UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

(AMENDMENT NO.        )

Filed by the Registrant ☑

Filed by a Party other than the Registrant ☐

Check the appropriate box:

 

☐	Preliminary Proxy Statement

 

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

 

☑	Definitive Proxy Statement

 

☐	Definitive Additional Materials

 

☐	Soliciting Material Pursuant to Rule14a-12

LIONS GATE ENTERTAINMENT CORP.

 

(Name of Registrant as Specified In Its Charter)

 

 

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

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LIONS GATE ENTERTAINMENT CORP.

250 Howe Street, 20 ^th Floor

Vancouver, British Columbia V6C 3R8

2700 Colorado Avenue

Santa Monica, California 90404

NOTICE OF ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS

To Be Held September 11, 2018

To Our Shareholders:

You are invited to attend the annual general and special meeting of the holders of Class A voting shares (the “Annual Meeting”) of Lions Gate Entertainment Corp. (“Lionsgate” or the “Company”), which will be held on Tuesday, September 11, 2018, beginning at 10:00 a.m., local time, at the Four Seasons Hotel Toronto, 60 Yorkville Avenue, Toronto, Ontario, M4W 0A4, Canada. At the Annual Meeting, shareholders will act on the following matters:

 

1.

Elect 13 directors, each for a term of one year or until their respective successors are duly elected and qualified;

2.

Re-appoint Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending March 31, 2019;

3.

Conduct an advisory vote to approve executive compensation;

4.

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

We are using the Securities and Exchange Commission rule that allows companies to furnish their proxy materials over the Internet. As a result, we are mailing to most of our shareholders a “Notice of Internet Availability of Proxy Material s” (the “Notice”) instead of a printed copy of the notice of Annual Meeting, proxy statement, proxy card or voting instruction form, and our Annual Report for the fiscal year ended March 31, 2018 (including the audited consolidated financial statements of the Company for the fiscal year ended March 31, 2018, together with the auditor’s report therein) (the “Meeting Materials”). The Notice contains instructions on how shareholders can access those documents over the Internet and vote their Class A voting shares. The Notice also contains instructions on how shareholders can receive a printed copy of the Meeting Materials. We believe this process will expedite shareholders’ receipt of the Meeting Materials, lower the costs of the Annual Meeting and conserve natural resources.

We are also utilizing the “Notice and Access” rules adopted by the Canadian Securities Administrators pursuant to which the Company will post electronic copies of the Meeting Materials on the System for Electronic Document Analysis and Retrieval at www.sedar.com and also on our website at http://investors.lionsgate.com/financial-reports/annual-reports-and-proxy-statements , rather than mailing paper copies to all registered and Non-Registered Shareholders (as defined in this proxy statement).

Shareholders of record at 5:00 p.m. (Eastern Standard Time) on July 20, 2018 are entitled to notice of and to vote at the Annual Meeting or any continuations, adjournments or postponements thereof.

By Order of the Board of Directors,

 

 

Jon Feltheimer

Chief Executive Officer

Santa Monica, California

Vancouver, British Columbia

July 27, 2018

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

 

 

 

TABLE OF CONTENTS

 

 

		Page
EXECUTIVE SUMMARY		i
PROXY STATEMENT		1
ABOUT THE ANNUAL MEETING		1
PROPOSAL 1: ELECTION OF DIRECTORS		8
PROPOSAL 2: RE-APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		19
PROPOSAL 3: ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION		20
INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS		21
Board Leadership Structure		21
Board Role in Risk Oversight		21
Policy on Hedging		23
Role of The Board		23
Board Committees and Responsibilities		24
Shareholder Communications		28
Codes of Conduct and Ethics		29
Annual Director Evaluations		29
Director Independence		30
Director Compensation		31
MANAGEMENT		34
Biographical Information		34
Appointment of Executive Officers		34
COMPENSATION DISCUSSION AND ANALYSIS		35
Named Executive Officers		35
Executive Summary		35
Shareholder Engagement		40
Our 2017 Say-On-Pay Vote		41
Key Features of Our Executive Compensation Program		41
Program Objectives		42
Compensation Practices		42
Process for Determining Executive Compensation		43
Compensation Components		45
Compensation Committee Report on Executive Compensation		57
COMPANY’S COMPENSATION POLICIES AND RISK MANAGEMENT		57
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION		57
EXECUTIVE COMPENSATION INFORMATION		58
Summary Compensation Table		58
Description of Employment Agreements		60
Grants of Plan-Based Awards		61
Outstanding Equity Awards		67
Options Exercises and Stock Vested		69
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL		70
Estimated Severance and Change in Control Benefits		73
Pay Ratio Disclosure		74
EQUITY COMPENSATION PLAN INFORMATION		75
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS		76
SECURITY OWNERSHIP OF MANAGEMENT		78
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE		80
REPORT OF THE AUDIT & RISK COMMITTEE		80
STATEMENT OF CORPORATE GOVERNANCE PRACTICES		81
Board of Directors		81
Board Mandate		84
Orientation and Continuing Education		84
Ethical Business Conduct		84
Nomination of Directors		84
Compensation		85
Assessments		85
Term Limits		85
Considerations of the Representation of Women on the Board		85
Executive Officer Diversity		86
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		86
Review of Related Transactions		86
Relationships and Transactions		87
ACCOUNTANTS’ FEES		89
OTHER INFORMATION		89
OTHER BUSINESS		89
DIRECTORS’ APPROVAL		90
EXHIBIT A: USE OF NON-GAAP MEASURES		A-1

 

 

 

EXECUTIVE SUMMARY

This summary highlights information contained elsewhere in this proxy statement and does not contain all of the information you should consider in making a voting decision. You should read the entire proxy statement carefully before voting. For information on the details of the voting process and how to attend the Annual Meeting, please see About the Annual Meeting on page 1.

