Definitive Proxy Statement
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

(Rule 14a-101)

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES

EXCHANGE ACT OF 1934 (AMENDMENT NO.     )

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Check the appropriate box:

☐      Preliminary Proxy Statement

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☑      Definitive Proxy Statement

☐      Definitive Additional Materials

☐      Soliciting Material Pursuant to §240.14a-12

 

AMC Networks Inc.

(Name of registrant as specified in its charter)

         

(Name of person(s) filing proxy statement, if other than the registrant)

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Table of Contents

           

 

              

  

 

April 30, 2021

 

LOGO

 

Dear Stockholder:

 

You are cordially invited to attend the AMC Networks annual meeting of stockholders, which will be conducted via live audio webcast on Wednesday, June 16, 2021 at 10:00 a.m. Eastern Daylight Time. You can attend the annual meeting via the internet, vote your shares electronically and submit your questions during the annual meeting, by visiting www.virtualshareholdermeeting.com/AMCX2021. We encourage you to allow ample time for online check-in, which will begin at 9:45 a.m. Eastern Time. For further information, please refer to the General Information section of the website. Please note that due to ongoing health and safety concerns and recommendations related to the COVID-19 pandemic, there is no in-person annual meeting this year for you to attend.

 

For the past several years, AMC Networks has been transforming itself from primarily a domestic linear cable network business to a more diversified content centric company. During this transition, the Company has delivered solid financial results. While navigating what was a uniquely challenging and uncertain operating environment in 2020, we continued to transform our business while delivering strong performance. The following are a few of our 2020 business highlights:

 

•  AMC Networks aired three of the top four dramas on ad-supported cable: The Walking Dead, Better Call Saul and Fear the Walking Dead.

 

•  Our original series, including Better Call Saul, Killing Eve and Seven Worlds, One Planet, received Emmy®, Golden Globe and Critics’ Choice Award recognition, underscoring the strength of our original content.

 

•  The Company ended 2020 with more than six million streaming subscribers in aggregate across our AMC+, Acorn TV, Shudder, Sundance Now and ALLBLK streaming services, representing year-over-year aggregate subscriber growth of 157%.

 

•  We launched our new AMC+ bundled streaming offering with Comcast Xfinity, DISH Network, Sling TV and AT&T’s DIRECTV, as well as on Amazon Prime Video Channels, Apple TV Channels and Roku.

 

•  We renewed eight carriage arrangements with our network distribution partners in the United States and Canada, including three of the top five MVPDs.

 

•  We continued to expand our advanced advertising efforts to take advantage of technologies that allow for greater audience targeting for our advertising partners.

 

•  We appointed our first Chief Diversity, Equity and Inclusion Officer who reports to our CEO and is dedicated to helping the Company build a more diverse, equitable and inclusive culture in our workplace and in the stories we tell.

 

Throughout the year, we have worked to update our stockholders on a range of topics including the Company’s business strategy, Board, governance and executive compensation practices, as well as environmental and social matters with a focus on diversity. We are committed to maintaining an active dialogue with our stockholders and remain focused on creating stockholder value.

 

Thank you for your support and your continued investment in AMC Networks.

 

Sincerely yours,

 

LOGO

James L. Dolan

Chairman of the Board

 

 

 

                          

    

 

AMC+    /    AMC    /    BBC    AMERICA     /    IFC    /    SUNDANCE  TV    /    WE  TV    /    ACORN   TV

ALLBLK    /    SHUDDER    /    SUNDANCE NOW    /    IFC FILMS    /    AMC NETWORKS INTERNATIONAL

 

 

 


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NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS

 

To the Stockholders of

AMC Networks Inc.

The Annual Meeting of Stockholders of AMC Networks Inc. (the “Company”) will be held on Wednesday, June 16, 2021, at 10:00 a.m. Eastern Daylight Time. You can attend the annual meeting via the internet, vote your shares electronically and submit your questions during the annual meeting, by visiting www.virtualshareholdermeeting.com/AMCX2021 (there is no physical location for the annual meeting). For further information on how to participate in the meeting, please see General Information, “How do I attend, vote at and ask questions during the annual meeting?” You will need to have your 16-Digit Control Number included on your Notice of Internet Availability of Proxy Materials or your proxy card (if you received a printed copy of the proxy materials) to join the annual meeting. The annual meeting will be held to consider and vote upon the following proposals:

 

  1.

Election of Directors.

 

  2.

Ratification of appointment of independent registered public accounting firm.

 

  3.

An advisory vote on Named Executive Officer compensation.

 

  4.

Vote on a stockholder proposal regarding voting standards for director elections, if properly presented at the annual meeting.

 

  5.

Vote on a stockholder proposal regarding a policy on our dual class structure, if properly presented at the annual meeting.

 

  6.

Conduct such other business properly brought before the meeting.

Only stockholders of record on April 19, 2021 may vote at the meeting.

The Company is pleased to take advantage of the Securities and Exchange Commission rules that allow issuers to furnish proxy materials to their stockholders on the Internet. We believe these rules allow us to provide you with the information you need while lowering the costs of delivery and reducing the impact of the Company’s annual meeting on the environment.

Your vote is important. We urge you to vote as soon as possible by telephone, over the Internet or by mailing a proxy card. If you choose to vote by mail, please sign and return the proxy card in the envelope provided.

 

By order of the Board of Directors,
LOGO

Anne G. Kelly

Senior Vice President and Secretary

New York, New York

April 30, 2021

AMC Networks Inc., 11 Penn Plaza, New York, NY 10001


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PROXY STATEMENT SUMMARY

We present here a summary of important information in this proxy statement. Please review the complete proxy statement before you vote.

2020 Business Highlights

The Company continued to deliver solid financial results in 2020 and remains well positioned to capitalize on future opportunities. Here are some key highlights:

 

   

Net revenues were $2.8 billion

 

   

Operating income was $443 million

 

   

Adjusted operating income (AOI)(1) was $767 million

 

   

Cash provided by operating activities was $749 million

 

   

Free cash flow(2) was $686 million

In 2020, we further strengthened our balance sheet, which allowed us to continue to pursue our various strategic priorities such as investing in the creation of strong desirable content, growing our targeted streaming services, increasing our data analytics capabilities and maximizing the value of our core networks and brands. The following are a few of our 2020 business highlights:

 

   

AMC Networks aired three of the top four dramas on ad-supported cable: The Walking Dead, Better Call Saul and Fear the Walking Dead.

 

   

Our original series, including Better Call Saul, Killing Eve and Seven Worlds, One Planet, received Emmy®, Golden Globe and Critics’ Choice Award recognition, underscoring the strength of our original content.

 

   

The Company ended 2020 with more than six million aggregate AMC Networks Streaming Services subscribers across the Company’s AMC+, Acorn TV, Shudder, Sundance Now and ALLBLK streaming services, representing year-over-year aggregate subscriber growth of 157%.

 

   

We launched our new AMC+ bundled streaming offering with Comcast Xfinity, DISH Network, Sling TV and AT&T’s DIRECTV, as well as on Amazon Prime Video Channels, Apple TV Channels and Roku.

 

   

We renewed eight major carriage arrangements with our network distribution partners in the United States and Canada, including three of the top five MVPDs.

 

   

We continued to expand our advanced advertising efforts to take advantage of technologies that allow for greater audience targeting for our advertising partners.

 

   

We appointed our first Chief Diversity, Equity and Inclusion Officer who reports to our CEO and is dedicated to helping the Company build a more diverse, equitable and inclusive culture in our workplace and in the stories we tell.

 

(1) 

Adjusted operating income is a non-GAAP measure. See Annex A for the calculations of these measures and for reconciliations to the nearest GAAP measure.

(2) 

Free cash flow is a non-GAAP measure. See Annex A for the calculations of these measures and for reconciliations to the nearest GAAP measure.


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Director Nominees

The Board has nominated twelve director candidates: three Class A nominees and nine Class B nominees. Each director is nominated for a term to expire at the 2022 annual meeting of the Company’s stockholders. Our directors have significant management, leadership and industry experience. Our Class A nominees, elected by our Class A stockholders, also bring extensive knowledge of the media industry while our Class B nominees, elected by our Class B stockholders, provide valuable institutional knowledge of the Company. The Board is comprised of 33% independent directors. See Proposal 1 — Election of Directors, “Directors Elected By Class A Common Stockholders” and “Directors Elected By Class B Common Stockholders” of the Proxy Statement for detailed information about each director’s background, skills and qualifications.

 

   
  Name

 

 

  Director  

Since

 

 

Principal Occupation

 

 

Committees

 

  Directors Elected By Class A Common Stockholders

 

  Leonard Tow

  2011  

•  Chief Executive Officer, New Century Holdings LLC

  Compensation (Chair); Audit

  David E. Van Zandt

  2015  

•  Global General Counsel and Adviser, Artal Group S.A. and The Invus Group, LLC

  Audit

  Carl E. Vogel

  2013  

•  Private Investor

•  Industry Advisor, KKR & Co Inc.

  Audit (Chair)

  Directors Elected By Class B Common Stockholders

  William J. Bell

  2011  

•  Former Vice Chairman and Chief Financial Officer, Cablevision Systems Corporation

  —  

  Aidan J. Dolan

  Director

Nominee

 

•  Manager and Performer, Upright Man

  —  

  Charles F. Dolan

Chairman Emeritus and Former Executive Chairman

  2011  

•  Chairman Emeritus, AMC Networks Inc.

•  Former Executive Chairman, AMC Networks Inc.

•  Former Chairman, Cablevision Systems Corporation

  —  

  James L. Dolan

  2011  

•  Executive Chairman, MSG Networks Inc.

•  Executive Chairman and Chief Executive Officer, Madison Square Garden Entertainment Corp.

•  Executive Chairman, Madison Square Garden Sports Corp.

  —  

  Kristin A. Dolan

  2011  

•  Chief Executive Officer, 605, LLC

  —  

  Patrick F. Dolan

  2011  

•  Former Senior Network Advisor, News 12 Networks

  —  

  Thomas C. Dolan

  2011  

•  Former Executive Vice President-Strategy and Development, Office of the Chairman, Cablevision Systems Corporation

  —  

  Brian G. Sweeney

  2011  

•  Former President and Chief Financial Officer, Cablevision Systems Corporation

  —  

  Vincent Tese

  2016  

•  Chairman of ICE Clear Credit LLC

•  Former Chief Executive Officer of the New York State Urban Development Corporation

•  Former Executive Chairman of FCB Financial Holdings Inc., and its subsidiary Florida Community Bank

  Compensation

 

ii


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Executive Compensation Highlights

We, as a company, place a great importance on our ability to attract, retain, motivate and reward experienced executive officers. The Company strives to do so by developing executive compensation policies and programs that are consistent with, explicitly linked to, and supportive of, the strategic objectives of growing the Company’s businesses and maximizing stockholder value. In particular, we believe that the majority of compensation should be at risk and contingent on Company performance.

The primary elements of 2020 executive compensation were base salary, an annual cash incentive award and long-term incentive awards in the form of RSUs, which vest ratably over three years, and cash performance awards that cliff vest based on the achievement of specified performance metrics. In 2020, in-line with our commitment to aligning pay with Company performance, 90% of the CEO’s and 70% of our other NEOs’ total target compensation was “at-risk.” In this way, a significant portion of the value of compensation ultimately realized by the executive depended upon either the Company’s performance against key performance measures that align with our business strategy, or the direct performance of our stock and thus, the experience of our stockholders.

2020 NEO Total Direct Compensation Program Structure

 

       

  Component

      Pay for Performance Rationale    Performance Period
       

  Base Salary

  

 

  

•  Based on level and merit

   N/A
       

  Annual

  Cash

  Incentives

  

 

  

•  Combination of weighted average of all business units’ operating performance (including revenue, AOI and free cash flow) and an assessment of each business unit’s achievement of certain strategic objectives

   One year
       

  Long-Term

  Incentive

  Awards

  

Cash Performance Awards

(CPAs)

•  60%: CEO/Chairman

•  50%: Other NEOs

 

 

 

  

•  AOI

•  Net revenue

•  Free cash flow

•  Modifier based on Company’s share of subscribers and audience relative to a comparator group

 

  

Three one-year performance periods averaged and subject to modifier tied to three-year performance

 

  

 

Restricted Stock Units (RSUs)

•  40%: CEO/Chairman

•  50%: Other NEOs

 

 

  

•  Stock Performance

   Vest ratably over three years

 

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2020 CEO Annual Compensation Decision Mix

 

 

 

LOGO

 

 Compensation Governance Practices

  ✓  

  Align pay and performance

  ✓  

  Majority of compensation is at risk

  ✓  

  Engage in rigorous target-setting process for incentive metrics

  ✓  

  Prohibit hedging and short sales by all employees

  ✓  

  Discourage pledging of Company stock and require pre-approval of trading by directors and executive officers

  ✓  

  No excise tax gross up provisions

  ✓  

  No dividends or dividend equivalents on equity awards

  ✓  

  Include clawback provisions in our equity awards

  ✓  

  Stockholder feedback incorporated into compensation program reviews

Corporate Governance Highlights

We are committed to ensuring that our Board is accountable to, and acts in the best interests of, all our stockholders, notwithstanding our status as a controlled company. We have implemented a number of strong governance practices and policies to promote independent leadership in the boardroom and the protection of stockholder rights.

 

 Commitment to Sound Governance Practices as a Controlled Company

  ✓  

  Annual election of directors, with directors serving one-year terms

  ✓  

  Robust director nomination criteria, including consideration for diversity of perspectives, backgrounds and experiences relevant to the Company’s strategic priorities, and ability to serve the interests of both Class A and Class B stockholders

  ✓  

  Independent Board committees, with Audit and Compensation comprised 100% of independent directors

  ✓  

  Executive sessions with only independent directors at least twice a year

  ✓  

  Effective Board self-evaluations conducted at least annually

  ✓  

  Regular engagement with stockholders regarding Company performance and strategy, our Board and corporate governance practices, our executive compensation program and environmental and social matters

 

iv


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Diversity, Equity and Inclusion

Our vision is to be an industry leader that thinks, operates and creates using diversity, equity and inclusion (DEI) as a necessary lever for change and business results. As a company driven by telling original stories that entertain, capture the imagination, and endure, we know that attracting, developing and retaining a high performing and diverse workforce is essential to our success.

Our commitment to DEI is prevalent at all levels of our organization and ensures success in all areas of our business. Starting at the top, DEI is a priority for our Board which seeks diversity of viewpoints, opinions, backgrounds and experiences. Over the past few years, AMC Networks’ senior management team has focused on expanding its diversity and inclusion efforts, recognizing the importance of diversity and inclusivity to a successful and sustainable business. AMC Networks believes that such efforts are not only important within the Company but also for the diverse content we develop, produce and air.

 

LOGO   LOGO   

Over 27%

 

In 2020, the Company
appointed Aisha Thomas-Petit
as its first Chief Diversity,
Equity and Inclusion Officer
  As part of our diversity efforts, we have
established 12 Employee Resource Groups(1)
to drive employee engagement, foster an
inclusive culture and support diverse talent
   Of our U.S.-based
workforce are people of
color
          

 

 

LOGO

 

1)

The Company has twelve ERGs across nine categories, including Asian American, Visible & Invisible Disabilities, Emerging Leaders, Parents & Caregivers, LGBTQIA+, Black, Hispanic and Women. The Company encourages each of these groups to design and implement relevant diversity-related programming, including speaker series, panels and mentorship programs.

Content & Programming Focus

 

 

LOGO

 

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COVID-19 Pandemic

The health and safety of our employees, customers and the public is our top priority and we continue to monitor the changing conditions regarding the Coronavirus (COVID-19) pandemic in coordination with local, state, national and international officials, including following guidance from the Centers for Disease Control and Prevention (CDC).

Supporting our Employees and Communities

AMC Networks’ senior management team has worked throughout the pandemic, informed by guidance from the CDC, to ensure that the Company’s employees and their communities receive the support needed to work safely and effectively. Some measures that the Company has taken include:

 

   

We proactively closed our offices and provided allowances for employees to equip their home workspaces for a smooth and rapid transition to remote work for 2,642 employees beginning in mid-March;

 

   

We provided frequent communication and updates, including virtual town halls with our CEO, Josh Sapan, and other members of senior management;

 

   

We enhanced child and elder care benefits to support employees with children and other caregivers;

 

   

We conducted employee engagement surveys designed to provide feedback on working remotely;

 

   

We launched the “We’re With You” campaign, featuring videos from our talent sharing their experiences; and

 

   

Additionally, to support our communities, we provided $1,000 to each employee to donate to a charity promoting relief from COVID-19.

Supporting our Operations

During the COVID-19 pandemic, the Company maintained its operations while taking steps to ensure the safety of its offices and production facilities. Some measures that the Company has taken include:

 

   

For those essential workers who were required to continue to report to our Broadcast & Technology facility, we provided our employees with personal protective equipment (PPE) and complied with CDC guidelines so that they could carry out their duties safely;

 

   

We closed down our productions and hired a top epidemiologist to advise us and work closely with local and state emergency preparedness and health officials to coordinate the responsible restarting of our productions;

 

   

We prepared our offices for our eventual return with a COVID-19 protocol safe environment, including installation of plexiglass around open cubicles, reducing capacity of conference rooms and common areas and putting into place directional arrows on floors to ensure limited contact with other employees in tight spaces; and

 

   

We have worked with health and government officials to arrange for the cast and crew members of certain of our productions to receive vaccinations in accordance with local and state rules.

 

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TABLE OF CONTENTS

 

     Page  

BOARD AND CORPORATE GOVERNANCE PRACTICES

     1  

Corporate Governance Guidelines

     1  

Engagement with our Stockholders

     1  

Board Leadership Structure

     1  

Board Oversight of Company Strategy

     2  

Board Self-Assessment

     2  

Executive Sessions of Non-Management and Independent Board Members

     2  

Risk Management Oversight

     2  

Communicating with Our Directors

     2  

Code of Conduct and Ethics

     3  

Director Independence

     3  

Director Nomination

     3  

Director Selection

     4  

Board Meetings

     4  

Board Committees

     5  

Director Compensation

     8  

PROPOSAL 1 — ELECTION OF DIRECTORS

     10  

Directors Elected By Class A Common Stockholders

     10  

Directors Elected By Class B Common Stockholders

     12  

PROPOSAL 2 —  RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     16  

Fees Paid to Independent Registered Public Accounting Firm

     16  

PROPOSAL 3 —  ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION

     17  

STOCKHOLDER PROPOSALS

     18  

PROPOSAL 4 —  STOCKHOLDER PROPOSAL REGARDING VOTING STANDARDS FOR DIRECTOR ELECTIONS

     18  

Company Statement in Opposition to Proposal 4

     19  

PROPOSAL 5 —  STOCKHOLDER PROPOSAL REGARDING A POLICY ON OUR DUAL CLASS STRUCTURE

     21  

Company Statement in Opposition to Proposal 5

     22  


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     Page  

REPORT OF THE AUDIT COMMITTEE

     24  

COMPENSATION DISCUSSION AND ANALYSIS

     26  

EXECUTIVE SUMMARY

     26  

Business Highlights

     26  

Strategic Priorities

     29  

2020 Key Compensation Decisions

     31  

Stockholder Engagement and Our Compensation-Related Stockholder Votes

     31  

Compensation Governance Practices

     32  

Philosophy and Objectives of Our Executive Compensation Program

     32  

Elements of the Company’s Compensation Program

     33  

2020 COMPENSATION DECISIONS

     35  

COMPENSATION DECISION PROCESS AND COMPENSATION POLICIES

     43  

REPORT OF THE COMPENSATION COMMITTEE

     49  

EXECUTIVE COMPENSATION

     50  

2020 Summary Compensation Table

     50  

2020 Grants of Plan-Based Awards

     52  

Outstanding Equity Awards at 2020 Year End

     53  

2020 Options Exercised and Stock Vested

     54  

Non-Qualified Deferred Compensation

     55  

AMC Networks Inc. 401(K) Savings Plan

     55  

AMC Networks Inc. Excess Savings Plan

     55  

Employment Agreements

     56  

Termination and Severance

     67  

Equity Compensation Plan Information

     71  

CEO Pay Ratio

     71  

OUR EXECUTIVE OFFICERS

     73  

TRANSACTIONS WITH RELATED PARTIES AND RELATED PARTY TRANSACTION APPROVAL POLICY

     74  

Relationship Between US, MSG Sports, MSG Entertainment and MSG Networks

     74  

Dolan Family Matters

     74  

Arrangement with 605 LLC

     74  

Certain Relationships and Potential Conflicts of Interest

     75  

Related Party Transaction Approval Policy

     75  


Table of Contents
     Page  

DELINQUENT SECTION 16(A) REPORTS

     76  

STOCK OWNERSHIP TABLE

     77  

GENERAL INFORMATION

     89  

OTHER MATTERS

     94  

ANNEX A: CALCULATION OF NON-GAAP FIGURES

     A-1  


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LOGO

 

 

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON JUNE 16, 2021

 

 

BOARD AND CORPORATE GOVERNANCE PRACTICES

In this proxy statement, the words “Company,” “we,” “us,” “our” and “AMC Networks” refer to AMC Networks Inc., a Delaware corporation. We refer to the U.S. Securities and Exchange Commission as the “SEC” and The Nasdaq Stock Market LLC as “NASDAQ.” This proxy statement is first being sent to stockholders on April 30, 2021.

AMC Networks Inc. is a holding company and conducts substantially all of its operations through its subsidiaries. Our Class A Common Stock is listed on NASDAQ under the symbol “AMCX.” As a result, we are generally subject to NASDAQ corporate governance listing standards. Our Board of Directors oversees the business of AMC Networks and monitors the performance of management.

Corporate Governance Guidelines

The board of directors of AMC Networks Inc. (the “Board of Directors” or “Board”) has adopted our Corporate Governance Guidelines. These guidelines set forth our practices and policies with respect to Board composition and selection, Board meetings, executive sessions of the Board, Board committees, the expectations we have of our directors, selection of the Chairman of the Board and the President and Chief Executive Officer, management succession, Board and executive compensation, and Board self-evaluation requirements. The full text of our Corporate Governance Guidelines may be viewed at our corporate website at http://investors.amcnetworks.com. A copy may be obtained by writing to AMC Networks Inc., 11 Penn Plaza, New York, NY 10001, Attention: Corporate Secretary.

Engagement with our Stockholders

The Company values feedback from its stockholders and regularly engages with stockholders to keep informed on the evolving perspectives of the investor community. We engage with our stockholders on various matters, including business strategy and performance, Board, corporate governance and executive compensation practices as well as environmental and social matters with a focus on diversity. These stockholder dialogues, which are often focused on Board, governance and compensation matters, inform discussions in the boardroom and are a component of the Compensation Committee’s review and refinement of our executive compensation program.

Board Leadership Structure

Our Board has chosen to separate the roles of Chairman of the Board and Chief Executive Officer. The Board believes that this is the optimal leadership structure at this time as it recognizes both Mr. James L. Dolan’s leadership position on the Company’s Board while the Company is also able to benefit from the experience of its President and Chief Executive Officer (the “CEO”), Mr. Joshua W. Sapan, with responsibility for day-to-day management of the Company.


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Board Oversight of Company Strategy

The Board and its Committees are involved in overseeing our corporate strategy, including major business and organizational initiatives, capital allocation priorities and potential business development opportunities. The Board engages in discussions regarding our corporate strategy at nearly every Board meeting and, at least annually, receives a formal update on the Company’s short- and long-term objectives, including the Company’s operating plan and long-term corporate strategic plan. The Board’s Committees oversee elements of our strategy associated with their respective areas of responsibility.

Board Self-Assessment

The Board conducts an annual self-assessment to determine whether the Board and its committees are functioning effectively. Among other things, the Board’s assessment process seeks input from the directors on whether they have the tools and access necessary to perform their oversight function as well as suggestions for improvement of the Board’s functioning. In addition, our Audit Committee and Compensation Committee each conduct its own annual self-assessment, which includes an assessment of the adequacy of their performance as compared to their respective charters.

Executive Sessions of Non-Management and Independent Board Members

Under our Corporate Governance Guidelines, our non-management directors may meet in executive sessions with no members of management present. The non-management directors may specify the procedure to designate the director who may preside at any such executive session. Non-management directors who are not independent under the rules of NASDAQ may participate in these executive sessions, but directors who are independent under the rules of NASDAQ must meet separately in regularly scheduled executive sessions at least twice each year.

Risk Management Oversight

The oversight of risk management is an important Board responsibility. The Audit Committee takes the lead on behalf of the Board in monitoring risk management. The Audit Committee discusses the process by which senior management of the Company and the relevant departments of the Company assess and manage the Company’s exposure to risk. The Committee also discusses the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures. Furthermore, the Audit Committee reviews and receives regular briefings concerning the Company’s information security and technology risks (including cybersecurity), including discussions of the Company’s information security and cybersecurity risk management programs.

Our Compensation Committee also considers the issue of the Company’s exposure to risk in establishing and implementing our executive compensation programs. AMC Networks believes that its executive compensation program, with its emphasis on long-term performance, its close connection to Company-wide and divisional performance and its significant equity components, is designed to align the executives’ compensation with the Company’s long-term strategy and growth and, as a result, does not encourage excessive risk taking.

Communicating with Our Directors

Our Board has adopted policies designed to allow stockholders and other interested parties to communicate with our directors. Any interested party that wishes to communicate directly with the Board or any director or the non-management directors as a group should send communications in writing to the Chairman of the Audit Committee, AMC Networks Inc., 11 Penn Plaza, New York, NY 10001. Any person, whether or not an employee, who has a concern with respect to our accounting, internal accounting controls, auditing issues or

 

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other matters, may, in a confidential or anonymous manner, communicate those concerns to our Audit Committee by contacting The Network, Inc., which has been designated to act as a confidential contact organization for these purposes, at 888-217-8076.

Code of Conduct and Ethics

Our Board has adopted a Code of Conduct and Ethics for our directors, officers and employees. A portion of this Code of Conduct and Ethics also serves as a code of conduct and ethics for our senior financial officers, including our principal accounting officer and controller. Among other things, our Code of Conduct and Ethics covers conflicts of interest, disclosure responsibilities, legal compliance, reporting and compliance under the Code of Conduct and Ethics, confidentiality, corporate opportunities, fair dealing, protection and proper use of Company assets, and equal employment opportunity and harassment. The full text of the code is available on our website at http://investors.amcnetworks.com. In addition, a copy may be obtained by writing to AMC Networks Inc., 11 Penn Plaza, New York, NY 10001, Attention: Corporate Secretary.

Director Independence

Our Board has elected for the Company to be treated as a “controlled company” under NASDAQ’s corporate governance rules, and, as a result, the Company is not required to comply with the corporate governance rules of NASDAQ requiring: (i) a majority of independent directors on our Board of Directors, (ii) an independent compensation committee and (iii) an independent corporate governance and nominating committee. Our Board of Directors has elected not to comply with the NASDAQ requirement for a majority of independent directors on our board and an independent corporate governance and nominating committee because of our status as a controlled company. We do comply with the requirement for an independent compensation committee. Our Board elected not to comply with the requirement for a majority of independent directors on our Board because of our stockholder voting structure. Under the terms of our Amended and Restated Certificate of Incorporation, the holders of the Company’s Class B Common Stock have the right to elect up to 75% of the members of our Board and there is no requirement that any of those directors be independent or be chosen independently.

Our Board has determined that each of the following non-employee directors is “independent” within the meaning of the rules of NASDAQ and the SEC: Messrs. Vincent Tese, David E. Van Zandt, Carl E. Vogel and Dr. Leonard Tow. In making the determination as to the independence of each director, the Board considered all relationships between that director and the Company and its affiliates. In reaching its determination with respect to Mr. Tese, the Board considered the fact that he serves as an outside director of Madison Square Garden Sports Corp. (formerly The Madison Square Garden Company and referred to as “MSG Sports”) and Madison Square Garden Entertainment Corp. (“MSG Entertainment”) and determined that this relationship is not material and that Mr. Tese is independent. The Board is comprised of 33% independent directors.

Director Nomination

As permitted under NASDAQ rules, we do not have a nominating committee and believe it is appropriate not to have one because of our stockholder voting structure. Under the terms of our Amended and Restated Certificate of Incorporation, the holders of our Class B Common Stock currently have the right to elect up to 75% of the members of our Board. We believe that creating a committee consisting solely of independent directors charged with responsibility for recommending nominees for election as directors would be inconsistent with the vested rights of the holders of Class B Common Stock under our Amended and Restated Certificate of Incorporation.

Our Corporate Governance Guidelines provide a mechanism for the selection of nominees for election as directors by the holders of our Class A Common Stock (“Class A Directors”) and by the holders of our

 

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Class B Common Stock (“Class B Directors”). The holders of our Class A Common Stock are currently entitled to elect 25% of the members of our Board. Under our Corporate Governance Guidelines, nominees for election as Class A Directors shall be recommended to the Board by the Class A Directors then in office who were elected by the holders of our Class A Common Stock. Nominees for election as Class B Directors shall be recommended to our Board by the Class B Directors then in office who were elected by the holders of the Class B Common Stock.

Director Selection

Our directors have not set specific, minimum qualifications that nominees must meet in order for them to be nominated for election to the Board, but rather believe that each nominee should be evaluated based on his or her individual merits, taking into account, among other matters, the factors set forth in our Corporate Governance Guidelines under “Board Composition” and “Selection of Directors.” Those factors include:

 

   

The desire to have a board that encompasses a broad range of skills, expertise, industry knowledge, diversity of viewpoints, opinions, background and experience and contacts relevant to our business;

 

   

Personal qualities and characteristics, accomplishments and reputation in the business community;

 

   

Ability and willingness to commit adequate time to board and committee matters; and

 

   

The fit of the individual’s skill and personality with those of other directors and potential directors in building a board that is effective, collegial and responsive to the needs of our Company.

The Class A Directors will evaluate possible candidates to recommend to the Board for nomination as Class A Directors and suggest individuals for the Board to explore in more depth. The Board also considers nominees for Class A Directors recommended by holders of our Class A Common Stock. Nominees recommended by stockholders are given appropriate consideration in the same manner as other nominees.

Stockholders who wish to submit nominees for consideration by the Board for election at our 2022 annual meeting of stockholders may do so by submitting in writing such nominees’ names, in compliance with the procedures and along with other information required by the Company’s By-laws. See Other Matters, “Stockholder Proposals for the 2022 Annual Meeting.”

The Class B Directors will consult from time to time with one or more of the holders of Class B Common Stock to assure that all Class B Director nominees recommended to the Board are individuals who will make a meaningful contribution as Board members and will be individuals likely to receive the approving vote of the holders of a majority of the outstanding Class B Common Stock. The Class B Directors do not intend to consider unsolicited suggestions of nominees by holders of our Class A Common Stock. We believe that this is appropriate in light of the voting provisions of our Amended and Restated Certificate of Incorporation, which vest exclusively in the holders of our Class B Common Stock the right to elect our Class B Directors.

Board Meetings

The Board met six times between January 1, 2020 and December 31, 2020. During that time, each of our directors attended at least 75% of the meetings of the Board and, as applicable, the committees of the Board on which he or she served during such time. We also encourage our directors to attend annual meetings of stockholders and believe that attendance at annual meetings is just as important as attendance at meetings of the Board. Eleven of our twelve directors attended the 2020 annual meeting of stockholders.

 

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Board Committees

Our Board has two standing committees: the Audit Committee and the Compensation Committee.

Audit Committee

Committee Members: Mr. Vogel (Chair), Dr. Tow and Mr. Van Zandt

Meetings in 2020: 4

The primary purposes and responsibilities of our Audit Committee are to:

 

   

Assist the Board (i) in its oversight of the integrity of our financial statements, (ii) in its oversight of our compliance with legal and regulatory requirements, (iii) in assessing our independent registered public accounting firm’s qualifications and independence, and (iv) in assessing the performance of our internal audit function and independent registered public accounting firm;

 

   

Appoint, retain or terminate the Company’s independent registered public accounting firm and to pre-approve, or to adopt appropriate procedures to pre-approve, all audit and non-audit services, if any, to be provided by the independent registered public accounting firm;

 

   

Review the appointment of Ernst & Young as the Company’s internal audit service provider (the “Internal Audit Service Provider”);

 

   

Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and for the confidential, anonymous submission by Company employees or any provider of accounting-related services of concerns regarding questionable accounting and auditing matters and review of submissions and treatment of any such complaints;

 

   

Discuss the process by which senior management of the Company assess and manage the Company’s exposure to risk, and discuss the Company’s major financial risk exposures and the steps management of the Company has taken to monitor and control such exposures, including, without limitation, risks related to data privacy, data security and cybersecurity;

 

   

Review and approve related party transactions that are required to be disclosed under SEC rules, other than those submitted for approval by a committee of independent directors under the Company’s Related Party Transaction Approval Policy;

 

   

Conduct and review with the Board an annual performance evaluation of the Audit Committee;

 

   

Prepare any report of the Audit Committee required by the rules and regulations of the SEC for inclusion in our annual proxy statement;

 

   

Review and reassess the Audit Committee charter at least annually; and

 

   

Report to the Board on a regular basis.

The text of our Audit Committee charter is available on our website at http://investors.amcnetworks.com/governance.cfm. A copy may be obtained by writing to AMC Networks Inc., 11 Penn Plaza, New York, NY 10001, Attention: Corporate Secretary.

As discussed above, our Board has determined that each member of our Audit Committee is “independent” within the meaning of the rules of both NASDAQ and the SEC, and that each has not participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the past three years and is able to read and understand fundamental financial statements, including balance sheets, income statements and cash flow statements. Our Board has also determined that each of Dr. Tow, Mr. Van Zandt and Mr. Vogel is an “audit committee financial expert” within the meaning of the rules of the SEC.

 

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Our Board has established a procedure whereby complaints or concerns with respect to accounting, internal controls, auditing and other matters may be submitted to the Audit Committee. This procedure is described under Corporate Governance, “Communicating with Our Directors.”

Compensation Committee

Committee Members: Dr. Tow (Chair) and Mr. Tese

Meetings in 2020: 7

The primary purposes of our Compensation Committee are to:

 

   

Establish our general compensation philosophy and, in consultation with management, oversee the development and implementation of compensation programs;

 

   

Review and approve corporate goals and objectives relevant to the compensation of our Executive Chairman, if applicable, and President and CEO, evaluate their performance in light of these goals and objectives and determine and approve their compensation based upon that evaluation;

 

   

Make recommendations to the Board with respect to the compensation of our executive officers (other than the Executive Chairman, if applicable, and the CEO) who are required to file reports with the SEC under Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (together with the Executive Chairman, if applicable, and the CEO, the “Senior Employees”);

 

   

Approve any new equity compensation plan or material changes to an existing plan;

 

   

Oversee the activities of the committee or committees administering our retirement and benefit plans;

 

   

In consultation with management, oversee regulatory compliance with respect to compensation matters;

 

   

Determine and approve any severance or similar termination payments to be made to senior employees (current or former);

 

   

Determine the components and amount of Board compensation and review such determinations from time to time in relation to other similarly situated companies;

 

   

Prepare any reports of the Compensation Committee to be included in the Company’s annual proxy statement;

 

   

Conduct and review with the Board an annual performance evaluation of the Compensation Committee; and

 

   

Report to the Board on a regular basis, but not less than annually.

The Compensation Committee may, in its discretion, delegate a portion of its duties and responsibilities to one or more subcommittees of the Compensation Committee. For example, the Compensation Committee may delegate the approval of certain transactions to a subcommittee consisting solely of members of the Compensation Committee who are “non-employee directors” for the purposes of Rule 16b-3 of the Exchange Act. The text of our Compensation Committee charter is available on our website at http://investors.amcnetworks.com/governance.cfm. A copy may be obtained by writing to AMC Networks Inc., 11 Penn Plaza, New York, NY 10001; Attention: Corporate Secretary.

The Compensation Committee reviews the performance of the Executive Chairman, if applicable, and CEO, evaluates their performance in light of the corporate goals and objectives relevant to their compensation and determines and approves the compensation levels for the Executive Chairman, if applicable, and CEO based on this evaluation. In determining the long-term incentive component compensation for the Executive Chairman,

 

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if applicable, and CEO, the Compensation Committee considers, among other factors, the Company’s performance, the value of similar incentive awards to executives in similar positions at comparable companies and the awards given to the Executive Chairman, if applicable, and to the CEO in past years.

As discussed above, our Board has determined that each member of our Compensation Committee is “independent” under the rules of NASDAQ.

Compensation Committee Interlocks and Insider Participation

Dr. Tow and Mr. Tese served as members of the Compensation Committee during 2020. Mr. Miller served as a member of the Compensation Committee until his resignation, effective July 8, 2020. None of Mssrs. Tow, Tese and Miller are current or former officers or employees of the Company.

Other Committees

In addition to standing committees, the Company has adopted a policy whereby a committee of our Board consisting entirely of independent directors (an “Independent Committee”) will review and approve or take such other action as it may deem appropriate with respect to transactions involving the Company and its subsidiaries in which any director, executive officer, greater than 5% stockholder of the Company or any other “related person” (as defined in Item 404 of Regulation S-K adopted by the SEC (“Item 404”) has or will have a direct or indirect material interest. This approval requirement covers any transaction that meets the related party disclosure requirements of the SEC as set forth in Item 404, which currently applies to transactions (or any series of similar transactions) in which the amount involved exceeds $120,000.

Our Board has also adopted a special approval policy for transactions with MSG Sports, MSG Entertainment, and MSG Networks Inc. (“MSG Networks”) and their respective subsidiaries whether or not such transactions qualify as “related party” transactions described above. Under this policy, an Independent Committee oversees approval of all transactions and arrangements between the Company and its subsidiaries, on the one hand, and each of MSG Sports and its subsidiaries, MSG Entertainment and its subsidiaries, and MSG Networks and its subsidiaries, on the other hand, in which the amount exceeds $1 million. In addition, the Audit Committee receives a quarterly update from the Company’s General Counsel of all related party transactions, including transactions and arrangements between the Company and its subsidiaries on the one hand, and each of MSG Sports and its subsidiaries, MSG Entertainment and its subsidiaries, and MSG Networks and its subsidiaries, on the other hand regardless of value. To simplify the administration of the approval process under this policy, the Independent Committee may, where appropriate, establish guidelines for certain of these transactions.

For a further discussion of the scope of these policies, see “Related Party Transaction Approval Policy.”

Currently, and throughout our fiscal year ended December 31, 2020, our Audit Committee or Compensation Committee (each of which consisted solely of directors elected by the Class A stockholders) served as the Independent Committee under the above policy. For a further discussion of the scope of this policy, see “Related Party Transaction Policy.”

Our Amended By-Laws permit us to form an Executive Committee of the Board which would have the power to exercise all of the powers and authority of the Board in the management of the business and affairs of the Company, except as limited by the Delaware General Corporation Law. Our Board has not formed an Executive Committee, although it could do so in the future.

 

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Director Compensation

The following table describes the components of the non-employee Director compensation program in effect during 2020:

 

Compensation Element*    Compensation Program

Annual Retainer

  

$70,000

Annual Equity Retainer**

  

$135,000 in RSUs that vest on the date of grant and settle 90 days after service on the Board ceases

Annual Committee Retainer Fees

  

$7,500

Chair Fee

  

$20,000 for the Audit Committee, $20,000 for the Compensation Committee

Meeting Fees

  

$2,000 per meeting

 

* Includes any non-standing committee of the Board that may be established from time to time. A director who is a Company employee receives no additional compensation for serving as a director.

** Each director annual grant of RSUs is determined by dividing the value of the annual equity retainer by the twenty trading day average closing price on the day prior to the annual stockholders’ meeting.

2020 Director Compensation Table

The table below summarizes the total compensation paid to or earned by each of our non-employee directors from January 1, 2020 through December 31, 2020. Directors who are employees of the Company receive no additional compensation for service as directors.

 

   Name    Fees Earned
or Paid in
Cash ($)(1)
     Stock
Awards
($)(2)(3)
     All Other
Compensation
(4)
     Total ($)       

Leonard Tow

     133,000        118,844               251,844       

David E. Van Zandt

     97,500        118,844               216,344       

Carl E. Vogel

     117,500        118,844               236,344       

William J. Bell

     82,000        118,844               200,844       

James L. Dolan

     80,000        118,844               198,844       

Kristin A. Dolan

     82,000        118,844               200,844       

Patrick F. Dolan

     82,000        118,844               200,844       

Thomas C. Dolan

     82,000        118,844               200,844       

Brian G. Sweeney

     82,000        118,844               200,844       

Vincent Tese

     103,500        118,844               222,344       

Marianne Dolan Weber

     80,000        118,844               198,984       

Robert Wright(5)

     41,962        118,844               160,806       

Jonathan Miller(5)

     53,815        118,844               172,659       

 

(1)

These amounts represent base fees, meeting fees and committee fees earned. The amounts reported do not include the Company’s reimbursement of reasonable out-of-pocket expenses incurred by each non-employee director in attending Board and Committee meetings.

 

(2)

This column reflects the fair market value of 4,195 RSUs granted to each non-employee director on June 11, 2020 based on the closing stock price of $28.33 on that date as calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718.

 

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(3)

For each non-employee director, the aggregate number of RSUs held as of December 31, 2020 is as follows: Dr. Leonard Tow, 25,133 units; Mr. David E. Van Zandt, 15,339 units; Mr. Carl E. Vogel, 18,829 units; Mr. William J. Bell, 25,133 units; Mr. James L. Dolan, 25,133 units; Ms. Kristin A. Dolan, 25,133 units; Mr. Patrick F. Dolan, 25,133 units; Mr. Thomas C. Dolan, 25,133 units; Mr. Brian G. Sweeney, 25,133 units; Mr. Vincent Tese, 13,596 units and Ms. Marianne Dolan Weber, 25,133 units.

 

(4)

The Company encourages its directors to attend certain events relating to its business at the Company’s expense to gain a better understanding of the Company’s business and products. The value of these benefits is not included in the table as permitted by SEC rules because the aggregate amount of perquisites did not exceed $10,000 for any director.

 

(5)

Mr. Wright and Mr. Miller resigned from the Board effective July 8, 2020.

 

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PROPOSAL 1 — ELECTION OF DIRECTORS

In 2021, current director Marianne Dolan Weber will not stand for re-election and will retire from the Board, effective as of this year’s annual meeting. The Board has nominated Aidan J. Dolan together with the remaining eleven current directors for election to the Board at this year’s annual meeting. Of the twelve nominees for director, three are to be elected by the Class A stockholders and nine are to be elected by the Class B stockholders. Other than Aidan J. Dolan, all director candidates were elected by the respective Class A and Class B stockholders at the 2020 annual meeting of the Company’s stockholders held on June 11, 2020.

All candidates are hereby nominated for a term to expire at the 2022 annual meeting of the Company’s stockholders.

The Company representatives appointed by the Board (the persons named in the proxy card, or, if applicable, their substitutes) will vote your shares as you instruct. If you sign your proxy card and return it without indicating how you would like to vote your shares, your shares will be voted to elect each of the director nominees below, as applicable based on whether you are a holder of Class A Common Stock or Class B Common Stock.

If a nominee for election as a director by the Class A stockholders becomes unavailable before the election, the Company representatives named in the Class A proxy card would be authorized to vote for a replacement nominee for election as a director by the Class A stockholders if the Board names one. If a Class B director nominee becomes unavailable before the election, the persons named in the Class B proxy card would be authorized to vote for a replacement Class B director nominee if the Board names one.

The Board unanimously recommends that you vote FOR each of the following candidates:

Directors Elected By Class A Common Stockholders

LEONARD TOW

Age: 92

Director since June 2011

Dr. Tow is Chief Executive Officer of New Century Holdings LLC, an outdoor advertising company, since January 2005. Chairman and Chief Executive Officer of Citizens Communications Company from 1990 to September 2004. Dr. Tow previously served as a director of Cablevision until its sale in June 2016 and Citizens Communications Company. Dr. Tow also serves as Chairman of the Tow Foundation, a trustee of the Brooklyn College Foundation, a trustee of Columbia University Mailman School of Public Health, a trustee of WNET.ORG and a member of the board of Lincoln Center Theater.

Key Skills & Qualifications  In light of Dr. Tow’s experience as a founder and chief executive officer of a major cable television company, his experience as the chief executive officer of a private company, as well as the knowledge and experience he has gained and contributions he has made during his tenure as a director of the Company and Cablevision, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class A stockholders, has concluded that he should be reelected to the Board.

 

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DAVID E. VAN ZANDT

Age: 68

Director since June 2015

Mr. Van Zandt is the global general counsel for Artal Group S.A., a European-based family controlled and funded private equity firm, and The Invus Group, LLC, a U.S.-based worldwide family controlled and funded private equity firm since April 16, 2020, and was previously special general counsel and adviser for Artal Group S.A. and The Invus Group, LLC. From 2011 through April 16, 2020, Mr. Van Zandt was also the President of The New School, and from 1995 through 2010, he served as the Dean of Northwestern University School of Law. Mr. Van Zandt joined the faculty of Northwestern University School of Law in 1985. After graduating from law school, Mr. Van Zandt clerked for Judge Pierre N. Leval, U.S. District Court for the Southern District of New York (now on the U.S. Court of Appeals for the Second Circuit), and for Harry Blackmun, Associate Justice of the Supreme Court of the United States, and then joined the law firm, Davis Polk & Wardwell LLP. Mr. Van Zandt is an active member of the Council on Foreign Relations and is on the education advisory board for The Vistria Group. Mr. Van Zandt serves as a director of Action Against Hunger.

Key Skills & Qualifications  In light of Mr. Van Zandt’s significant and valuable leadership and management experience as the President of The New School and as the Dean of Northwestern University School of Law and the extensive experience he has gained in strategic planning, risk management and governance by serving in those roles, as well as the knowledge and experience he has gained and contributions he has made during his tenure as a director of the Company, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class A stockholders, has concluded that he should be elected to the Board.

CARL E. VOGEL

Age: 63

Director since June 2013

Mr. Vogel is a private investor and an industry advisor for KKR & Co Inc., a leading global investment firm. Mr. Vogel is also a member of the board of directors of Dish Network Corporation, a satellite television provider, and a senior advisor to its Chairman. He served as President of Dish Network Corporation from September 2006 until February 2008 and served as its Vice Chairman from June 2005 until March 2009. From October 2007 until March 2009, Mr. Vogel served as the Vice Chairman of the board of directors of, and as a Senior Advisor to, EchoStar Communications Corporation. From 2001 until 2005, Mr. Vogel served as the President and Chief Executive Officer of Charter Communications, Inc., a cable television and broadband services provider. Prior to joining Charter, Mr. Vogel worked as an executive officer in various capacities for companies affiliated with Liberty Media. Mr. Vogel is the chairman of Progress Acquisition Corp., a blank check company. Mr. Vogel is a member of the board of directors of Shaw Communications, Inc., Universal Electronics, Inc. and Sirius XM Holdings Inc. On April 30, 2021, Mr. Vogel left the board of directors of Dish Network Corporation. Mr. Vogel also served as a director of Ascent Media Corporation, Inc. during the last five years.

Key Skills & Qualifications  In light of Mr. Vogel’s extensive knowledge of the media industry acquired through his high level executive roles at DISH Network Corporation and Charter Communications Inc., his accounting experience acquired through his work as a certified public accountant and his role as a chief executive and senior finance executive of public companies, as well as the knowledge and experience he has gained and contributions he has made during his tenure as a director of the Company, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class A stockholders, has concluded that he should be reelected to the Board.

 

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Directors Elected By Class B Common Stockholders

WILLIAM J. BELL

Age: 81

Director since June 2011

Mr. Bell was a Consultant to Cablevision from 2005 to 2014 and held various positions at Cablevision and its predecessor from 1979 to 2004, including serving as its Vice Chairman and Chief Financial Officer until 2004. He serves as a director of MSG Networks. Mr. Bell also serves as the Treasurer and a director of the Lustgarten Foundation.

Key Skills & Qualifications  In light of Mr. Bell’s experience in various positions with Cablevision since 1979, including as its former Vice Chairman and Chief Financial Officer, as well as the knowledge and experience he has gained and contributions he has made during his tenure as a director of the Company, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class B stockholders, has concluded that he should be reelected to the Board.

AIDAN J. DOLAN

Age: 29

Mr. Dolan is a graduate of New York University and has earned a certification in entrepreneurship at the Wharton School of Business. Mr. Dolan has been involved with various entrepreneurial endeavors, including managing and performing in Upright Man, a New York-based band, since 2015 and launching an apparel line founded in May 2019. Aidan J. Dolan is the son of James L. Dolan, the step-son of Kristin A. Dolan, the grandson of Charles F. Dolan and the nephew of Thomas C. Dolan, Patrick Dolan and Brian G. Sweeney.

Key Skills & Qualifications  In light of his familiarity with the Company’s business and being a member of the third generation of Cablevision’s founding family and experience as a director of MSG Networks Inc., our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class B stockholders, has concluded that Aidan J. Dolan should be elected to serve as a director of the Company.

CHARLES F. DOLAN

Age: 94

Director since March 2011

Mr. Charles F. Dolan is Chairman Emeritus of the Company since September 2020. Mr. Dolan served as Executive Chairman of the Company from June 2011 until September 2020. He served as the Chairman of Cablevision from 1985 until its sale in June 2016. He was Chief Executive Officer of Cablevision from 1985 to October 1995. Mr. Dolan founded and acted as the General Partner of Cablevision’s predecessor from 1973 to 1985 and established Manhattan Cable Television in 1961 and Home Box Office in 1971. He serves as a director of MSG Networks, Madison Square Garden Sports Corp., formerly known as The Madison Square Garden Company (“MSG Sports”) and Madison Square Garden Entertainment Corp. (“MSG Entertainment”), and previously served as a director of Cablevision. Mr. Dolan is the father of James L. Dolan, Patrick F. Dolan and Thomas C. Dolan, the father-in-law of Kristin A. Dolan and Brian G. Sweeney and the grandfather of Aidan J. Dolan.

Key Skills & Qualifications  In light of Mr. Dolan’s experience as founder of Cablevision, his previous service as Chairman and Chief Executive Officer of Cablevision and its predecessors, as well as the knowledge and experience he has gained and contributions he has made during his tenure as a director of the Company, MSG Networks, MSG Sports, MSG Entertainment and Cablevision, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class B stockholders, has concluded that he should be reelected to the Board.

 

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JAMES L. DOLAN

Age: 65

Director since March 2011

Mr. James L. Dolan is Non-Executive Chairman since September 2020. He is also Executive Chairman of MSG Networks since July 2009. He is also Executive Chairman of MSG Sports since October 2015 and was the Chief Executive Officer of MSG Sports from November 2017 until the effective time of the spinoff of MSG Entertainment from MSG Sports, which occurred on April 17, 2020. Mr. Dolan is the Executive Chairman and Chief Executive Officer of MSG Entertainment since November 2019. Mr. Dolan was the President and Chief Executive Officer of MSG Networks from March 15, 2015 to July 15, 2015. Mr. Dolan was Chief Executive Officer of Cablevision from October 1995 until its sale in June 2016. He was President of Cablevision from June 1998 to April 2014, Chief Executive Officer of Rainbow Media Holdings, Inc. from September 1992 to October 1995, and Vice President of Cablevision from 1987 to September 1992. He serves as a director of MSG Networks, MSG Sports and MSG Entertainment. Mr. Dolan previously was a director of Cablevision and Live Nation Entertainment, Inc. Mr. Dolan is the son of Charles F. Dolan, the spouse of Kristin A. Dolan, the father of Aidan J. Dolan, the brother of Patrick F. Dolan and Thomas C. Dolan and the brother-in-law of Brian G. Sweeney.

Key Skills & Qualifications  In light of Mr. Dolan’s experience in various positions with Cablevision since 1979, including as its Chief Executive Officer from 1995 until its sale in June 2016 and his experience as the Executive Chairman of MSG Networks, Inc. since 2009, MSG Sports since 2015 and MSG Entertainment since 2019, as well as the knowledge and experience he has gained and contributions he has made during his tenure as a director of the Company, MSG Networks, MSG Sports, MSG Entertainment and Cablevision, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class B stockholders, has concluded that he should be reelected to the Board.

KRISTIN A. DOLAN

Age: 55

Director since June 2011

Ms. Kristin A. Dolan is the founder and has been the Chief Executive Officer of 605, LLC, an audience measurement and data analytics company in the media and entertainment industries, since its inception in November 2016. She previously served as the Chief Operating Officer of Cablevision from April 2014 until its sale in June 2016. She was President of Optimum Services for Cablevision from April 2013 to April 2014, Senior Executive Vice President of Product Management and Marketing of Cablevision from November 2011 to April 2013 and Senior Vice President of Cablevision from 2003 to 2011. She serves as a director of MSG Sports, MSG Entertainment, MSG Networks, Revlon, Inc. and The Wendy’s Company and previously served as a director of Cablevision. Ms. Dolan is the daughter-in-law of Charles F. Dolan, the spouse of James L. Dolan, the step-mother of Aidan J. Dolan and the sister-in-law of Patrick F. Dolan, Thomas C. Dolan and Brian G. Sweeney.

Key Skills & Qualifications  In light of Ms. Dolan’s experience in various positions with Cablevision since 1990, as well as the knowledge and experience she has gained and contributions she has made during her tenure as a director of the Company, MSG Networks, MSG Sports, MSG Entertainment and Cablevision, Revlon, Inc. and The Wendy’s Company, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class B stockholders, has concluded that she should be reelected to the Board.

 

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PATRICK F. DOLAN

Age: 69

Director since June 2011

Mr. Patrick F. Dolan was Senior Network Advisor of News 12 Networks from April 2018 to October 2018. News 12 Networks is a subsidiary of Altice N.V. He was the President of News 12 Networks from February 2002 to April 2018 and Vice President from September 1995 to February 2002. He is a majority owner of Newsday Media Group since July 2016. Mr. Dolan previously served as a director of Cablevision. Mr. Dolan is the son of Charles F. Dolan, the brother of James L. Dolan and Thomas C. Dolan, the uncle of Aidan J. Dolan and the brother-in-law of Kristin A. Dolan and Brian G. Sweeney.

Key Skills & Qualifications  In light of Mr. Dolan’s experience in his position with News 12 Networks and in various previous positions with Cablevision, as well as the knowledge and experience he has gained and contributions he has made during his tenure as a director of the Company and Cablevision, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class B stockholders, has concluded that he should be reelected to the Board.

THOMAS C. DOLAN

Age: 68

Director since June 2011

Mr. Thomas C. Dolan was Executive Vice President-Strategy and Development, Office of the Chairman of Cablevision from September 2008 until its sale in June 2016. He was Chief Executive Officer of Rainbow Media Corp. from April 2004 to April 2005 and Executive Vice President and Chief Information Officer of Cablevision from October 2001 until April 2005. He serves as a director of MSG Networks, MSG Sports and MSG Entertainment and previously served as a director of Cablevision. Mr. Dolan is the son of Charles F. Dolan, the brother of James L. Dolan and Patrick F. Dolan, the uncle of Aidan J. Dolan and the brother-in-law of Kristin A. Dolan and Brian G. Sweeney.

Key Skills & Qualifications  In light of Mr. Dolan’s experience in various positions with Cablevision since 1987, as well as the knowledge and experience he has gained and contributions he has made during his tenure as a director of the Company, MSG Networks, MSG Sports, MSG Entertainment and Cablevision, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class B stockholders, has concluded that he should be reelected to the Board.

BRIAN G. SWEENEY

Age: 56

Director since June 2011

Mr. Brian G. Sweeney served as the President of Cablevision from April 2014 and Chief Financial Officer of Cablevision from March 2015 until its sale in June 2016. Previously, Mr. Sweeney served as the Senior Executive Vice President, Strategy and Chief of Staff of Cablevision from January 2013 to April 2014, Senior Vice President — Strategic Software Solutions of Cablevision from June 2012 to January 2013 and Senior Vice President — eMedia of Cablevision from January 2000 to December 2012. He serves as a director of MSG Networks, MSG Sports and MSG Entertainment and previously served as a director of Cablevision. Mr. Sweeney is the son-in-law of Charles F. Dolan and the brother-in-law of James L. Dolan, Kristin A. Dolan, Patrick F. Dolan and Thomas C. Dolan and the uncle of Aidan J. Dolan.

Key Skills & Qualifications  In light of Mr. Sweeney’s experience in various positions with Cablevision since 1993, as well as the knowledge and experience he has gained and contributions he has made during his tenure as a director of the Company, MSG Networks, MSG Sports, MSG Entertainment and Cablevision, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class B stockholders, has concluded that he should be reelected to the Board.

 

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VINCENT TESE

Age: 78

Director since June 2016

Mr. Tese has been Chairman of ICE Clear Credit LLC since 2013. Mr. Tese was the Chairman of FCB Financial Holdings, Inc. (formerly known as Bond Street Holdings, LLC) from November 2009 to January 2019 and the Executive Chairman of FCB Financing Holdings, Inc. and its subsidiary, Florida Community Bank from January 2010 to January 2019. Mr. Tese served as Chairman and Chief Executive Officer of the New York State Urban Development Corporation from 1985 to 1987 and as Director of Economic Development for New York State from 1987 to December 1994. He is a director of MSG Sports, MSG Entertainment and Intercontinental Exchange, Inc. He also serves as a trustee of New York Presbyterian Hospital and New York University School of Law. Mr. Tese previously was a director of Gabelli Asset Management, National Wireless Holdings, Inc., The Bear Stearns Companies, Inc., Cablevision, MSG Networks and Mack-Cali Realty Corporation.

Key Skills & Qualifications  In light of his experience as the chief executive officer of the New York State Urban Development Corporation, his other governmental service, his experience as the executive chairman of Florida Community Bank, as well as the knowledge and experience he has gained and contributions he has made during his tenure as a director of the Company, MSG Sports and Cablevision, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class B stockholders, has concluded that he should be elected to the Board.

 

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PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee, comprised of independent members of the Board, has appointed KPMG LLP (“KPMG”) as our independent registered public accounting firm (the “independent auditors”) with respect to our operations for 2021. KPMG will audit our financial statements, including our internal control over financial reporting, for 2021. Representatives of KPMG will participate in the annual meeting to answer appropriate questions and to make a statement if they desire.

We are asking our stockholders to ratify the selection of KPMG as our independent registered public accounting firm. Although ratification is not required by our organizational documents, the Board is submitting the selection of KPMG to our stockholders for ratification because we believe it is a matter of good corporate practice. In the event that our stockholders fail to ratify the selection, it will be considered a recommendation to the Board of Directors and the Audit Committee to consider the selection of a different firm. Even if the selection is ratified, the Audit Committee may in its discretion select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders. Approval of this proposal requires the favorable vote of the majority of the votes cast by the holders of Class A Common Stock and Class B Common Stock, voting together as a single class. In accordance with our Amended and Restated Certificate of Incorporation, holders of Class A Common Stock will have one vote per share and holders of Class B Common Stock will have ten votes per share.

The Board unanimously recommends that you vote FOR this proposal.

Fees Paid to Independent Registered Public Accounting Firm

The following table provides information about fees for services rendered by KPMG, our independent registered public accounting firm, in 2020 and 2019:

 

              2020                      2019          

Audit fees (1)

  

 

$3,637,000

 

  

 

$3,946,398

 

Audit-related fees (2)

  

 

$   375,000

 

  

 

$1,115,297

 

Tax fees (3)

  

 

$   122,000

 

  

 

$   386,507

 

All other fees (4)

  

 

$     10,000

 

  

 

$     91,384

 

 

 

(1)

Audit fees billed to and incurred by the Company consist of (i) services for work arising from the Company’s financial statement audit, including the integrated audit of internal control over financial reporting, (ii) statutory and separate Company audits of the financial statements of certain Company subsidiaries and (iii) reviews of the Company’s unaudited interim consolidated financial statements for quarterly periods.

 

(2)

Audit-related fees billed to the Company consisted principally of services relating to due diligence in connection with acquisitions and employee benefit plan audits.

 

(3)

Tax fees billed to the Company consisted of fees for advisory services relating to state, federal and foreign tax matters and compliance services.

 

(4)

All other fees billed to the Company consisted of contract compliance and other permitted advisory services.

The Audit Committee’s pre-approval policy requires that the Audit Committee pre-approve audit and non-audit services performed by the independent registered public accounting firm. The Audit Committee may delegate its pre-approval authority to the Chairman of the Audit Committee provided that any such services are subsequently ratified by the entire Audit Committee. All of the services for which fees were disclosed under “Audit fees,” “Audit-related fees,” and “Tax fees” and “All other fees” in the table above were pre-approved under the Audit Committee’s pre-approval policy.

 

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PROPOSAL 3 — ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION

As required by Regulation 14A of the Exchange Act, we are seeking stockholder approval, on an advisory basis, of the compensation of our Named Executive Officers as disclosed under the “Executive Compensation Tables” section of this proxy statement.

The Company’s stockholders previously approved, in an advisory vote, holding an advisory vote to approve the compensation of our Named Executive Officers once every three years. After considering feedback received from stockholders through our ongoing stockholder engagement, however, the Company has determined to increase the frequency of this vote by holding an advisory vote to approve the compensation of our Named Executive Officers this year and currently expects to conduct the vote on a yearly basis going forward. Accordingly, the next advisory vote to approve the compensation of our Named Executive Officers is scheduled for our 2022 annual meeting.

The Company values the opinions of its stockholders and, consistent with our record of stockholder engagement, will consider the outcome of the vote when making future compensation decisions. In considering your vote, we invite you to review the Company’s compensation philosophy and program under “Compensation Discussion and Analysis.” As described in the Compensation Discussion and Analysis, we believe that the Company’s executive compensation programs effectively ties a significant portion of compensation to the Company’s performance and provides a competitive level of compensation needed to recruit, retain and motivate talented executives critical to the Company’s long-term success.

We are asking our stockholders to vote “FOR” the adoption of the following resolution:

RESOLVED, that the stockholders of AMC Networks Inc. (“AMC Networks”) approve, on an advisory basis, the compensation of AMC Networks’ Named Executive Officers, as disclosed in AMC Networks’ Proxy Statement for the 2021 Annual Meeting of Stockholders pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narratives under the heading “Executive Compensation.”

Our Board and Compensation Committee value the opinions of all our stockholders and will consider the outcome of this vote when making future compensation decisions for our Named Executive Officers.

Approval of this proposal requires the favorable vote of a majority of the votes cast by the holders of Class A Common Stock and Class B Common Stock, voting together as a single class. In accordance, with our Amended and Restated Certificate of Incorporation, holders of Class A Common Stock will have one vote per share and the holders of Class B Common Stock will have ten votes per share.

The Board unanimously recommends that you vote FOR this proposal.

 

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STOCKHOLDER PROPOSALS

PROPOSAL 4 — PROPOSAL REGARDING VOTING STANDARDS FOR DIRECTOR ELECTIONS    

In accordance with the rules of the SEC, we have set forth below a stockholder proposal, along with a supporting statement, that was submitted to the Company by Kenneth Steiner, a stockholder of the Company. Other than formatting changes, we are reprinting the stockholder proposal and accompanying supporting statement as they were submitted to the Company. The stockholder proposal and supporting statement contain assertions about the Company and other statements that we believe to be incorrect. We have not attempted to refute all of these inaccuracies and take no responsibility for the content of the stockholder proposal or supporting statement. The address and, to our knowledge, stock ownership of the stockholder proponent will be provided to any stockholder upon written request addressed to AMC Networks Inc., 11 Penn Plaza, New York, NY 10001; Attention: Corporate Secretary.

The stockholder proposal is required to be voted on at our 2021 annual meeting only if the proponent of the proposal, or a representative of the proponent who is qualified under Delaware law, participates in the 2021 annual meeting and presents the proposal for a vote. The stockholder proponent has advised the Company that the proponent or its qualified representative intends to present the proposal for a vote at the 2021 annual meeting.

Approval of this proposal requires the favorable vote of the majority of the votes cast by the holders of Class A Common Stock and Class B Common Stock, voting together as a single class. In accordance with our Amended and Restated Certificate of Incorporation, holders of Class A Common Stock will have one vote per share and holders of Class B Common Stock will have ten votes per share.

The Board unanimously recommends that you vote AGAINST this proposal for the reasons set forth below under “Company Statement in Opposition to Proposal 4.”

* * *

Proposal 4 — Directors to be Elected by Majority Vote

Resolved: Shareholders request that our Board of Directors take the steps necessary as soon as possible to amend our Company’s articles of incorporation and/or bylaws to provide that director nominees shall be elected by the affirmative vote of the majority of votes cast at an annual meeting of shareholders, with a plurality vote standard retained for contested director elections, that is, when the number of director nominees exceeds the number of board seats.

Proponent’s Supporting Statement

A director who receives less than such a majority vote could be asked to resign from the board immediately as there may be no need to replace the director promptly. If such a director has key experience the director can transition to work as a consultant.

In order to provide shareholders a meaningful role in director elections, our Company’s current director election standard should be changed from a plurality vote standard to a majority vote standard. The majority vote standard is the most appropriate voting standard for director elections where only board nominated candidates are on the ballot.

This could lead to improved performance by individual directors and the entire board. Under our Company’s current voting system, a director can be elected with only his or her own vote. In other words a director can be elected if all other shareholders oppose the director.

 

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More than 77% of the companies in the S&P 500 have already adopted majority voting for uncontested elections. Our company has an opportunity to join the growing list of companies that have already adopted this standard.

A majority vote standard might give Carl Vogel, Chair of the Audit Committee, an incentive to do better than get rejected by 34% of the vote in 2020.

Now is a good time for this reform since our stock has fallen from $85 in 2015.

Also in AMC Networks Inc. (April 23, 2019) management would not even allow AMCX shareholders to cast an advisory vote in 2019 for a one-share/one-vote structure for our company.

Please see the AMC Networks Inc. (April 23, 2019) no action request to the Securities and Exchange Commission of 1422 pages: https://www.sec.gov/divisions/corpfin/cf-noaction/14a-8/2019/steineramc042319-14a8.pdf.

Then do a Command-Find for “We collectively hold” to see the one-page of adamant determination of management to not allow a one-share/one-vote structure for our company in spite of the numerous advantages of management accountability in a one-share/one-vote company.

In spite of the cost and nonsense of outside attorneys Sullivan & Cromwell submitting 1422-pages in response to a one-page submission by a shareholder, management had the gall to put this sentence in the 2020 proxy, “We are committed to ensuring that our Board is accountable to, and acts in the best interests of, all our stockholders, notwithstanding our status as a controlled company.”

Please vote yes for one small step toward management accountability:

Directors to be Elected by Majority Vote — Proposal 4

* * *

Company Statement in Opposition to Proposal 4

The Board opposes the stockholder proposal because it is not in the long-term interests of the Company or its stockholders. To the contrary, the Board believes that our current method of plurality voting, as set forth in our Amended By-Laws, continues to be in the best interests of the Company and its stockholders and that our commitment to sound corporate governance provides stockholders the opportunity to have their interests represented in the boardroom.

We have implemented a number of strong corporate governance practices and policies to promote independent leadership in the boardroom and the protection of stockholder rights. Stockholders of the Company elect directors annually, with directors serving one-year terms. When selecting director nominees, the Board uses robust criteria, including consideration of diversity of perspectives, backgrounds and experiences relevant to the Company’s strategic priorities and ability to serve the interests of both Class A and Class B stockholders. Our Audit Committee and Compensation Committee are comprised entirely of independent directors, and the Board holds executive sessions with only independent directors at least twice a year. Our independent directors are available to communicate with stockholders as appropriate. In addition, the Board conducts self-evaluations at least annually and considers feedback from the Company’s engagement with our stockholders regarding our performance and strategy, Board and corporate governance practices, our executive compensation program and environmental and social matters. If dissatisfied with director nominees, Class A and Class B stockholders are able to withhold their vote or, under our Amended By-Laws, submit nominees for election as directors in connection with the next year’s annual meeting. Overall, the Board believes that these practices and policies ensure that the Company’s directors are highly-qualified and have a broad range of knowledge, viewpoints and experiences.

 

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Under the Delaware General Corporation Law, plurality, rather than majority, voting is the default standard for the director elections. Plurality voting protects the Company from “failed elections”, which are elections in which a director is not chosen, resulting in a vacancy on the board. The Board believes that the current plurality voting standard ensures that we avoid such failed elections and any resulting uncertainty or risk to our director election process or corporate governance policies. Adopting a majority voting standard could also have unforeseen consequences, such as an inability to comply with NASDAQ listing requirements or difficulty attracting a broad pool of director nominees to serve on the Board. The Board believes that our current voting procedures for electing directors to the Board, as opposed to a mandated majority voting standard, provide the Board with the flexibility to appropriately respond to stockholders’ views without the risk of potential corporate governance complications arising from failed elections.

The Board unanimously recommends that you vote AGAINST this proposal.

 

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PROPOSAL 5 — PROPOSAL REGARDING A POLICY ON OUR DUAL CLASS STRUCTURE

In accordance with the rules of the SEC, we have set forth below a stockholder proposal, along with a supporting statement, that was submitted to the Company by John Chevedden, a stockholder of the Company. Other than formatting changes, we are reprinting the stockholder proposal and accompanying supporting statement as they were submitted to the Company. The stockholder proposal and supporting statement contain assertions about the Company and other statements that we believe to be incorrect. We have not attempted to refute all of these inaccuracies and take no responsibility for the content of the stockholder proposal or supporting statement. The address and, to our knowledge, stock ownership of the stockholder proponent will be provided to any stockholder upon written request addressed to AMC Networks Inc., 11 Penn Plaza, New York, NY 10001; Attention: Corporate Secretary.

The stockholder proposal is required to be voted on at our 2021 annual meeting only if the proponent of the proposal, or a representative of the proponent who is qualified under Delaware law, participates in the 2021 annual meeting and presents the proposal for a vote. The stockholder proponent has advised the Company that the proponent or its qualified representative intends to present the proposal for a vote at the 2021 annual meeting.

Approval of this proposal requires the favorable vote of the majority of the votes cast by the holders of Class A Common Stock and Class B Common Stock, voting together as a single class. In accordance with our Amended and Restated Certificate of Incorporation, holders of Class A Common Stock will have one vote per share and holders of Class B Common Stock will have ten votes per share.

The Board unanimously recommends that you vote AGAINST this proposal for the reasons set forth below under “Company Statement in Opposition to Proposal 5.”

* * *

Proposal 5 — Proposal Regarding a Policy on our Dual Class Structure

Whereas, dual-class stocks tend to create an inferior class of shareholders and hand over power to a privileged few, who are then allowed to pass the financial risk onto others;

Whereas, with few constraints placed upon them, managers holding super-class stock can spin out of control;

Whereas, families and senior managers can entrench themselves into the operations of the Company, regardless of their abilities and performance;

Whereas, dual-class structures may allow management to make bad decisions with few consequences;

Therefore resolved: Shareholders request that our Board of Directors adopt a policy to support the owners of Class B stock by working to improve the corporate governance of our company in the interest of the long-term viability of our company and by working to change their opposition to a one-share/one-vote corporate structure as stated in the below letter signed by members of the insider Dolan family.

The Board of Directors

AMC Networks Inc.

11 Penn Plaza

New York, NY 1001

January 28, 2019

 

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Re: Statement of Position Regarding Shareholder Proposal Submitted by Kenneth Steiner for Inclusion in AMC’s 2019 Proxy Statement

We collectively hold the voting power of 100% of the Class B common stock (“Class B Common Stock”) of AMC Networks Inc., a Delaware corporation (“AMC”). Solely in our capacities as holders of such voting power, we confirm that we will not support the shareholder proposal and related statement (the “Proposal”) submitted by MR. Kenneth Steiner dated November 21, 2018, proposing that the board of directors of AMC (the “Board”) “take steps to ensure that all of AMC’s outstanding stock has an equal one-vote per share in each voting situation” because such Proposal would adversely and materially impact the property and shareholder rights of the holders of Class B Common Stock. We further affirm that we will (i) respond in the negative to any encouragement by the Board, or any attempt by the Board to engage in any discussion or negotiation with us, to relinquish any of the preexisting rights of the Class B Common Stock, (ii) not engage in any discussions or negotiations regarding any proposed amendment to AMC’s amended and restated certificate of incorporation that gives effect to the Proposal or any similar proposal and (iii) vote against any such proposed amendment to AMC’s amended and restated certificate of incorporation to limit the voting rights of the Class B Common Stock. The foregoing affirmation also applies to any shareholder proposal submitted by a shareholder proponent in the future that concerns a similar subject matter such as that contained in the Proposal.

If any of us determine to change our position with respect to the foregoing issues, we will so advise the Board.

Please Vote Yes:

Proposal Regarding a Policy on our Dual Class Structure — Proposal 5

* * *

Company Statement in Opposition to Proposal 5

The Company opposes the stockholder proposal because it is not in the best interests of the Company or our stockholders. To the contrary, our Board believes that the capital structure set forth in our Amended and Restated Certificate of Incorporation continues to be in the best interests of the Company and our stockholders.

Our dual-class voting structure has existed since we became a public company in June 2011 following the spinoff of the Company by Cablevision. Cablevision in turn had a similar dual-class structure in place since it became a public company in 1986. We believe that our dual-class capital structure contributes to our stability and allows our Board and senior management to focus on the Company’s long-term objectives and success without being compromised by short-term pressures. We believe that our structure and the stability it promotes has driven, and will continue to drive, the most value for our stockholders over the long term. Furthermore, every investor who has owned and may in the future purchase shares of our Class A Common Stock is aware of our dual-class structure, which is disclosed in detail in our public filings with the SEC, and the Board believes that our stockholders are attracted to our Class A Common Stock at least in part due to the stability that our dual-class structure provides to the Company.

The Board notes that dual-class capital structures are recognized and valid under applicable federal and corporate law and stock exchange regulations and are not uncommon among public companies. The dual-class voting structure is particularly prevalent among media and technology companies, including for example Comcast, ViacomCBS, Discovery, Facebook and Google.

We are committed to ensuring that our Board is accountable to, and acts in the best interests of, all of our stockholders, notwithstanding our dual-class structure and status as a controlled company. As we describe further in this proxy statement, the Company has implemented a number of strong governance practices and policies to promote independent leadership in the boardroom and the protection of stockholder rights.

 

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Finally, under our Amended and Restated Certificate of Incorporation, no amendment that affects the voting rights of our Class B Common Stock can be effected without the consent of at least 66 2/3% of the Class B Common Stock, voting separately as a class. As noted in the letter from the holders of the voting power of 100% of the Class B Common Stock set forth in the stockholder proposal, such holders are not amenable to any encouragement by the Board, or any attempt by the Board to engage in any discussion or negotiation, regarding any such amendment to the Amended and Restated Certificate of Incorporation. Therefore, the Company is unable to implement the policy underlying the stockholder proposal.

The Board unanimously recommends that you vote AGAINST this proposal.

 

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REPORT OF THE AUDIT COMMITTEE

The Audit Committee assists the Board in its oversight of the Company’s financial reporting, internal controls, and audit functions. Three independent Class A Directors comprise the Audit Committee. The Audit Committee operates under a written charter adopted by the Board. The Board has determined that each member of the Audit Committee has no material relationship with the Company under the Board’s independence standards and each is independent and financially literate under the listing standards of NASDAQ and under the SEC’s standards relating to independence of audit committees. In addition, the Board of Directors has determined that all of our Audit Committee members: Messrs. Van Zandt and Vogel, and Dr. Tow, satisfy the financial expertise requirements of NASDAQ and have the requisite experience to be designated an audit committee financial expert as that term is defined by rules of the SEC. Management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements, the Company’s accounting and financial reporting principles and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations.

The Company’s independent registered public accounting firm, KPMG, is responsible for auditing the Company’s financial statements and internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) and expressing an opinion on the conformity of the consolidated financial statements to U.S. generally accepted accounting principles (“GAAP”) and on the effectiveness of the Company’s internal control over financial reporting.

In the performance of its oversight function, the Audit Committee has reviewed and discussed the audited financial statements and internal control over financial reporting with management and KPMG. The Audit Committee also has discussed with KPMG the matters required to be discussed under the applicable requirements of the PCAOB and the SEC. Finally, the Audit Committee has received the written disclosures from KPMG in accordance with the applicable requirements of the PCAOB regarding KPMG’s independence, and has discussed with KPMG its independence.

As part of its responsibilities for oversight of the risk management process, the Audit Committee has reviewed and discussed the Company’s risk assessment and risk management framework, including discussions of individual risk areas as well as a summary of the overall process.

The Audit Committee has discussed with the Company’s Internal Audit Service Provider and KPMG the overall scope of and plans for their respective audits. The Audit Committee meets with the Internal Audit Service Provider and KPMG in regular and executive sessions (with and without management), to discuss the results of their examinations, the evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting and compliance programs.

The Audit Committee is also responsible for the approval of audit fees, and the Committee reviewed and approved all fees paid to KPMG. These fees are described under “Fees Paid to Independent Registered Public Accounting Firm.” The Audit Committee also considered whether KPMG’s provision of non-audit services to the Company was compatible with the independence of the independent registered public accountants. The Audit Committee has adopted a formal policy for pre-approval of audit-related and non-audit services, which is briefly described under “Fees Paid to Independent Registered Public Accounting Firm.” The Audit Committee concluded that KPMG is independent from the Company and its management.

Based upon the reports, review and discussions described in this report, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC. The Audit Committee has also retained KPMG as the Company’s independent registered public accountants for the fiscal year 2021. The Audit Committee and the Board believe that the continued retention of KPMG to serve as the Company’s independent

 

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registered public accountants is in the best interests of the Company and its stockholders and have recommended that stockholders ratify the appointment of KPMG as the Company’s independent registered public accountants for the fiscal year 2021.

Members of the Audit Committee

Carl E. Vogel (Chair)

Leonard Tow

David E. Van Zandt

Dated: April 21, 2021

 

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COMPENSATION DISCUSSION AND ANALYSIS

AMC Networks’ executive compensation program emphasizes alignment of pay and performance through annual and long-term programs that provide performance-based incentives tied to key financial measures that we believe drive stockholder value and reward sustained achievement of our key financial goals.

This Compensation Discussion and Analysis provides a discussion of our compensation philosophy and 2020 program for the following named executive officers (“NEOs” or “Named Executive Officers”):

 

   

   Charles F. Dolan

  Chairman Emeritus and Former Executive Chairman
 

   Joshua W. Sapan

  President and CEO
 

   Edward A. Carroll

  Chief Operating Officer
 

   James G. Gallagher

  Executive Vice President and General Counsel
 

   Donna Coleman

  Interim Chief Financial Officer
 

   Christian B. Wymbs

  Executive Vice President and Chief Accounting Officer
 

   Sean S. Sullivan

  Former Executive Vice President and Chief Financial Officer

EXECUTIVE SUMMARY

Business Highlights

Our Business

AMC Networks is a global entertainment company known for its groundbreaking and award-winning original content. We own and operate a suite of focused and targeted video entertainment products that are delivered to viewers around the world on an ever-expanding array of platforms. These include: our linear TV networks carried by traditional and virtual multi-channel video programming distributors (MVPDs) and our streaming services, consisting of AMC+ and our targeted streaming services.

We operate several of the most recognized brands in entertainment, creating and presenting high quality content and compelling stories for more than 40 years and, over this time, we have continually enhanced the value of our portfolio. Our content spans multiple genres, including drama, comedy, documentary, reality, anthology, feature film and short form and is well known and well regarded by our key constituents — our viewers, subscribers, distributors and advertisers.

In the United States, our linear programming networks are AMC, WE tv, BBC AMERICA (operated through a joint venture with BBC Studios), IFC and SundanceTV. Our deep and established presence in the entertainment industry and the recognition we have received for our brands through industry awards, critical acclaim and other honors lend us a high degree of credibility within the industry, providing us with strong relationships with top creators and producers as well as increased demand for our owned programming for distribution on third-party platforms. Our TV networks are distributed primarily through MVPDs and are available on every major U.S. distribution platform. Today, through AMC Studios, we own and control a significant portion of the original scripted series that we deliver to viewers on our linear and streaming platforms.

Our ability to produce and own high quality content has also provided us with the opportunity to distribute our content on platforms other than our domestic networks. Our owned content as well as the content that we license is distributed domestically and internationally on multiple platforms, including linear television, company-owned and third-party SVOD services, digital services, home video and syndication.

In 2020, we launched a premium subscription streaming bundle called AMC+ that includes commercial-free access to original programming from across our entertainment networks as well as access to several of the

 

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Company’s targeted streaming services. AMC+ includes some of the best scripted content from AMC, BBC AMERICA, IFC and SundanceTV, including The Walking Dead, Killing Eve, and Better Call Saul as well as all seven seasons of the iconic Mad Men. AMC+ is currently available to customers through MVPDs and virtual MVPDs as well as through Amazon Prime Video Channels, Apple TV Channels and Roku. We also own and operate four targeted streaming services that offer curated content destinations that provide unique viewership experiences for distinct audiences. The four services are: Acorn TV, specializing in world-class mysteries and drama from Britain and beyond; Shudder, serving fans of horror and suspense; Sundance Now, featuring mysteries, prestige drama and true crime; and ALLBLK (previously branded as Urban Movie Channel), the first streaming destination dedicated to Black audiences, featuring the best in Black TV and film.

While we primarily license content for these services, we continue to increasingly invest in producing original programming, which is contributing to strong growth and a stable user base.

Internationally, we deliver programming that reaches subscribers in more than 125 countries and territories around the world. The international division of the Company, AMC Networks International, consists of global brands, including AMC and SundanceTV, in the movie and entertainment programming genres, as well as popular, locally recognized channels in several other programming genres.

AMC Networks also operates IFC Films, a film distribution business that distributes independent narrative and documentary films under the IFC Films and IFC Midnight distribution labels. IFC Films is known for attracting high-profile talent and distributing films that regularly garner critical acclaim and industry honors, including numerous Oscar, Golden Globe, and Cannes Film Festival-award winning titles. IFC Films also operates IFC Films Unlimited, a subscription video on demand streaming channel comprised of theatrically-released and award-winning titles from its distribution labels. It is currently available in North America on Amazon Prime Video Channels and Apple TV Channels.

Solid 2020 Performance Continues to Drive Long-Term Financial Results

For the past several years, the Company has been transforming itself from primarily a domestic linear TV networks business to a more diversified content-centric company. During this transition, the Company has continued to deliver solid financial results. While navigating what was a uniquely challenging and uncertain operating environment in 2020 due to the Covid-19 pandemic, we continued to transform our business as evidenced by the strong growth of our streaming services, which represented a year-over year aggregate subscriber growth of 157%, as well as new digital advertising business.

Key highlights for 2020 include:

 

   

Net revenues of $2.8 billion

 

   

Operating income of $443 million

 

   

Adjusted operating income (AOI)(1) of $767 million

 

   

Cash provided by operating activities of $749 million

 

   

Free cash flow(3) of $686 million

 

 

(1) 

The Company defines AOI, which is a non-GAAP financial measure, as operating income (loss) before depreciation and amortization, cloud computing amortization, share-based compensation expense or benefit, impairment charges (including gains or losses on sales or dispositions of business), restructuring and other related charges and including the Company’s proportionate share of adjusted operating income (loss) from majority-owned equity method investees. Because it is based on operating income (loss), AOI also excludes interest expense (including cash interest expense) and other non-operating income and expense items.

(2) 

For a reconciliation of these non-GAAP figures with the corresponding GAAP figures, please see Annex A.

(3) 

Free cash flow is a non-GAAP financial measure and is defined as net cash provided by operating activities less capital expenditures and cash distributions to non-controlling interests.

 

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Our incentive compensation is largely determined by successful performance against these financial measures and is designed to promote the creation of long-term stockholder value. Our Annual Incentive Program awards include not only these financial measures but also an assessment of each business unit’s achievement of certain strategic objectives.

The Compensation Committee has identified net revenues, adjusted operating income (AOI) and free cash flow as the three key financial measures that promote the creation of long-term stockholder value. Investors and analysts use these measures to compare performance in the industry. In order to create a meaningful link between our performance and our NEOs’ compensation, these three financial measures are utilized in calculating the Company’s incentive compensation. The chart below provides the Company’s performance for these measures in 2018, 2019 and 2020.

 

 

LOGO

The Company continues to focus on our commitment to return value to our stockholders through our Board approved stock repurchase program, which authorizes the Company to repurchase up to $1.5 billion of the Company’s outstanding shares of Class A Common Stock. During 2020, the Company repurchased approximately 14.8 million shares for $353.6 million, including conducting a Dutch Tender Offer resulting in the repurchase of $250.6 million of the Company’s outstanding shares of Class A Common Stock. As of February 26, 2021, the Company has approximately $135.3 million available for future repurchases under our stock repurchase program. Our share repurchases are part of an overall capital allocation strategy overseen by our Board and designed to efficiently balance return of capital to stockholders with investment in our business.

The following are several of our 2020 achievements.

 

   

AMC Networks was a top five destination for original programming in all of cable and was a top 10 destination in all of TV.

 

   

The Company was home to three of the top four dramas on ad-supported cable with The Walking Dead, Better Call Saul and Fear the Walking Dead.

 

   

The Company ended 2020 with more than six million streaming subscribers in aggregate across our AMC+, Acorn TV, Shudder, Sundance Now and ALLBLK streaming services, representing year-over-year aggregate subscriber growth of 157%.

 

   

We launched our new AMC+ bundled streaming offering with Comcast Xfinity, DISH Network, Youtube TV and Sling TV and AT&T’s DIRECTV, as well as on Amazon Prime Video Channels, Apple TV Channels and Roku.

 

   

We renewed eight carriage arrangements with our network distribution partners in the United States and Canada, including three of the top five MVPDs.

 

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We reached agreements with and launched content on leading ad-supported video on demand (AVOD) and free ad-supported streaming (FAST) channels platforms, including PlutoTV, Amazon’s IMDb TV, Sling TV, Samsung TV Plus, Plex and VIZIO SmartCast.

 

   

The Company completed two first-to-market national linear addressable campaigns, a significant and long-awaited step to unleash the potential of addressable advertising on television at scale.

 

   

We operated the Company successfully and in compliance with all COVID-19 protocols including beginning in mid-March 2020, having substantially all of our employees work remotely. We resumed production of multiple shows in the third and fourth quarters of 2020, including The Walking Dead, Fear the Walking Dead, Creepshow and the upcoming Kevin Can F**k Himself, among others.

 

   

The Company successfully managed its liquidity and balance sheet particularly in light of the challenges posed by the COVID-19 pandemic, including successfully conducting a Modified Dutch Auction Tender Offer resulting in a repurchase of approximately 10.8 million shares of the Company’s Class A Common Stock at $ 23.20 per share.

 

   

We appointed our first Chief Diversity, Equity and Inclusion Officer who reports to our CEO and is dedicated to helping the Company build a more diverse, equitable and inclusive culture in our workplace and in the stories we tell.

 

   

Awards Recognition — AMC Networks received 18 Primetime Emmy®, three Golden Globe, 8 Critics’ Choice, two Screen Actors Guild (SAG), five Writers Guild of America (WGA) award nominations and won two Emmy® Awards and one Critic’s Choice Award for the following:

 

   

Better Call Saul (Emmy® nomination, Critic’s Choice Award and was named a Top Television Program of the Year by the American Film Institute)

 

   

Killing Eve (Emmy® and Golden Globe Award nominations)

 

   

Seven Worlds, One Planet (Emmy® Award)

 

   

La Llorona (Golden Globe and Critics’ Choice Award nominations and National Board of Review’s Best Foreign Language Film of the Year)

 

   

Brockmire (Critics’ Choice Award nomination)

 

   

Doctor Who: The Runaway (Emmy® nomination)

Strategic Priorities

We have identified the following strategic priorities as part of our ongoing transformation:

Continued Development of High-Quality Original Programming. We intend to continue developing strong original programming across all of our programming TV networks and streaming services to further enhance our brands, strengthen our relationships with our viewers, subscribers, distributors and advertisers, and increase distribution and audience ratings. We intend to seek increased distribution of our national networks to grow distribution and advertising revenues. We believe that our continued investment in original programming will support future growth in distribution and advertising revenue. We also intend to continue to expand the exploitation of our original programming across multiple distribution platforms.

Increased Ownership and Control of Content and Valuable Intellectual Property (IP). We believe that control and ownership of content is important. Through our AMC Studios operation, we intend to increase our control over more of our programming content. We currently control, own or have long-term license agreements covering significant portions of our content across our programming networks, our streaming services, and our independent film distribution business operated by IFC Films. We intend to continue to focus on obtaining the broadest possible control rights (both as to territory and platforms) for our content.

Grow Targeted Streaming Offerings and Brands. We have been focused on creating and growing targeted streaming services for several years. Our targeted streaming strategy is to serve distinct premium

 

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audiences and build loyal and engaged fan communities around each service. As the market for this category evolves, consumers are increasingly complementing their general entertainment subscriptions with our targeted streaming services.

Innovation in Content, Format, Distribution, and New Products. The technological landscape of the distribution of entertainment content has expanded to include other media platforms. We distribute our content across many of these platforms, when it makes business sense to do so, so that our viewers can access our content where, when and how they want it. To that end, our programming networks are allowing many of our distributors to offer our content to subscribers on various platforms permitting subscribers to access programs at their convenience. We also make select content available on streaming services or digital platform providers, such as Netflix, Hulu, and Amazon Prime, electronic-sell-through (EST) and physical (DVD and Blu-ray) formats.

Growth and Innovation in Advertising. We continue to develop popular and high quality original programming that achieves strong viewer engagement across our linear networks and new platforms, increasing the value of our programming to an expanding array of advertising partners. We transact with advertisers across traditional television networks, our own digital platforms and fast-growing third-party platforms where we are reaching new audiences through our own series content and also purpose-built digital originals.

We are industry leaders in embracing new ad-related technologies and applications including programmatic buying, addressable advertising, the use of data and analytical insights to drive our ongoing relationships with advertisers and the vibrant fan communities that have formed around our content.

Increased Global Distribution. We distribute our programming networks around the globe. We first expanded beyond the U.S. market with the launch in Canada of IFC (in 2001) and AMC (in 2006), and in Europe of SundanceTV (in 2010) and AMC (in 2014). One or more of AMC Networks International’s channels are available in more than 125 countries and territories worldwide.

In 2020, the Company’s businesses achieved notable successes, which the Committee uses in assessing each business unit’s achievement of our strategic objectives. The Compensation Committee believes that the efforts and leadership of our senior management team, including our NEOs, have been critical to the Company’s accomplishments.

 

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2020 Key Compensation Decisions

Taking into consideration the Company’s solid overall 2020 operational and financial performance despite the impact of the COVID-19 pandemic and shifts in consumer behavior that are impacting the cable television business, the Compensation Committee made the following determinations for this year:

 

   Topic    Committee Action    Committee Rationale

Annual Incentive

Bonus Pool

  

Approved the 2020 annual incentive bonus payouts at 105.9%

  

To reflect the Company’s performance for 2020, the Compensation Committee approved the payout of the annual incentive bonuses to the NEOs at 105.9% of target, based on the Company’s overall corporate performance, which is calculated based on the weighted average of (i) each business unit’s financial performance against pre-established financial targets and (ii) an assessment of each business unit’s achievement of certain strategic objectives during the year.

 

2018-2020 Performance Restricted Stock Unit Award Payout

  

Certified Company’s achievement against performance objectives and approved payout at 100.1% for Company’s 2018 long-term performance restricted stock unit awards

  

To reflect the Company’s financial performance over the three-year period of 2018 to 2020, the Compensation Committee certified and approved achievement against the Company’s specified targets of average AOI, average net revenues and average free cash flow measures over the three years resulting in an overall payout of these awards at 100.1% of target.

 

Restructuring Long-Term Incentive Awards

  

Beginning with 2020 awards, replaced three-year Performance Stock Unit Awards with three-year Cash Performance Awards

  

Recognizing that the Company and the industry are currently in transition, the Committee decided to replace the performance restricted stock unit award components of its long-term incentive program with a cash performance award (50% of the long-term incentive award, other than for the CEO who receives 60%) to reward the Company’s NEOs and senior employees for the achievement of specific long-term financial goals during this transitional time. The remaining long-term incentive award is fully stock based.

Stockholder Engagement and Our Compensation-Related Stockholder Votes

The Company values feedback from our stockholders and regularly engages with stockholders to keep them informed on the evolving perspectives of the investor community. We engage with our stockholders on various matters, including Company performance and strategy, our Board and corporate governance practices, and our executive compensation program as well as environmental and social matters with a particular focus on diversity in the Company’s programming, workforce and leadership. Specifically, in 2020, we engaged with holders of a majority of our Class A Common Stock on these topics. These stockholder dialogues, focused on governance and compensation matters, are an important component of the Compensation Committee’s review of our executive compensation program.

The Compensation Committee believes that our executive compensation program closely links to our business strategies, aligns pay with performance and reflects competitive practices regarding executive compensation. Management and directors also engaged with our institutional shareholders in meetings and calls regarding our executive compensation program throughout 2020.

 

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Consistent with the results of the advisory vote on the frequency of the stockholder advisory vote on executive compensation held at the 2018 annual meeting of stockholders, the Company had previously determined to conduct an advisory vote on executive compensation, or “Say-on-Pay,” every three years, as permitted under SEC rules. However, in response to stockholder feedback, the Company has decided to increase the frequency of the vote by holding an advisory vote to approve the compensation of our Named Executive Officers this year and currently expects to conduct the vote on an annual basis going forward. See Proposal 3 for this year’s “say-on-pay” proposal.

In the Company’s most recent advisory “say-on-pay” proposal, which was held in 2020, 91% of stockholders (including 60% of the holders of our Class A Common Stock) voted to approve on an advisory basis the Company’s executive compensation.

Compensation Governance Practices

Our executive compensation program is governed by sound pay practices highlighted below that are maintained and reviewed by our Compensation Committee.

 

  ✓  

  Align pay and performance

  ✓  

  Majority of compensation is at risk

  ✓  

  Engage in rigorous target-setting process for incentive metrics

  ✓  

  Prohibit hedging and short sales by all employees

  ✓  

  Discourage pledging of Company stock and require pre-approval of trading by directors and executive officers

  ✓  

  No excise tax gross up provisions

  ✓  

  No dividends or dividend equivalents on unvested equity awards

  ✓  

  Include clawback provisions in our equity awards

  ✓  

  Stockholder feedback incorporated into compensation program reviews

Philosophy and Objectives of Our Executive Compensation Program

The Company is a media and entertainment business comprised of dynamic and powerful brands. In support of our business objectives, the Company places great importance on our ability to attract, retain, motivate and reward experienced executive officers. The Company strives to do so by developing executive compensation policies and programs that are consistent with, explicitly linked to, and supportive of the strategic objectives of growing the Company’s businesses and maximizing stockholder value. The Compensation Committee sets executive compensation, and seeks to offer both short and long-term incentive compensation programs that will provide competitive compensation, drive performance and encourage executive retention, guided by the following principles:

 

   

The majority of compensation for the Company’s executive officers should be at risk and contingent on Company performance;

 

   

Incentive compensation of the Company’s executive officers should be weighted more heavily on long-term rather than short-term accomplishments and results;

 

   

Equity-based compensation should be used when appropriate to align the interests of our executive officers with our stockholders’ interests; and

 

   

The overall executive compensation program should be competitive, equitable and structured so as to ensure the Company’s ability to attract, retain, motivate and reward the talented

 

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executives who are essential to the Company’s continuing success. Total target compensation, rather than individual compensation elements, is the Compensation Committee’s focus in designing the competitive compensation program.

The primary elements of 2020 executive compensation are base salary, an annual cash incentive award and long-term incentive awards in the form of RSUs, which vest ratably over three years, and cash performance awards that cliff vest at the end of three years. We target the elements of our compensation so that at least 70% of total target compensation for our NEOs is performance-based. In this way, a significant portion of the value ultimately realized by the executive depends upon the Company’s performance and can be considered at-risk compensation.

Elements of the Company’s Compensation Program

Our executive compensation program is designed to provide a mix of fixed and variable incentive awards, including short-and long-term incentives:

2020 NEO Total Direct Compensation Program Structure

 

Component

        Pay for Performance Rationale    Performance Period

Base Salary

       

•  Based on level and merit

  

N/A

Annual

Cash

Incentives

       

•  Combination of weighted average of all business units’ operating performance (including revenue, AOI and free cash flow) and an assessment of each business unit’s achievement of certain strategic objectives

 

   One year
       

Long-Term

Incentive

Awards

  

Cash Performance Awards

•  60%: CEO/Chairman

•  50%: Other NEOs

  

•  AOI

•  Net revenue

•  Free cash flow

•  Modifier based on Company’s share of linear subscribers and audience relative to a comparator group

  

 

Three one-year performance periods averaged and subject to modifier tied to three-year performance

  

Restricted Stock Units (RSUs)

•  40%: CEO/Chairman

•  50%: Other NEOs

  

•  Stock Performance

   Vest ratably over three years

 

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2020 CEO Annual Compensation Decision Mix

 

 

 

LOGO

2020 Performance Metrics

A significant percentage of total compensation is allocated to at-risk compensation in accordance with the Compensation Committee’s philosophy as described above. The Compensation Committee reviews historical Company compensation, other information provided by the Compensation Committee’s independent compensation consultant and other factors, such as each executive officer’s experience, performance and length of service, to determine the level and mix of compensation for executive officers, by position and grade level, that the Compensation Committee has deemed appropriate. The allocation between cash and equity compensation and short and long-term compensation is designed to provide a combination of fixed and at-risk compensation that is related to the achievement of the Company’s short-term and long-term objectives.

Generally, the performance metrics for the Company’s incentive compensation have been based on the Company’s net revenues, AOI and free cash flow. The Compensation Committee believes that these are the key measures for evaluating our NEOs’ effectiveness in executing the Company’s strategy as these are the common performance measures used by the Company’s investors and analysts to evaluate the Company’s operating performance. The Compensation Committee believes that successful performance against these measures promotes the creation of long-term stockholder value.

 

   

Net revenue is important to the creation of long-term stockholder value because it is a reflection of management’s ability to grow our top line through growth in distribution, advertising and other revenue.

 

   

AOI is important because it reflects our ability to control costs and generate income through our operations to invest in our current businesses as well as new opportunities.

 

   

Free cash flow reflects our ability to generate cash for our stockholders after we have made the necessary investments in our current operations to ensure they continue to perform.

In connection with the annual incentive award payout, the Committee considers these financial measures for each of our business units as well as an assessment of each business unit’s achievement of certain strategic objectives. The level at which cash performance awards are earned is tied to the Company’s performance measured by these financial measures over three one-year periods.

 

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2020 COMPENSATION DECISIONS

Employment Agreements

We have written employment agreements with each of our NEOs. We enter into employment agreements with our senior executives when the Compensation Committee determines that it is appropriate to attract or retain an executive. As discussed in greater detail below under Executive Compensation Tables, “Employment Agreements,” much of the NEOs’ compensation is determined in accordance with their employment agreements.

On September 15, 2020, the Company entered into an amendment to Mr. Dolan’s employment agreement, effective on the date thereof, providing for Mr. Dolan’s employment as our Chairman Emeritus. In addition, on December 11, 2020, the Company entered into an amended and restated employment agreement with Mr. Sapan, which amended and restated his employment agreement with the Company from 2014. The Company also entered into employment agreements with Mr. Carroll in October 2016, and with Messrs. Sullivan and Gallagher in October 2018. In addition, as a result of the departure of the Company’s Chief Financial Officer, Sean Sullivan, the Company hired and entered into a new employment agreement with Ms. Coleman on October 16, 2020. The employment agreement covered Ms. Coleman’s service as the Company’s Interim Chief Financial Officer through January 15, 2021 with a minimum weekly base salary of $100,000. She also was eligible to participate in our standard benefits programs, on the same basis as similarly situated executives at the Company but was not eligible to participate in any of the Company’s annual or long-term bonus or incentive programs.

The Compensation Committee believes that entering into employment contracts with our senior executives provides management stability and helps ensure that the Company has the continuity to achieve our strategic objectives. The Compensation Committee further recognizes that the entertainment industry standard practice is for executives to have employment agreements. Each of the NEOs has demonstrated strong performance and willingness to take on greater responsibilities as the Company grows and their multi-year agreements are designed to ensure their continued contributions to the Company. For additional details about these employment agreements, please refer to the “Employment Agreements” section which is on pages 56 to 67 of this Proxy Statement.

Base Salaries

Base salaries for our executives have been set at levels that are intended to reflect the competitive marketplace in attracting and retaining quality executives. The Compensation Committee currently reviews the salaries of the executive officers at least annually. The Compensation Committee evaluates each executive’s performance and experience and based on this evaluation and in accordance with the terms of the employment agreements, the Compensation Committee, in its discretion, may increase base salaries for the executive officers over time. Each of the employment agreements of our NEOs contains a minimum base salary level. For information regarding these minimum base salary levels, please see Executive Compensation Tables, “Employment Agreements” below.

For 2020, the Compensation Committee decided to not increase the NEOs’ base salaries except for Mr. Wymbs who received the Company’s 2% merit increase that the Company provided to its employees other than its 2019 NEOs. The annual base salaries paid to the NEOs in 2020 were as follows: Mr. Dolan — $400,000; Mr. Sapan — $2,000,000; Mr. Carroll — $1,734,000; Mr. Gallagher — $800,000, Ms. Coleman- $1,020,0004, Mr. Wymbs— $536,000; and Mr. Sullivan — $900,000. See footnote 1 to Executive Compensation Tables, “Summary Compensation Table” for additional information regarding the 2020 base salaries.

 

4 

Pursuant to Ms. Coleman’s employment agreement, commencing on October 16, 2020, Ms. Coleman received a minimum weekly base salary of $100,000 for her service as the Company’s Interim Chief Financial Officer, which amounted to $1,020,000 for the period of October 15, 2020 through December 31, 2020.

 

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Annual Cash Incentives

Annual cash incentive awards are designed to link executive compensation directly to the Company’s performance and provide incentives and rewards for excellent business performance during the year. All members of management, including the NEOs (other than Ms. Coleman), participate under the Company’s primary annual incentive program (“Annual Incentive Program”).

NEO Annual Incentive Award Target Setting

Each employee who is eligible for an annual cash incentive award is assigned a target annual incentive award equal to a percentage of that employee’s annual base salary. For 2020, target awards were set as a percentage of the base salary earned during 2020.

The target annual cash incentive awards are determined based upon the applicable employee’s position, grade level, responsibilities, and historical and expected future contributions to the Company. In addition, each of the employment agreements of Messrs. Dolan, Sapan, Carroll, Sullivan, Gallagher and Wymbs contains a target annual incentive award level. The Compensation Committee currently reviews the target award levels of the executive officers and going forward intends to do so at least annually. The Compensation Committee evaluates each such executive’s performance and experience, and, based on this evaluation and in accordance with the terms of the employment agreements, the Compensation Committee, in its sole discretion, determines target annual incentive award levels for the executive officers. Target annual incentive awards for NEOs in 2020 (expressed as a percentage of earned base salary), which were unchanged from 2019, were as follows: Mr. Dolan — 200%; Mr. Sapan —200%; Mr. Carroll — 175%; Mr. Gallagher — 100%; Mr. Wymbs—60%; and Mr. Sullivan — 125%. As noted above, Ms. Coleman was not eligible to receive an annual incentive award. For information regarding these target annual incentive award levels, see Executive Compensation Tables, “Employment Agreements,” below.

2020 Annual Incentive Program Awards

The payment of annual incentive awards under the Annual Incentive Program is based upon the satisfaction of one or more performance objectives established by the Compensation Committee based on Company performance and the performance of the employee’s specific business unit. For individuals who hold corporate-wide positions at the Company such as our executive officers, the Annual Incentive Program performance objectives are predominantly based on the weighted average performance of the different business units.

For 2020, under the Annual Incentive Program, these performance objectives include (i) the Company’s overall AOI and free cash flow performance as well as the number of subscribers on to its streaming services; and (ii) an assessment of Company performance against goals, strategies, operating performance and growth initiatives. In addition to Company level metrics, business unit-specific targets include revenue and AOI for each of the following business units: Entertainment Networks (AMC, BBC AMERICA, IFC, Sundance TV), WE tv, IFC Films, AMC Networks International, Affiliate Sales (without AOI), and AMC Networks SVOD. Each business unit also is assessed on its achievement of certain strategic objectives. Taken together, the Company achieved a performance level 105.9% of target in 2020 under the Annual Incentive Program.

The Company’s achievement of 105.9% of target (without discretion) was generally attributable to a combination of factors including, but not limited to, (i) significant outperformance of our streaming services resulting in over six million subscribers representing year-over-year aggregate subscriber growth of 157%, (ii) strong free cash flow generated by all of our business units outperforming all target levels, and (iii) all business units managing revenues and AOI to fall only slightly below target for the year despite all the significant challenges presented by the COVID-19 pandemic. Certain other factors also contributed to the

 

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Company exceeding its performance targets including 1) renewal of eight carriage arrangements with our networks distribution partners in the United States and Canada, including three of the top five MVPDs, 2) launching the AMC+ bundled streaming offering on several MVPD platforms as well as on Amazon, Apple TV and Roku and 3) BBC AMERICA’s outperforming delivery with Killing Eve.

The Company decided to pay the 2020 NEOs under the Annual Incentive Program at 105.9% of target (other than Mr. Wymbs who was paid at 111% of target). However, the Company decided to pay all other eligible employees, including Mr. Wymbs, under the Annual Incentive Program at 111% of target in recognition of the extraordinary work, achievement and adaptability demonstrated by its employees during the pandemic.

2020 Annual Incentive Award Payouts

Based on the performance under the Annual Incentive Program, the 2020 annual incentive awards were paid by the Company to the NEOs as shown in the table below:

 

           
   NEO   Eligible
Earnings
    Target Bonus as
% of Base Salary
    Target Bonus     Earned
Annual Incentive
Program Award
of Target
    Actual
Annual
Incentive Award
 
           

   Charles F. Dolan

    $400,000       200%       $800,000       105.9%       $847,200  
           

   Joshua W. Sapan

    $2,000,000       200%       $4,000,000       105.9%       $4,236,000  
           

   Edward A. Carroll

    $1,734,000       175%       $3,034,500       105.9%       $3,313,674  
           

   James G. Gallagher

    $800,000       100%       $800,000       105.9%       $847,200  
           

   Donna Coleman*

    $0       0       $0       0       $0  
           

   Christian B. Wymbs

    $532,890       60%       $319,734       111%       $354,905  
           

   Sean S. Sullivan*

    $900,000       125%       $1,125,000       0       $0  

 

 

*

Ms. Coleman was not eligible for a bonus under the Company’s Annual Incentive Program. Mr. Sullivan departed the Company on October 15, 2020 and therefore was not entitled to any annual bonus for fiscal year 2020.

Long-term Incentives

Long-term incentives represent a substantial portion of our NEO’s total compensation. For 2020, our long-term incentive program for all executives consisted of two elements: cash performance awards and RSUs. These long-term incentives are awarded to members of management based upon each individual’s grade level. Except for Messrs. Dolan and Sapan, who receive long-term incentive awards comprised of 60% of the value in cash performance awards and 40% of the value in RSUs, these long-term incentive awards granted to the NE$Os are comprised of 50% of the value in cash performance awards and 50% of the value in RSUs.

In March 2020, the Company decided to replace the performance stock unit award component of its long-term incentive program with a cash performance award component in order to minimize shareholder dilution during this transitional time while also providing strong incentives for the NEOs to help the Company achieve specific long-term financial objectives. In addition, because these awards vest in their entirety on the third anniversary of the grant date (i.e., cliff vesting), we believe these awards provide strong incentives for the executives to remain with the Company. We also believe that the restricted stock units component provides the NEOs with an incentive to improve the Company’s stock price performance and indicates direct alignment with stockholders’ interests, as well as the potential for a continuing stake in the long-term success of the Company.

 

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Cash Performance Awards

In 2020, our executive compensation program provided an annual grant of three-year cash performance awards to each executive officer and other members of management to be earned on the basis of performance of the Company relative to pre-established financial goals. The 2020 cash performance awards were awarded under the Company’s 2016 Cash Incentive Plan. Each recipient is eligible to receive a target cash performance award for the three-year vesting period, the amount of which depends on the employee’s grade level and employment agreement, if any. To the extent that the Company’s target performance objectives are achieved and the recipient is continuously employed through the payment date, eligible employees may receive payouts greater than or less than (or none of) their target cash performance award.

Due to ongoing competitive and dynamic challenges in the industry, which have continued to make multi-year performance targets unfeasible and potentially counter-productive, and the Committee’s desire to retain ambitious financial targets, similar to the approach taken with respect to the 2019 PSUs, the Compensation Committee has designed its long-term cash performance awards with three one-year performance periods with the performance conditions for each year set at the beginning of such year (as opposed to a single three-year performance period in which the performance conditions are set at the beginning of that period). By setting performance conditions each year, the Committee can pivot for strategic re-alignment in response to new market entrants, increased competition for talent and similar changes in the industry. Each one year performance period will be subject to achievement of specified targets of AOI, net revenues and free cash flow. These performance targets are intended to measure the Company’s ongoing operating performance and will be subject to various adjustments, including for acquisitions and dispositions and investments in new business initiatives not contemplated at the time the performance objectives are formulated and will exclude all charges for long-term performance-based compensation. The 2020 performance conditions under the awards will also adjust performance for the net impact to the business resulting from the COVID-19 pandemic. The percentage of target earned in each of the three years (which may not exceed 150% of target) will be averaged at the end of the third year and adjusted by a performance modifier based on the Company’s share of linear subscribers and audience among a comparator group measured over the full three-year period. The Company selected linear subscriber and audience share among a comparator group because these measures are directly related to the Company’s heightened focus on content creation and growing the number of linear subscribers. The comparator group for 2020 performance is comprised of Discovery, Scripps, Viacom, A&E and Hallmark Channels, the Company’s direct competitors in the basic cable universe within the content and subscription linear services market. The modifier has the ability to reduce or increase the three-year average performance by up to +/- 10%.

This cash performance award design enables the Company to continue to achieve the intended goals of its long-term incentive plan — alignment with Company performance and retention of key executives — while providing the flexibility to set appropriate annual incentive goals in an increasingly changing media landscape. Further, combining a three-year modifier wrapped around three one-year measures enables the Company to annually set meaningful and challenging business goals while maintaining a long-term focus toward audience development, whose continued growth remains a critical success factor for the Company.

2020 Cash Performance Award Grants. In March 2020, the Compensation Committee granted cash performance awards to the NEOs in the following target amounts:

 

   NEO

  

 

 Cash Performance Awards 

 (at target) 

 

Charles F. Dolan

  

$

900,000

 

Joshua W. Sapan

  

$

  8,400,000

 

Edward A. Carroll

  

$

1,700,000

 

James G. Gallagher

  

$

750,000

 

Donna Coleman

  

 

0

 

Christian B. Wymbs

  

$

300,000

 

Sean S. Sullivan

  

$

1,500,000

 

 

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2020 Cash Performance Awards — Performance Results for the First Performance Year

The 2020 annual performance targets for the 2020 cash performance awards set forth in the table below were derived from the Company’s strategic plan. We believe that our strategic plan, and consequently the 2020 annual performance targets set by the Compensation Committee, reflect desired above-market performance. In determining the threshold levels of performance, the Company’s strategic plans and the degree of difficulty in achieving the targets, including a comparison with analysts’ published projections of our growth as well as the projected growth of some of our competitors, were considered. The portion of the 2020 cash performance awards tied to the first performance year was determined as follows: a threshold performance of 80% of target would result in earning 80% of target and a performance of 115% of target or better would result in earning 115% of target. For purposes of determining the average three-year performance under the award (before the +/- 10% modifier is applied), 0% will be earned in respect of the first performance year for performance below threshold. Performance between threshold and target and between target and maximum will be established by linear interpolation. The Compensation Committee believed that the lowest levels on the sliding scale of the 2020 annual performance metrics for the 2020 cash performance awards would likely be achieved, although there was no assurance this would occur. The Compensation Committee had the authority to amend or waive the 2020 annual performance targets under the 2020 cash performance awards and to make interpretations thereof and adjustments thereto subject to the award agreement.

Performance Results for Year One (2020)

On April 15, 2021, the Compensation Committee determined the Company’s achievement against the 2020 annual performance objectives of AOI, net revenue and free cash flow for the 2020 cash performance awards. The following table shows actual performance with respect to each of the 2020 annual performance objectives relative to the targets established by the Compensation Committee in March 2020 and the resulting percentage earned for 2020 at 102% of target. Such percentage amount will be averaged with the percentage earned in each of 2021 and 2022 at the end of the third year and adjusted by the three-year performance modifier as described above.

 

             
   ($000s)   2020
Target
    Financial
Performance
Range
    Actual
2020
Performance
    Actual
Performance
v. Target
    Weighting     Weighted
Performance
Factor
             
   AOI(1)(2)   $ 864     $ 691 – $  994       $ 790     91%       40%     37%
             
   Net Revenue   $   2,985     $   2,388 – $  3,432       $   2,834     95%       20%     19%
             
   Free Cash Flow(2)(3)   $ 433     $ 347 – $  498       $ 686     158%       40%     63%
   
   Performance Achieved for 2020

 

                  119%
   
   Percentage Earned for 2020 (based on sliding earn-out scale discussed above)

 

          102%

2019 PSUs — Performance Results for the First and Second Performance Years

The 2019 and 2020 annual performance targets for the 2019 PSU awards set forth in the table below were derived from the Company’s strategic plan. We believe that our strategic plan, and consequently the 2019 annual performance targets set by the Compensation Committee, reflect desired above-market performance. In determining the threshold levels of performance, the Company’s strategic plans and the degree of difficulty in achieving the targets, including a comparison with analysts’ published projections of our growth as well as the projected growth of some of our competitors, were considered. The portion of the 2019 PSU awards tied to the first and second performance years was determined as follows: a threshold performance of 80% of target would result in earning 50% of target and a performance of 115% of target or better would result in earning 150% of target. For purposes of determining the average three-year performance under the award (before the +/- 10%

 

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modifier is applied), 0% will be earned in respect of the first performance year for performance below threshold. Performance between threshold and target and between target and maximum will be established by linear interpolation. The Compensation Committee believed that the lowest levels on the sliding scale of the 2019 and 2020 annual performance metrics for the 2019 PSU awards would likely be achieved, although there was no assurance this would occur. The Compensation Committee had the authority to amend or waive the 2019 or 2020 annual performance targets under the 2019 PSU awards and to make interpretations thereof and adjustments thereto subject to the award agreement.

Performance Results for Year One (2019)

On April 15, 2020, the Compensation Committee determined the Company’s achievement against the 2019 annual performance objectives of AOI, net revenue and free cash flow for the 2019 PSUs. The following table shows actual performance with respect to each of the 2019 annual performance objectives relative to the targets established by the Compensation Committee in March 2019 and the resulting percentage earned for 2019 at 116% of target. Such percentage amount will be averaged with the percentage earned in each of 2020 and 2021 at the end of the third year and adjusted by the performance modifier as described above.

 

             
   ($000s)   2019
Target
    Financial
Performance
Range
    Actual
2019
Performance
    Actual
Performance
v. Target
    Weighting     Weighted
Performance
Factor
             
   AOI(1)(2)   $ 929     $ 743 – $  1,068     $ 975     105%       50%     53%
             
   Net Revenue   $   3,079   $   2,463 – $  3,541   $ 3,107     101%       30%     30%
             
   Free Cash Flow(2)(3)   $ 293     $ 234 – $  337     $ 377     129%       20%     26%
   
   Performance Achieved for 2019

 

                  109%
   
   Percentage Earned for 2019 (based on sliding earn-out scale discussed above)

 

          116%

Performance Results for Year Two (2020)

On April 15, 2021, the Compensation Committee determined the Company’s achievement against the 2020 annual performance objectives of AOI, net revenue and free cash flow for the 2020 PSUs. The following table shows actual performance with respect to each of the 2020 annual performance objectives relative to the targets established by the Compensation Committee in March 2020 and the resulting percentage earned for 2020 at 101% of target. Such percentage amount will be averaged with the percentage earned in each of 2019 and 2021 at the end of the third year and adjusted by the performance modifier as discussed above.

 

             
   ($000s)   2020
Target
    Financial
Performance
Range
    Actual
2020
Performance
    Actual
Performance
v. Target
    Weighting     Weighted
Performance
Factor
             
   AOI(1)(2)   $ 864     $ 691 – $  994     $ 790     91%       50%     46%
             
   Net Revenue   $   2,986   $   2,389 – $  3,433   $ 2,834     95%       30%     28%
             
   Free Cash Flow(2)(3)   $ 434     $ 347 – $  499     $ 686     158%       20%     32%
   
   Performance Achieved for 2020

 

                  106%
   
   Percentage Earned for 2020 (based on sliding earn-out scale discussed above)

 

          101%

Restricted Stock Units

Under our executive compensation program, long-term incentive grants of RSUs are made to executive officers and certain other members of management pursuant to the Company’s 2016 Employee Stock Plan. The

 

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2020 RSU awards were granted on March 11, 2020 and vest ratably over a three-year vesting period. The Committee believes that this vesting schedule provides the Company with a more effective recruitment tool, conforms to industry practice and is appropriately balanced by the three-year cliff vesting of the PSUs or cash performance awards, as the case may be.

Mr. Sapan’s RSU award is also subject to the attainment of the performance vesting condition during the three-year period. The performance objective under his 2020 RSU award requires the Company to achieve 80% of Business Unit AOI (relative to 2019) in any of the three fiscal years of 2020, 2021 or 2022. “Business Unit” means the combined AOI of the Company’s operating businesses. This performance metric was met in 2020.

In March 2020, the Compensation Committee granted RSUs to the NEOs in the following amounts:

 

 

   NEO

  

 

RSU Awards

    

 

Grant Date Fair Value* 

 

Charles F. Dolan

  

 

21,827

 

  

 

$     600,000 

 

Joshua W. Sapan

  

 

203,711

 

  

 

$  5,600,000 

 

Edward A. Carroll

  

 

61,841

 

  

 

$  1,700,000 

 

James G. Gallagher

  

 

27,283

 

  

 

$     750,000 

 

Donna Coleman

  

 

0

 

  

 

$                0 

 

Christian B. Wymbs

  

 

10,914

 

  

 

$     300,000 

 

Sean S. Sullivan

  

 

54,566

 

  

 

$  1,500,000 

 

 

 

*

The grant date fair value listed above is calculated in accordance with FASB ASC Topic 718 using a share price of $30 on March 11, 2020 as its grant value. A five-trading day average share price was used to determine the number of shares granted to executive officers.

Additional information regarding RSUs for the NEOs during 2020 is set forth in the Summary Compensation Table and the Grants of Plan-Based Awards table under “Executive Compensation Tables” below. More information regarding other equity grants for the NEOs appears in the Outstanding Equity Awards at December 31, 2020 table under “Executive Compensation Tables” below.

2018 PSU Awards

Achievement of 2018 PSU Award Objectives. In February 2021, the Compensation Committee certified the Company’s achievement against performance objectives of average AOI, average net revenue and average free cash flow for the performance stock unit awards granted in March 2018. In determining the achievement of the performance objectives for the 2018 performance stock unit awards, AOI, net revenue and free cash flow were weighted at 40%, 30%, and 30%, respectively. The following table shows actual performance with respect to each of the performance objectives relative to the ranges established by the Compensation Committee in March 2018 and the resulting performance factor used in calculating the aggregate weighted performance payout of shares at 100.1% of target in March 2020.

 

             
   ($000s)   2018-2020
Target
    Financial
Performance
Range*
    Actual
2018-2020
Performance
    Actual
Performance
v. Target
    Weighting     Weighted
Performance
Factor
             
   AOI(1)(2)   $ 959     $ 767 – $  1,102               $ 914               95.3%       40%       95.2%
             
   Net Revenue   $   3,025   $   2,420 – $  3,479               $ 2,773               91.7%       30%       91.7%
             
   Free Cash Flow(2)(3)   $ 361     $ 289 – $  416               $ 550             152.2%       30%     115.0%
   
   Weighted Performance Payout

 

                  100.1%

 

 

*

These awards provide for a potential payout on a sliding scale such that the actual payment may range from zero (if average AOI, average net revenues and average free cash flow each fail to reach at least 80% of the targets) to 115% (if,

 

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for example, average AOI equals or exceeds 115% of the target, average net revenues equal or exceed 115% of the target, and average free cash flow equals or exceeds 115% of the target).

For the 2018 performance stock unit awards to pay out at 100%, the Company was required to achieve specified targets of average AOI of $959 million, average net revenues of $3,025 million, and average free cash flow of $361 million for years 2018 through 2020 subject to various adjustments including for unanticipated acquisitions and dispositions and investments in new business initiatives and excluding all charges for long-term performance-based compensation. Based upon the Company’s performance, as shown in the table above, the 2018 performance stock unit awards paid out at 100.1% of target in March 2020, which resulted in the following number of shares being issued to each of the NEOs: (i) Mr. Dolan: 17,493; (ii) Mr. Sapan: 163,270; (iii) Mr. Carroll: 33,043; (iv) Mr. Gallagher: 14,579; (v) Mr. Wymbs: 4,666; and (vi) Mr. Sullivan: 0. Ms. Coleman did not hold 2018 PSUs.

 

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COMPENSATION DECISION PROCESS AND COMPENSATION POLICIES

Role of Compensation Committee

The Compensation Committee oversees the design and administration of AMC Networks’ compensation and benefits policies and programs. Among its duties, the Compensation Committee is responsible for (1) establishing our general compensation philosophy and, in consultation with management, overseeing the development and implementation of compensation programs; (2) reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer and the other executive officers of the Company; (3) evaluating the CEO’s and other executive officers’ performance in light of those goals and objectives and determining and approving their compensation levels based upon those evaluations; (4) evaluating the competitiveness of each executive officer’s total compensation package; (5) administering our stockholder approved compensation plans; and (6) overseeing the activities of the committee or committees administering our benefit and retirement plans.

The Compensation Committee is supported in its work by the People and Culture Department and the Committee’s independent executive compensation consultant as described below. Based upon a review of performance and historical compensation, recommendations and information from members of management, and discussions with the compensation consultant, the Compensation Committee determines and approves compensation for the executive officers, which includes making recommendations to the full Board for its approval of compensation for the Company’s executive officers (other than the Executive Chairman and CEO).

The Compensation Committee’s charter, which sets out its duties and responsibilities and addresses other matters, can be found on our website at www.amcnetworks.com.

Role of Independent Compensation Consultant

In accordance with its charter, the Compensation Committee has the authority to engage outside consultants to assist in the performance of its duties and responsibilities. Our Compensation Committee utilizes the services of an independent compensation consultant to assist in determining whether the elements of our executive compensation program are reasonable and consistent with our objectives.

In August 2011, after a full review and selection process, the Compensation Committee engaged Pay Governance LLC (“Pay Governance”) to serve as its independent compensation consultant. Pay Governance reports directly to our Compensation Committee, and, at the request of the Compensation Committee, Pay Governance meets with members of our management from time to time for purposes of gathering information on management proposals and recommendations to be presented to our Compensation Committee.

The following is a description of the services provided by Pay Governance as the Compensation Committee’s consultant:

 

   

Attended all Compensation Committee meetings;

 

   

Provided information, research and analysis pertaining to the executive compensation program for 2020;

 

   

Regularly updated the Compensation Committee on market trends, changing practices and legislation pertaining to compensation;

 

   

Assisted the Compensation Committee in making pay determinations for the Executive Chairman, the President and CEO and the other executive officers;

 

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Advised on the design of the executive compensation program and the competitiveness of individual compensation targets and awards; and

 

   

Provided advice and recommendations that incorporated both market data and Company-specific factors.

During 2020, Pay Governance provided no other services to the Company.

The Compensation Committee believes that Pay Governance’s work did not raise any conflict of interest during 2020. In reaching this conclusion, the Compensation Committee considered the factors set forth in the SEC rules regarding compensation advisor independence. Although such independence rules are not applicable to the Company because it is a controlled company, the Compensation Committee believes that Pay Governance nonetheless satisfies the independence factors provided in such rules.

Role of Management

The Compensation Committee reviews the performance and compensation of the Executive Chairman and the President and CEO and, following discussions with Pay Governance and a review of market competitive data, establishes compensation for each. The management of the Company assists the Compensation Committee and Pay Governance as described above. Within the framework of the compensation programs approved by the Compensation Committee and based on management’s review of market competitive positions, management provides to the Compensation Committee, either directly or through the compensation consultant, management’s recommendations on the compensation for executive officers other than the Executive Chairman and the President and CEO. These recommendations are influenced by the CEO’s assessment of each executive officer’s performance, the performance of the individual’s respective business or function and employee retention considerations. The Compensation Committee reviews management’s recommendations and approves any compensation changes affecting our executive officers, as it determines in its sole discretion.

Risk Considerations

The Compensation Committee reviews the risks and rewards associated with the Company’s compensation programs. The programs are designed with features that the Compensation Committee believes mitigate risk without diminishing the incentive nature of the compensation. We believe or compensation programs encourage and reward prudent business judgment and appropriate risk taking over the short term and the long term.

Management and the Compensation Committee do not believe any of the Company’s compensation programs create risks that are reasonably likely to have a material adverse impact on the Company.

Benchmarking

To ensure we provide compensation comparable to that offered by other leading companies in our industry, we compare the Company’s executive compensation levels against an appropriate peer group of companies tailored for specific NEOs. As part of the Compensation Committee’s review of 2020 compensation, Pay Governance assisted the Compensation Committee in: (1) determining the appropriate peer group to be used for competitive comparisons (the “Corporate Peer Group”); (2) assessing executive compensation in comparison with the Corporate Peer Group and in light of the Company’s performance; and (3) reviewing the Company’s equity and cash-based executive incentive programs, taking into account evolving market trends.

On December 13, 2019, the Compensation Committee reviewed the Corporate Peer Group used in 2019. The Committee found that the seven of the eight companies used for the Corporate Peer Group for the 2019

 

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performance year should remain for the 2020 performance year noting that Scripps Networks interactive Inc. had merged into Discovery Communications Inc. The Committee decided to add Fox Corporation to its 2020 Peer Group as it is both an industry and talent competitor of the Company and its revenue size was now within the current peer range after the sale of its film and certain of its television assets to Disney.    

 

2020 Corporate Peer Group

CBS Corporation*

  

Netflix Inc.

Discovery Communications, Inc.

  

Take-Two Interactive Software Inc.

Fox Corporation

  

Tribune Media Company

Lions Gate Entertainment Corp

  

Viacom Inc.*

 

 

*

Includes the 2019 compensation for each company prior to their merger in December 2019.

The Corporate Peer Group includes companies with significantly larger market capitalizations than the Company because there are not a sufficient number of peers with similar market capitalizations in our industry to develop a broadly representative peer group. Therefore, the Committee determined that market capitalization should only be one of many factors considered when selecting a peer group. Revenues, lines of business and sources and competition for talent are also important and, thus, CBS Corporation and Netflix, Inc. were again included in the Company’s Corporate Peer Group for 2020. The Committee further noted that while Viacom Inc. and CBS Corporation had announced their decision to merge in August 2019, both companies were operating as separate public companies and would be each publicly disclosing their compensation. This Corporate Peer Group differs from that used in the stock performance graph contained in the Annual Report on Form 10-K.

In connection with the review of 2020 compensation, Pay Governance presented to the Compensation Committee a comparison of total compensation and each of its components with the median in each position’s peer group. In its review, the compensation consultant noted that there was limited market information regarding the role and compensation of the Executive Chairman in its peer group. The Compensation Committee further considered that the Company’s Chairman Emeritus and Former Executive Chairman, Mr. Charles F. Dolan, plays a unique role in setting the strategic direction of the Company in addition to his role on the Board. Pay Governance compared Mr. Dolan’s total target compensation to that received by other executive chairmen of other similar sized companies who were significant stockholders of their companies and found that Mr. Dolan’s total target compensation was below the 50th percentile of this group.

In connection with its review of 2020 compensation, the Compensation Committee set a general guideline for total target compensation, over time, at a range from the median to the 75th percentile of the applicable peer group, reserving for the Compensation Committee the flexibility to recognize differences by individual. The Company competes for talented executives in a highly-compensated industry. The Compensation Committee believes that this range is appropriate in light of the competitive nature of the Company’s businesses as well as the Company’s and its management’s performance. The Compensation Committee believes that these guidelines for total target compensation provide a useful point of reference, along with the other factors described above, in administering the Company’s executive compensation program. For 2020, after considering individual performance and scope of responsibilities, the Compensation Committee believes that all NEOs are assigned total target compensation levels consistent with the compensation philosophy.

In light of the prevalence of M&A activity and consolidation in the media & entertainment industry during recent years, for 2021, the Committee reviewed its 2020 Corporate Peer Group and decided to add certain peers that are outside of the traditional entertainment group. As such, for 2021, the Committee decided to eliminate Netflix, despite it being a competitor for talent, due to its considerable growth and now being

 

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substantially larger in both market cap and revenues than AMC Networks. The Committee decided to add Electronic Arts, Sirius XM Holdings and World Wide Wrestling Entertainment to its 2021 Corporate Peer Group in order to maintain a highly relevant benchmark.

 

2021 Corporate Peer Group

Discovery Communications, Inc.

  

Sirius XM Holdings, Inc.

Electronic Arts

  

Take-Two Interactive Software Inc.

Fox Corporation

  

ViacomCBS Inc.

Lions Gate Entertainment Corp

  

World Wrestling Entertainment Inc.

Nexstar Media Group, Inc. (merged with Tribune Media Company)

    

Benefits

Our executive officers are generally eligible to participate in the same retirement plans, health and welfare benefit plans and other voluntary benefit plans made available to other benefits-eligible employees of the Company, including, for example, medical, dental, vision, life insurance and disability coverage.

Defined Contribution Plans

The Company maintains the AMC Networks Inc. 401(k) Savings Plan, a tax qualified retirement savings plan (the “AMC 401(k) Plan”). Participating employees, including executive officers, may contribute into their plan accounts a percentage of their eligible pay on a before-tax basis as well as a percentage of their eligible pay on an after-tax basis. The Company matches 100% of the first 3% of pretax eligible earnings and 50% of the next 2% of pretax eligible earnings contributed by participating employees.

The Company also maintains the AMC Networks Inc. Excess Savings Plan (the “AMC Excess Savings Plan”) for certain of the Company’s employees, including executive officers. The AMC Excess Savings Plan is a non-qualified deferred compensation plan offered to certain employees, including executive officers, who are restricted by the applicable IRS annual compensation limitation and/or the pre-tax income deferral limitation. More information regarding the AMC Excess Savings Plan is provided in the Nonqualified Deferred Compensation table. In addition, the Company may provide a profit sharing contribution based on the employee’s eligible earnings. For December 31, 2020, the Company made a profit sharing contribution of 2%.

Matching contributions made by the Company under the AMC 401(k) Plan on behalf of the NEOs are set forth in the Summary Compensation Table under “Executive Compensation Tables” below. The Company did not make any matching contributions under the AMC Excess Savings Plan in 2020.

Other Benefits

In addition to the standard life insurance available to all Company employees (based on a multiple of base salary, up to a $4,000,000 cap on the total amount of life insurance), Cablevision had purchased whole life insurance policies for certain current and former senior executives of Cablevision, including Mr. Sapan. The policies originally provided coverage (before the application of any dividends to purchase increased insurance) in the amount of the greater of three times the individual’s annual base salary as in effect in 1996 or the estimated death benefit provided under previous policies. As of the most recent anniversary date, the policies for Mr. Sapan provided for an estimated aggregate death benefit of $1,433,777. Information regarding premiums paid with respect to Mr. Sapan is set forth in the Summary Compensation Table below. On June 30, 2011, the date on which Cablevision spun off the Company, the Company assumed responsibility for the payment of required premiums, if any, with respect to Mr. Sapan.

 

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Perquisites

The Company has adopted a policy that it generally will not provide perquisites to our executive officers. During 2020, the aggregate value of perquisites received by each of Messrs. Dolan, Sapan, Carroll, Sullivan, Gallagher and Wymbs and Ms. Coleman by the Company was less than $10,000.

Post-Termination Compensation

We believe that post-termination benefits are integral to the Company’s ability to attract and retain qualified executives. Under certain circumstances, payments or other benefits may be provided to employees upon the termination of their employment with the Company. These may include payments or other benefits upon a termination by the Company without cause, termination by the employee for good reason, other voluntary termination by the employee, retirement, death, disability, or termination following a change in control of the Company or a going-private transaction. With respect to the NEOs, the amounts and terms of such payments and other benefits (including the definition of “cause” and “good reason”) are governed by each NEO’s employment agreement and any applicable long-term incentive award agreements. The Company award agreements regarding various long-term incentives address employment termination events, including the circumstances upon which vesting, payment and/or forfeiture of all or a portion of the long-term incentives may be accelerated. If an executive’s employment agreement with the Company refers to the treatment of any award upon a triggering event, the employment agreements generally provide that, if the terms of the award agreement are more favorable to the executive than the terms of the employment agreement, then the terms of the award agreement will apply. Post-termination compensation is discussed in greater detail in Executive Compensation Tables, “Employment Agreements” and Executive Compensation Tables, “Termination and Severance” below.

Tax Deductibility of Compensation

Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), generally limits the deductibility of compensation paid to certain executive officers in excess of $1 million during a year. The exemption from Code Section 162(m)’s deduction limit for performance-based compensation has generally been repealed, effective for years beginning after December 31, 2017, and the group of covered executive officers has been expanded to include the chief financial officer and certain former executive officers. Therefore, compensation (including performance-based compensation) paid to covered executive officers in excess of $1 million in calendar year 2018 and subsequent calendar years generally will not be deductible unless it qualifies for transition relief. The Committee continues to consider the tax consequences when determining named executive compensation, including in light of the changes to Code Section 162(m). The Committee sets named executive compensation in accordance with our compensation philosophy and believes that attracting, retaining and motivating our employees with a compensation program that supports long-term value creation is in the best interests of our stockholders.

Company Insider Trading Policy; Trading Restrictions and Prohibitions

The Company’s Insider Trading Policy prohibits Company employees, directors and consultants (and any member of such person’s immediate family) from the following activities:

 

   

engaging in any transactions in Company securities or any derivative security relating to any Company security, if the employee, director or consultant is aware of material, nonpublic or confidential information relating to the Company;

 

   

engaging in any transactions involving the purchase and sale of any of the securities of another company if the employee, director or consultant is aware of material, nonpublic or confidential information about that company;

 

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passing on or “tipping” any nonpublic or confidential information on to others or recommend to anyone the purchase or sale of any securities when the employee, director or consultant is aware of such information;

 

   

engaging in any short selling in any Company equity securities, including any short sales against the box and other speculative hedging transactions; and

 

   

placing any Company securities in margin accounts or pledging any Company securities at any time when the employee, director or consultant is aware of material, nonpublic or confidential information or otherwise is not permitted to trade in Company securities.

Company directors and executive officers are also prohibited from engaging in any transaction in Company securities without pre-approval from the Company’s Corporate Secretary. Company directors and executive officers must also abide by the Company’s policies with respect to window and blackout periods for trading.

 

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REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis set forth above. Based on such review and discussions, we have recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement for filing with the U.S. Securities and Exchange Commission.

Members of the Compensation Committee

Leonard Tow (Chair)

Vincent Tese

Dated: April 16, 2021

 

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EXECUTIVE COMPENSATION

The tables below reflect the compensation of the Company’s Chairman Emeritus and Former Executive Chairman, President and CEO, Former Chief Financial Officer, Interim Chief Financial Officer and the three other most highly paid executive officers. See “Compensation Discussion and Analysis” for an explanation of our compensation philosophy and program.

2020 Summary Compensation Table

The table below summarizes the total compensation paid or earned by each of our NEOs and paid by us for the years ended December 31, 2018, December 31, 2019 and December 31, 2020. Pursuant to SEC rules, the Summary Compensation Table is required to include for a particular year only those equity awards granted during that year and only cash compensation earned during that year. Accordingly, long-term cash performance awards granted during 2020 (which will be earned, if at all, during 2022) are not reflected in the 2020 Summary Compensation Table and will instead be disclosed for the year during which they are earned.

 

Name and Principal Position

 

 

Year

 

 

    Salary
    ($)(3)

 

 

Bonus
($)

 

 

Stock
Awards
($)(4)

 

 

Option and
Rights
Awards
($)(5)

 

 

Non-Equity
Incentive Plan
Compensation
($)(6)

 

 

All Other
Compensation
($)(8)

 

 

Total ($)

 

Charles F. Dolan (1)

   

 

 

 

2020

 

   

 

 

 

400,000

 

   

 

 

 

 

   

 

 

 

594,786

 

   

 

 

 

 

   

 

 

 

847,200

 

   

 

 

 

8,308

 

   

 

 

 

1,850,294

 

Chairman Emeritus and Former Executive

      2019       400,000             1,479,392             873,600             2,752,992

Chairman

      2018       400,000             1,486,611             924,000       22,515       2,833,126

Joshua W. Sapan (6)

      2020       2,000,000             5,551,125             4,236,000       62,724       11,849,849

President and Chief Executive

      2019       2,000,000             13,807,531             4,368,000       20,786       20,196,317

Officer

 

     

 

2018

 

 

     

 

2,000,000

 

 

     

 

 

 

     

 

13,874,604

 

 

     

 

 

 

     

 

4,620,000

 

 

     

 

120,786

 

 

     

 

20,615,390

 

 

Edward A. Carroll

      2020       1,734,000             1,685,167             3,213,536       47,414       6,680,117

Chief Operating Officer

      2019       1,734,000             3,353,338             3,313,674       11,200       8,412,212
        2018       1,734,000             3,381,246             3,504,848       95,267       8,715,361

James G. Gallagher

      2020       800,000             743,462             847,200       28,015       2,418,677

Executive Vice President and

      2019       800,000             1,479,392             873,600       11,111       3,164,103

General Counsel

 

     

 

2018

 

 

     

 

800,000

 

 

     

 

 

 

     

 

5,058,732

 

 

     

 

 

 

     

 

924,000

 

 

     

 

41,097

 

 

     

 

6,823,829

 

 

Donna Coleman (2)

      2020       1,020,000                               13,200       1,033,200

Interim Chief Financial Officer

      2019                                          
        2018                                          

Chris Wymbs (7)

      2020       585,500             297,407             354,905       22,460       1,260,272

Executive Vice President and

      2019                                          

Chief Accounting Officer

 

     

 

2018

 

 

     

 

 

 

     

 

 

 

     

 

 

 

     

 

 

 

     

 

 

 

     

 

 

 

     

 

 

 

Sean S. Sullivan (2)

      2020       758,077             1,486,294                   11,400       2,255,771

Former Executive Vice President and

      2019       900,000             2,958,784             1,228,500       11,111       5,098,395

Chief Financial Officer

      2018       900,000             7,936,071             1,319,452       50,302       10,205,825

 

(1)

Charles F. Dolan served as the Company’s Executive Chairman from June 2011 until he retired on September 15, 2020. Mr. Dolan currently serves as the Company’s Chairman Emeritus and is a member of the Company’s board of directors.

 

(2)

Sean S. Sullivan served as the Company’s Chief Financial Officer from September 2010 until he resigned on October 15, 2020. Donna Coleman served as the Company’s Interim Chief Financial Officer from October 16, 2020 until the expiration of her employment agreement on January 15, 2021.

 

(3)

For 2020, salaries paid to the NEOs accounted for the following percentage of their total compensation: Mr. Dolan — 15%; Mr. Sapan — 10%; Mr. Carroll — 21%; Mr. Sullivan — 33%; Mr. Gallagher — 25%; Ms. Coleman — 99%; and Mr. Wymbs — 37%.

 

(4)

This column includes the value of stock-based awards granted to NEOs during 2020, 2019 and 2018 based upon the grant date fair value, as determined under SEC guidance.

The 2020 figures in this column for Messrs. Dolan, Sapan, Carroll, Sullivan, Gallagher and Wymbs reflect the aggregate grant date fair value of the Company’s RSUs at target that were awarded in 2020 without any reduction for the risk of forfeiture, as calculated in accordance with FASB ASC Topic 718 as follows: Mr. Dolan: $594,786; Mr. Sapan: $5,51,125; Mr. Carroll: $1,685,167; Mr. Sullivan: $1,486,294; Mr. Gallagher: $743,462; and Mr. Wymbs: $297,407. Long-term performance awards in respect of 2020 were granted in the form of cash-based awards and are not reflected in this table (instead, such awards will be disclosed for the year during which they are earned (if any)), and were granted in the following target amounts: for Mr. Dolan: $900,000; for Mr. Sapan: $8,400,000; for Mr. Carroll: $1,700,000; for

 

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Mr. Gallagher: $750,000; and for Mr. Wymbs: $300,000. Details regarding the grants of RSUs and the long-term cash performance awards can be found in the “2020 Grants of Plan-Based Awards” table and details regarding outstanding stock awards can be found in the “Outstanding Equity Awards at 2020 Year End” table.

The 2019 figures in this column for Messrs. Dolan, Sapan, Carroll, Sullivan and Gallagher reflect the aggregate grant date fair value of the Company’s RSUs and PSUs at target that were awarded in 2019 without any reduction for risk of forfeiture, as calculated in accordance with FASB ASC Topic 718 as follows: Mr. Dolan: $591,769 and $887,623, respectively; Mr. Sapan: $5,523,012 and $8,284,519, respectively; Mr. Carroll: $1,676,669 and $1,676,669, respectively; Mr. Sullivan: $1,479,392 and $1,479,392, respectively; and Mr. Gallagher: $739,696 and $739,696, respectively. The grant date fair value of the 2019 PSUs assuming maximum performance, as calculated in accordance with FASB ASC Topic 718, is as follows: Mr. Dolan: $1,464,578, Mr. Sapan: $13,669,456, Mr. Carroll: $2,766,504, Mr. Sullivan: $2,440,997; and Mr. Gallagher: $1,220,498.

The 2018 figures in this column reflect the aggregate grant date fair value of the Company’s RSUs and PRUs at target that were awarded in 2018 without any reduction of risk for forfeiture, as calculated in accordance with FASB ASC Topic 718. In October 2018, concurrently with the execution of their employment agreements, each of Messrs. Sullivan and Gallagher also received a one-time special equity retention award of RSUs with an aggregate target value of $6,000,000, and $4,000,000, respectively, which awards vest on December 31, 2022. See “Employment Agreements — Sean S. Sullivan” and “Employment Agreements — James G. Gallagher” for details about the special equity retention award.

 

(5)

No stock options and/or rights were granted in 2020, 2019 or 2018.

 

(6)

The 2019 figures in this column for Messrs. Dolan, Sapan, Carroll, Sullivan, Gallagher and Wymbs include amounts from the annual incentive awards for performance in 2019.

The 2018 figures in this column for Messrs. Dolan, Sapan, Carroll, Sullivan, Gallagher and Wymbs include amounts from the annual incentive awards for performance in 2018.

The 2020 figures in this column for Messrs. Dolan, Sapan, Carroll, Wymbs and Gallagher include amounts from the annual incentive awards for performance in 2020. Pursuant to SEC rules, these figures do not reflect long-term cash performance awards granted during 2020 which will be earned at the end of 2022.

 

(7)

Chris Wymbs served as the Company’s Chief Accounting Officer from August 2016 until his resignation on April 2, 2021.

 

(8)

The table below shows the components of this column:

 

   Name        Year        401(k)
Plan
Match
($)(a)
   Excess
Savings
Plan
Match
$(a)
   Life
Insurance
Premiums
($)(b)
   Deferred
Compensation
Awards ($)
   Perquisites
($)(c)
   Total ($)    

 

   Charles F. Dolan

 

    

 

 

 

 

 

 

2020

 

 

 

 

 

    

 

 

 

 

5,700

 

 

 

    

 

 

 

 

2,608

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

8,308

 

 

 

 

   Joshua W. Sapan

 

    

 

 

 

 

2020

 

 

 

 

    

 

 

 

 

16,100

 

 

 

    

 

 

 

 

35,838

 

 

 

    

 

 

 

 

10,786

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

62,724

 

 

 

 

   Edward A. Carroll

 

    

 

 

 

2020

 

 

    

 

 

 

 

17,100

 

 

 

    

 

 

 

 

30,314

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

47,414

 

 

 

 

   James G. Gallagher

 

    

 

 

 

 

 

 

2020

 

 

 

 

 

    

 

 

 

17,100

 

    

 

 

 

 

10,915

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

28,015

 

 

 

 

   Donna Coleman

 

    

 

 

 

2020

 

 

    

 

 

 

 

 

 

13,200

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

13,200

 

 

 

 

   Chris Wymbs

 

    

 

 

 

 

 

 

2020

 

 

 

 

 

    

 

 

 

 

17,100

 

 

 

    

 

 

 

 

5,360

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

22,460

 

 

 

 

   Sean S. Sullivan

 

    

 

 

 

 

2020

 

 

 

 

    

 

 

 

 

11,400

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

11,400

 

 

 

 

(a)

These columns represent, for each individual, a matching contribution funded by the Company on behalf of such individual under the AMC 401(k) Plan or the AMC Excess Savings Plan.

 

(b)

This column represents amounts paid for premiums on whole life insurance policies for Mr. Sapan.

 

(c)

Perquisites provided to Messrs. Dolan, Sapan, Carroll, Sullivan, Gallagher or Wymbs or Ms. Coleman did not exceed an aggregate value of $10,000. For more information regarding perquisites, see Compensation Discussion and Analysis, “Compensation Decision Process and Compensation Policies — Perquisites.”

 

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2020 Grants of Plan-Based Awards

The table below presents information regarding awards granted in 2020 to each NEO under the Company’s plans, including estimated possible and future payouts under non-equity incentive plan awards and other restricted stock-based awards.

 

                

 

Estimated Future Payouts Under Non-
Equity Incentive Plan Awards

    

All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (#)

 

    

Grant Date
Fair Value
of Stock
and Option
Awards
($)(1)

 

 

  Name

 

  

Year

 

  

Grant Date

 

    

Threshold($)

 

    

Target($)

 

    

Maximum($)

 

 

  Mr. Dolan

   2020      1/1/2020(2)                 800,000        1,600,000                
   2020      3/11/2020(3)        720,000        900,000        1,138,500                
     2020

 

    

 

3/11/2020(4)

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

21,827

 

 

 

    

 

594,786

 

 

 

  Mr. Sapan

   2020      1/1/2020(2)               4,000,000        8,000,000                
   2020      3/11/2020(3)        6,720,000        8,400,000        10,626,000                
     2020

 

    

 

3/11/2020(4)

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

203,711

 

 

 

    

 

5,551,125

 

 

 

  Mr. Carroll

   2020      1/1/2020(2)               3,034,500        6,069,000                
   2020      3/11/2020(3)        1,360,000        1,700,000        2,150,500                
     2020

 

    

 

3/11/2020(4 )

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

61,841

 

 

 

    

 

1,685,167

 

 

 

  Mr. Gallagher

   2020      1/1/2020(2)               800,000        1,600,000                
   2020      3/11/2020(3)        600,000        750,000        948,750                
     2020

 

    

 

3/11/2020(4)

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

27,283

 

 

 

    

 

743,462

 

 

 

  Ms. Coleman

   2020      —                                        
   2020      —                                        
     2020

 

    

 

—   

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

 

 

 

  Mr. Wymbs

   2020      1/1/2020(2)               321,300        642,600                
   2020      3/11/2020(3)        240,000        300,000        379,500                
     2020

 

    

 

3/11/2020(4)

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

10,914

 

 

 

    

 

297,407

 

 

 

  Mr. Sullivan

   2020      1/1/2020(2)               1,350,000        2,700,000                
   2020      3/11/2020(3)        1,200,000        1,500,000        1,897,500               8,400,000  
     2020

 

    

 

3/11/2020(4)

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

54,566

 

 

 

    

 

1,486,924

 

 

 

 

(1)

This column reflects the aggregate grant date fair value of the Company’s RSUs granted to each NEO in 2020 without any reduction for risk of forfeiture, as calculated in accordance with FASB ASC Topic 718 on the grant date.

 

(2)

This row reflects the possible payouts with respect to grants of annual incentive awards under the Company’s Annual Incentive Program for performance in 2020. Each of the executives is assigned a target bonus percentage and amount; there is no threshold amount for annual incentive awards. The amounts of annual incentive awards actually paid for performance in 2020 are disclosed in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table above. For more information regarding the terms of these annual incentive awards, please see Compensation Discussion and Analysis, “2020 Compensation Decisions — Annual Cash Incentives.”

 

(3)

This row reflects the Company’s long-term cash performance awards that were granted in 2020. The cash performance awards have three one-year performance periods where the performance conditions for each year are set at the beginning of each such year. Each cash performance award was granted with a target amount, and the actual amount that is earned will be based on the average of the percentage of target earned in each of the three one-year performance periods (which may not exceed 115% of target) and adjusted by a performance modifier based on the Company’s share of subscribers and audience among a comparator group measured over the full three-year period. The modifier has the ability to reduce or increase the three-year average performance by up to +/- 10%. These cash performance awards will be payable in the first quarter of 2023 in an amount determined by the Committee based on the Company’s performance over the performance period. See Compensation Discussion and Analysis, “2020 Compensation Decisions — Long-term Incentives — Cash Performance Awards.”

 

(4)

This row reflects the Company’s RSUs that were awarded in 2020. The awards vest ratably over three years on March 9, 2021, March 9, 2022 and March 9, 2023 and are subject to performance criteria which have been satisfied. See Compensation Discussion & Analysis, “2020 Compensation Decisions — Long-term Incentives — Restricted Stock Units.”

 

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Table of Contents

Outstanding Equity Awards at 2020 Year End

The table below shows the aggregate number of unvested RSUs and PSUs outstanding for each NEO, in each case as of December 31, 2020. The amounts in this table do not include equity awards that vested on December 31, 2020.

 

     Stock Awards

Name

 

  

Number of

Shares or

Units of Stock

That Have

Not Vested (#)

 

   

Market Value

of Shares or

Units of Stock

That Have

Not Vested

($)(1)

 

    

Equity

Incentive Plan

Awards:

Number of

Unearned

Shares, Units

or Other

Rights That

Have Not

Vested (#)

 

  

Equity

Incentive Plan

Awards:

Market or

Payout Value

of Unearned

Shares, Units

or Other

Rights That

Have not

Vested ($)

 

 

Charles F. Dolan

  

 

 

 

14,227

 

(2) 

 

 

 

 

508,900

 

 

  

 

  

 

     17,476 (3)      625,117        
     21,827 (4)      780,752        
     6,324 (5)      226,209        
      

 

3,828

 

(6) 

 

   

 

136,928

 

 

 

  

 

  

 

 

Joshua W. Sapan

  

 

 

 

132,786

 

(2) 

 

 

 

 

4,749,755

 

 

  

 

  

 

     163,107 (3)      5,834,337        
     203,711 (4)      7,286,742        
     59,016 (5)      2,111,002        
      

 

35,726

 

(6) 

 

   

 

1,277,919

 

 

 

  

 

  

 

 

Edward A. Carroll

  

 

 

 

26,874

 

(2) 

 

 

 

 

961,283

 

 

  

 

  

 

     33,010 (3)      1,180,768        
     61,841 (4)      2,212,053        
     17,916 (5)      640,855        
     10,846 (6)      387,961        
      

 

242,813

 

(7) 

 

   

 

8,685,421

 

 

 

  

 

  

 

 

James G. Gallagher

  

 

 

 

11,856

 

(2) 

 

 

 

 

424,089

 

 

  

 

  

 

     14,564 (3)      520,954        
     27,283 (4)      975,913        
     7,904 (5)      282,726        
     4,785 (6)      171,159        
      

 

61,872

 

(8) 

 

   

 

2,213,161

 

 

 

  

 

  

 

 

Donna Coleman

  

 

 

 

 

 

 

 

 

 

 

 

  

 

  

 

                  
                  
                  
                  
      

 

 

 

 

   

 

 

 

 

  

 

  

 

 

Chris Wymbs

  

 

 

 

4,743

 

(2) 

 

 

 

 

169,657

 

 

  

 

  

 

     4,661 (3)      166,724        
     10,914 (4)      390,394        
     3,162 (5)      113,105        
      

 

1,532

 

(6) 

 

   

 

54,800

 

 

 

  

 

  

 

 

Sean S. Sullivan

  

 

 

 

 

 

 

 

 

 

 

 

  

 

  

 

                  
                  
                  
                  
      

 

 

 

 

   

 

 

 

 

  

 

  

 

 

(1)

Calculated using the closing price of Class A Common Stock on NASDAQ on December 31, 2020, the last trading day of the year, of $35.77 per share.

 

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(2)

These PSUs vest in March 2022 on the later of March 9, 2022 and the date on which the Compensation Committee determines the award earned, if any, based on the average of the percentage of target earned in each of the three one-year performance periods (which may not exceed 115% of target) as adjusted by a +/- 10% performance modifier based on the Company’s share of subscribers and audience among a comparator group measured over the full three-year period ending December 31, 2021. The PSUs and associated value reported in the table are based on the target numbers of shares granted. The actual number of units that will vest will be equal to the average of the percentage of target earned in each of 2019, 2020 and 2021, as adjusted by the three-year performance modifier. The annual performance metrics for each of 2019 and 2020 were determined by the Company in March 2019 and March 2020, respectively, and provide that achievement of maximum performance will result in a percentage earned in respect of such years equal to 115% of target (before any adjustment resulting from the modifier). The annual performance metrics for 2021 will be determined in 2021.

 

(3)

These PSUs vested on March 9, 2021. The PSUs and associated value reported in the table are based on the target numbers of shares granted. The actual number of units vested was subject to a sliding scale ranging from 0% to 115% of the target grant amount based on the level of performance achieved (and were earned at 100.1%).

 

(4)

One third of these RSUs vested on March 9, 2021. The remainder RSUs vest ratably on March 9, 2022 and March 9, 2023.

 

(5)

One third of these RSUs vested on March 9, 2020 (and are not included in this table) and another one third of these RSUs vested on March 9, 2021. The remainder RSUs vest ratably on March 9, 2022.

 

(6)

One third of these RSUs vested on March 9, 2019 (and are not included in the table) and another one third of these RSUs vested on March 9, 2020 (and are not included in the table). The remainder of the RSUs vested on March 9, 2021.

 

(7)

These RSUs are scheduled to vest on December 31, 2021.

 

(8)

These RSUs are scheduled to vest on December 31, 2022.

2020 Option Exercises and Stock Vested

The table below shows stock option exercises during the year ended December 31, 2020 and the vesting of RSUs during the same period.

 

     Option Exercises    RSUs
Name    Number of Shares
Acquired on
Exercise
   Value Realized on
Exercise ($)
   Number of Shares
Acquired on
Vesting
   Value Realized On
Vesting ($)(1)

 

Charles F. Dolan

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

23,916

 

 

 

    

 

 

 

 

622,055

 

 

 

 

Joshua W. Sapan

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

930,723

 

 

 

    

 

 

 

 

31,117,436

 

 

(2)

 

 

Edward A. Carroll

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

55,024

 

 

 

    

 

 

 

 

1,431,174

 

 

 

 

James G. Gallagher

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

24,277

 

 

 

    

 

 

 

 

631,445

 

 

 

 

Donna Coleman

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

Chris Wymbs

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

8,085

 

 

 

    

 

 

 

 

210,291

 

 

 

 

Sean S. Sullivan

 

    

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

    

 

 

 

 

43,132

 

 

 

    

 

 

 

 

1,121,863

 

 

 

 

 

(1)

With respect to the shares granted March 4, 2017, they were calculated using the closing price of Class A Common Stock on March 9, 2020, multiplied by the number of shares vesting on March 9, 2020. With respect to shares granted March 9, 2018, they were calculated using the closing price of Class A Common Stock on March 9, 2020, multiplied by the number of shares vesting on March 9, 2020. With respect to shares granted March 9, 2019, they were calculated using the closing price of Class A Common Stock on March 9, 2020, multiplied by the number of shares vesting on March 9, 2020. With respect to the shares granted on April 25, 2014, they were calculated using the closing price of Class A Common Stock on December 31, 2020, multiplied by the number of shares vesting on December 31, 2020.

 

(2)

Includes 357,757 shares that vested on December 31, 2020.

 

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Non-Qualified Deferred Compensation

The table below shows: (1) the contributions made by the NEOs in respect of their compensation from the Company and contributions funded by the Company in 2020; (2) aggregate earnings on each NEO account balance in 2020; and (3) the account balance of such executive officer under the AMC Networks Inc. Excess Savings Plan as of December 31, 2020.

 

Name   Plan Name   Executive
Contributions
in 2020(1)($)
    Registrant
Contributions
in 2020(2)($)
    Aggregate
Earnings in
2020(3)($)
    Aggregate
Withdrawals/
Distributions
($)
  Aggregate
Balance at
2020 FYE ($)
 

 

Charles F. Dolan

 

 

 

AMC Excess Savings Plan

 

 

 

 

 

 

24,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,574

 

 

 

 

 

 

 

 

 

 

 

 

456,035

 

 

 

 

 

Joshua W. Sapan

 

 

 

AMC Excess Savings Plan

 

 

 

 

 

 

180,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,820

 

 

 

 

 

 

 

 

 

 

 

 

3,435,956

 

 

 

 

 

Edward A. Carroll

 

 

 

AMC Excess Savings Plan

 

 

 

 

 

 

145,542

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,411

 

 

 

 

 

 

 

 

 

 

 

 

2,465,162

 

 

 

 

 

James G. Gallagher

 

 

 

AMC Excess Savings Plan

 

 

 

 

 

 

58,333

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

80,577

 

 

 

 

 

 

 

 

 

 

 

 

843,837

 

 

 

 

 

Donna Coleman

 

 

 

AMC Excess Savings Plan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chris Wymbs

 

 

 

AMC Excess Savings Plan

 

 

 

 

 

 

19,791

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,274

 

 

 

 

 

 

 

 

 

 

 

69,941

 

 

 

 

 

Sean S. Sullivan

 

 

 

AMC Excess Savings Plan

 

 

 

 

 

 

54,141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

112,945

 

 

 

 

 

 

 

 

 

 

 

 

1,055,101

 

 

 

 

 

(1)

These amounts represent a portion of the NEOs’ salaries, which are included in the numbers reported in the “Salary” column of the Summary Compensation Table that the executives contributed to the respective plans.

 

(2)

These amounts are included in the Summary Compensation Table under “All Other Compensation” and described in Note 5 to that table.

 

(3)

These amounts are not reported in the “All Other Compensation” column of the Summary Compensation Table.

AMC Networks Inc. 401(k) Savings Plan

During 2020, the Company’s U.S. employees, including its executive officers participated in the AMC 401(k) Plan, a tax-qualified retirement savings plan. Under this plan, participating employees are eligible to contribute into their plan accounts a percentage of their eligible pay on a before-tax basis as well as a percentage of their eligible pay on an after-tax basis. The Company matches up to 100% of the first 3% of eligible earnings contributed pre-tax by participating employees and then matches 50% of the next 2% of eligible earnings contributed pre-tax by participating employees. In addition, the Company may provide a non-contributory profit sharing contribution based on the employee’s eligible earnings. The Company’s profit sharing contributions are subject to vesting limitations for the first three years of employment. For December 31, 2020, the Company provided a profit sharing contribution of 2% that was deposited into participant accounts in February 2021.

AMC Networks Inc. Excess Savings Plan

During 2020, certain of the Company’s U.S. employees, including its executive officers, participated in the AMC Excess Savings Plan. The AMC Excess Savings Plan is a non-qualified deferred compensation plan that operates in conjunction with the AMC 401(k) Plan. An employee is eligible to participate in the AMC Excess Savings Plan for a calendar year if his or her eligible earnings in the preceding year exceeded (or would have exceeded, if the employee had been employed for the entire year) the IRS limit on the amount of compensation that can be taken into account in determining contributions under tax-qualified retirement plans ($280,000 in 2020) and he or she makes an election to participate prior to the beginning of the year. An eligible employee whose contributions to the AMC 401(k) Plan are limited as a result of this compensation limit or as a result of reaching the maximum 401(k) deferral limit ($19,500 or $26,000 if 50 or over, for 2020) can continue to

 

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make pre-tax contributions under the AMC Excess Savings Plan of up to 10% of his or her eligible pay. For 2020, the Company did not make any matching contributions under the AMC Excess Savings Plan. A participant is always fully vested in his or her own contributions and in the Company’s matching contributions. Account balances under the AMC Excess Savings Plan are invested at the discretion of the executive choosing from a selection of investments generally equal to those investments available in the AMC 401(k) Plan. Distributions are made in a lump sum as soon as practicable after termination of the participant’s employment with the Company, subject to restrictions under Section 409A. For December 31, 2020, the Company provided a profit sharing contribution of 2% that was deposited into participant accounts in February 2021.

Employment Agreements

The Company’s employment agreements with Messrs. Dolan, Sapan, Carroll, Gallagher, Wymbs and Sullivan and Ms. Coleman are described below.

Charles F. Dolan

On September 15, 2020, the Company entered into an amendment to Mr. Dolan’s employment agreement, effective on the date thereof. Mr. Dolan’s amended employment agreement with the Company provides for his employment as our Chairman Emeritus. The employment agreement with the Company has an initial term of one year and automatically renews for successive one-year terms unless terminated by either party at least three months prior to the end of the then existing term. The agreement provides for an annual base salary of not less than $400,000 per year, subject to increase by the Company’s Compensation Committee. Mr. Dolan is not eligible to participate in any of the Company’s annual or long-term bonus or incentive programs.

The Company provides Mr. Dolan with medical, life and accidental death and dismemberment insurance. Such life and accidental death and dismemberment insurance provided by the Company is based on Mr. Dolan’s base salary. The employment agreement authorizes Mr. Dolan, in carrying out his responsibilities and duties under the agreement, to make expenditures from time to time on behalf of the Company for the performance, furtherance and maintenance of the Company’s business, including travel relating to the business of the Company, entertainment and similar items, and the Company agrees to promptly reimburse Mr. Dolan for such expenditures or in some cases to advance the amount thereof to Mr. Dolan.

Mr. Dolan’s employment agreement does not provide for any post-employment benefits in the event of the termination of his employment by him or the Company other than in the case of his death or disability. In the event of Mr. Dolan’s death, his agreement provides for payment to his estate of an amount equal to the greater of one year’s base salary or one-half of the compensation that would have been payable to Mr. Dolan during the remaining term of his agreement. The Company has the right under the employment agreement to terminate the agreement if Mr. Dolan is incapacitated for more than six consecutive months. In that event, Mr. Dolan will be entitled to receive all his compensation and benefits until the end of the remaining term of his agreement. Mr. Dolan’s employment agreement does not address (or provide for any benefits in the event of) termination by the Company without cause, by Mr. Dolan for good reason or termination in connection with retirement, a change in control or a going private transaction.

Joshua W. Sapan

On December 11, 2020, the Company entered into an amended and restated employment agreement with Mr. Sapan. The employment agreement amended and restated an employment agreement that the Company entered into with Mr. Sapan in 2014 (the “2014 Employment Agreement”). Mr. Sapan’s employment agreement with the Company provides for Mr. Sapan’s employment as President and CEO of the Company until December 31, 2022 (the “Sapan Scheduled Expiration Date”) at a minimum annual base salary of $2,000,000 (subject to annual review and potential increase in the discretion of the Company’s Compensation Committee)

 

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and an annual target bonus equal to 200% of his annual base salary (and a possible range of 0% to 400%) based on the achievement of performance criteria established by the Compensation Committee in its discretion. Such performance criteria will be set with the same level of difficulty as applied to other senior executives of the Company generally and it is anticipated that such performance criteria will be set with a level of difficulty reasonably consistent with past practice. The employment agreement also provides that the Company or Mr. Sapan may, upon written notice of at least 90 days prior to December 31, 2021, change Mr. Sapan’s title to Vice Chairman for the 2022 calendar year. Under the agreement, Mr. Sapan continues to be eligible to participate in all the Company’s employee benefits and retirement plans at the level available to other members of senior management of the Company subject to meeting the relevant eligibility requirements and the terms of the plans.

Mr. Sapan is eligible to participate in the Company’s long-term cash or equity programs and arrangements consistent with the role and responsibilities of President and CEO. In calendar year 2020, and each year thereafter through the Sapan Scheduled Expiration Date during which Mr. Sapan is President and CEO of the Company, Mr. Sapan is entitled to receive long-term cash and equity awards with an aggregate target value of $14,000,000. Unless consented to by Mr. Sapan in writing, the ratio of long-term cash and equity awards in each applicable period will be reasonably consistent with past practice and will be the same ratio as generally provided to Mr. Sapan currently or to other senior executives of the Company generally. Any performance criteria applicable to the long-term cash and equity awards will be set with the same level of difficulty as applied to other senior executives of the Company generally and it is anticipated that the performance criteria will be set with a level of difficulty reasonably consistent with past practice. If either the Company or Mr. Sapan exercises the option to transition Mr. Sapan’s title to Vice Chairman for the 2022 calendar year, Mr. Sapan will not be eligible to participate in the long-term cash or equity programs and arrangements of the Company for the 2022 calendar year.

To provide an additional incentive for Mr. Sapan to agree to extend his tenure and stay through the end of the term of his 2014 Employment Agreement, the Compensation Committee offered Mr. Sapan the opportunity to earn a one-time special equity retention award of 353,757 RSUs (the “Sapan Special Equity Award”). This Sapan Special Equity Award vested on December 31, 2020.

If, prior to the Sapan Scheduled Expiration Date, Mr. Sapan’s employment with the Company is terminated (i) by the Company or (ii) by him for Good Reason, and at the time of any such termination Cause does not exist, then, subject to his execution of the Company’s then standard separation agreement (modified to reflect terms of the employment agreement), which separation agreement will include, without limitation, general releases by him as well as non-competition, non-solicitation, non-disparagement, confidentiality and other provisions substantially similar to (and not more restrictive than) those set forth in the agreement (a “Separation Agreement”), the Company will provide him with the following benefits and rights:

(a)        A cash severance payment equal to two times the sum of his annual base salary and annual target bonus will be made on the 90th day after the termination of his employment;

(b)        Each outstanding long-term cash performance award that is subject to performance criteria will immediately vest in full and will be paid at the same time and to the same extent that other members of senior management receive payment for such awards as determined by our Compensation Committee (subject to the satisfaction of any applicable performance objectives);

(c)        Each of his outstanding long-term cash awards (including any deferred compensation awards under the long-term cash award program) that are not subject to performance criteria will immediately vest in full and will be payable on the 90th day after the termination of his employment;

(d)        (i) All of the time-based restrictions on his outstanding restricted stock and RSUs will immediately be eliminated; (ii) deliveries with respect to all such restricted stock that are not subject to performance criteria will be made to him immediately after the effective date of the Separation Agreement;

 

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(iii) payment and deliveries with respect to all such RSUs that are not subject to performance criteria will be made to him on the 90th day after the termination of his employment; and (iv) payments or deliveries with respect to his restricted stock and RSUs that are subject to performance criteria will be made (A) with respect to any award granted after the date of the employment agreement, as soon as practicable after the Compensation Committee determines that performance criteria have been satisfied (which determination will be made (1) with respect to performance periods that ended on or prior to the date of termination, within a reasonable period of time following termination and (2) with respect to performance periods ending after the date of termination, within a reasonable period of time following the end of such performance periods) and (B) with respect to other awards only if, when and to the same extent that other executive officers receive payment or deliveries for such awards as determined by our Compensation Committee (subject to satisfaction of any applicable performance objectives);

(e)        Each of his outstanding stock options and stock appreciation awards will immediately vest and become exercisable and he will have the right to exercise each of those options and stock appreciation awards for the remainder of the term of the option or award; and

(f)        A prorated annual bonus for the year in which such termination occurred to the same extent that other executive officers receive payment of bonuses for such year as determined by our Compensation Committee in its sole discretion (and subject to the satisfaction of any applicable performance objectives), payable at the same time annual bonuses for such year are payable to other executive officers, and, if not previously paid, his annual bonus for the preceding year, to the same extent that other members of senior management receive payment of annual bonuses for such preceding year as determined by our Compensation Committee in its sole discretion (and subject to the satisfaction of any applicable performance objectives), which annual bonus shall be payable at the same time annual bonuses for such preceding year are payable to other members of senior management.

Notwithstanding clauses (c), (d) and (e) above, any more favorable provisions of Mr. Sapan’s existing cash incentive, restricted stock, RSU, stock option or stock appreciation right award agreements will apply to the treatment of such awards following a “going private transaction” (as defined in the award agreements), a “change of control” (as defined in the award agreements) or Mr. Sapan’s death.

With respect to any long-term cash performance, restricted stock and RSU awards that are subject to performance criteria and for which the performance periods have not been completed on the date of Mr. Sapan’s termination of employment by the Company without Cause or by him for Good Reason at which time Cause does not exist, the Company will (1) pay a cash amount equal to the target amount of the cash awards and deliver a number of shares equal to the number of restricted shares and RSU awards to a “Rabbi Trust” and (2) to the extent the performance criteria are satisfied, the cash and shares in the Rabbi Trust will be paid to Mr. Sapan in accordance with the terms set forth in clauses (c) and (d) above (and to the extent the performance criteria are not achieved, the cash and shares will revert to the Company).

If Mr. Sapan ceases to be an employee of the Company or any of its affiliates prior to the Sapan Scheduled Expiration Date as a result of his death or physical or mental disability, Mr. Sapan (or his estate or beneficiary) will be provided with the benefits and rights set forth in (b) through (f) of the preceding paragraph, and, in the event of his death, such longer period to exercise his then outstanding stock options and stock appreciation awards as may otherwise be permitted under the applicable plan and award letter.

If, after the Sapan Scheduled Expiration Date, Mr. Sapan’s employment with the Company is terminated (i) by the Company; (ii) by him for Good Reason; or (iii) by him without Good Reason but only if he had provided the Company with at least six months’ advance written notice of his intent to terminate his employment and such written notice specifies an effective date of termination no sooner than the first day after the Sapan Scheduled Expiration Date; or (iv) as a result of his death or disability, and at the time of any such termination, Cause does not exist, then, subject to (except in the case of his death) his execution of a Separation Agreement,

 

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he or his estate or beneficiary, as the case may be, will be provided with the benefits and rights set forth above in (b) through (f).

If, prior to, on, or after the Sapan Scheduled Expiration Date, Mr. Sapan ceases to be employed by the Company for any reason other than his being terminated for Cause, he will have three years to exercise outstanding stock options and stock appreciation awards, unless he is afforded a longer period for exercise pursuant to his employment agreement or any applicable award letter. In no event, however, will stock options or stock appreciation rights remain exercisable beyond their regularly scheduled term (except as may otherwise be permitted under the applicable award in the case of death).

Upon the termination of Mr. Sapan’s employment with the Company, except as otherwise specifically provided in the employment agreement, his rights to benefits and payments under the Company’s pension and welfare plans (other than severance benefits) and any outstanding long-term cash or equity awards will be determined in accordance with the then current terms and provisions of such plans, agreements and awards under which such benefits and payments (including such long-term cash or equity awards) were granted.

The employment agreement contains certain covenants by Mr. Sapan, including a noncompetition agreement that restricts Mr. Sapan’s ability to engage in competitive activities until the first anniversary of the termination of his employment with the Company.

For purposes of Mr. Sapan’s employment agreement, the following definitions apply:

“Cause” is defined as (1) commission of an act of fraud, embezzlement, misappropriation, willful misconduct, gross negligence or breach of fiduciary duty against the Company or an affiliate thereof, or (2) commission of any act or omission that results in, or may reasonably be expected to result in, a conviction, plea of no contest, plea of nolo contendere or imposition of unadjudicated probation for any crime involving moral turpitude or any felony.

“Change in Control” of the Company means the acquisition, in a transaction or a series of related transactions, by any person or group, other than Charles F. Dolan or members of the immediate family of Charles F. Dolan or trusts for the benefit of Charles F. Dolan or his immediate family (or an entity or entities controlled by any of them) or any employee benefit plan sponsored or maintained by the Company, of the power to direct the management of the Company or substantially all its assets (as constituted immediately prior to such transaction or transactions).

Termination for “Good Reason” means that (1) without Mr. Sapan’s consent, (A) Mr. Sapan’s base salary or annual bonus target is reduced, (B) the Company requires that Mr. Sapan’s principal office be located more than 50 miles from Manhattan, (C) the Company materially breaches its obligations to Mr. Sapan under his employment agreement, (D) Mr. Sapan is no longer the President and CEO of the Company, (E) Mr. Sapan no longer reports directly to the Chairman (or an Executive Chairman) of the Board of Directors of the Company, or (F) Mr. Sapan’s responsibilities are materially diminished; (2) Mr. Sapan has given the Company written notice, referring specifically to this definition, that he does not consent to such action; (3) the Company has not corrected such action within 15 days of receiving such notice; and (4) Mr. Sapan voluntarily terminates his employment within 90 days following the happening of the action described in subsection (1) of this definition.

Edward A. Carroll

On October 13, 2016, AMC Networks entered into an employment agreement with Mr. Carroll (the “Carroll Employment Agreement”), replacing his previous employment agreement, which expired on December 31, 2016. The Carroll Employment Agreement provides for Mr. Carroll’s employment as Chief Operating Officer of the Company through December 31, 2021 (the “Carroll Scheduled Expiration Date”), with a minimum annual base salary, effective as of March 1, 2016, of $1,600,000 and, effective as of September 1,

 

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2016, of $1,700,000 (subject to annual review and potential increase in the discretion of the Company’s Compensation Committee) and an annual target bonus opportunity equal to not less than 175% of his annual base salary. He will be eligible for our standard benefits programs and retirement plans at the level available to other members of senior management of the Company subject to meeting the relevant eligibility requirements and the terms of the plans.

Mr. Carroll is eligible to participate in the Company’s long-term cash or equity programs and arrangements consistent with the role and responsibilities of a Chief Operating Officer. Beginning in calendar year 2017, and each year thereafter through the Carroll Scheduled Expiration Date during which Mr. Carroll is employed by the Company, Mr. Carroll is entitled to receive long-term cash and equity awards with an aggregate target value of $3,400,000.

To provide an additional incentive for Mr. Carroll to agree to extend his tenure and stay through the end of the term of his new employment agreement, the Compensation Committee offered Mr. Carroll the opportunity to earn a one-time special equity retention award of 242,813 RSUs (the “Carroll Special Equity Award”) and, in recognition of Mr. Carroll’s increased compensation level, a one-time grant of long-term cash and/or equity awards with an aggregated target value of not less than $150,000. Except as described below, the Carroll Special Equity Award will vest on December 31, 2021, as long as Mr. Carroll is continuously employed until such date and the performance condition is attained or on an earlier change in control (as defined in the award agreement). The performance condition requires the Company to achieve in either of the two fiscal years 2017 and 2018, at least 90% of the AOI for fiscal year 2015. This Company performance requirement was met in 2018.

If, prior to the Carroll Scheduled Expiration Date, Mr. Carroll’s employment with the Company is terminated (i) by the Company or (ii) by him for Good Reason, and at the time of any such termination Cause does not exist, then, subject to his execution of the Company’s then standard separation agreement (modified to reflect terms of the employment agreement), which separation agreement will include, without limitation, general releases by him as well as non-competition, non-solicitation, non-disparagement, confidentiality and other provisions substantially similar to (and not more restrictive than) those set forth in the agreement, the Company will provide him with the following benefits and rights:

(a)        the payment of an amount in cash equal to not less than two times the sum of Mr. Carroll’s annual base salary and his annual target bonus as in effect at that time;

(b)        the payment of a prorated bonus for the year of termination and, to the extent termination occurs prior to the payment of an annual bonus for the preceding year, payment of an annual bonus for the preceding year, in each case, if and when other similarly situated employees receive payment of bonuses for such years as determined by the Company’s Compensation Committee in its sole discretion (and subject to the satisfaction of any applicable Company and business-unit performance objectives without adjustment for individual performance);

(c)        each of his outstanding long-term cash awards and PSUs granted under the plans of the Company shall immediately vest in full and be payable at the same time and to the same extent such awards are paid to similarly situated active executives as determined by the Company’s Compensation Committee (subject to satisfaction of any applicable performance criteria);

(d)        each of his outstanding restricted stock or RSU awards granted under plans of the Company (other than the Carroll Special Equity Award) will continue to vest in accordance with their original vesting schedule and payments or deliveries will be made to him on the original vesting date;

(e)        each of his outstanding stock options and stock appreciation awards under the plans of the Company will continue to vest in accordance with their original vesting schedule and he will have the right to exercise each of such options and awards for the remainder of the term of such option or award; and

 

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(f)        the time-based restrictions on the Carroll Special Equity Award will lapse and such award will be paid to Mr. Carroll upon achievement of the performance criteria.

If Mr. Carroll ceases to be an employee of the Company prior to the Carroll Scheduled Expiration Date as a result of his death or physical or mental disability, and at the time Cause does not exist then, subject (other than in the case of death) to his execution of a Separation Agreement, Mr. Carroll (or his estate or beneficiary) will be provided with the benefits and rights set forth in clauses (b), (d), (e) and (f) in the preceding paragraph, and each of his outstanding long-term cash incentive awards and PSUs granted under plans of the Company will immediately vest in full, whether or not subject to performance criteria and will be payable on the 90th day after termination of his employment; provided, that if any such award is subject to any performance criteria, then (i) if the measurement period for such performance criteria has not yet been fully completed, then the payment amount shall be at the target amount for such award and (ii) if the measurement period for such performance criteria has already been fully completed, then the payment of such award shall be at the same time and to the extent that other similarly situated executives receive payment as determined by the Company’s Compensation Committee (subject to satisfaction of the applicable performance criteria).

If, after the Carroll Scheduled Expiration Date, Mr. Carroll’s employment with the Company is terminated (i) by the Company; (ii) by him for Good Reason; or (iii) by him without Good Reason but only if he had provided the Company with at least six months’ advance written notice of his intent to terminate his employment and such written notice specifies an effective date of termination no sooner than the first day after the Carroll Scheduled Expiration Date; or (iv) as a result of his death or disability, and at the time of any such termination, Cause does not exist, then, subject to (except in the case of his death) his execution of a separation agreement, he or his estate or beneficiary, as the case may be, will be provided with the benefits and rights set forth above in (b) through (e).

Notwithstanding clauses (c), (d) and (e) above, any more favorable provisions of Mr. Carroll’s existing cash incentive, PSUs, restricted stock, RSU, stock option or stock appreciation right award agreements will apply to the treatment of such awards following a “going private transaction” (as defined in the award agreements), a “change of control” (as defined in the award agreements) or Mr. Carroll’s death.

For purposes of the Carroll Employment Agreement the following definitions apply:

“Cause” means (i) commission of an act of fraud, embezzlement, misappropriation, willful misconduct, gross negligence or breach of fiduciary duty against the Company or an affiliate thereof, or (ii) commission of any act or omission that results in a conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for any crime involving moral turpitude or any felony.

Termination for “Good Reason” means that (1) without Mr. Carroll’s consent, (A) his base salary or annual bonus target is reduced, (B) his title is reduced, (C) he reports directly to someone other than the Executive Chairman or the President and CEO of the Company, (D) his responsibilities as in effect immediately after October 13, 2016 are thereafter materially diminished, (E) the Company requires that his principal office be located more than 50 miles from Manhattan or (F) the Company materially breaches it obligations to Mr. Carroll under the Carroll Employment Agreement; (2) he has given the Company written notice, referring specifically to the Carroll Employment Agreement and the Good Reason definition, that he does not consent to such action; (3) the Company has not corrected such action within 30 days of receiving such notice; and (4) he voluntarily terminates his employment within 90 days following the happening of the action described in subsection (1) above.

James G. Gallagher

On October 12, 2018, the Company entered into a new employment agreement with Mr. Gallagher (the “Gallagher Employment Agreement”), which replaced his 2016 employment agreement and became effective on

 

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October 10, 2018. The employment agreement provides for Mr. Gallagher’s employment as Executive Vice President — General Counsel of the Company through December 31, 2022 (the “Gallagher Scheduled Expiration Date”), with a minimum annual base salary of $800,000 (subject to annual review and potential increase in the discretion of the Company’s Compensation Committee) and, effective January 1, 2018, an annual target bonus opportunity equal to 100% of his annual base salary, subject to the discretion of the Company’s Compensation Committee. He is eligible to participate in our standard benefits programs and our long-term equity and other incentive programs, in each case on the same basis as similarly situated executives at the Company. The agreement provides that, beginning in 2019, it is expected that Mr. Gallagher’s participation in the Company’s long-term equity and other incentive programs will consist of annual grants of cash and/or equity awards with a target value of not less than $1,500,000, as determined by the Compensation Committee.

To provide an additional incentive for Mr. Gallagher to agree to extend his tenure and stay through the end of the term of his new employment agreement, the Compensation Committee offered Mr. Gallagher the opportunity to earn a one-time special equity retention award of 61,872 RSUs (the “Gallagher Special Equity Award”). Except as described below, the Gallagher Special Equity Award will vest on December 31, 2022, subject to Mr. Gallagher’s continued employment until such date and the attainment of performance condition or on an earlier change in control (as defined in the award agreement). The performance condition requires the Company to achieve in either of the two fiscal years 2019 and 2020, at least 80% of Business Unit AOI for fiscal year 2017. This Company performance requirement was met in 2019.

If, prior to the Gallagher Scheduled Expiration Date, Mr. Gallagher’s employment with the Company is terminated (i) by the Company or (ii) by him for Good Reason, and at the time of any such termination Cause does not exist, then, subject to his execution of the Company’s then standard separation agreement (modified to reflect terms of the employment agreement), which separation agreement will include, without limitation, general releases by him as well as non-competition, non-solicitation, non-disparagement, confidentiality and other provisions substantially similar to (and not more restrictive than) those set forth in the agreement, the Company will provide him with the following benefits and rights:

(a)        The payment of an amount in cash equal to not less than two times the sum of Mr. Gallagher’s annual base salary and his annual target bonus as in effect at that time;

(b)        the payment of a prorated bonus for the year of termination and, to the extent termination occurs prior to the payment of an annual bonus for the preceding year, payment of an annual bonus for the preceding year, in each case, if and when other similarly situated employees receive payment of bonuses for such years as determined by the Company’s Compensation Committee in its sole discretion (and subject to the satisfaction of any applicable Company and business-unit performance objectives without adjustment for individual performance) (collectively, the “Gallagher Bonuses”);

(c)        each of his outstanding long-term cash incentive awards and performance-based restricted stock units shall immediately vest in full and be payable at the same time as such awards are paid to active employees of the Company and the payment amount of such awards shall be to the same extent that other similarly situated active employees receive payment as determined by the Compensation Committee (subject to the satisfaction of any applicable performance criteria);

(d)        each of the his outstanding restricted stock or restricted stock unit awards granted under plans of the Company (other than the Gallagher Special Equity Awards) generally will continue to vest in accordance with its original vesting schedule (subject to the satisfaction of any applicable performance criteria); provided that a prorated portion of any such awards outstanding on October 10, 2018 will vest and be settled immediately on termination (subject to the satisfaction of any applicable performance criteria);

(e)        each of the executive’s outstanding stock options and stock appreciation awards under plans of the Company, if any, will continue to vest in accordance with their original vesting schedule and he will have the right to exercise each of such options and awards for the remainder of the term of such option or award; and

 

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(f)        the time-based restrictions on the Gallagher Special Equity Award will lapse and such award will be paid to Mr. Gallagher upon achievement of the performance criteria.

If Mr. Gallagher ceases to be an employee of the Company prior to December 31, 2022 as a result of his death or physical or mental disability, and at such time Cause does not exist, subject to his execution of a separation agreement (other than in the case of death), the Company will pay Mr. Gallagher (or his spouse or beneficiary) the Gallagher Bonuses, and his outstanding equity and cash incentive awards will vest and pay in full, whether or not subject to performance criteria, provided that in the event of Mr. Gallagher’s termination of employment due to his physical or mental disability, the Special Equity Award will remain subject to the satisfaction of the applicable performance condition. Any such award that is subject to performance criteria will vest and pay at the target level unless the performance measurement period for such award has been completed prior to the date of termination, in which case the award will vest and pay when and to the same extent as the awards held by other employees, subject to the satisfaction of the performance criteria.

In connection with any termination of Mr. Gallagher’s employment, other than as specifically provided above, all equity or cash incentive grants or awards he may then have outstanding will be treated in accordance with their terms and nothing in the employment agreement is intended to limit any more favorable rights to which Mr. Gallagher is entitled under the terms of his equity or cash incentive grants or awards, including in event of a termination of employment, a “going private transaction” (as defined in the award agreements) or a “change of control” (as defined in the award agreements).

The employment agreement contains certain covenants by Mr. Gallagher, including a noncompetition agreement that restricts Mr. Gallagher’s ability to engage in competitive activities until the first anniversary of the termination of his employment with the Company.

For purposes of Mr. Gallagher’s employment agreement the following definitions apply:

“Cause” means Mr. Gallagher’s (i) commission of an act of fraud, embezzlement, misappropriation, willful misconduct, gross negligence or breach of fiduciary duty against the Company or an affiliate thereof, or (ii) commission of any act or omission that results in a conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for, in each case, any crime involving moral turpitude or any felony.

Termination for “Good Reason” means that (1) without Mr. Gallagher’s consent, (A) his base salary or annual bonus target (as each may be increased from time to time in the Company’s Compensation Committee’s discretion) is reduced, (B) his title is diminished, (C) he reports to someone other than the Company’s President and CEO or the Executive Chairman, (D) his responsibilities as in effect immediately after October 10, 2018 are thereafter materially diminished, (E) the Company materially breaches its obligations under the employment agreement or (F) the Company requires that his principal office be located more than 50 miles from Manhattan; (2) he has given the Company written notice, referring specifically to the employment agreement and the Good Reason definition, that he does not consent to such action; (3) the Company has not corrected such action within 30 days of receiving such notice; and (4) he voluntarily terminates his employment with the Company within 90 days following the happening of the action described in subsection (1) above.

Donna Coleman

On October 16, 2020, the Company entered into a new employment agreement with Ms. Coleman (the “Coleman Employment Agreement”), which became effective on October 16, 2020. The employment agreement provides for Ms. Coleman’s employment as Interim Chief Financial Officer of the Company through January 15, 2021 (the “Coleman Scheduled Expiration Date”), with a minimum weekly base salary of $100,000. She is eligible to participate in our standard benefits programs, on the same basis as similarly situated executives at the Company, but is not eligible to participate in any of the Company’s annual or long-term bonus or incentive programs.

 

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If, prior to the Coleman Scheduled Expiration Date, Ms. Coleman’s employment with the Company is terminated by the Company, and at the time of any such termination Cause does not exist, then, subject to her execution of the Company’s then standard separation agreement (modified to reflect terms of the employment agreement), the Company will provide her with continued payments of her base salary as if she had remained continuously employed through the Expiration Date.

For purposes of Ms. Coleman’s employment agreement the following definitions apply:

“Cause” means Ms. Coleman’s (i) commission of an act of fraud, embezzlement, misappropriation, willful misconduct, gross negligence or breach of fiduciary duty against the Company or an affiliate thereof, or (ii) commission of any act or omission that results in a conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for, in each case, any crime involving moral turpitude or any felony.

Ms. Coleman’s service as Interim Chief Financial Officer terminated as per the terms of her employment agreement on January 15, 2021.

Chris Wymbs

On March 8, 2019, AMC Networks entered into an employment agreement with Mr. Wymbs (the “Wymbs Employment Agreement”). The Wymbs Employment Agreement provides for Mr. Wymbs’s employment as Chief Accounting Officer of the Company through March 8, 2022 (the “Wymbs Scheduled Expiration Date”), with a minimum annual base salary, effective as of March 8, 2019, of $525,000 (subject to annual review and potential increase in the discretion of the Company’s Compensation Committee) and an annual target bonus opportunity equal to not less than 60% of his annual base salary. He will be eligible for our standard benefits programs and retirement plans at the level available to other members of senior management of the Company subject to meeting the relevant eligibility requirements and the terms of the plans.

Mr. Wymbs is eligible to participate in the Company’s long-term cash or equity programs and arrangements in each case on the same basis as similarly situated executives at the Company. Beginning in calendar year 2019, and each year thereafter through the Wymbs Scheduled Expiration Date during which Mr. Wymbs is employed by the Company, Mr. Wymbs is entitled to receive long-term cash and equity awards with an aggregate value of not less than $600,000.

If, prior to the Wymbs Scheduled Expiration Date, Mr. Wymbs’s employment with the Company is terminated by the Company and at the time of any such termination Cause does not exist, then, subject to his execution of the Company’s then standard separation agreement (modified to reflect terms of the employment agreement), which separation agreement will include, without limitation, general releases by him as well as non-competition, non-solicitation, non-disparagement, confidentiality and other provisions substantially similar to (and not more restrictive than) those set forth in the agreement, the Company will provide him with the following benefits and rights:

(a)        the payment of an amount in cash equal to not less than one and one-half times the sum of Mr. Wymbs’s annual base salary and his annual target bonus as in effect at that time; and

(b)        the payment of a prorated bonus for the year of termination and, to the extent termination occurs prior to the payment of an annual bonus for the preceding year, payment of an annual bonus for the preceding year, in each case, if and when other similarly situated employees receive payment of bonuses for such years as determined by the Company’s Compensation Committee in its sole discretion (and subject to the satisfaction of any applicable Company and business-unit performance objectives without adjustment for individual performance).

In connection with any termination of Mr. Wymbs’s employment, other than as specifically provided above, all equity or cash incentive grants or awards he may then have outstanding will be treated in accordance with their terms and nothing in the employment agreement is intended to limit any more favorable rights to which Mr. Wymbs is entitled under the terms of his equity or cash incentive grants or awards, including in event of a termination of employment, a “going private transaction” (as defined in the award agreements) or a “change of control” (as defined in the award agreements).

 

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The employment agreement contains certain covenants by Mr. Wymbs, including a noncompetition agreement that restricts Mr. Wymbs’s ability to engage in competitive activities until the first anniversary of the termination of his employment with the Company.

For purposes of Mr. Wymbs’s employment agreement the following definitions apply:

“Cause” means Mr. Wymbs’s (i) commission of an act of fraud, embezzlement, misappropriation, willful misconduct, gross negligence or breach of fiduciary duty against the Company or an affiliate thereof, or (ii) commission of any act or omission that results in a conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for, in each case, any crime involving moral turpitude or any felony.

Mr. Wymbs resigned from employment with the Company on April 2, 2021.

Sean S. Sullivan

On October 12, 2018, the Company entered into a new employment agreement with Mr. Sullivan (the “Sullivan Employment Agreement”), which replaced his 2016 employment agreement and became effective on October 10, 2018. The employment agreement provides for Mr. Sullivan’s employment as Executive Vice President — Chief Financial Officer of the Company through December 31, 2022 (the “Sullivan Scheduled Expiration Date”), with a minimum annual base salary of $900,000 (subject to annual review and potential increase in the discretion of the Company’s Compensation Committee) and an annual target bonus opportunity equal to 125% of his annual base salary in years 2018 and 2019 and 150% of his annual base salary in years 2020, 2021 and 2022. Annual bonuses are paid subject to the discretion of the Company’s Compensation Committee. He is eligible to participate in our standard benefits programs and our long-term equity and other incentive programs, in each case on the same basis as similarly situated executives at the Company. The agreement provides that, beginning in 2019, it is expected that Mr. Sullivan’s participation in the Company’s long-term equity and other incentive programs will consist of annual grants of cash and/or equity awards with a target value of not less than $3,000,000, as determined by the Compensation Committee.

To provide an additional incentive for Mr. Sullivan to agree to extend his tenure and stay through the end of the term of his new employment agreement, the Compensation Committee offered Mr. Sullivan the opportunity to earn a one-time special equity retention award of 92,808 RSUs (the “Sullivan Special Equity Award”). Except as described below, the Sullivan Special Equity Award will vest on December 31, 2022, subject to Mr. Sullivan’s continued employment until such date and the attainment of the performance condition or on an earlier change in control (as defined in the award agreement). The performance condition requires the Company to achieve in either of the two fiscal years 2019 and 2020, at least 80% of the combined AOI of the Company’s operating businesses (“Business Unit AOI”) for fiscal year 2017. This Company performance requirement was met in 2019.

If, prior to the Sullivan Scheduled Expiration Date, Mr. Sullivan’s employment with the Company is terminated (i) by the Company or (ii) by him for Good Reason, and at the time of any such termination Cause does not exist, then, subject to his execution of the Company’s then standard separation agreement (modified to reflect terms of the employment agreement), which separation agreement will include, without limitation, general releases by him as well as non-competition, non-solicitation, non-disparagement, confidentiality and other provisions substantially similar to (and not more restrictive than) those set forth in the agreement, the Company will provide him with the following benefits and rights:

(a)        The payment of an amount in cash equal to not less than two times the sum of Mr. Sullivan’s annual base salary and his annual target bonus as in effect at that time;

(b)        the payment of a prorated bonus for the year of termination and, to the extent termination occurs prior to the payment of an annual bonus for the preceding year, payment of an annual bonus for the preceding year, in each case, if and when other similarly situated employees receive payment of bonuses for such years as determined by the Company’s Compensation Committee in its sole discretion (and subject to the satisfaction of

 

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any applicable Company and business-unit performance objectives without adjustment for individual performance) (collectively, the “Sullivan Bonuses”);

(c)        each of his outstanding long-term cash incentive awards and performance-based restricted stock units shall immediately vest in full and be payable at the same time as such awards are paid to active employees of the Company and the payment amount of such awards shall be to the same extent that other similarly situated active employees receive payment as determined by the Compensation Committee (subject to the satisfaction of any applicable performance criteria);

(d)        each of the his outstanding restricted stock or restricted stock unit awards granted under plans of the Company (other than the Sullivan Special Equity Awards) generally will continue to vest in accordance with its original vesting schedule irrespective of the termination of employment (subject to the satisfaction of any applicable performance criteria); provided that a prorated portion of any such awards outstanding on October 10, 2018 will vest and be settled immediately on termination (subject to the satisfaction of any applicable performance criteria);

(e)        each of the executive’s outstanding stock options and stock appreciation awards under plans of the Company, if any, will continue to vest in accordance with their original vesting schedule and he will have the right to exercise each of such options and awards for the remainder of the term of such option or award; and

(f)        the time-based restrictions on the Sullivan Special Equity Award will lapse and such award will be paid to Mr. Sullivan upon achievement of the performance criteria.

If Mr. Sullivan ceases to be an employee of the Company prior to December 31, 2022 as a result of his death or physical or mental disability, and at such time Cause does not exist, subject to his execution of a separation agreement (other than in the case of death), the Company will pay Mr. Sullivan (or his spouse or beneficiary) the Sullivan Bonuses, and his outstanding equity and cash incentive awards will vest and pay in full, whether or not subject to performance criteria, provided that in the event of Mr. Sullivan’s termination of employment due to his physical or mental disability, the Special Equity Award will remain subject to the satisfaction of the applicable performance condition. Any such award that is subject to performance criteria will vest and pay at the target level unless the performance measurement period for such award has been completed prior to the date of termination, in which case the award will vest and pay when and to the same extent as the awards held by other employees, subject to the satisfaction of the performance criteria.

In connection with any termination of Mr. Sullivan’s employment, other than as specifically provided above, all equity or cash incentive grants or awards he may then have outstanding will be treated in accordance with their terms and nothing in the employment agreement is intended to limit any more favorable rights to which Mr. Sullivan is entitled under the terms of his equity or cash incentive grants or awards, including in event of a termination of employment, a “going private transaction” (as defined in the award agreements) or a “change of control” (as defined in the award agreements).

The employment agreement contains certain covenants by Mr. Sullivan, including a noncompetition agreement that restricts Mr. Sullivan’s ability to engage in competitive activities until the first anniversary of the termination of his employment with the Company.

For purposes of Mr. Sullivan’s employment agreement the following definitions apply:

“Cause” means Mr. Sullivan’s (i) commission of an act of fraud, embezzlement, misappropriation, willful misconduct, gross negligence or breach of fiduciary duty against the Company or an affiliate thereof, or (ii) commission of any act or omission that results in a conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for, in each case, any crime involving moral turpitude or any felony.

 

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Termination for “Good Reason” means that (1) without Mr. Sullivan’s consent, (A) his base salary or annual bonus target (as each may be increased from time to time in the Company’s Compensation Committee’s discretion) is reduced, (B) his title is diminished, (C) he reports to someone other than the Company’s President and CEO or the Executive Chairman, (D) his responsibilities as in effect immediately after October 10, 2018 are thereafter materially diminished, (E) the Company materially breaches its obligations under the employment agreement or (F) the Company requires that his principal office be located more than 50 miles from Manhattan; (2) he has given the Company written notice, referring specifically to the employment agreement and the Good Reason definition, that he does not consent to such action; (3) the Company has not corrected such action within 30 days of receiving such notice; and (4) he voluntarily terminates his employment with the Company within 90 days following the happening of the action described in subsection (1) above.

Mr. Sullivan resigned from employment with the Company on October 15, 2020.

Termination and Severance

This section describes the payments that would be received by NEOs from the Company upon various termination of employment scenarios.

Separation from the Company

Payments may be made to employees upon the termination of their employment with the Company depending upon the circumstances of their termination, which include termination by the Company with cause or without cause, termination by the employee for good reason, other voluntary termination by the employee, retirement, death, disability, or termination following a change in control of the Company or following a going-private transaction. Certain of these circumstances are addressed in employment agreements between the Company and the executives. The information set forth below assumes that the NEO was employed by the Company under his or her applicable agreement, and his or her employment terminated as of December 31, 2020. For a description of termination provisions in the employment agreements, see “Employment Agreements” above. In addition, long-term incentive award agreements will address some of these circumstances.

Quantification of Termination and Severance

The following tables set forth a quantification of estimated severance and other benefits payable to our NEOs under various circumstances regarding the termination of their employment. In calculating these severance and other payments, we have taken into consideration or otherwise assumed the following:

(1) Termination of employment occurred after the close of business on December 31, 2020. Payment calculations are based upon the applicable NEO’s employment agreement, as in effect on that date.

(2) We have valued equity awards using the closing market price of Class A Common Stock on the NASDAQ on December 31, 2020 of $35.77.

In the event of termination of employment, the payment of certain long-term incentive awards and other amounts may be delayed, depending upon the terms of each specific award agreement, the provisions of the applicable NEO’s employment agreement and the applicability of Section 409A. In quantifying aggregate termination payments, we have not taken into account the timing of the payments and we have not discounted the value of payments that would be made over time, except where otherwise disclosed.

We have assumed that all performance metrics for performance-based awards are achieved at the target level (but not exceeded).

 

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Benefits Payable As a Result of Voluntary Termination of Employment by Employee,

Retirement or Termination of Employment by the Company for Cause

In the event of voluntary termination of employment by the executive without Good Reason or retirement, in each case that is not in connection with a change in control, or termination by the Company for cause none of our NEOs would have been entitled to any payments at December 31, 2020.

Benefits Payable As a Result of Termination of Employment by the Company Without

Cause or by Employee For Good Reason*

 

  Elements   Mr. Dolan   Mr. Sapan   Mr. Carroll   Mr. Gallagher   Mr. Wymbs   Ms. Coleman   Mr. Sullivan(7)
  Severance     $12,708,000(1)   $10,099,683(1)   $3,388,800(1)   $1,426,572(2)    

  Pro rata bonus

    $4,236,000(3)   $3,213,536(3)   $847,200(3)   $354,905(3)    
  Unvested RSUs     $20,793,634(4)   $11,156,436(4)   $3,303,332(4)      

  Unvested PSUs

    $10,584,093(5)   $2,142,051(5)   $945,043(5)      
  Unvested CPAs     $8,400,000(6)   $1,700,000(6)   $750,000(6)      

 

*

The amounts in this table do not include any payments or awards that were vested at December 31, 2020 or any pension or other vested retirement benefits.

 

(1)

Represents severance equal to two times the sum of the executive’s salary and target bonus in accordance with the executive’s employment agreement.

 

(2)

Represents severance equal to 1.5 times the sum of the executive’s salary and target bonus in accordance with the executive’s employment agreement.

 

(3)

Represents a pro rata annual bonus for the year in which the termination occurred, payable to the same extent as annual bonuses are paid to the other executives, without regard to individual performance in accordance with the executive’s employment agreement.

 

(4)

Represents full vesting of the executive’s outstanding RSUs in accordance with the executive’s employment agreement.

 

(5)

Represents full vesting of the executive’s outstanding PSUs in accordance with the executive’s employment agreement.

 

(6)

Represents full vesting of the executive’s outstanding CPAs in accordance with the executive’s employment agreement.

 

(7)

Mr. Sullivan resigned from his position as Chief Financial Officer on October 15, 2020 and did not receive any payments in connection therewith.

Benefits Payable As a Result of Termination of Employment Due to Death*

 

  Elements   Mr. Dolan     Mr. Sapan     Mr. Carroll     Mr. Gallagher     Mr. Wymbs     Ms. Coleman   Mr. Sullivan(9)
  Severance                                  

  Salary

    $400,000 (1)                             
  Pro rata bonus           $4,236,000 (2)      $3,213,536 (2)      $847,200 (2)      $345,905 (2)     

  Unvested RSUs

    $872,151 (3)      $20,793,634 (3)      $11,156,436 (3)      $3,303,332 (3)      $408,586 (3)     
  Unvested PSUs     $966,079 (4)      $10,584,093 (5)      $2,142,051 (6)      $945,043 (6)      $280,394 (8)     

  Unvested CPAs

    $300,000 (7)      $8,400,000 (7)      $1,700,000 (7)      $750,000 (7)      $100,000 (8)     

 

*

The amounts in this table do not include any payments or awards that were vested at December 31, 2020 or any pension or other vested retirement benefits.

 

(1)

Represents one year of base salary.

 

(2)

Represents a pro rata annual bonus for the year in which the termination occurred, payable to the same extent as annual bonuses are paid to the other executives, without regard to individual performance in accordance with the executive’s employment agreement.

 

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(3)

Represents full vesting of the executive’s outstanding RSUs.

 

(4)

Represents pro rata vesting of executive’s outstanding PSUs based on target performance, prorated for the number of completed months of executive’s employment during the performance period prior to termination in accordance with the executive’s award agreement.

 

(5)

Represents full vesting of executive’s outstanding PSUs in accordance with the executive’s employment agreement.

 

(6)

Represents full vesting of executive’s outstanding PSUs in accordance with the executive’s employment agreement provided that said units shall be payable at target if the applicable performance period has not been completed, or alternatively, if the applicable performance period has been completed, to the same extent paid to similarly situated executives.

 

(7)

Represents full vesting of executive’s outstanding CPAs in accordance with the executive’s employment agreement.

 

(8)

Represents pro rata vesting of the executive’s outstanding cash performance award or PSU, as the case may be, pursuant to the terms of the award agreements, the remaining amount of the executive’s cash performance award or PSU would be forfeited.