The rights of the holders of Holdings’ Class A common stock and Holdings’ Class B common stock are identical, except with respect to voting and conversion applicable to the Class B common stock. Holders of Holdings’ Class A common stock are entitled to one vote per share and holders of Holdings’ Class B common stock are entitled to three votes per share. Holders of Class A common stock and Class B common stock will share ratably (based on the number of shares of common stock held) in any dividend declared by its board of directors, subject to any preferential rights of any outstanding preferred stock. The Class A common stock is not convertible into any other shares of Holdings’ capital stock. Each share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock. In addition, each share of Class B common stock shall convert automatically into one share of Class A common stock upon any transfer, whether or not for value, except for certain transfers described in Holdings’ certificate of incorporation.

The following is a summary of dividends and dividend equivalents declared to stockholders during the year ended December 31, 2019:

During the year ended December 31, 2019, the Company paid dividends and dividend equivalents of $84.1 million and accrued $2.3 million for the remaining unpaid dividends at December 31, 2019. The aggregate dividends paid for Class A common stock, Class B common stock, and dividend equivalents were approximately $41.7 million, $41.4 million, and $1.0 million, respectively.

On February 26, 2020, the Company declared a cash dividend in the amount of $0.03 per share on Class A and Class B common stock, payable on March 23, 2020 to stockholders of record on March 9, 2020. The dividend decrease of $0.17 per share compared to the Company’s previous historical declarations of $0.20 per share reduces the total dividend payout for the quarter by approximately $18.0 million.

The following is a summary of dividends and dividend equivalents declared to stockholders during the year ended December 31, 2018:

During the year ended December 31, 2018, the Company paid dividends and dividend equivalents of $258.1 million and accrued $4.0 million for the remaining unpaid dividends at December 31, 2018. The aggregate dividends paid for Class A common stock, Class B common stock, and dividend equivalents were approximately $122.0 million, $136.1 million, and $0.1 million, respectively.

During the year ended December 31, 2017, the Company paid dividends and dividend equivalents of $104.6 million and accrued $1.1 million for the remaining unpaid dividends at December 31, 2017. The aggregate dividends paid for Class A common stock, Class B common stock, and dividend equivalents were approximately $43.9 million, $60.6 million, and $0.2 million, respectively.

As of December 31, 2019 and December 31, 2018, the Company recorded a receivable due from Wanda of $0.8 million and $0.9 million, respectively for reimbursement of general administrative and other expense incurred on behalf of Wanda. Total reimbursements of other expenses from Wanda were $0.4 million, $0.0 million and $0.6 million for the years ended December 31, 2019, December 31, 2018, and December 31, 2017, respectively. The Company’s majority shareholder, Wanda, owns Legendary Entertainment, a motion picture production company. The Company will occasionally play Legendary’s films in its theatres, as a result of transactions with independent film distributors.

On September 14, 2018, the Company entered into the Investment Agreement with Silver Lake Alpine, L.P., an affiliate of Silver Lake Group, L.L.C. (“Silver Lake”), relating to the issuance to Silver Lake (or its designated affiliates) of $600.0 million principal amount of the Convertible Notes due 2024. See Note 8—Corporate Borrowings and Finance Lease Obligations - Senior Unsecured Convertible Notes due 2024 for more information.

On September 14, 2018, the Company, Silver Lake and Wanda entered into a Right of First Refusal Agreement (the “ ROFR Agreement ”), which provides Silver Lake certain rights to purchase shares of the Company’s common stock that Wanda proposes to sell during a period of two years from the date of execution of the ROFR Agreement or, if earlier, until such time that Wanda and its affiliates cease to beneficially own at least 50.1% of the total voting power of the Company’s voting stock. The right of first refusal applies to both registered and unregistered transfers of shares. Under the ROFR Agreement, in the event that Wanda and its affiliates cease to beneficially own at least 50.1% of the total voting power of the Company’s voting stock, then the Company will have the same right of first refusal over sales of the Company’s common stock by Wanda as described above until the expiration of the two-year period beginning on the date of execution of the ROFR Agreement. In such event, the Company may exercise such right to purchase shares from Wanda from time to time pursuant to the ROFR Agreement in its sole discretion, subject to approval by the disinterested directors of the Board. If the Company determines to exercise its right to purchase shares from Wanda pursuant to the ROFR Agreement, it will have the obligation under the Investment Agreement to offer to sell to Silver Lake a like number of shares of the Company’s Class A Common Stock, at the same per share price at which it purchased the Wanda shares.

On September 14, 2018, the Company used the proceeds from the Convertible Notes due 2024, and pursuant to a stock repurchase agreement between the Company and Wanda, repurchased 24,057,143 shares of Class B common stock at a price of $17.50 per share or $421.0 million and associated legal fees of $2.6 million. As of December 31, 2019, Wanda owns 49.85% of AMC through its 51,769,784 shares of Class B common stock. With the three-to-one voting ratio between Class B and Class A common stock, Wanda retains voting control of AMC with 74.89% of the voting power of the Company’s common stock. As discussed in Note 8, up to 5,666,000 shares of Class B common stock are subject to forfeiture for no consideration in connection with the reset provision contained in the Indenture.

Certain members of management have the right to require Holdings to repurchase the Class A common stock held by them under certain limited circumstances pursuant to the terms of a stockholders agreement. Beginning on January 1, 2016 (or upon the termination of a management stockholders employment by the Company without cause, by the management stockholder for good reason, or due to the management stockholders death or disability) management stockholders had the right, in limited circumstances, to require Holdings to purchase shares that were not fully and freely tradeable at a price equal to the price per share paid by such management stockholder with appropriate adjustments for any subsequent events such as dividends, splits, or combinations. The shares of Class A common stock, subject to the stockholder agreement, were classified as temporary equity, apart from permanent equity, as a result of the contingent redemption feature contained in the stockholder agreement. The Company determined the amount reflected in temporary equity for the Class A common stock based on the price paid per share by the management stockholders and Wanda on August 30, 2012, the date Wanda acquired Holdings.

As of January 1, 2019, the remaining management employees who held 75,712 shares relinquished their put rights and the related share amount of $0.4 million was reclassified to additional paid in capital, a component of stockholders’ equity.

During the year ended December 31, 2018, one former employee and one current employee who held a total of 37,105 shares relinquished their put rights, therefore the related share amount of $0.4 million was reclassified to additional paid in capital, a component of stockholders’ equity.

On February 13, 2017, the Company completed an additional public offering of 20,330,874 shares of Class A common stock at a price of $31.50 per share ($640.4 million), resulting in net proceeds of $616.8 million after underwriters commission and other professional fees. The Company used a portion of the net proceeds to repay the aggregate principal amount of the Interim Bridge Loan of $350.0 million and general corporate purposes.

On August 3, 2017, the Company announced that its Board of Directors had approved a $100.0 million share repurchase program to repurchase its Class A common stock over a two-year period.

Repurchases were made at management's discretion from time to time through open-market transactions including block purchases, through privately negotiated transactions, or otherwise until mid-August 2019 in accordance with all applicable securities laws and regulations. The extent to which AMC repurchases its shares, and the timing of such repurchases, depended upon a variety of factors, including liquidity, capital needs of the business, market conditions, regulatory requirements, and other corporate considerations, as determined by AMC’s management team. Repurchases were made under a Rule 10b5-1 plan, which permitted common stock to be repurchased when the Company’s management might otherwise be precluded from doing so under insider trading laws. The repurchase program did not obligate the Company to repurchase any minimum dollar amount or number of shares and may be suspended for periods or discontinued at any time. During the year ended December 31, 2018, the Company repurchased 500,000 shares of Class A common stock at a cost of approximately $8.2 million. During the year ended December 31, 2017, the Company repurchased 3,195,856 shares of Class A common stock at a cost of $47.5 million. The program expired on August 2, 2019.

The 2013 Equity Incentive Plan provides for grants of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSU’s”), performance stock units (“PSU’s), stock awards, and cash performance awards. The maximum number of shares of Holdings’ common stock available for delivery pursuant to awards granted under the 2013 Equity Incentive Plan is 9,474,000 shares. At December 31, 2019, the aggregate number of shares of Holdings’ common stock available for grant was 4,674,150 shares.

The Company recorded stock-based compensation expense of $4.4 million, $14.9 million, and $5.7 million within general and administrative: other during the years ended December 31, 2019, December 31, 2018, and December 31, 2017, respectively.

AMC’s Board of Directors approved awards of stock, RSU’s, and PSU’s to certain of the Company’s employees and directors under the 2013 Equity Incentive Plan. During years 2019, 2018, and 2017, the grant date fair value of these awards was based on the closing price of AMC’s stock on the date of grant, which ranged from $8.67 to $31.45 per share.


	Vested	Recognized
	Class A	Upon
Stock Award Agreement	Common Stock	Grant
Year Granted	Granted	(in millions)
2019	32,464	$	0.5
2018	28,055		0.5
2017	13,684		0.4

●

Restricted Stock Unit Award Agreement: The Company granted RSU awards to certain members of management. Each RSU represents the right to receive one share of Class A common stock at a future date. The RSUs granted during 2019, 2018, and 2017 vest over three years with 1/3 vesting in each year. These RSUs will be settled within 30 days of vesting. A dividend equivalents equal to the amount paid in respect of one share of Class A common stock underlying the RSUs began to accrue with respect to the RSUs on the date of grant. Such accrued dividend equivalents are paid to the holder upon vesting of the RSUs.


		Recognized
Restricted Stock Unit		in 2019
Year Granted	Units Granted	(in millions)
2019	730,167	$	3.5
2018	656,576		3.1
2017	201,726		1.6
		$	8.2

●

Restricted Stock Unit Award Executive Agreement: During the year ended December 31, 2019, the Company granted RSU awards of 200,000 to an executive officer (“2019 RSU executive”) of the Company

with one-half vesting on the first anniversary of employment on December 2, 2020 and the remaining one-half vesting ratably over a three year period ending on December 2, 2022. All unvested RSUs shall be forfeited upon termination of services. Each RSU represents the right to receive one share of Class A common stock at a future date. These RSUs will be settled within 30 days of vesting. A dividend equivalent equal to the amount paid in respect of one share of Class A common stock underlying the RSUs began to accrue with respect to the RSUs on the date of grant. Such accrued dividend equivalents are paid to the holder upon vesting of the RSUs. The Company recognized approximately $0.1 million of expense in general and administrative: other expense during the year ended December 31, 2019.

●

Restricted Stock Unit Named Executive Officer Award Agreement: During the year ended December 31, 2017, RSU awards of 129,214 units were granted to certain executive officers covered by Section 162(m) of the Internal Revenue Code (“2017 RSU NEO awards”). The RSUs will be forfeited if AMC does not achieve a specified cash flow from operating activities target for each of the years ended on December 31, 2017, 2018 and 2019. The RSUs vest over three years with 1/3 vesting in each of 2017, 2018 and 2019 if the cash flow from operating activities target is met. The vested RSUs will be settled within 30 days of vesting. A dividend equivalent equal to the amount paid in respect of one share of Class A common stock underlying the RSUs began to accrue with respect to the RSUs on the date of grant. Such accrued dividend equivalents are paid to the holder upon vesting of the RSUs. The grant date fair value was $4.1 million based on the probable outcome of the performance targets and a stock price of $31.45 on March 31, 2017. The Company recognized expense for these awards of $1.4 million, $1.3 million, and $1.4 million in general and administrative: other expense, during the each of the years ended December 31, 2019, December 31, 2018 and December 31, 2017, respectively, based on achievement of the performance condition for 2019, 2018, and 2017.

During the year ended December 31, 2016, RSU awards of 135,981 units were granted to certain executive officers covered by Section 162(m) of the Internal Revenue Code (“2016 RSU NEO awards”). The RSUs will be forfeited if AMC does not achieve a specified cash flow from operating activities target for each of the years ending December 31, 2016, 2017 and 2018. The RSUs vest over three years with 1/3 vesting in each of 2016, 2018 and 2019 if the cash flow from operating activities target is met. The vested RSUs will be settled within 30 days of vesting. A dividend equivalent equal to the amount paid in respect of one share of Class A common stock underlying the RSUs began to accrue with respect to the RSUs on the date of grant. Such accrued dividend equivalents are paid to the holder upon vesting of the RSUs. The grant date fair value was $3.4 million based on the probable outcome of the performance targets and a stock price of $24.88 on March 1, 2016. The Company recognized expense for these awards of $1.1 million in general and administrative: other expense, during each the of years ended December 31, 2018 and December 31, 2017, respectively, based on achievement of the performance conditions for 2018 and 2017.

●

Performance Stock Unit Award Agreement: During the year ended December 31, 2019, PSU awards of 730,167 were granted to certain members of management and executive officers, with three-year cumulative Adjusted EBITDA, diluted earnings per share, and net profit performance target conditions and service conditions, covering a performance period beginning January 1, 2019 and ending on December 31, 2021. The PSUs will vest based on achieving 80% to 120% of the performance targets with the corresponding vested unit amount ranging from 30% to 200%. If the performance target is met at 100%, the PSU awards granted during the year ended December 31, 2019 will vest at 730,167 units in the aggregate. No PSUs will vest if Holdings does not achieve 80% of the three-year cumulative Adjusted EBITDA, diluted earnings per share, and net profit performance target. Additionally, unvested PSU’s shall be ratably forfeited upon termination of service prior to December 31, 2021. If service terminates prior to January 2, 2020, all unvested PSU’s shall be forfeited, if service terminates prior to January 2, 2021, 2/3 of unvested PSU’s shall be forfeited and if service terminates prior to January 4, 2022, 1/3 of unvested PSU’s shall be forfeited. The vested PSUs will be settled within 30 days of vesting which will occur upon certification of performance results by the Compensation Committee of the Board of Directors. A dividend equivalent equal to the amount paid in respect of one share of Class A common stock underlying the PSUs began to accrue with respect to the PSUs on the date of grant. Such accrued dividend equivalents are paid to the holder upon vesting of the PSUs. During the third quarter of 2019, the Company determined that achieving the three-year net profit performance thresholds of the 2019 Performance Stock Units was no longer probable and ceased accruing any additional expense on these units. At December 31, 2019, the Company determined that achieving the three-year net profit performance thresholds was improbable and reversed all previously recorded expense. If the Company later determines that the performance thresholds are

probable, then historical expense would be reinstated, and the Company would resume recognizing expense. The Company did not recognize any expense for these awards in general and administrative: other expense, during the year ended December 31, 2019 and ceased accruing any expense on these units.

During the year ended December 31, 2018, PSU awards were granted to certain members of management and executive officers with three-year cumulative net profit, Adjusted EBITDA, and diluted earnings per share performance target conditions and service conditions, covering a performance period beginning January 1, 2018 and ending on December 31, 2020. During the third quarter of 2019, the Company determined that achieving the three-year net profit performance thresholds of the 2018 Performance Stock Units was no longer probable and ceased accruing any additional expense on these units. At December 31, 2019, the Company determined that achieving the three-year net profit performance thresholds was improbable and reversed all previously recorded expense. If the Company later determines that the performance thresholds are probable, then historical expense would be reinstated, and the Company would resume recognizing expense. The Company reversed all previously recorded expense and recorded a credit for these awards of $5.8 million during the year ended December 31, 2019, which reversed the expense of $5.8 million recorded during the year ended December 31, 2018 in general and administrative: other expense and ceased accruing any additional expense on these units.

During the year ended December 31, 2017, PSU awards were granted to certain members of management and executive officers with three-year cumulative net profit, Adjusted EBITDA, and diluted earnings per share performance target conditions and service conditions, covering a performance period beginning January 1, 2017 and ending on December 31, 2019. During the year ended December 31, 2017, the Company determined that achieving the three-year performance thresholds of the 2017 Performance Stock Units was improbable and reversed $1.8 million of stock-based compensation expense and ceased accruing any additional expense on these units. The Company did not recognize any further expense in years 2019 and 2018.

During the year ended December 31, 2016, PSU awards were granted to certain members of management and executive officers, with both a three-year cumulative adjusted free cash flow and net earnings performance target condition and a service condition, covering a performance period beginning January 1, 2016 and ended on December 31, 2018. During the year ended December 31, 2017, the Company determined that achieving the three-year performance thresholds of the 2016 Performance Stock Units was improbable and reversed $2.0 million of stock-based compensation expense and ceased accruing any additional expense on these units. The Company did not recognize any further expense in 2018.

●

Performance Stock Unit Executive Award Agreement: During the year ended December 31, 2019, a PSU market condition award of 300,000 was granted to an executive officer of the Company that will vest based upon achieving target prices for the Company’s common stock (“2019 PSU executive”). Achievement of the target prices will be determined using the volume weighted average closing price of the Company’s Class A common stock over a 20 trading-day period. Any unvested PSUs remaining after 10 years will be forfeited. If service is terminated prior to December 2, 2029, all unvested PSUs shall be forfeited. The target prices and vesting tranches are set forth in the table below:


Target Stock Price		PSUs Vesting
$15.00		75,000
$20.00		75,000
$25.00		75,000
$30.00		75,000

The vested PSUs will be settled within 30 days of vesting. A dividend equivalent equal to the amount paid in respect of one share of Class A common stock underlying the PSUs began to accrue with respect to the PSUs on the date of grant. Such accrued dividend equivalents are paid to the holder upon vesting of the PSUs.

The Company used the Monte Carlo simulation model to estimate the fair value of the PSUs. This model utilizes multiple input variables to estimate the probability that the market conditions will be achieved. The Company used the following assumptions in determining the fair value of the PSUs:



		Year Ended December 31, 2019
Expected stock price volatility		45.0%
Expected dividend yield		9.23%
Risk-free interest rate		1.83%
Grant-date stock price		$8.67

The expected stock price volatility is based on the historical volatility of the Company’s stock for a period equivalent to the derived service period. The expected dividend yield is based on annual expected dividend payments. The risk-free interest rate is based on the treasury yield rates as of the date of grant for a period equivalent to the performance measurement period. The fair value of each PSU is amortized over the requisite or derived service period, which is up to 4.6 years. The PSUs granted during the year ended December 31, 2019 have a grant date fair value of $1.4 million. Since the award was granted in December 2019, the Company recognized an immaterial amount of expense for these awards in general and administrative: other expense, during the year ended December 31, 2019.

●

Performance Stock Unit Transition Award: In recognition of the shift in 2016 from one-year to three-year performance periods for annual equity awards, on March 31, 2017, PSU transition awards were granted to certain members of management and executive officers, with net profit, Adjusted EBITDA, and diluted earnings per share performance target conditions and a service condition, covering a performance period beginning January 1, 2017 and ended on December 31, 2017.

No PSU Transition Awards vested in 2017 as the Company did not meet the fiscal year 2017 net profit threshold, and as a result, all of the PSUTs were forfeited and the units were returned to the 2013 Employee Incentive Plan pool.

The following table represents the nonvested RSU and PSU activity for the years ended December 31, 2019, December 31, 2018 and December 31, 2017:


		Weighted
		Average
	Shares of RSU	Grant Date
	and PSU	Fair Value
Beginning balance at January 1, 2017	556,510	$	24.88
Granted	701,788		31.23
Vested	(92,722)		24.88
Forfeited	(44,309)		28.68
Cancelled (1)	(37,426)		31.45
Beginning balance at January 1, 2018	1,083,841	$	28.61
Granted	1,313,152		15.65
Vested	(408,848)		21.68
Forfeited	(53,698)		20.69
Beginning balance at January 1, 2019	1,934,447	$	21.50
Granted	1,960,334		12.89
Vested	(303,201)		21.76
Forfeited	(220,632)		17.17
Cancelled	(100,855)		21.46
Nonvested at December 31, 2019	3,270,093	$	15.88

(1)

No PSU Transition Awards vested as the Company did not achieve the adjusted free cash flow or net earnings minimum performance target.