 

Proposal				Board Vote Recommendation		For More Information, see:
1.		Election of 13 directors		FOR EACH DIRECTOR NOMINEE		Proposal 1—Election of Directors, page 8
2.		Re-appointment of Ernst & Young LLP  as our independent registered public accounting firm for fiscal 2019 and authorization of the Audit & Risk Committee to fix their remuneration		FOR		Proposal 2—Re-appointment of Independent Registered Public Accounting Firm, page 19
3.		Advisory vote to approve executive compensation		FOR		Proposal 3—Advisory Vote to Approve Executive Compensation, page 20

 

Lionsgate 2018 Proxy Statement     i

 

 

 

2018 ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS OF

LIONS GATE ENTERTAINMENT CORP.

PROXY STATEMENT

This proxy statement is part of a solicitation of proxies by the Board of Directors (the “Board”) and management of Lions Gate Entertainment Corp. (“Lionsgate,” the “Company,” “we,” “us” or “our”) and contains information relating to our annual general and special meeting of shareholders (the “Annual Meeting”) to be held on Tuesday, September 11, 2018, beginning at 10:00 a.m., local time, at the Four Seasons Hotel Toronto, 60 Yorkville Avenue, Toronto, Ontario, M4W 0A4, Canada, and to any continuations, adjournments or postponements thereof. All dollar figures contained in this proxy statement are in U.S. dollars, unless otherwise indicated.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON SEPTEMBER 11, 2018

This proxy statement and our 2018 Annual Report for the fiscal year ended March 31, 2018 are available at www.proxyvote.com . These materials are also available on our website at http://investors.lionsgate.com/financial-reports/annual-reports-and-proxy-statements . The other information on our corporate website does not constitute part of this proxy statement.

ABOUT THE ANNUAL MEETING

Why did I receive a “Notice of Internet Availability of Proxy Materials” in the mail instead of a full set of proxy materials?

We are using the Securities and Exchange Commission (the “SEC”) rule that allows companies to furnish their proxy materials over the Internet. As a result, we are mailing to our shareholders a “Notice of Internet Availability of Proxy Materials” (the “Notice”) instead of a printed copy of the notice of Annual Meeting, proxy statement, proxy card or voting instruction form, and our Annual Report for the fiscal year ended March 31, 2018 (including the audited consolidated financial statements of the Company for the fiscal year ended March 31, 2018, together with the auditor’s report therein) (collectively, the “Meeting Materials”). The Notice contains instructions on how shareholders can access those documents over the Internet and vote their Company Class A voting shares, without par value (NYSE: LGF.A) (the “Class A voting shares”). The Notice also contains instructions on how shareholders can receive a printed copy of the Meeting Materials. We believe this process will expedite shareholders’ receipt of the Meeting Materials, lower the costs of the Annual Meeting and conserve natural resources.

In addition, the Company will utilize the “Notice and Access” rules adopted by the Canadian Securities Administrators pursuant to which the Company will post electronic copies of the Meeting Materials on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com and also at http://investors.lionsgate.com/financial-reports/annual-reports-and-proxy-statements , rather than mailing paper copies to all registered and Non-Registered Shareholders (as defined below). Notwithstanding the foregoing, paper copies of the Meeting Materials are available but will only be mailed to those registered and Non-Registered Shareholders who request paper copies. All other shareholders will receive the Notice which will contain information on how to obtain either electronic or paper copies of the Meeting Materials in advance of the Annual Meeting. Registered shareholders and Non-Registered Shareholders may request paper copies of the Meeting Materials in advance of the Annual Meeting by contacting Broadridge Financial Solutions, Inc. toll-free at (800) 579-1639 or by email at sendmaterial@proxyvote.com .

The Company has elected not to use the procedure known as “stratification” in relation to its use of the “Notice and Access” rules. Stratification occurs when a reporting issuer using the “Notice and Access” rules provides a paper copy of proxy-related materials to some, but not all, of its shareholders.

We are first mailing the Notice to our shareholders on or about July 27, 2018.

 

Lionsgate 2018 Proxy Statement     1

 

 

 

 

What is the purpose of the Annual Meeting?		At the Annual Meeting, shareholders will be asked to vote upon the matters outlined in the notice of the Annual Meeting, including the election of directors, re-appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending March 31, 2019, and conducting an advisory vote on executive compensation. In addition, after the formal portion of the Annual Meeting, the Company’s management will report on the Company’s performance during fiscal 2018 and respond to appropriate questions.
Who is entitled to vote at the Annual Meeting?		Only shareholders of record of Class A voting shares at 5:00 p.m. (Eastern Daylight Time) on July 20, 2018 (the “Record Date”) are entitled to receive notice of the Annual Meeting and to vote the Class A voting shares that they held on that date at the Annual Meeting, or any continuations, adjournments or postponements of the Annual Meeting. Each outstanding Class A voting share entitles its holder to cast one vote on each matter to be voted upon. As of the Record Date, 82,002,671 Class A voting shares were outstanding and entitled to vote and held by approximately 536 shareholders of record.   Holders of the Company’s Class B non-voting shares, without par value (the “Class B non-voting shares”) are entitled to receive notice of and to attend the Annual Meeting but are not entitled to vote on the matters to be presented at the Annual Meeting. As of the Record Date, there were 131,990,033 Class B non-voting shares outstanding. Unless the context dictates otherwise, all references to “you,” “your,” “yours” or other words of similar import in this proxy statement refer to holders of Class A voting shares.   Each shareholder of record of the Class A voting shares has the right to appoint a person or company to represent the shareholder to vote in person at the Annual Meeting other than the persons designated in the form of proxy. See “ How do I vote at the Annual Meeting? ” below.
Who can attend and vote at the Annual Meeting?		Only registered shareholders of Class A voting shares or the persons they appoint as their proxies are permitted to attend and vote at the Annual Meeting. Holders of Class B non-voting shares are entitled to notice of and to attend the Annual Meeting but are not entitled to vote at the Annual Meeting. Most holders of Class A voting shares of the Company are “non-registered” shareholders (“Non-Registered Shareholders”) because the Class A voting shares they own are not registered in their names but are, instead, registered in the name of the brokerage firm, bank or trust company through which they hold the Class A voting shares. Class A voting shares beneficially owned by a Non-Registered Shareholder are registered either: (i) in the name of an intermediary (an “Intermediary”) that the Non-Registered Shareholder deals with in respect of the Class A voting shares of the Company (Intermediaries include, among others, banks, trust companies, securities dealers or brokers and trustees or administrators of self-administered Registered Retirement Savings Plans, Registered Retirement Income Funds, Registered Education Savings Plans and similar plans); or (ii) in the name of a clearing agency (such as The Canadian Depository for Securities Limited or The Depository Trust & Clearing Corporation) of which the Intermediary is a participant. In accordance with applicable securities law requirements, the Company will have distributed copies of the Notice to the clearing agencies and Intermediaries for distribution to Non-Registered Shareholders.

 

2    Lionsgate 2018 Proxy Statement

 

 

 

(cont.)		Shareholders are able to access the Notice and vote their shares following the instructions in the Notice. If shareholders have requested printed copies, Intermediaries are required to forward the Meeting Materials to Non-Registered Shareholders unless a Non-Registered Shareholder has waived the right to receive them. Intermediaries often use service companies to forward the Notice to Non-Registered Shareholders. Generally, Non-Registered Shareholders who have not waived the right to receive the Notice and who have requested a printed copy of the Meeting Materials will either:     (i)   be given a voting instruction form which is not signed by the Intermediary and which, when properly completed and signed by the Non-Registered Shareholder and returned to the Intermediary or its service company , will constitute voting instructions (often called a “voting instruction form”) which the Intermediary must follow. Typically, the voting instruction form will consist of a one-page printed form. Sometimes, instead of the one-page pre-printed form, the voting instruction form will consist of a regular printed proxy form accompanied by a page of instructions which contains a removable label with a bar code and other information. In order for the form of proxy to validly constitute a voting instruction form, the Non-Registered Shareholder must remove the label from the instructions and affix it to the form of proxy, properly complete and sign the form of proxy and submit it to the Intermediary or its service company in accordance with the instructions of the Intermediary or its service company; or   (ii)    be given a form of proxy which has already been signed by the Intermediary (typically by a facsimile or stamped signature), which is restricted to the number of Class A voting shares beneficially owned by the Non-Registered Shareholder but which is otherwise not completed by the Intermediary. Because the Intermediary has already signed the form of proxy, this form of proxy is not required to be signed by the Non-Registered Shareholder when submitting the proxy. In this case, the Non-Registered Shareholder who wishes to submit a proxy should properly complete the form of proxy and deposit it with the Company, c/o MacKenzie Partners, Inc. Attention Lionsgate Tabulation, 105 Madison Avenue, New York, NY 10016.   In either case, the purpose of these procedures is to permit Non-Registered Shareholders to direct the voting of the Class A voting shares of the Company they beneficially own. Should a Non-Registered Shareholder who receives one of the above forms wish to vote at the Annual Meeting in person (or have another person attend and vote on behalf of the Non-Registered Shareholder), the Non-Registered Shareholder should request a legal proxy from their Intermediary . Instructions for obtaining legal proxies may be found on the voting instruction form. If you have any questions about voting your shares, please call MacKenzie Partners, Inc. at 1-800-322-2885 or 212-929-5500 or e-mail lionsgate@mackenziepartners.com .   A Non-Registered Shareholder may revoke a voting instruction form or request to receive the Meeting Materials and to vote, which has been given to an Intermediary, at any time by written notice to the Intermediary, provided that an Intermediary is not required to act on a revocation of a voting instruction form or of a waiver of the right to receive the Meeting Materials and to vote, which is not received by the Intermediary in a timely manner in advance of the Annual Meeting.
What constitutes a quorum?		A quorum is necessary to hold a valid meeting of shareholders. The presence at the Annual Meeting, in person or by proxy, of two holders of the Class A voting shares outstanding on the Record Date who, in the aggregate, hold at least 10% of the issued Class A voting shares of the Company entitled to vote at the Annual Meeting, will constitute a quorum. Abstentions and “broker non-votes” (shares held by a broker or nominee that does not have the authority, either express or discretionary, to vote on a particular matter) will each be counted as present for purposes of determining the presence of a quorum.

 

Lionsgate 2018 Proxy Statement     3

 

 

 

How do I vote at the Annual Meeting?		If you are a shareholder of record of Class A voting shares, you have the right to vote in person at the Annual Meeting. If you choose to do so, you can vote using the ballot that will be provided at the Annual Meeting, or, if you requested and received printed copies of the Meeting Materials by mail, you can complete, sign and date the proxy card enclosed with the Meeting Materials you received and submit it at the Annual Meeting. If you are a Non-Registered Shareholder, you may not vote your shares in person at the Annual Meeting unless you obtain a “legal proxy” from the bank, broker, trustee or other nominee that holds your shares, giving you the right to vote the Class A voting shares at the Annual Meeting.   Even if you plan to attend the Annual Meeting, we recommend that you submit your proxy or voting instructions in advance of the Annual Meeting as described herein, so that your vote will be counted if you later decide not to attend the Annual Meeting.   At the Annual Meeting, a representative from Broadridge Financial Solutions, Inc. shall be appointed to act as scrutineer. The scrutineer will determine the number of Class A voting shares represented at the Annual Meeting, the existence of a quorum and the validity of proxies, will count the votes and ballots, if required, and will determine and report the results to the Company.
How can I vote my Class A voting shares without attending the Annual Meeting?		Whether you are a shareholder of record of Class A voting shares or a Non-Registered Shareholder, you may direct how your Class A voting shares are voted without attending the Annual Meeting. If you are a shareholder of record, you may submit a proxy to authorize how your Class A voting shares are to be voted at the Annual Meeting. You can submit a proxy over the Internet by following the instructions provided in the Notice, or, if you requested and received printed copies of the Meeting Materials, you can also submit a proxy by mail or telephone pursuant to the instructions provided in the proxy card enclosed with the Meeting Materials. If you are a Non-Registered Shareholder, you may also submit your voting instructions over the Internet by following the instructions provided in the Notice, or, if you requested and received printed copies of the Meeting Materials, you can also submit voting instructions by telephone or mail by following the instructions provided in the voting instruction form sent by your Intermediary. If you do not fill a name in the blank space in the form of proxy, the persons named in the form of proxy are appointed to act as your proxy holder. Those persons are directors and/or officers of the Company.   Submitting your proxy or voting instructions over the Internet, by telephone or by mail will not affect your right to vote in person should you decide to attend the Annual Meeting, although Non-Registered Shareholders must obtain a “legal proxy” from the Intermediary that holds their shares giving them the right to vote the shares in person at the Annual Meeting.
Can I change or revoke my vote after I return my proxy card?		Yes. Even after you have submitted your proxy, you may change your vote by submitting a duly executed proxy bearing a later date in the manner and within the time described above. See How do I vote at the Annual Meeting? above if you are a Non-Registered Shareholder. If you are a shareholder of record, you may also revoke a previously deposited proxy (i) by an instrument in writing that is received by or at the Annual Meeting prior to the closing of the polls, (ii) by an instrument in writing provided to the Chairman of the Annual Meeting at the Annual Meeting or any adjournment thereof, or (iii) in any other manner permitted by law. The powers of the proxy holders will be suspended if you attend the Annual Meeting in person and so request, although attendance at the Annual Meeting will not by itself revoke a previously granted proxy.

 

4    Lionsgate 2018 Proxy Statement

 

 

 

Is my vote confidential?		Proxy instructions, ballots and voting tabulations that identify individual shareholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within the Company or to third parties, except:   •   As necessary to meet applicable legal requirements; •   To allow for the tabulation and certification of votes; and •   To facilitate a successful proxy solicitation.   Occasionally, shareholders provide written comments on their proxy cards, which may be forwarded to the Company’s management and the Board.
What are the Board’s recommendations?		The enclosed proxy is solicited on behalf of the Board and the Company’s management. Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of the Board set forth with the description of each item in this proxy statement.   The Board recommends a vote:   •   “FOR” the election of each of the nominated directors (see page 8); •   “FOR” the re-appointment of Ernst & Young LLP as our independent registered public accounting firm and authorization of the Audit & Risk Committee to fix their remuneration (see page 19); and •   “FOR” the proposal regarding an advisory vote to approve executive compensation (see page 20).   Other than the proposals described in this document, the Board does not know of any other matters that may be brought before the Annual Meeting. If any other matter should properly come before the Annual Meeting, the proxy holders will vote as recommended by the Board or, if no recommendation is given, in accordance with their best judgment.
What vote is required to approve the election of each of the nominated directors?		A plurality of the Class A voting shares voting in person or by proxy is required to elect each of the 13 nominees for director (“Proposal 1”). A plurality means that the 13 nominees receiving the largest number of votes cast (votes “FOR”) will be elected. Shareholders are not permitted to cumulate their Class A voting shares for purposes of electing directors.   Note that if your Class A voting shares are held by a broker or nominee, such broker or nominee will not have authority to exercise his or her discretion to vote your Class A voting shares on Proposal 1 unless you provide instructions to him or her regarding how you would like your Class A voting shares to be voted. If such broker or nominee does not receive such instructions, and as a result, is unable to vote your Class A voting shares on Proposal 1, this will result in a “broker non-vote.”   For purposes of determining the number of votes cast, only the Class A voting shares voting “FOR” or “WITHHOLD” are counted. As such, abstentions are not treated as votes cast and are not counted in the determination of the outcome of Proposal 1.   Broker non-votes are not treated as votes cast and are not counted in the determination of the outcome of Proposal 1. Abstentions and broker non-votes are counted for purposes of determining whether a quorum is present at the Annual Meeting.

 

Lionsgate 2018 Proxy Statement     5

 

 

 

What vote is required to approve the re-appointment of Ernst & Young LLP as our independent registered public accounting firm?		The affirmative vote of a majority of the votes cast by holders of the Class A voting shares present or represented by proxy at the Annual Meeting is required for the re-appointment of Ernst & Young LLP as our independent registered public accounting firm (“Proposal 2”).   Note that because this proposal is considered a routine matter, if your Class A voting shares are held by a broker or nominee, such broker or nominee will have authority to exercise his or her discretion to vote your Class A voting shares on Proposal 2 if you do not provide instructions to him or her regarding how you would like your Class A voting shares to be voted.   For purposes of determining the number of votes cast, only the Class A voting shares voting “FOR” or “WITHHOLD” are counted. As such, abstentions are not treated as votes cast and are not counted in the determination of the outcome of Proposal 2.   There are no broker non-votes for Proposal 2. Abstentions are counted for purposes of determining whether a quorum is present at the Annual Meeting.
What vote is required to approve the proposal regarding an advisory vote to approve executive compensation?		The affirmative vote of a majority of the votes cast by holders of the Class A voting shares present or represented by proxy at the Annual Meeting is required for the advisory vote to approve executive compensation (“Proposal 3”). Notwithstanding the vote required, please be advised that Proposal 3 is advisory only and is not binding on us. The Board will consider the outcome of the vote of this proposal in considering what action, if any, should be taken in response to the advisory vote by shareholders.   Note that if your Class A voting shares are held by a broker or nominee, such broker or nominee will not have authority to exercise his or her discretion to vote your Class A voting shares on Proposal 3 unless you provide instructions to him or her regarding how you would like your Class A voting shares to be voted. If such broker or nominee does not receive such instructions, and as a result is unable to vote your Class A voting shares on Proposal 3, this will result in a “broker non-vote.”   For purposes of determining the number of votes cast, only Class A voting shares voting “FOR” or “AGAINST” are counted. As such, abstentions are not treated as votes cast and are not counted in the determination of the outcome of Proposal 3.   Broker non-votes are not treated as votes cast and are not counted in the determination of the outcome of Proposal 3. Abstentions and broker non-votes are counted for purposes of determining whether a quorum is present at the Annual Meeting.
Who pays for the preparation of this proxy statement?		The Company will pay the cost of proxy solicitation, including the cost of preparing, assembling and mailing the Notice and, as applicable, the Meeting Materials. In addition to the use of mail, the Company’s employees and advisors may solicit proxies personally and by telephone, facsimile, courier service, telegraph, the Internet, e-mail, newspapers and other publications of general distribution. The Company’s employees will receive no compensation for soliciting proxies other than their regular salaries. The Company may request banks, brokers and other custodians, nominees and fiduciaries to forward copies of the Meeting Materials to their principals and to request authority for the execution of proxies, and the Company will reimburse those persons for their reasonable out-of-pocket expenses incurred in connection with these activities. The Company will compensate only independent third-party agents that are not affiliated with the Company but who solicit proxies. We have retained MacKenzie Partners, Inc., a third-party solicitation firm, to assist in the distribution of the Meeting Materials and solicitation of proxies on our behalf for an estimated fee of $20,000 plus reimbursement of certain out-of-pocket expenses.

 

6    Lionsgate 2018 Proxy Statement

 

 

 

May I propose actions or recommend director nominees for consideration at next year’s annual general meeting of shareholders?		Yes. Under U.S. laws, for your proposal or recommendation for director nominees to be considered for inclusion in the proxy statement for next year’s annual meeting, we must receive your written proposal no later than March 29, 2019. You should also be aware that your proposal must comply with SEC regulations regarding inclusion of shareholder proposals in company-sponsored Meeting Materials. Shareholder proposals or recommendations for director nominees submitted as per the Business Corporations Act (British Columbia) (the “BC Act”) to be presented at the next annual general meeting of shareholders must be received by our Corporate Secretary at our registered office no later than June 12, 2019, and must comply with the requirements of the BC Act. If you wish to recommend a director nominee you should also provide the information set forth under Information Regarding the Board of Directors and Committees of the Board of Directors — Shareholder Communications .   If the date of the 2019 annual meeting is advanced or delayed by more than 30 days from the date of the 2018 annual meeting, under U.S. laws, shareholder proposals intended to be included in the proxy statement for the 2019 annual meeting must be received by us within a reasonable time before we begin to print and mail the proxy statement for the 2019 annual meeting.   SEC rules also govern a company’s ability to use discretionary proxy authority with respect to shareholder proposals that were not submitted by the shareholders in time to be included in the proxy statement. In the event a shareholder proposal is not submitted to us prior to June 12, 2019, the proxies solicited by the Board for the 2019 annual meeting of shareholders will confer authority on the proxyholders to vote the shares in accordance with the recommendations of the Board if the proposal is presented at the 2019 annual meeting of shareholders without any discussion of the proposal in the proxy statement for such meeting. If the date of the 2019 annual meeting is advanced or delayed more than 30 days from the date of the 2018 annual meeting, then the shareholder proposal must have been submitted to us within a reasonable time before we mail the proxy statement for the 2019 annual meeting.
Who can I contact if I have questions?		Shareholders who have questions about deciding how to vote should contact their financial, legal or professional advisors. For any queries referencing information in this proxy statement or in respect of voting your Class A voting shares, please call MacKenzie Partners, Inc. at 1-800-322-2885 or 212-929-5500 or e-mail lionsgate@mackenziepartners.com .
Where can I find the voting results of the Annual Meeting?		We intend to announce preliminary voting results at the Annual Meeting and disclose final voting results in a Current Report on Form 8-K to be filed with the SEC within four business days following the Annual Meeting.

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

Our registered and head office is located at 250 Howe Street, 20 ^th Floor, Vancouver, British Columbia V6C 3R8. Our principal executive office and our corporate head office is located at 2700 Colorado Avenue, Santa Monica, California 90404, and our telephone number is (310) 449-9200. Our website is located at www.lionsgate.com . Website addresses referred to in this proxy statement are not intended to function as hyperlinks, and the information contained on our website is not a part of this proxy statement. As used in this proxy statement, unless the context requires otherwise, the terms “Lionsgate,” “we,” “us,” “our” and the “Company” refer to Lions Gate Entertainment Corp. and its subsidiaries.

The date of this proxy statement is July 27, 2018

 

Lionsgate 2018 Proxy Statement     7

 

 

 

PROPOSAL 3

ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

The Company is providing its shareholders with the opportunity to cast a non-binding, advisory vote on the compensation of our Named Executive Officers (as defined below) as disclosed pursuant to the SEC’s executive compensation disclosure rules and set forth in this proxy statement (including in the compensation tables and narratives accompanying those tables as well as in the Compensation Discussion and Analysis ).

In accordance with the requirements of Section 14A of the Exchange Act (which was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act) and the related rules of the SEC, the Board will request your advisory vote on the following resolution at the Annual Meeting:

RESOLVED , that the compensation paid to the Company’s Named Executive Officers, as disclosed in this proxy statement pursuant to the SEC’s executive compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis , the compensation tables and the narrative discussion that accompanies the compensation tables), is hereby approved.

This vote is an advisory vote only and will not be binding on the Company, the Board or the Compensation Committee of the Board, and will not be construed as overruling a decision by, or creating or implying any additional fiduciary duty for, the Board or the Compensation Committee. However, the Compensation Committee, which is responsible for designing and administering the Company’s executive compensation program, values the opinions expressed by shareholders in their vote on this proposal, and will consider the outcome of the vote when making future compensation decisions for the Named Executive Officers.

The Company’s current policy is to provide shareholders with an opportunity to approve the compensation of the Named Executive Officers each year at the Annual Meeting. The next such vote will occur at the 2019 Annual Meeting.

 

 

Vote Required and Board Recommendation

 

 

Approval of this Proposal No. 3 requires the affirmative vote of the holders of a majority of the votes cast by holders of the Class A voting shares present in person or by proxy at the Annual Meeting. For purposes of this proposal, abstentions and broker non-votes will not be counted as votes cast in determining the number of votes necessary for the advisory vote to approve executive compensation.

UNLESS SUCH AUTHORITY IS WITHHELD, THE PROXIES GIVEN PURSUANT TO THIS SOLICITATION WILL BE VOTED FOR THE ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION. THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” PROPOSAL NO. 3.

 

20    Lionsgate 2018 Proxy Statement

 

 

 

INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS

 

 

Board Leadership Structure

 

 

The Board is currently comprised of the following members:

 

•

an independent, non-executive Chairman;

•

an executive Chief Executive Officer;

•

an executive Vice Chairman; and

•

10 other independent directors (see Director Independence below).

Mr. Feltheimer is the Chief Executive Officer of the Company, and together with Mr. Burns, the Company’s Vice Chairman, has led the Company’s development for over 20 years. The Board believes it is appropriate for Messrs. Feltheimer and Burns to be on the Board in an executive capacity, as they are responsible for the day-to-day supervision, management and control of the business and affairs of the Company, develop its strategic direction, and serve as a bridge between management and the Board to support the alignment of the goals of both.

Dr. Rachesky is the Chairman of the Board. Dr. Rachesky provides leadership as a non-executive Chairman and helps ensure independent oversight of the Company. Dr. Rachesky also presides over the regularly scheduled executive sessions of the members of the Board who are not employees of the Company or any of its subsidiaries (the “Non-Employee Directors”). In furtherance of the independent oversight of management, the Non-Employee Directors routinely meet and hold discussions without management present.

In keeping with good corporate governance practices and as required by the corporate governance standards of the New York Stock Exchange (the “NYSE”), we maintain a majority of independent directors, as defined under the NYSE rules. The Board currently has 11 independent members. A number of our independent Board members are currently serving or have served as directors or as members of senior management of other public companies. All of the committees of the Board are comprised solely of independent directors, each with a different independent director serving as chairperson of the committee. We believe that the number of independent experienced directors that make up the Board, along with the independent oversight of the Board by the non-executive Chairman, benefits the Company and our shareholders.

The Board does not have a policy regarding the separation of the roles of Chief Executive Officer and Chairman of the Board as the Board believes it is in the best interests of the shareholders of the Company for the Board to make that determination based on the position and direction of the Company and the membership of the Board. The Board, in its discretion, may elect a Chairman from among its members. The Board has determined that having an independent director serve as Chairman of the Board is in the best interest of the shareholders of the Company.

 

 

Board Role in Risk Oversight

 

 

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

 

Lionsgate 2018 Proxy Statement     21

 

 

 

 

Board of Directors		At regularly scheduled meetings, the Board generally receives reports from management which include information relating to specific risks faced by the Company. As appropriate, the Company’s Chief Executive Officer or other members of senior management provide strategic and operational reports, which include risks relating to the Company’s Motion Pictures , Television Production and Media Networks segments. The Company’s Vice Chairman reports on the Company’s various investments and financing activities, including analysis of prospective capital sources and uses. The Company’s Chief Financial Officer reports on credit and liquidity risks, tax strategies, integrity of internal controls over financial reporting and on internal audit activities. The Company’s General Counsel reports on legal risks and reviews material litigation with the Board. Additionally, the full Board may receive reports from individual committee chairpersons, which may include a discussion of risks initially overseen by the committees for discussion and input from the Board. In addition to these regular reports, the Board receives reports on specific areas of risk from time to time, such as cyclical or other risks that are not covered in the regular reports given to the Board and described above. Outside of formal meetings, Board members also have regular access to senior and other executives of the Company. The committee and management reports, and real-time management access, collectively provide the Board with integrated insight on the Company’s management of its risks.
Committees		The Board also carries out its oversight responsibility through the delegation to its committees of responsibilities related to the oversight of certain risks.   •    The Audit & Risk Committee is generally responsible for reviewing the Company’s risk assessment and enterprise risk management, including having oversight over the Company’s information technology and cybersecurity policies and procedures. Specifically, among other responsibilities set forth in the Audit & Risk Committee’s charter, the committee: (i) discusses guidelines and policies, as they arise, with respect to financial risk exposure, financial statement risk assessment and risk management periodically with the Company’s management, internal auditor, and independent auditor, and the Company’s plans or processes to monitor, control and minimize such risks and exposures; (ii) reviews and evaluates management’s identification of all major risks to the business and their relative weight; (iii) when necessary, reviews the steps the Company’s management has taken to address failures, if any, in compliance with established risk management policies and procedures; (iv) reviews the Company’s various insurance policies, including directors’ and officers’ liability insurance; (v) reviews the significant reports to the Company’s management prepared by the internal audit department and management’s responses; and (vi) reviews the Company’s disclosure of risks in all filings with the SEC.   •    The Compensation Committee monitors risks related to the Company’s compensation practices, including practices related to equity programs, other executive or Company-wide incentive programs.   •    The Nominating and Corporate Governance Committee oversees risk as it relates to monitoring developments in law and practice with respect to the Company’s corporate governance processes, independence of the Board and director and management succession and transition.

The Board believes that the processes it has established for overseeing risk would be effective under a variety of leadership frameworks and, therefore, do not materially affect its choice of leadership structure as described under Board Leadership Structure above.

 

22    Lionsgate 2018 Proxy Statement

 

 

 

 

 

Policy on Hedging

 

 

The Board recognizes that hedging against losses in the Company’s securities may disturb the alignment between the interests of our officers and directors and those of our other shareholders in our performance and prospects. For this reason, officers, directors and employees are generally prohibited from entering into short sales of our securities, trading in “puts” and “calls” or other derivative securities that relate to the Class A voting shares and the Class B non-voting shares, and hedging or monetization transactions (such as zero-cost collars and forward sale contracts) that are designated to hedge or offset any decrease in the market value of our securities.

The Company’s Corporate Governance Guidelines also provide that directors are prohibited from pledging as collateral for a loan or holding in a margin account in which the shares are subject to margin a minimum number of shares held in the Company (currently, such number of shares equal to $150,000, which can be either through ownership of Class A voting shares, Class B non-voting shares or Class A voting shares and Class B non-voting shares on a combined basis) but if they have shares above such minimum number, they are able to pledge such shares as collateral for a loan or holding in a margin account.

 

 

Role of the Board

 

 

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

The Board held a total of six meetings in fiscal 2018 (including regularly scheduled and special meetings of the Board, which were held in person or via teleconference) and took action via unanimous written consent seven times. Other than Messrs. Fries and Grainge, and Dr. Malone, each director attended at least 75% of the aggregate number of meetings of the Board and, meetings of committees on which he or she served in fiscal 2018. All directors are invited, but not required, to attend the Annual Meeting. All of our directors attended our 2017 Annual General Meeting of Shareholders in person.

 

Lionsgate 2018 Proxy Statement     23

 

 

 

 

 

Board Committees and Responsibilities

 

 

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

 

Name

Audit & Risk Committee

Compensation Committee

Nominating and Corporate Governance Committee

Strategic Advisory Committee

Michael Burns

Gordon Crawford*

Arthur Evrensel*

Jon Feltheimer

Emily Fine*

Michael T. Fries*

Sir Lucian Grainge*

Dr. John C. Malone (1)*

G. Scott Paterson (1)*

Mark H. Rachesky, M.D.*

Daryl Simm*

Hardwick Simmons*

David M. Zaslav*

Meetings held in fiscal 2018 (in person or via teleconference)

5

5

4

2

(1)    Dr. Malone and Mr. Paterson are not standing for re-election at the Annual Meeting.

*Independent Director         Chairperson         Member         Financial Expert

 

Audit & Risk Committee				Number of Members		3
				Current Members		G. Scott Paterson, Chairman Emily Fine Hardwick Simmons
				Meetings held in fiscal 2018		5
				Messrs. Paterson (Chairman), Simmons and Ms. Fine are the current members of the Audit & Risk Committee. The Audit & Risk Committee held five meetings during fiscal 2018 (in person or via teleconference) and did not take action via unanimous written consent. The Audit & Risk Committee is governed by a written charter adopted by the Board, which is available on our website at http://investors.lionsgate.com/governance/governance-documents , or may be obtained in print, without charge, by any shareholder upon request to our Corporate Secretary, at either of our principal executive offices.

 

24    Lionsgate 2018 Proxy Statement

 

 

 

(cont.)				Pursuant to its charter, the duties and responsibilities of the Audit & Risk Committee include, among other things, the following:   •    overseeing the integrity of the Company’s financial statements; •    overseeing the Company’s exposure to risk and compliance with legal and regulatory requirements; •    overseeing the independent auditor’s qualifications and independence; •    overseeing the performance of the Company’s internal audit function and independent auditor; •    overseeing the development, application and execution of all the Company’s risk management and risk assessment policies and programs, and the discussion of such as they are reviewed in the Company’s financial statements; and •    preparing the reports required by applicable SEC and Canadian securities commissions’ disclosure rules.   The Board has determined that each member of the Audit & Risk Committee qualifies as an “independent” director under the NYSE listing standards and the enhanced independence standards applicable to audit committees pursuant to Rule 10A-3(b)(1) under the Exchange Act and that each member of the Audit & Risk Committee is “independent” and “financially literate” as prescribed by Canadian securities laws, regulations, policies and instruments. Additionally, the Board has determined that Mr. Paterson is an “audit committee financial expert” under applicable SEC rules and has “accounting or related financial management expertise” under the NYSE listing standards.   As of the date of this proxy statement, a replacement for Mr. Paterson, who currently serves as the Chairman on the Audit & Risk Committee, has not been determined by the Board. The Board intends to make such replacement no later than the meeting of the Board occurring immediately following the Annual Meeting, which is historically when the Board has re-appointed all Committee members.
Compensation Committee				Number of Members		4
				Current Members		Arthur Evrensel, Chairman Michael T. Fries Mark H. Rachesky, M.D. Daryl Simm
				Meetings held in fiscal 2018		5
				Messrs. Evrensel (Chairman), Fries, Rachesky and Simm are the current members of the Compensation Committee. The Compensation Committee held five meetings during fiscal 2018 (in person or via teleconference) and took action via unanimous written consent eight times. The Compensation Committee is governed by a written charter adopted by the Board, which is available on our website at http://investors.lionsgate.com/governance/governance-documents , or may be obtained in print, without charge, by any shareholder upon request to our Corporate Secretary, at either of our principal executive offices.   Pursuant to its charter, the duties and responsibilities of the Compensation Committee include, among other things, the following:   •    reviewing, evaluating and making recommendations to the Board with respect to management’s proposals regarding the Company’s overall compensation policies and practices and overseeing the development and implementation of such policies and practices;

 

Lionsgate 2018 Proxy Statement     25

 

 

 

(cont.)				•    evaluating the performance of and reviewing and approving the level of compensation for our Chief Executive Officer and Vice Chairman; •    in consultation with our Chief Executive Officer, considering and approving the selection, retention and remuneration arrangements for other executive officers and employees of the Company with compensation arrangements that meet the requirements for Compensation Committee review, and establishing, reviewing and approving compensation plans in which such executive officers and employees are eligible to participate; •    reviewing and recommending for adoption or amendment by the Board and, when required, the Company’s shareholders, incentive compensation plans and equity compensation plans and administering such plans and approving award grants thereunder to eligible persons; and •    reviewing and recommending to the Board compensation for Board and committee members.   The Compensation Committee may form subcommittees and delegate to its subcommittees such power and authority as it deems appropriate, but no subcommittee will have final decision-making authority on behalf of the Board unless so authorized. Our executive officers, including the Named Executive Officers, do not have any role in determining the form or amount of compensation paid to the Named Executive Officers and our other senior executive officers (other than our Chief Executive Officer, who makes recommendations to the Compensation Committee with respect to compensation paid to the other Named Executive Officers (other than the Vice Chairman)). Pursuant to its charter, the Compensation Committee is also authorized, after considering such independence factors as may be required by the NYSE rules or applicable SEC rules, to retain independent compensation consultants and other outside experts or advisors as it believes to be necessary or appropriate to carry out its duties. See Compensation Discussion and Analysis for additional discussion of the Compensation Committee’s role and responsibilities, including a discussion on the role of our compensation consultant in fiscal 2018.   The Board has determined that each member of the Compensation Committee qualifies as an “independent” director under the NYSE listing standards. In making its independence determination for each member of the Compensation Committee, our Board considered whether the director has a relationship with the Company that is material to the director’s ability to be independent from management in connection with the duties of a compensation committee member.
Nominating and Corporate Governance Committee				Number of Members		4
				Current Members		Daryl Simm (Chair) Emily Fine Sir Lucian Grainge David M. Zaslav
				Meetings held in fiscal 2018		4
				Messrs. Simm (Chair), Grainge, