Moreover, Mr. Ludwig’s practical business experience, financial and business acumen and his connections in the business community provide the Board with critical perspective on the business issues the Company faces and make him uniquely qualified to serve on the Board.

Residence: West Vancouver, Canada

 

G. Scott Paterson

Age: 46

Director Since: November 1997

Position with the Company: Mr. Paterson is Chairman of the Audit Committee of the Board and a member of the Strategic Advisory Committee of the Board.

Business Experience: Mr. Paterson is Vice Chairman of NeuLion Inc., a public company listed on the Toronto Stock Exchange. In October 2008, NeuLion merged with JumpTV Inc., a company where Mr. Paterson had been Chairman since January 2002. From October 1998 to December 2001, Mr. Paterson served as Chairman and Chief Executive Officer of Yorkton Securities, Inc., which was then the leading underwriter of technology and film and entertainment companies in Canada. Mr. Paterson is also the former Chairman of the Canadian Venture Stock Exchange and a former Vice Chairman of the Toronto Stock Exchange. Mr. Paterson is a graduate of the Institute of Corporate Directors (2009) at the Rotman Business School, University of Toronto.

Other Directorships: Mr. Paterson is Chairman of Automated Benefits Corp., a public company listed on the Toronto Venture Stock Exchange. From 2003 to 2007, Mr. Paterson was a member of the Board and Audit Committee of Rand A Technology Corp., a public company then listed on the Toronto Stock Exchange; from 1994 to 2002, a member of the Board of Leitch Technology Corp., a public company then listed on the Toronto Stock Exchange; and from 2006 to 2008, a member of the Board of Pioneering Technology Corp., a public company then listed on the TSX Venture Exchange. In addition, Mr. Paterson is Chairman of the Merry Go Round Children’s Foundation, a position he has held since he founded the charity in 1997, and a Governor of Ridley College.

Involvement in certain Legal Proceedings: In December 2001, Mr. Paterson entered into a settlement agreement with the Ontario Securities Commission in connection with conduct that was, in the view of the commission, contrary to the public interest in connection with certain corporate finance and trading activities engaged in by Mr. Paterson and the investment dealer with which he was associated. Mr. Paterson has fulfilled the terms of the settlement agreement which provided that he could not be registered under the Securities Act (Ontario) until December 19, 2003, that he make a voluntary payment to the commission of $1 million Canadian dollars and that he temporarily cease trading for a six-month period. There were no allegations of securities rule or law breaches.

Qualifications: Mr. Paterson’s investment banking background and experience with the Canadian securities industry, together with his management experience at entertainment-related companies provide the Board with significant operational and financial expertise with specific application to the entertainment industry. His varied service as a director and chairman of other public companies brings him a wide range of knowledge surrounding strategic transactions, board of director oversight, corporate responsibility, and Canadian securities regulations that is valuable to the Board when considering recommendations and decisions for the Company.

Residence: Toronto, Canada

 

Mark H. Rachesky, M.D.

Age: 51

Director Since: September 2009

Position with the Company: Dr. Rachesky is a member of the Strategic Advisory Committee of the Board.

Business Experience: Dr. Rachesky is a co-founder and the President of MHR Fund Management LLC (founded in 1996) and affiliates, investment managers of various private investment funds that invest in inefficient market sectors, including distressed investments and special situation equities. Dr. Rachesky

holds an M.B.A. from the Stanford University School of Business, an M.D. from the Stanford University School of Medicine, and a B.A. from the University of Pennsylvania.

Other Directorships: Dr. Rachesky is the non-executive Chairman of the Board of Directors, member of the Executive Committee and Chairman of the Compensation Committee of Loral Space & Communications Inc., a public company listed on the NASDAQ stock market, the non-executive Chairman of the Board of Telesat Canada, the non-executive Chairman of the Board, Chairman of the Nominating and Corporate Governance Committee and member of the Compensation Committee of Leap Wireless International, Inc., a public company listed on the NASDAQ stock market, and a director, Chairman of the Governance and Nominating Committee, member of the Compensation Committee and member of the Executive Committee of Emisphere Technologies, Inc., a company listed on the Over the Counter Bulletin Board, and a member of the Board of Directors of Nations Health, Inc., a private company. Additionally, from 2005 to 2009, Dr. Rachesky served as a member of the Board of Directors of NationsHealth, Inc. and from 1999 to 2008, Dr. Rachesky served as a member of the Board of Directors of Neose Technologies, Inc.

Qualifications: Dr. Rachesky has demonstrated leadership skills as well as extensive financial expertise and broad-based business knowledge and relationships. In addition, as the President of MHR Fund Management LLC, with a demonstrated investment record in companies engaged in a wide range of businesses over the last 15 years, together with his experience as chairman and director of other public and private companies, Dr. Rachesky brings to the Board broad and insightful perspectives relating to economic, financial and business conditions affecting the Company and its strategic direction.

Letter Agreement: On July 9, 2009, we entered into a letter agreement with Dr. Rachesky in which we agreed to, among other things, name Dr. Rachesky to our slate of nominees for election to the Board at the Company’s 2009 Annual General Meeting of Shareholders. On September 15, 2009, Dr. Rachesky was elected to the Board.

Residence: New York, New York

 

Daryl Simm

Age: 49

Director Since: September 2004

Position with the Company: Mr. Simm is a member of the Compensation Committee of the Board and the Nominating & Corporate Governance Committee of the Board.

Business Experience: Since 1998, Mr. Simm has been Chairman and Chief Executive Officer of Omnicom Media Group, a division of Omnicom Group, Inc., of which he is an officer.

Qualifications: During his career, Mr. Simm has played a leading role in the decoupling of media services from ad agencies, resulting in the best media values and cost shares for clients. Under Mr. Simm’s tenure at Omnicom, the company has been honored as the world’s most creative media agency for four consecutive years by The Gunn Report for Media, which evaluates global media creativity. Additionally, Mr. Simm has received numerous industry awards over the years, including “Media Maven” by Advertising Age and the Media Executive of the Year and Media Innovator Awards. This knowledge and experience in leading a highly successful, entrepreneurial, creative-led agency provides meaningful leadership in these areas to the Board.

Residence: Scarsdale, New York

 

Hardwick Simmons

Age: 70

Director Since: June 2005

Position with the Company: Mr. Simmons is a member of the Strategic Advisory Committee of the Board, the Nominating & Corporate Governance Committee of the Board and the Special Committee of the Board.

Business Experience: From February 2001 to June 2003, Mr. Simmons served first as Chief Executive Officer and then as Chairman and Chief Executive Officer at The NASDAQ Stock Market Inc. From May 1991 to December 2000, Mr. Simmons served as President and Chief Executive Officer of Prudential Securities Incorporated.

Other Directorships: Mr. Simmons is currently the lead director, Chairman of the Audit Committee and a member of the Corporate Governance, Nominating and Compensation Committee for Raymond James Financial, a company listed on the New York Stock Exchange, the non-executive Chairman of Stonetex Corp., a private company, and a director of Invivoscribe, Inc., a private company. Additionally, from 2007 to 2009, Mr. Simmons was a director of Geneva Acquisition Corp., a company listed on the American Stock Exchange.

Qualifications: Mr. Simmons, through an accomplished career overseeing one of the largest equity securities trading markets in the world and other large complex financial institutions, brings important business and financial expertise to the Board in its deliberations on complex transactions and other financial matters. In addition, his broad business knowledge, connections in the business community, and valuable insight regarding investment banking and regulation is relevant to the Board’s oversight of the Company’s business.

Residence: Marion, Massachusetts

 

Phyllis Yaffe

Age: 61

Director Since: September 2009

Position with the Company: Ms. Yaffe is a member of the Audit Committee of the Board.

Business Experience: From June 2005 to December 2007, Ms. Yaffe was Chief Executive Officer and a member of the board of directors of Alliance Atlantis Communications, a media company for whom she has worked in several capacities since 1998. The Company was acquired in 2007 by CanWest Global Communications, an affiliate of Goldman Sachs.

Other Directorships: Ms. Yaffe is Lead Director, the Chair of the Nominating and Governance Committee and a member of the Salary and Organization Committee of Torstar Corporation, a public company listed on the Toronto Stock Exchange, a director of Astral Media, Inc., a public company listed on the Toronto Stock Exchange, and the Chair of the Board of Cineplex Entertainment LP. The units of Cineplex Galaxy Income Fund, which owns approximately 99.6% of Cineplex Entertainment LP, are traded on the Toronto Stock Exchange. Ms. Yaffe is also Chair of the Board of Governors of Ryerson University, is on the Executive Board of Governors of the World Wildlife Fund Canada, and the Chair of Women Against Multiple Sclerosis (Canada).

Qualifications: Ms. Yaffe has extensive experience in the entertainment industry. At Alliance Atlantis, Ms. Yaffe was responsible for overseeing worldwide operations, including all of its Canadian specialty television channels, its international television distribution business and the hit CSI franchise. In 1999, Ms. Yaffe was selected as the Canadian Women in Communications Woman of the Year, and received the Lifetime Achievement Award from Women in Film and Television in April 2000. In 2006, Ms. Yaffe was included in the Women’s Executive Network’s list of Canada’s 100 Most Powerful Women and in November 2007, she was inducted into the Canadian Association of Broadcasters’ Broadcast Hall of Fame. Ms. Yaffe brings to the Board new broadcast expertise as the Company continues its successful diversification into television production and broadcasting.

Residence: Toronto, Canada

 

Vote Required and Board Recommendation

 

The affirmative vote of a majority of votes cast by holders of the common shares present at the Annual Meeting or represented by proxy is required for the election of each of the nominated directors. For purposes of this proposal, abstentions and broker non-votes will not be counted in determining the number of votes necessary for the election of each of the nominated directors.

 

UNLESS SUCH AUTHORITY IS WITHHELD, THE PROXIES GIVEN PURSUANT TO THIS SOLICITATION WILL BE VOTED FOR THE ELECTION OF EACH DIRECTOR. THE BOARD RECOMMENDS A VOTE FOR EACH OF THE NOMINEES.

 

At the request of the Audit Committee, Ernst & Young LLP will be nominated at the Annual Meeting for re-appointment as the Company’s independent registered public accounting firm at a remuneration to be fixed by the Audit Committee. Ernst & Young LLP has been our independent registered public accounting firm since August 2001.

 

Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting, and will have the opportunity to make a statement if they desire to do so, and to respond to appropriate questions from shareholders.

 

Vote Required and Board of Directors Recommendation

 

The affirmative vote of a majority of votes cast by holders of the common shares present at the Annual Meeting or represented by proxy is required for the re-appointment of Ernst & Young LLP as our independent registered public accounting firm. For purposes of this proposal, abstentions and broker non-votes will not be counted in determining the number of votes necessary for the re-appointment of Ernst & Young LLP as our independent registered public accounting firm.

 

UNLESS SUCH AUTHORITY IS WITHHELD, THE PROXIES GIVEN PURSUANT TO THIS SOLICITATION WILL BE VOTED FOR THE RE-APPOINTMENT OF ERNST & YOUNG LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OF THE COMPANY TO HOLD OFFICE UNTIL THE CLOSE OF THE 2011 ANNUAL GENERAL MEETING OF SHAREHOLDERS, OR UNTIL A SUCCESSOR IS APPOINTED, AT A REMUNERATION TO BE DETERMINED BY THE AUDIT COMMITTEE. THE BOARD RECOMMENDS THEIR RE-APPOINTMENT.

 

The Board is comprised of the following members:

 

 

Mr. Feltheimer is the Chief Executive Officer of the Company, and together with Mr. Burns, the Company’s Vice Chairman, has led the Company’s development over the past 10 years. The Board believes it is appropriate for Mr. Feltheimer to be Co-Chairman of the Board in an executive capacity, as he is responsible for the day-to-day supervision, management and control of the business and affairs of the Company, develops its strategic direction, and serves as a bridge between management and the Board to support the alignment of the goals of both.

 

Mr. Ludwig, the Co-Chairman of the Board, is the lead independent director of the Board. Mr. Ludwig provides leadership as a non-executive Co-Chairman and helps ensure independent oversight over the Company. Mr. Ludwig also presides over the regularly scheduled executive sessions of the non-management directors. In support of the independent oversight of management, the non-management directors routinely meet and hold discussions without management present.

 

The Company believes that this structure is most appropriate for the Company, since the two positions serve different functions.

 

In keeping with good corporate governance practices, we maintain a majority of independent directors. The Board currently has nine independent members. A number of our independent Board members are currently serving or have served as directors or as members of senior management of other public companies. The Audit Committee and Compensation Committee are comprised solely of independent directors, each with a different independent director serving as chairperson of the committee. We believe that the number of independent experienced directors that make up the Board, along with the independent oversight of the Board by the non-executive Co-Chairman, benefits the Company and our shareholders.

 

The Company’s management is responsible for communicating the most material risks to the Board and its committees, who provide oversight over the risk management practices implemented by management. Even when the oversight of a specific area of risk has been delegated to a committee, the full Board may maintain oversight over such risks through the receipt of reports from the committee to the full Board. In addition, if a particular risk is material or where otherwise appropriate, the full Board may assume oversight over a particular risk, even if the risk was initially overseen by a committee. The Board and committee reviews occur principally through the receipt of reports from Company management on these areas of risk and discussions with management regarding risk assessment and risk management.

 

Full Board.  At its regularly scheduled meetings, the Board generally receives reports from management which include information relating to specific risks faced by the Company. As appropriate, the Company’s Chief Executive Officer or other members of senior management provide strategic and operational reports, which include risks relating to the Company’s core theatrical film, home entertainment and television business, as well as the Company’s new business ventures. The Company’s Vice Chairman reports on the Company’s various investments, including analysis of prospective capital sources and uses. The Company’s Chief Financial Officer reports on credit and liquidity risks, the integrity of internal controls over financial reporting and on internal audit activities. The Company’s General Counsel reports on legal risks and reviews material litigation with the Board. Additionally, at each regularly scheduled Board meeting, the full Board may receive reports from individual committee chairpersons, which may include a discussion of risks initially overseen by the committees for discussion and input from

the full Board. As noted above, in addition to these regular reports, the Board receives reports on specific areas of risk from time to time, such as cyclical or other risks that are not covered in the regular reports given to the Board and described above. Outside of formal meetings, Board members also have regular access to senior executives, including the Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, General Counsel and other division heads. The committee and management reports and real-time management access collectively provide the Board with integrated insight on the Company’s management of its risks.

 

Committees.  The Board also carries out its oversight responsibility through the delegation to its committees of responsibilities related to the oversight of certain risks, as follows:

 

 

The Board reviews and regularly monitors the effectiveness of the Company’s fundamental operating, financial and other business plans, policies and decisions, including the execution of its strategies and objectives, and seeks to enhance shareholder value over the long term. The key practices and procedures of the Board are outlined in our Corporate Governance Guidelines available on the Investors/Governance Documents section of our website at www.lionsgate.com.

 

The Board held a total of fourteen meetings in fiscal 2010 (including regularly scheduled and special meetings of the Board, which were held in person or via teleconference) and took action via unanimous written consent six times. Each director attended at least 75% of the aggregate number of meetings of the Board and, other than as described below, meetings of committees on which he or she served in fiscal 2010. All directors are invited, but not required, to attend the Annual Meeting. All of our then current directors attended our 2009 Annual General Meeting of Shareholders in person.

 

The Board has a standing Audit Committee, Compensation Committee, Nominating & Corporate Governance Committee and Strategic Advisory Committee. The table below provides current membership information for our standing committees, as well as meeting information for such committees.

 

 

 

 

Audit Committee

 

 

Messrs. Paterson (Chairman) and Koffman and Ms. Yaffe are the current members of the Audit Committee. The Audit Committee held five meetings during fiscal 2010 (in person or via teleconference). Ms. Yaffe joined the Audit Committee in September 2009. Mr. Tobin resigned as a member of the committee in February 2010. The Audit Committee is governed by a written charter adopted by the Board, as amended on May 27, 2010. The full text of the charter is available in the Investors/Governance Documents section on our website at www.lionsgate.com, or may be obtained in print, without charge, by any shareholder upon request to our Corporate Secretary.

 

Pursuant to its charter, the duties and responsibilities of the Audit Committee include, among other things, the following:

 

 

The Board has determined that each member of the Audit Committee qualifies as an “independent” director under the New York Stock Exchange (the “NYSE”) listing standards, the enhanced independence standards

applicable to audit committees pursuant to Rule 10A-3(b)(1) under the Exchange Act and National Instrument 52-110 Audit Committees (“NI 52-110”). Additionally, the Board has determined that Mr. Paterson is a “financial expert” under NYSE listing standards, applicable SEC rules and Canadian securities laws, regulations, policies and instruments.

 

Compensation Committee

 

 

Messrs. Evrensel (Chairman), Ludwig and Simm are the current members of the Compensation Committee. The Compensation Committee held fifteen meetings during fiscal 2010 (in person or via teleconference). The Compensation Committee is governed by a written charter adopted by the Board, as amended on May 27, 2010. The full text of the charter is available in the Investors/Governance Documents section on our website at www.lionsgate.com, or may be obtained in print, without charge, by any shareholder upon request to our Corporate Secretary. If re-elected, we expect that Mr. Evrensel will resign as a member of the Compensation Committee after the Annual Meeting and will be replaced by another “independent” director.

 

Pursuant to its charter, the duties and responsibilities of the Compensation Committee include, among other things, the following:

 

 

The Compensation Committee may form subcommittees and delegate to its subcommittees such power and authority as it deems appropriate, but no subcommittee will have final decision-making authority on behalf of the Compensation Committee unless so authorized. The Compensation Committee has no current intention to delegate any of its authority to any subcommittee. Our executive officers, including the Named Executive Officers (as defined below), do not have any role in determining the form or amount of compensation paid to the Named Executive Officers and our other senior executive officers. However, the Chief Executive Officer makes recommendations to the Compensation Committee with respect to compensation paid to the other executive officers.

 

Pursuant to its charter, the Compensation Committee is also authorized to retain independent compensation consultants and other outside experts or advisors as it believes to be necessary or appropriate to carry out its duties. In fiscal 2010, the Compensation Committee retained Mercer (US), Inc. (“Mercer”) a consulting firm specializing in executive compensation matters, to assist the committee in evaluating the Company’s compensation programs, policies and objectives, and to provide advice and recommendations on the amount and form of executive and director compensation. The decision to engage Mercer was made by the Compensation Committee and approved by the Board.

 

See the Compensation Discussion and Analysis below for additional discussion of the Compensation Committee’s role and responsibilities.

The Board has determined that each member of the Compensation Committee qualifies as an “independent” director under the NYSE listing standards and NI 52-110.

 

Nominating & Corporate Governance Committee

 

 

Messrs. Koffman (Chairman), Simm and Simmons are the current members of the Nominating & Corporate Governance Committee. The Nominating & Corporate Governance Committee held six meetings during fiscal 2010 (in person or via teleconference). The Nominating & Corporate Governance Committee is governed by a written charter adopted by the Board, as amended on May 27, 2010. The full text of the charter is available in the Investors/Governance Documents section on our website at www.lionsgate.com, or may be obtained in print, without charge, by any shareholder upon request to our Corporate Secretary.

 

Pursuant to its charter, the duties and responsibilities of the Nominating & Corporate Governance Committee include, among other things, the following:

 

 

The Board nominates directors for election at each annual meeting of stockholders and elects new directors to fill vacancies when they arise. The Nominating & Corporate Governance Committee has the responsibility to identify, evaluate, recruit and recommend qualified candidates to the Board for nomination or election. In considering candidates for the Board, the Nominating & Corporate Governance Committee reviews the entirety of each candidate’s credentials. In particular, the committee’s assessment of potential candidates for election includes, but is not limited to, consideration of: (i) relevant knowledge and diversity of background and experience; (ii) understanding of the Company’s business; (iii) roles and contributions valuable to the business community; (iv) personal qualities of leadership, character, judgment and whether the candidate possesses and maintains throughout service on the Board a reputation in the community at large of integrity, trust, respect, competence and adherence to the highest ethical standards; (v) whether the candidate is free of conflicts and has the time required for preparation, participation and attendance at all meetings; (vi) compatibility with our Chief Executive Officer, senior management and the culture of the Board; and (vii) other factors deemed relevant. With regard to diversity, the Company’s corporate guidelines provide that the Company is committed to considering candidates for the Board regardless of gender, ethnicity and national origin.

 

The Nominating & Corporate Governance Committee assesses the Board’s current and anticipated strengths and needs based upon the Board’s then-current profile and the Company’s current and future needs, and screens the slate of candidates to identify the individuals who best fit the criteria listed above. During the selection process, the Nominating & Corporate Governance Committee seeks inclusion and diversity within the Board. Prior to the nomination of a new director, the Nominating & Corporate Governance Committee follows prudent practices, such as interviews of the potential nominee conducted by members of the Board and senior management.

 

For instructions on how shareholders may submit recommendations for director nominees to the Nominating & Corporate Governance Committee, see Shareholder Communications below.

 

The Board has determined that each member of the Nominating & Corporate Governance Committee qualifies as an “independent” director under the NYSE listing standards and NI 52-110.

Strategic Advisory Committee

 

 

Messrs. Ludwig (Chairman), Paterson, Rachesky, Simmons and Tobin are the current members of the Strategic Advisory Committee. Dr. Rachesky joined as a member of the committee in September 2009. The Strategic Advisory Committee held six meetings during fiscal 2010 (in person or via teleconference). Dr. Rachesky and Mr. Simmons did not attend at least 75% of the number of meetings of the Strategic Advisory Committee held in fiscal 2010.

 

The Strategic Advisory Committee is responsible for reviewing the Company’s strategic plan, meeting with management on a periodic basis to review operations against the plan, as well as overseeing preliminary negotiations regarding strategic transactions and, when applicable, acting as a pricing and approval committee on certain transactions.

 

Each member of the Strategic Advisory Committee qualifies as an “independent” director under the NYSE listing standards and NI 52-110.

 

Special Committee

 

 

In March 2009, the Board created a special committee (the “Special Committee”) consisting of Messrs. Koffman, Ludwig, Simmons and Tobin to review and evaluate strategic alternatives and consider the best interests of all of our shareholders in light of discussions with certain Company shareholders. The Special Committee was reconfirmed in February 2010, and met several times during fiscal 2010. Each member of the Special Committee is an “independent” director under the NYSE listing standards and NI 52-110.

 

In May 2010, the Compensation Committee engaged Mercer to conduct an assessment of market practices for special committee compensation. For its assessment, Mercer utilized its proprietary board of director compensation database to analyze typical compensation structures for special committees, highlighting companies based on revenue between $750 million and $5 billion, companies that had established temporary special committees to address critical issues and companies with significant committee activity. Based on this assessment, for their services on the Special Committee, each member earns a fee of $10,000 per month and will receive a one-time fee of $10,000 (other than the Chairman) for 2010. Additionally, Mr. Ludwig, as Chairman of the Special Committee, will receive an additional one-time fee of $60,000 in 2010.

 

Shareholders and interested parties who would like to communicate with the Board may do so by writing to any or all non-employee directors, care of our Corporate Secretary, at either of our principal executive offices. The complete text of our Policy on Shareholder Communications is available in the Investors/Governance Documents section on our website at www.lionsgate.com. Our Corporate Secretary will log in all shareholder and interested party correspondence and forward to the director addressee(s) all communications that, in his judgment, are appropriate for consideration by the directors. Any director may review the correspondence log and request copies of any correspondence. Examples of communications that would be considered inappropriate for consideration by the directors include, but are not limited to, commercial solicitations, trivial, obscene, or profane items,

administrative matters, ordinary business matters, or personal grievances. Correspondence that is not appropriate for board of director review will be handled by our Corporate Secretary. All appropriate matters pertaining to accounting or internal controls will be brought promptly to the attention of the Chairman of the Audit Committee.

 

Shareholder recommendations for director nominees are welcome and should be sent to our General Counsel at 2700 Colorado Avenue, Suite 200, Santa Monica, California 90404, who will forward such recommendations to the Chairman of the Nominating & Corporate Governance Committee. At the time a shareholder makes a recommendation the shareholder must provide:

 

 

 

 

The Nominating & Corporate Governance Committee will evaluate candidates recommended by shareholders in the same manner as candidates recommended by other sources, using criteria, if any, developed by the committee and approved by the Board, from time to time.

 

Our policy on shareholder and interested party communications may be amended at any time with the consent of the Nominating & Corporate Governance Committee.

 

We have a Code of Business Conduct and Ethics that applies to all our directors, officers and employees, and a Code of Ethics for Senior Financial Officers that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. Each of these codes is available in the Investors/Governance Documents section on our website at www.lionsgate.com, or may be obtained in print, without charge, by any shareholder upon request to our Corporate Secretary. We will disclose on our website when there have been waivers of, or amendments to, either code that applies to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer or persons performing similar functions.

 

None of our directors or executive officers, and none of the associates or affiliates of any of the foregoing, is currently indebted to the Company or was indebted to the Company at any time since the beginning of the Company’s most recently completed fiscal year.

 

It is the policy of the Board that a majority of directors be “independent” of the Company and of the Company’s management. For a director to be deemed “independent,” the Board shall affirmatively determine that the director has no material relationship with the Company or its affiliates or any member of the senior management of the Company or his or her affiliates. In making this determination, the Board shall apply, at a minimum and in addition to any other standards for independence established under applicable statutes and regulations, the following

standards, which are available in the Investors/Governance Documents section on our website at www.lionsgate.com and which may be amended or supplemented, from time to time:

 

 

Pursuant to our Corporate Governance Guidelines, the Board undertook its annual review of director independence in May 2010. During this review, the Board considered transactions and relationships between each director or any member of his immediate family and the Company and its subsidiaries and affiliates, including those reported under the heading Certain Relationships and Related Transactions below. The Board also examined transactions and relationships between directors or their affiliates and members of the Company’s senior management or their affiliates. As provided in our Corporate Governance Guidelines, the purpose of this review was to determine whether any such relationships or transactions were inconsistent with a determination that the director is “independent.” The Nominating & Corporate Governance Committee, with assistance from counsel, regularly reviews our Corporate Governance Guidelines to ensure their compliance with Canadian law and SEC and NYSE regulations. The full text of our Corporate Governance Guidelines is available on our website at www.lionsgate.com, or may be obtained in print, without charge, by any shareholder upon request to our Corporate Secretary.

 

As a result of this review, the Board affirmatively determined that each of Messrs. Bacal, Evrensel, Koffman, Ludwig, Paterson, Dr. Rachesky, Simm, Simmons, Tobin and Ms. Yaffe are “independent” of the Company and its management under our Standards for Director Independence, Canadian standards, SEC rules and regulations and the NYSE listing standards. The Board has also affirmatively determined that Mr. Giustra, who will replace Mr. Tobin on the Board if elected at the Meeting, is “independent” of the Company and its management under our Standards for Director Independence, Canadian standards, SEC rules and regulations and the NYSE listing standards. Each of these directors meets the independence requirements adopted by the Board of Directors as set forth above and has no other material relationships with the Company that the Board of Directors, after considering

all relevant facts and circumstances, believes would interfere with the exercise of independent judgment in carrying out such director’s responsibilities.

 

In making its determination that Messrs. Bacal and Evrensel are “independent” directors, the Board noted that Heenan Blaikie LLP, of which Messrs. Bacal and Evrensel are partners, is the Company’s outside Canadian corporate counsel. Given that neither Mr. Bacal nor Mr. Evrensel directly represented the Company in any legal matters in fiscal 2010 and the Company’s payments to Heenan Blaikie LLP for services rendered in fiscal 2010 represented less than 2% of such firms’ total consolidated gross revenues, the Board concluded that this relationship does not affect their status as “independent” directors.

 

The Compensation Committee reviews and makes recommendations to the Board with respect to compensation of the Board and committee members. Directors who are employees of the Company receive no compensation for service as members of the Board. Directors who are not also our employees (“Non-Employee Directors”) are entitled to receive an annual retainer of $40,000 and an additional retainer of $15,000 if such director acts as Chairman of the Audit Committee, or $10,000 if such director acts as Chairman of the Compensation Committee, Chairman of the Nominating & Corporate Governance Committee or Chairman of the Strategic Advisory Committee. The non-employee Co-Chairman of the Board is entitled to receive an additional annual retainer of $52,000. In addition, each Non-Employee Director is entitled to receive a fee of $1,400 for each meeting of the Board or any committee thereof that the director attends in person, via teleconference or via videoconference.

 

Additionally, in May 2010, the Compensation Committee engaged Mercer to conduct an assessment of market practices for special committee compensation. For its assessment, Mercer utilized its proprietary board of director compensation database to analyze typical compensation structures for special committees, highlighting companies based on revenue between $750 million and $5 billion, companies that had established temporary special committees to address critical issues and companies with significant committee activity. Based on this assessment, for their services on the Special Committee, each member earns a fee of $10,000 per month and will receive a one-time fee of $10,000 (other than the Chairman) for 2010. Additionally, Mr. Ludwig, as Chairman of the Special Committee, will receive an additional one-time fee of $60,000 in 2010.

 

The retainers and fees for Non-Employee Directors are paid, at the director’s election, either 50% in cash and 50% in the form of our common shares or 100% in the form of our common shares, except that the additional annual retainer for our non-employee Co-Chairman is paid 50% in cash and 50% in the form of our common shares. Retainers are generally paid in two installments each year, with the number of shares to be delivered in payment of any retainer to be determined by dividing the dollar amount of the retainer to be paid in the form of common shares by the average closing price of our common shares for the last five business days prior to payment.

 

Non-Employee Directors are also granted 12,500 restricted share units upon first being elected or appointed to the Board and an additional 12,500 restricted share units after five years of service on the Board. The restricted share units vest in annual installments over three years following the date of grant and are paid upon vesting in an equivalent number of our common shares.

 

Pursuant to our policies, we also reimburse our directors for reasonable expenses incurred in the performance of their duties, including reimbursement for air travel and hotel expenses.

The following table presents information regarding compensation paid to each of our Non-Employee Directors for services rendered during the fiscal year ended March 31, 2010. Compensation paid to Messrs. Feltheimer and Burns, each of whom is also employed by us, is presented below in the Summary Compensation table and the related explanatory tables. Compensation paid to Mark Amin and Laurie May, former directors of the Company, reflect amounts paid from April 1, 2009 to September 15, 2009. Compensation paid to Dr. Rachesky and Ms. Yaffe reflect amounts paid from September 15, 2009. Dr. Rachesky and Ms. Yaffe replaced Mr. Amin and Ms. May at the Company’s 2009 Annual General Meeting of Shareholders.

 

DIRECTOR COMPENSATION — FISCAL 2010

 

 

 

 

 

 

Pursuant to our compensation program for Non-Employee Directors, as described above, Messrs. Bacal, Simm and Tobin were each granted 12,500 restricted share units on September 15, 2009 as each of these individuals had served on the Board for at least five years as of that date. Additionally, as new directors, Dr. Rachesky and Ms. Yaffe were each granted 12,500 restricted share units on September 15, 2009. The grant date fair value of each of these awards was $82,125.

 

The following is a list of our executive officers followed by their biographical information (other than for Messrs. Feltheimer and Burns, whose biographical information appears on page 8). Ages are as of November 1, 2010.

 

 

Steven Beeks.  Mr. Beeks has been our Chief Operating Officer since April 2007, Co-Chief Operating Officer since September 2007, President since July 2006 and President of Lions Gate Entertainment Inc., our wholly owned subsidiary, since December 2003. From January 1998 until December 2003, Mr. Beeks served as President of Artisan Home Entertainment Inc.

 

Joseph Drake.  Mr. Drake has been our Co-Chief Operating Officer and President, Motion Picture Group, since September 2007. From March 2001 to September 2007, Mr. Drake was the President of Mandate Pictures, LLC (“Mandate Pictures”), a worldwide independent film producer, financier and distributor. We acquired Mandate Pictures in September 2007.

 

James Keegan.  Mr. Keegan has been our Chief Financial Officer since September 2002 and our Chief Administrative Officer since April 2002. From September 1998 to April 2002, Mr. Keegan was the Chief Financial Officer of Artisan Entertainment Inc. From April 1989 to March 1990, Mr. Keegan was Controller of Trimark Holdings, Inc. and from March 1990 to August 1998, he was the Chief Financial Officer of Trimark Holdings, Inc.

 

Wayne Levin.  Mr. Levin has been our Executive Vice President, Corporate Operations since February 2004 and our General Counsel since November 2000. Previously, Mr. Levin had been our Executive Vice President, Legal and Business Affairs since November 2000. Mr. Levin worked for Trimark Holdings, Inc. from September 1996 to November 2000, first as Director of Legal and Business Affairs from 1996 to 1998, and then as General Counsel and Vice President from 1998 to 2000.

 

Our officers are appointed and serve at the discretion of the Board. The employment agreements for the Named Executive Officers are described in Executive Compensation Information — Description of Employment Agreements — Salary and Bonus Amounts below.

 

This Compensation Discussion and Analysis is designed to provide shareholders with an understanding of the Company’s executive compensation philosophy and objectives as well as the analysis that the Compensation Committee performs in setting executive compensation. In doing so, it describes the material elements of compensation awarded to, earned by or paid to the individuals who served as our principal executive officer or our principal financial officer during fiscal 2010, and our three other most highly compensated executive officers (the “Named Executive Officers”). During fiscal 2010, the Named Executive Officers were:

 

 

The goal of the Company’s executive compensation program is to facilitate the creation of long-term value for the Company’s shareholders by attracting, motivating, and retaining qualified senior executive talent. To this end, the Company has designed and administered the Company’s compensation program to appropriately reward its executives for sustained financial and operating performance, to align their interests with those of the Company’s shareholders, and to encourage them to remain with the Company for long and productive careers. To achieve alignment with shareholder interests, the Compensation Committee believes that the Company’s compensation program provides significant, but appropriate, rewards for outstanding performance. The majority of the Company’s senior executives’ compensation is “at risk” in the form of annual and long-term incentive awards that are paid, if at all, based upon Company and individual performance. The Compensation Committee’s general philosophy is that bonus and equity compensation should fluctuate with the Company’s success in achieving financial and other goals, and that the Company should continue to use long-term compensation such as restricted share units, share appreciation rights (“SARs”) and stock options to align shareholders’ and executives’ interests. While a significant portion of compensation may fluctuate with annual results, the total program is structured to emphasize long-term performance and sustained growth in shareholder value. The Compensation Committee views the executive compensation program as one in which the individual components combine together to create a total compensation package for each Named Executive Officer that achieves these objectives and has a targeted value at approximately the 25th percentile of total direct compensation of the peer group companies identified below.

 

Role of the Compensation Committee

 

The Company’s executive compensation program is administered by the Compensation Committee. The Compensation Committee, working with management, determines and implements the Company’s executive compensation philosophy, structure, policies and programs, and administers and interprets the Company’s compensation and benefit plans.

 

Role of Management

 

Throughout the year, the Compensation Committee requests various types of information from management, in order to align the design and operation of the executive compensation programs with the Company’s business strategies and objectives. At various times during fiscal 2010, our Chief Executive Officer and our Chief Operating Officers were invited by the Compensation Committee to attend relevant portions of the Compensation Committee meetings in order to provide information and answer questions regarding the Company’s strategic objectives and financial performance that impact the Compensation Committee’s functions. Generally, these Named Executive Officers make recommendations to the Compensation Committee with respect to salary, bonus, and long-term

incentive awards for executive officers (other than themselves), based on competitive market information described below, the Company’s compensation strategy, their subjective assessment of the particular executive’s individual performance, and the experience level of the particular executive. The Compensation Committee discusses with the Named Executive Officer his recommendations and either approves or modifies the recommendations in its discretion. None of the Named Executive Officers are members of the Compensation Committee or otherwise have any role in determining their own compensation. The Compensation Committee reports to the Board on all compensation matters regarding our executives and other key salaried employees.

 

Role of Compensation Consultant

 

During fiscal 2010, the Compensation Committee retained the services of Mercer, outside compensation consultants, to assist the committee in evaluating the Company’s compensation programs, policies and objectives, and to provide advice and recommendations on the amount and form of executive and director compensation. In addition to discussing their review with the Compensation Committee, Mercer also contacted members of senior management and employees in our human resources and legal departments to obtain historical data and insight into the Company’s business strategy and compensation practices.

 

Mercer reviewed and used the Entertainment Industry Survey created by third-party compensation firm Towers Perrin to assess the Company’s executive compensation levels for the top ranking executive offices of the Company, relative to the market. The Towers Perrin survey included a competitive review and analysis of base salary, total cash compensation and total direct compensation for the highest ranking 20 executive officers of the Company, matched by total compensation and level relative to the Company’s identified peer group. This peer group is periodically reviewed and updated by the Compensation Committee, to ensure that it consists of companies against which the Compensation Committee believes the Company competes for talent. In selecting the fiscal 2010 peer group companies, the Compensation Committee focused on companies that are similar to the Company in terms of industry and business characteristics. Accordingly, for fiscal 2010, for the purpose of benchmarking our executive compensation, the Compensation Committee compared the Company’s compensation with that of the following U.S.-based entertainment companies:

 

 

This peer group was chosen because it represents the public entertainment and media-related companies with which the Company generally competes for both business and executive talent. The Towers Perrin report provided historical and prospective total compensation components for each executive officer as compared to similarly situated executives within the peer group. The data from the report was complied and reviewed by Mercer for their analysis. Utilizing Mercer’s conclusions, the Compensation Committee then evaluated the amount and proportions of base pay, annual incentive pay and long-term compensation, as well as the targeted total compensation value for the Company’s executive officers. In general, compensation data for positions included in the survey reflected compensation of executives within networks and studios. Mercer provided data for peer executives with the same position as the Company’s executive where available and provided data for peer executives at a level similar to the Company’s executive when a position match was not available.

 

Mercer determined that the Company’s executive pay levels are generally below the 25th percentile of the Towers Perrin market data in terms of base salary, total cash compensation and total direct compensation, which is consistent with the Compensation Committee’s targeted value for total direct compensation. As used in this discussion, the term “total direct compensation” means the aggregate amount of the executive’s base salary, annual incentive bonus, and long-term equity incentive awards based on the grant-date fair value of such awards, as

determined under the accounting principles used in the Company’s financial reporting. The Compensation Committee believes that this level is appropriately conservative as the Company is smaller than most of the peer group companies, in terms of market capitalization and market value. Because the Compensation Committee generally determines the target value of the executive compensation program based on an assessment of the compensation paid by the peer group companies, the Company does not generally factor in amounts realized from prior compensation paid to the Named Executive Officers.

 

The Company’s executive compensation program is generally based on three components, which are designed to be consistent with the Company’s compensation philosophy:

 

(1) base salary;

 

(2) annual incentive bonuses; and

 

(3) long-term incentive awards, including awards of restricted share units, SARs and stock options that are subject to time-based and/or performance-based vesting.

 

The Company also provides certain perquisites and personal benefits to the Named Executive Officers pursuant to their employment agreements, and severance benefits if the Named Executive Officer’s employment terminates under certain circumstances. In structuring executive compensation packages, the Compensation Committee considers how each component of compensation promotes retention and/or motivates performance by the executive. The rationale for providing each component of compensation is discussed in more detail in the sections below. Our compensation packages are designed to promote teamwork, initiative and resourcefulness by key employees whose performance and responsibilities directly affect our results of operations.

 

Base Salary

 

We provide our executive officers and other employees with an annual base salary to compensate them for the scope of their responsibilities, the complexity of the tasks associated with their position within the Company, their skill set and their performance during the year. Base salaries are not generally reviewed or increased annually — they are established when we hire an executive officer, based on market benchmarks for the position that are available at the time the executive commences employment. In determining base salary, the Compensation Committee primarily considers market data and compensation levels of executive officers of companies in competing businesses, an internal review of the executive’s compensation, both individually and relative to other executive officers, and the individual performance of the executive. We also consider the recommendations of our Chief Executive Officer for other executive officers. For the reasons set forth above, our philosophy has been to establish base salaries that are generally below the market 25th percentile of such salaries at our peer companies, with the majority of the executive’s compensation being delivered in the form of incentive compensation tied directly to shareholder value creation. The Compensation Committee believes that the base salary levels of the Named Executive Officers and the other executive officers generally are reasonable in view of competitive practices, the Company’s performance and the contribution of those officers relative to that performance.

 

Generally, base salaries along with perquisites and personal benefits are intended to attract and retain highly qualified executives. These are the elements of our executive compensation program where the value of the benefit in any given year is not dependent on performance and the marketplace (although base salary amounts and benefits determined by reference to base salary may increase from year to year depending on performance, among other things). We believe that in order to attract and retain top executives, we need to provide them with certain predictable compensation levels that reward their continued service. The Compensation Committee’s philosophy has been to set the base salary levels of the Named Executive Officers at or slightly below the median salary level paid to similarly situated executives at our peer companies.

 

During fiscal 2010, the Compensation Committee did not approve any changes to base salaries for the Named Executive Officers as set forth in their respective employment agreements.

Annual Incentive Bonuses

 

Annual incentive bonuses are primarily intended to motivate the Named Executive Officers to reward and motivate executives to achieve annual financial, operational and individual performance objectives and focus on promotion of/contribution to achievement of the Company’s business strategy. The Company has entered into employment agreements with each of the Named Executive Officers that generally provide for bonuses to be determined in the discretion of the Compensation Committee, as recommended by our Chief Executive Officer (other than for himself), based on the performance measures set forth in the employment agreement. Although annual incentive bonuses are primarily based on individual and corporate performance, in some circumstances, the Compensation Committee may provide additional discretionary bonus awards. The Compensation Committee believes that discretionary bonuses, where warranted, can be effective in motivating, rewarding and retaining our executive officers. Annual incentive bonus payments are typically paid in June based on performance for the prior fiscal year. For the reasons set forth above, our philosophy has been to establish annual incentive bonuses that are generally below the market 25th percentile of such bonuses at our peer companies.

 

In addition to their annual incentive bonus awards, Messrs. Feltheimer and Burns would be entitled to “stock price bonuses” pursuant to their employment agreements if the volume-weighted average of the median price of our common shares exceeds certain thresholds over a six-month period. We believe that the stock price bonus provides an effective incentive to these executives to enhance Company performance in a way that is directly tied to the creation of value for our shareholders. No such bonuses were granted in fiscal 2010. For more information on these bonuses, see the descriptions of the employment agreements for Messrs. Feltheimer and Burns under Description of Employment Agreements — Salary and Bonus Amounts below.

 

For fiscal 2010, the Compensation Committee approved the following annual incentive bonuses to be awarded to each of the Named Executive Officers. In each case, the bonuses were determined by the Compensation Committee in its discretion based on its subjective assessment of the achievement of the various performance objectives noted below. Except as expressly noted below, no specific financial performance targets or other objective performance criteria were established by the Compensation Committee for purposes of determining bonuses to be awarded to the Named Executive Officers. Rather, the Compensation Committee noted the actual performance of the Company or the individual executive, as applicable, and made a subjective determination as to the level of that performance.

 

Jon Feltheimer and Michael Burns

 

The bonus amounts for Messrs. Feltheimer and Burns were determined based on, as appropriate, review of certain of the following criteria adopted by the Compensation Committee (with no emphasis to be derived from the order in which they appear):

 

 

In reviewing such criteria, the Compensation Committee noted, among other things, that the Company’s businesses generally performed well in fiscal 2010, despite a difficult retail environment. The Company generated record library revenue of $323 million and cash flow of approximately $110 million in fiscal 2010, despite a challenging marketplace. Moreover, in April 2010, the Company announced that its adjusted EBITDA would be

$115 million rather than the $75 million in its initial guidance. Consequently, the Company ended the 2010 fiscal year with a record adjusted EBITDA performance of $129 million, 70% higher than its initial forecast.

 

For these purposes, adjusted EBITDA represents EBITDA, as defined above, adjusted for stock-based compensation, EBITDA attributable to non-controlling interest, certain non-recurring charges and non-risk prints and advertising expense. Stock-based compensation represents compensation expenses associated with stock options, restricted share units and stock appreciation rights. Non-recurring charges represent legal and other professional fees associated with a shareholder activist matter. Non-risk prints and advertising expense represents the amount of theatrical marketing expense for third party titles that the Company funded and expensed for which a third party provides a guarantee that such expense will be recouped from the performance of the film (i.e., there is no risk of loss to the Company) net of an amount of the estimated amortization of participation expense that would had been recorded if such amount had not been expensed.

 

Additionally, the Compensation Committee noted that the Company’s television business has grown at a compound annual rate of more than 40% over the last eleven years, and in fiscal 2010, its revenue grew approximately 58%, from $222 million to $351 million. Indeed, in fiscal 2010, the Company’s diversified portfolio of television businesses encompassed more than 15 shows on ten different networks spanning production, distribution and syndication. The Company also continued its leadership as a creator of distinctive original programming for cable networks, as Weeds, Mad Men, Nurse Jackie and Blue Mountain State were all renewed for new seasons (their sixth, fourth, third and second seasons, respectively). The Company’s prime time roster continued to win critical recognition and acclaim as Mad Men, Weeds and Nurse Jackie combined for a studio record 26 Emmy Award nominations, with Mad Men garnering 17 nominations, including Best Drama Series for the second straight year. In addition, the Company continued to diversify its slate as Fox Broadcasting picked up 13 episodes of the new comedy series Running Wilde. The Company also continued to leverage its television programming leadership into support of new distribution platforms, as Weeds joins Curb Your Enthusiasm and Ugly Betty on the 2010 fall lineup of TV Guide Network, and the Company readies the series Tough Trade and other original programming for EPIX, the Company’s joint venture with Viacom Inc., Paramount Pictures Corporation and Metro-Goldwyn-Mayer Studios Inc., next year.

 

The Compensation Committee also considered the contributions of Messrs. Feltheimer and Burns to the following achievements during fiscal 2010: that the gross contribution of the Company’s television production segment in fiscal 2010 was $39.5 million before overhead, more than doubling any previous contribution; in May 2009, the Company’s sale of a non-controlling interest in TV Guide Network to One Equity Partners (“OEP”), the global private equity investment arm of JPMorgan Chase, N.A.; in October 2009, the launch of EPIX, which, to date, has concluded carriage agreements with six distributors, including with Verizon FiOS, Cox Communications, Charter Communications, Inc., Mediacom Communications, the National Cable and Telecommunications Cooperative, and DISH Network L.L.C., and is now available to consumers in over 30 million homes; the consummation of various corporate financing transactions (described below under Time-Based Restricted Share Units); and numerous Academy Award, Emmy Award, Golden Globe, and other recognitions, nominations and wins for various Company film and television programs.

 

Accordingly, for fiscal 2010, based on its review, and review of annual incentive bonuses granted to similar executives in peer group companies, the Compensation Committee approved a discretionary cash bonus of $1,950,000 for Mr. Feltheimer and a discretionary cash bonus of $1,450,000 for Mr. Burns.

 

Steven Beeks

 

Mr. Beeks’ bonus was determined, in part, based on the Company’s EBITDA and the performance of the Company’s home entertainment division during the fiscal year and, in part, based on the Compensation Committee’s subjective assessment of Mr. Beeks’ performance, as well as Mr. Feltheimer’s recommendations, based on his subjective assessment of Mr. Beeks’ performance, during the fiscal year. In addition to the Company’s fiscal performance noted above, the Compensation Committee also acknowledged Mr. Beeks’ contribution to, among other things, the following: the Company achieving record library revenue of $323 million and cash flow of approximately $110 million in fiscal 2010 (even though home entertainment revenue decreased approximately 10% in fiscal 2010, as compared to fiscal 2009, due mostly to fewer theatrical releases in fiscal 2010 as compared to fiscal 2009, and a weakness in the overall economy); for the calendar year ended December 31, 2009, the Company

had attained a box-office to Blu-ray conversion rate that was nearly 16% higher than the average rate of the major studios; an extension of the Company’s distribution agreement with HIT Entertainment, Inc., which drove growth in fiscal 2010 for the domestic family entertainment division; in August 2009, the consummation of a multi-year distribution agreement with Redbox Automated Retail, LLC, pursuant to which the Company made certain of its titles available at the more than 22,000 Redbox DVD rental locations nationwide; and, in August 2009, consummation of a multi-year home entertainment distribution agreement with the Jim Henson Company, pursuant to which the Company obtained the North American distribution rights to over 350 hours of content from The Jim Henson Company’s extensive film and television library including television series, television specials and catalog home entertainment titles for DVD, electronic-sell-through and video-on-demand channels.

 

Accordingly, based on its review, and review of annual incentive bonuses granted to similar executives in peer group companies, the Compensation Committee approved a discretionary cash bonus of $790,000 for Mr. Beeks.

 

Joseph Drake

 

Mr. Drake’s bonus was determined, in part, based on the Company’s EBITDA and, in part, based on the Compensation Committee’s subjective assessment of Mr. Drake’s performance, as well as Mr. Feltheimer’s recommendations, based on his subjective assessment of Mr. Drake’s performance, during the fiscal year. In addition to the Company’s fiscal performance noted above, the Compensation Committee also acknowledged Mr. Drake’s contribution to, among other things, the following: the Company estimating ultimate profitability on nine of its last 13 films, which is consistent with its track record of 70% profitability for film releases over the past ten years; the increased revenue contribution of Mandate Pictures, LLC to the Company’s 2010 fiscal year; the strong contribution of the Company’s international division in fiscal 2010, even in a weak economy and with a smaller theatrical slate; in April 2009, the Company’s consummation of a multi-picture distribution agreement with Relativity Media in fiscal 2010; in June 2009, the Company’s acquisition of re-make rights to the thriller The Next Three Days, an adaptation of the French film Pour Elle; in August 2009, the Company’s acquisition of U.S. and Canadian distribution rights to Kick-Ass; in September 2009, the Company’s acquisition of worldwide distribution rights to filmmaker Tyler Perry’s adaptation of Ntozake Shange’s award-winning 1975 play For Colored Girls Who Have Considered Suicide When The Rainbow Is Enuf; in January 2010, the Company’s acquisition of worldwide rights to the screen adaptation of the bestselling book What To Expect When You’re Expecting; and, in January 2010, the Company’s acquisition of U.S. and Canadian rights to the 2010 Sundance Film Festival sensation, Buried.

 

Accordingly, based on its review, and review of annual incentive bonuses granted to similar executives in peer group companies, the Compensation Committee approved a discretionary cash bonus of $785,285 for Mr. Drake.

 

James Keegan

 

Mr. Keegan’s bonus was based on the Compensation Committee’s subjective assessment of Mr. Keegan’s performance, as well as Mr. Feltheimer’s recommendations, based on his subjective assessment of Mr. Keegan’s performance, during the fiscal year. In addition to the Company’s fiscal performance noted above, the Compensation Committee also acknowledged Mr. Keegan’s contribution to, among other things, the following: the financial integration of TV Guide Network with the Company and, in May 2009, the Company’s sale of a non-controlling interest in TV Guide Network to OEP; in October 2009, the Company’s consummation of a revolving film credit facility agreement, which provides for borrowings for the acquisition or production of motion pictures; and, in October 2009, the Company’s issuance of $236.0 million aggregate principal amount of 10.25% senior secured second-priority notes due 2016 (the “Senior Notes”) in a private offering conducted pursuant to Rule 144A and Regulation S under the Securities Act.

 

Accordingly, based on its review, and review of annual incentive bonuses granted to similar executives in peer group companies, the Compensation Committee approved a discretionary cash bonus of $275,000 for Mr. Keegan.

 

Long-term Incentive Awards

 

The Company believes that providing a meaningful equity stake in our business is essential to create compensation opportunities that can compete with entrepreneurial employment alternatives. In addition, the Company believes that ownership shapes behavior, and that by providing compensation in the form of equity

awards, we align the executive’s incentives with our stockholders’ interests in a manner that we believe drives superior performance over time. Therefore, we have historically made annual grants of stock options, restricted share units and SARs to provide further incentives to our executives to increase shareholder value. The Compensation Committee bases its award grants to executives each year on a number of factors, including:

 

 

In addition, the size, frequency and type of long-term incentive grants may be determined on the basis of tax consequences of the grants to the individual and the Company, accounting impact and potential dilution effects.

 

Award grants to the Named Executive Officers are generally made by the Compensation Committee in connection with the executive’s entering into a new employment agreement with the Company. The Company typically does not grant equity-based awards to its executive officers at any other time. The award grants to Mr. Burns during fiscal 2010 were made in connection with his entering into of new or amended employment agreements with the Company, as described under Description of Employment Agreements — Salary and Bonus Amounts below.

 

Stock Options.  The Company makes a portion of its long-term incentive grants to the Named Executive Officers in the form of stock options, with an exercise price that is equal to the closing price of our common shares on the date of grant. Thus, the Named Executive Officers will only realize value on their stock options if our shareholders realize value on their shares. The stock options also function as a retention incentive for our executives as they vest ratably over a certain period, generally four years, after the date of grant.

 

The Company did not grant any stock options to the Named Executive Officers in fiscal 2010.

 

Share Appreciation Rights.  The Company also makes a portion of its long-term incentive grants to the Named Executive Officers in the form of SARs. Upon exercise of a SAR, the holder receives a cash payment equal to the excess, if any, of the fair market value of our common shares on the date of exercise of the SAR over the base price of the SAR. Because the base price of the SAR is equal to the closing price of our common shares on the grant date, SARs provide the same incentives as stock options because the holder will only realize value on their SARs if our share price increases after the date of grant. The SARs also function as a retention incentive for our executives as they vest ratably over a certain period after the date of grant.

 

The Company did not grant any SARs to the Named Executive Officers in fiscal 2010.

 

Time-Based Restricted Share Units.  The Company also grants long-term incentive awards to the Named Executive Officers in the form of restricted share units that are subject to time-based vesting requirements. Awards of time-based restricted share units vest over a period of several years following the date of grant and, upon vesting, are paid in the Company’s common shares. Thus, the units are designed both to link executives’ interests with those of our shareholders as the units’ value is based on the value of our common shares and to provide a long-term retention incentive for the vesting period, as they generally have value regardless of stock price volatility.

 

In November 2009, the Company entered into an Amendment of Employment Agreement (the “Amendment”) with Mr. Burns pursuant to which the Company extended the term of Mr. Burns’ employment agreement for an additional two years. Under the Amendment, Mr. Burns was granted 229,018 time-based restricted stock units, which are scheduled to vest in three annual installments beginning on March 31, 2011. In addition, at the end of each three-month period after the date of the Amendment through September 1, 2013, Mr. Burns will be granted a number of fully-vested common shares of the Company determined by dividing $187,500 by the closing price of the Company’s common shares on the last trading day before the grant date, subject to Mr. Burns’ continued employment with the Company through the grant date. The vesting schedule of the time-based restricted share units was based on the term of Mr. Burns’ employment agreement (so that the units will be fully vested at the end of such term). In determining the levels of these grants to Mr. Burns, the Compensation Committee considered the historical equity grant levels for Mr. Burns and the other Named Executive Officers, the Towers Perrin report comparing compensation of similar positions at peer group companies, the importance of securing senior management under long term employment contracts, as well as the Compensation Committee’s judgment of

Mr. Burns’ unique and important contributions in spearheading various important corporate initiatives for the Company in the past calendar year including the following: leading communications and relationships with shareholder activists; in July 2008 (as amended in September 2009 and December 2009), the Company entering into an amended senior revolving credit facility which provides for a $340 million secured revolving credit facility; in April 2009, the Company’s completion of a refinancing exchange with certain existing holders of the Company’s 3.625% convertible senior subordinated secured notes due 2025 (the “Refinancing Exchange”); in May 2009, the Company’s sale of a non-controlling interest in TV Guide Network to OEP; in October 2009, the Company’s issuing $236 million aggregate principal amount of the Senior Notes; and in October 2009, the Company’s consummation of a revolving film credit facility agreement. Additionally, the Compensation Committee considered that the value of time-based restricted share units (and the performance-based restricted share units described below) granted to Mr. Burns, as well as the common shares to be issued at the end of each three-month period after the date of the Amendment, represent 75% of the value of total restricted share units and common shares granted to Mr. Feltheimer at the time his employment agreement was amended during fiscal 2009 and determined that the level of Mr. Burns’ grants was appropriate in light of the relative roles of Mr. Feltheimer and Mr. Burns within the Company.

 

Performance-Based Restricted Share Units.  The Company also grants long-term incentive awards to the Named Executive Officers in the form of performance-based restricted share units. The performance unit awards cover multiple years, with a percentage of the units subject to the award becoming eligible to vest each year based on the Company’s and the individual’s actual performance during that year relative to performance goals established by the Compensation Committee. Thus, the performance units are designed both to motivate executives to maximize the Company’s performance each year and to provide a long-term retention incentive for the entire period covered by the award.

 

Jon Feltheimer and Michael Burns

 

In November 2009, under the Amendment, the Company also granted Mr. Burns 229,018 performance-vesting restricted share units that vest in three equal annual installments beginning March 31, 2011 (subject to satisfaction of performance criteria approved by the Compensation Committee for the relevant period or on a sliding scale basis if the Compensation Committee determines in its discretion that the performance criteria have not been fully met for a particular year). The factors relied on by the Compensation Committee in determining the levels for this grant are described above under Time-Based Restricted Share Units.

 

For outstanding performance-based restricted share units previously granted to Messrs. Feltheimer and Burns that were eligible to vest for fiscal 2010, as well as those performance-based restricted share unit that were eligible but did not vest for fiscal 2009, the Compensation Committee selected the following performance criteria to determine the number of these units that would vest for the applicable twelve-month performance period:

 

 

The Compensation Committee did not assign any particular weight to any of the foregoing criteria or establish any particular performance targets for these measures. Instead, the Compensation Committee used these criteria as reference points in making its subjective assessment of the performance of the Company and the individual executives during the fiscal year. In reviewing such criteria, the Compensation Committee also acknowledged, among other things, the contributions of Messrs. Feltheimer and Burns to the following: in April 2009, the Company’s completion of the Refinancing Exchange; in October 2009, the Company’s consummation of a revolving film credit facility agreement; in October 2009, the Company’s issuance of $236 million aggregate principal amount of the Senior Notes; and, in December 2009, the Company’s payment of $37.7 million to extinguish $39.9 million of aggregate principal amount (carrying value — $35.0 million) of 3.625% convertible senior subordinated secured notes due 2025 and $38.0 million to extinguish $40.0 million of aggregate principal amount (carrying value — $35.5 million) of 2.9375% convertible senior subordinated secured notes due 2024.

 

Accordingly, based on its review, the Compensation Committee approved the vesting of all performance-based restricted share units that were eligible to vest for fiscal 2010 as well as those that were eligible but did not vest for fiscal 2009, which consists of an aggregate of 160,000 performance-based restricted share units (consisting of 80,000 performance-based restricted share units eligible to vest for 2009 and 80,000 performance-based restricted share units eligible to vest for 2010) for Mr. Feltheimer, and an aggregate of 258,095 performance-based restricted share units (consisting of 129,047 performance-based restricted share units eligible to vest for 2009, and 129,048 performance-based restricted share units eligible to vest for 2010) for Mr. Burns.

 

Steven Beeks and Joe Drake

 

For outstanding performance-based restricted share units previously granted to Messrs. Beeks and Drake that were eligible to vest for fiscal 2010, as well as those performance-based restricted share units that were eligible but did not vest for fiscal 2009, the Compensation Committee determined that the vesting of these units would be triggered upon achievement of 80% of the appropriate Company division’s annual budget for the contemplated fiscal year which is measured by EBITDA (as defined above), revenue and free cash flow for such fiscal year. The Compensation Committee believes that a target of 80% reflects an appropriately difficult yet achievable level of performance for payouts of performance-based restricted unit awards, based on, among other things, the difficulty in projecting film and television revenues due to the volatility of various market segments and the nature of the feature film business. If the threshold performance level is met, the performance-based restricted share units vest on a sliding scale basis based on the actual annual budget for that particular fiscal year. Our Chief Executive Officer has sole discretion to adjust any vesting based on: (i) any material non-recurring events that may, from time to time, increase or decrease the annual budget for such fiscal year, (ii) any transactions or initiatives that may materially affect the financial results of the Company for such fiscal year, (iii) any other relevant strategic operational imperatives completed during such fiscal year; and (iv) other facts that our Chief Executive Officer may consider appropriate.

 

In addition to reviewing the financial performance of the applicable divisions for these executives, the Compensation Committee also noted, with respect to Mr. Drake, that, due to Company’s small theatrical slate in fiscal 2010, the Company’s motion picture group’s overall contribution was less than its historical average contribution. Accordingly, based on its review, the Compensation Committee approved the vesting of all performance-based restricted share units that were eligible to vest for fiscal 2010 as well as those that were eligible but did not vest for fiscal 2009, which consists of an aggregate of 106,250 performance-based restricted share units (consisting of 53,125 performance-based restricted share units eligible vest in 2009 and 53,125 performance-based restricted share units eligible vest in 2010) for Mr. Beeks. Additionally, based on its review, the Compensation Committee approved the vesting of all performance-based restricted share units that were eligible to vest for fiscal 2010 as well as 65% of those that were eligible but did not vest for fiscal 2009, which consists of an aggregate of 120,750 performance-based restricted share units (consisting of 68,250 performance-based restricted share units eligible to vest for 2009 and 52,500 performance-based restricted share units eligible to vest for 2010) for Mr. Drake.

For more information on the equity-based awards granted to the Named Executive Officers during fiscal 2010, see the Grants of Plan-Based Awards table and accompanying narrative below.

 

We have entered into multi-year employment agreements with each of the Named Executive Officers. Each employment agreement specifies the annual base salary that the executive will be entitled to receive during the term of the agreement, as well as the Company benefit plans in which the executive will participate and any other perquisites that the executive will receive. In addition, each agreement sets forth the annual and long-term incentive compensation target or ranges that the executive officer will be eligible to receive, subject in all instances to the discretion of the Compensation Committee. Each agreement also specifies the post-termination benefits that will be received by each executive (including the treatment of any unvested equity awards) upon certain terminations of employment, a change in control or upon expiration of the employment agreement.

 

Each of the terms of the agreements was approved by the Compensation Committee and is described below under Description of Employment Agreements — Salary and Bonus Amounts. We believe that it is in the best interests of the Company to enter into multi-year employment agreements with the Named Executive Officers because the agreements foster long-term retention, while still allowing the Compensation Committee to exercise considerable discretion in designing incentive compensation programs and rewarding individual performance. In addition, we believe that use of multi-year employment agreements assists in recruiting efforts because generally, other entertainment companies with which we compete for executive talent enter into long-term employment agreements with their executives as well.

 

During fiscal 2010, the Compensation Committee approved an amendment to the employment agreement for Mr. Burns. The amendment is discussed in detail under the applicable sections of this Compensation Discussion and Analysis below.

 

Severance and Other Benefits upon Termination of Employment

 

The Company believes that severance protections, particularly in the context of a change in control transaction, can play a valuable role in attracting and retaining key executive officers. Accordingly, we provide such protections for the Named Executive Officers under their respective employment agreements. The Compensation Committee evaluates the level of severance benefits to provide a Named Executive Officer on a case-by-case basis, and, in general, we consider these severance protections an important part of an executive’s compensation and consistent with competitive practices.

 

As described in more detail under Potential Payments Upon Termination or Change in Control below, the Named Executive Officers would be entitled under their employment agreements to severance benefits in the event of a termination of employment by the Company without cause (and, in the case of Messrs. Feltheimer and Drake, for good reason). The Company has determined that it is appropriate to provide these executives with severance benefits under these circumstances in light of their positions with the Company and as part of their overall compensation package. The severance benefits for these executives are generally determined as if they continued to remain employed by the Company through the remainder of the term covered by their employment agreement.

 

The Company also believes that the occurrence, or potential occurrence, of a change in control transaction will create uncertainty regarding the continued employment of our executive officers. This uncertainty results from the fact that many change in control transactions result in significant organizational changes, particularly at the senior executive level. In order to encourage our executive officers to remain employed with the Company during an important time when their prospects for continued employment following the transaction are often uncertain, we provide certain Named Executive Officers with enhanced severance benefits if their employment is terminated by the Company without cause or, in certain cases, by the executive in connection with a change in control. Such enhanced severance benefits the Company and the shareholders by incentivizing the executives to be receptive to potential transactions that are in the best interest of shareholders even if the executives face great personal uncertainty in the change of control context.

 

Under their respective employment agreements, certain of the Named Executive Officers would be entitled to accelerated vesting of certain of their outstanding equity awards automatically on a change in control of the Company.

Perquisites and Other Benefits

 

We provide certain Named Executive Officers with limited perquisites and other personal benefits, such as a car allowance, life insurance policy contributions and club membership dues that the Compensation Committee believes are reasonable and consistent with our overall compensation program, to better enable us to attract and retain superior employees for key positions. Additionally, we own an interest in an aircraft through a fractional ownership program for use related to film promotion and other corporate purposes. This enables our executive officers and other service providers to fly more efficiently and to conduct business in privacy while traveling. As we own an interest in and maintain this aircraft for business purposes, we believe it is reasonable to afford limited personal use of the aircraft consistent with regulations of the Internal Revenue Service, the SEC and the Federal Aviation Administration. Mr. Feltheimer reimburses the Company for a substantial amount of the costs incurred for his limited personal use of the aircraft. All of these perquisites are reflected in the All Other Compensation column of the Summary Compensation table and the accompanying footnotes below.

 

Policy with Respect to Section 162(m)

 

Section 162(m) of the Internal Revenue Code of 1986, as amended, generally disallows public companies a tax deduction for compensation in excess of $1,000,000 paid to their chief executive officers and certain other executive officers unless certain performance and other requirements are met. Our intent generally is to design and administer executive compensation programs in a manner that will preserve the deductibility of compensation paid to our executive officers, and we believe that a substantial portion of our current executive compensation program (including the stock options granted to the Named Executive Officers, as described above) satisfies the requirements for exemption from the $1,000,000 deduction limitation. However, we reserve the right to design programs that recognize a full range of performance criteria important to our success, even where the compensation paid under such programs may not be deductible. The Compensation Committee will continue to monitor the tax and other consequences of our executive compensation program as part of its primary objective of ensuring that compensation paid to our executive officers is reasonable, performance-based and consistent with the goals of the Company and its shareholders.

 

The following Report of the Compensation Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any of our other filings under the Securities Act or the Exchange Act, except to the extent we specifically incorporate the report by reference in that filing.

 

The Compensation Committee has certain duties and powers as described in its charter. The Compensation Committee is currently composed of the three non-employee directors named at the end of this report, each of whom is independent as defined by the NYSE listing standards.

 

The Compensation Committee has reviewed and discussed with management the disclosures contained in the Compensation Discussion and Analysis section of this report. Based upon this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis section be included in this Amendment to be filed with the SEC.

 

Compensation Committee of the Board of Directors

 

Arthur Evrensel (Chairman)

Harald Ludwig

Daryl Simm

 

The Compensation Committee has reviewed the design and operation of the Company’s compensation structures and policies as they pertain to risk and has determined that the Company’s compensation programs do not create or encourage the taking of risks that are reasonably likely to have a material adverse effect on the Company. Mercer, the outside consultant to the Compensation Committee, assisted the Compensation Committee in its risk assessment of the Company’s compensation programs in fiscal 2010

 

Messrs. Evrensel, Ludwig and Simm were members of the Compensation Committee during all of fiscal 2010. No member who served on the Compensation Committee at any time during fiscal 2010 is or has been a former or current executive officer of the Company or had any relationships requiring disclosure by the Company under the SEC’s rules requiring disclosure of certain relationships and related-party transactions. None of the Company’s executive officers served as a director or a member of a compensation committee (or other committee serving an equivalent function) of any other entity, the executive officers of which served as a director or member of the Compensation Committee during the fiscal year ended March 31, 2010.

 

The Summary Compensation table below quantifies the value of the different forms of compensation earned by or awarded to the Named Executive Officers for the 2010 fiscal year. The primary elements of each Named Executive Officer’s total compensation reported in the table are base salary, an annual bonus, and long-term equity incentives consisting of stock options, restricted share units and SARs, as applicable. The Named Executive Officers also received the other benefits listed in column (i) of the Summary Compensation table, as further described in footnote 3 to the table.

 

The Summary Compensation table should be read in conjunction with the tables and narrative descriptions that follow. The Grants of Plan-Based Awards table, and the accompanying description of the material terms of equity awards granted in fiscal 2010, provide information regarding the long-term equity incentives awarded to the Named Executive Officers in fiscal 2010. The Outstanding Equity Awards at Fiscal Year End and Option Exercises and Stock Vested tables provide further information on the Named Executive Officers’ potential realizable value and actual value realized with respect to their equity awards.

 

SUMMARY COMPENSATION — FISCAL 2008, 2009 AND 2010

 

 

 

 

 

 

 

 

We have entered into employment agreements with each of the Named Executive Officers. These employment agreements, including the salary and bonus terms of each agreement, are briefly described below. Provisions of these agreements relating to outstanding equity incentive awards and post-termination of employment benefits are discussed below under the applicable sections of this Amendment.

 

Jon Feltheimer.  We entered into an employment agreement with Mr. Feltheimer effective September 20, 2006, as amended on September 18, 2008 and October 8, 2008. The agreement provides that Mr. Feltheimer will serve as our Chief Executive Officer for a term that ends March 31, 2014. Mr. Feltheimer’s annual base salary under the agreement is $1,200,000 but, commencing October 8, 2011, his salary will increase in the same proportion as the proportional difference between the “Consumer Price Index for Urban Wage Earners All Items (Los Angeles-Riverside-Orange County, CA),” published by the United States Department of Labor, Bureau of Labor Statistics (the “CPI”) in effect on March 1 of the preceding year and the CPI in effect as of October 8, 2011 and as of each successive anniversary of such date during the term of the agreement. Mr. Feltheimer is entitled to an annual discretionary bonus determined by the Compensation Committee, based on certain criteria set forth in the agreement, with an informal target bonus of 100% of his base salary. In addition, Mr. Feltheimer will be entitled

to receive a stock price bonus of $750,000 if the volume-weighted average of our median stock price exceeds $13.00, $16.00 or $19.00 for a period of six consecutive months (for a maximum total bonus of $2,250,000 if all three stock price values are met). The agreement also provides for Mr. Feltheimer to participate in the Company’s usual benefit programs for senior executives.

 

Michael Burns.  We entered into an employment agreement with Mr. Burns effective September 1, 2006, as amended on September 22, 2008 and November 2, 2009. The agreement provides that Mr. Burns will serve as our Vice Chairman for a term that ends September 1, 2013. Mr. Burns’ annual base salary under the agreement is $925,000 through September 1, 2010, and will increase to $950,000 from September 2, 2010 through September 1, 2013. Mr. Burns is entitled to an annual discretionary bonus, recommended by our Chief Executive Officer and determined by the Compensation Committee, based on certain criteria set forth in the agreement, with an informal target bonus of 100% of his base salary. In addition, Mr. Burns will be entitled to receive a stock price bonus of $600,000 if the volume-weighted average of our median stock price exceeds $13.00, $16.00 or $19.00 for a period of six consecutive months (for a maximum total bonus of $1,800,000 if all three stock price values are met). The agreement also provides for Mr. Burns to participate in the Company’s usual benefit programs for senior executives.

 

Steven Beeks.  We entered into an employment agreement with Mr. Beeks effective April 1, 2007, as amended on December 15, 2008 and February 6, 2009. The agreement provides that Mr. Beeks will serve as our President and Chief Operating Officer for a term that ends April 1, 2012. Mr. Beeks’ annual base salary under the agreement is $750,000 for the remainder of the term. Mr. Beeks is entitled to an annual performance bonus at the full discretion of our Chief Executive Officer, in consultation with the Compensation Committee. In addition, Mr. Beeks is entitled to receive an annual “EBITDA bonus” of either 12.5% or 25% of his annual base salary if the Company attains 105% or 115%, respectively, of an EBITDA target established by the Company for the applicable fiscal year. The agreement also provides for Mr. Beeks to participate in the Company’s usual benefit programs for its employees.

 

Joseph Drake.  We entered into an employment agreement with Mr. Drake effective September 10, 2007. The agreement provides that Mr. Drake will serve as our Co-Chief Operating Officer and President, Motion Picture Group, for a term that ends September 10, 2012. Mr. Drake’s annual base salary under the agreement is $850,000. Mr. Drake is entitled to an annual performance bonus at the full discretion of our Chief Executive Officer (in consultation with the Compensation Committee) which, for the first three years of his employment term only, can be up to $200,000. In addition, Mr. Drake is entitled to receive an annual bonus of either 12% or 23.5% of his annual base salary if the Company attains 105% or 115%, respectively, of an EBITDA target established by the Company for the applicable fiscal year. The agreement also provides for Mr. Drake to participate in the Company’s usual benefit programs for its employees.

 

James Keegan.  On January 14, 2009, we entered into an employment agreement with Mr. Keegan to continue to serve as our Chief Financial Officer for a term commencing April 16, 2009 and ending April 15, 2012. Pursuant to the agreement, Mr. Keegan will receive an annual base salary of $475,000. Mr. Keegan is also entitled to annual performance bonuses at the full discretion of our Chief Executive Officer, in consultation with the Compensation Committee, and to participate in the Company’s usual benefit programs for its employees.

 

The following table presents information regarding the equity incentive awards granted to the Named Executive Officers during fiscal 2010. Each of these awards was granted under the Lions Gate Entertainment Corp. 2004 Performance Incentive Plan (the “2004 Plan”).

 

GRANTS OF PLAN-BASED AWARDS — FISCAL 2010

 

 

 

 

Description of Plan-Based Awards

 

Each of the equity-based awards reported in the Grants of Plan-Based Awards table was granted under, and is subject to, the terms of the 2004 Plan. The 2004 Plan is administered by the Compensation Committee. The Compensation Committee has authority to interpret the plan provisions and make all required determinations under the plan. This authority includes making required proportionate adjustments to outstanding awards upon the occurrence of certain corporate events such as reorganizations, mergers and stock splits, and making provisions to ensure that any tax withholding obligations incurred in respect of awards are satisfied. Awards granted under the plan are generally only transferable to a beneficiary of a Named Executive Officer upon his death. However, the Compensation Committee may establish procedures for the transfer of awards to other persons or entities, provided that such transfers comply with applicable securities laws and, with limited exceptions set forth in the plan document, are not made for value.

Under the terms of the 2004 Plan, if there is a change in control of the Company, each Named Executive Officer’s outstanding awards granted under the plan will generally become fully vested and, in the case of options and SARs, exercisable, unless the Compensation Committee provides for the substitution, assumption, exchange or other continuation of the outstanding awards. Any options and SARs that become vested in connection with a change in control generally must be exercised prior to the change in control, or they will be canceled in exchange for the right to receive a cash payment in connection with the change in control transaction.

 

As described below under Potential Payments upon Termination or Change in Control, certain equity awards granted to the Named Executive Officers during fiscal 2010 are subject to accelerated vesting under the terms of their respective employment agreements in the event of a change in control of the Company and/or the termination of their employment under certain circumstances.

 

Restricted Share Units

 

Columns (g) and (i) in the table above report awards of restricted share units granted to the Named Executive Officers in fiscal 2010. Each restricted share unit represents a contractual right to receive one of our common shares. The Named Executive Officer does not have the right to vote or dispose of the restricted share units, but does have the right to receive cash payments as dividend equivalents based on the amount of dividends (if any) paid by the Company during the term of the award on a number of shares equal to the number of outstanding and unpaid restricted share units then subject to the award. Such payments are made at the same time the related dividends are paid to the Company’s shareholders generally.

 

Time-Based Units.  Column (i) in the table above reports awards of restricted share units granted to the Named Executive Officers in fiscal 2010 that are subject to time-based vesting requirements. The restricted share units granted to each of Messrs. Burns and Drake reported in this column (other than the “quarterly grant” to Mr. Burns described below) are subject to a three-year vesting schedule provided that, in each case, the officer continues to be employed with the Company through the vesting date. See the footnotes to the Outstanding Equity Awards at Fiscal 2010 Year-End table below for more information on the specific vesting dates of these awards.

 

Performance-Based Units.  Column (g) of the table above reports awards of restricted share units granted to the Named Executive Officers that are eligible to vest based on the Company’s performance over a specified period of time relative to certain pre-established goals. Up to one-third of the total number of restricted share units subject to the award are eligible to vest during each of the three 12-month performance periods covered by the award. In general, the number of restricted share units that vest each year is determined based on the Company’s performance during the applicable year, but the Compensation Committee has discretion to provide that the units may vest even if the performance goals are not met or that any units that do not vest based on the Company’s performance for a particular year will be eligible to vest based on the Company’s performance in a subsequent year. As noted above, each of these awards is treated as three separate annual awards for accounting purposes and, accordingly, only the units eligible to vest based on the Company’s performance for fiscal 2010 are reflected in the table above.

 

Quarterly Grants.  In November 2009, Mr. Burns was granted the right to receive, on the first day following each three month anniversary of November 2, 2009 that occurs during the term of his employment agreement and subject to regulatory approval, if required, a number of our common shares equivalent to $187,500, calculated using the closing price of our common shares on the last trading day immediately prior to the respective quarterly issuance date. This grant is reported in column (i) of the table above. If shareholder or regulatory approval of any such quarterly issuance is necessary and is not obtained, Mr. Burns will receive alternative commensurate compensation to be negotiated in good faith. As noted above, the term of Mr. Burns’ employment agreement is scheduled to end on September 1, 2013.

 

The following table presents information regarding the outstanding equity awards held by each of the Named Executive Officers as of March 31, 2010, including the vesting dates for the portions of these awards that had not vested as of that date.

 

OUTSTANDING EQUITY AWARDS AT FISCAL 2010 YEAR-END

 

 

 

 

 

The following table presents information regarding the exercise of stock options by the Named Executive Officers during fiscal 2010 and on the vesting during fiscal 2010 of other stock awards previously granted to the Named Executive Officers.

 

OPTION EXERCISES AND STOCK VESTED — FISCAL 2010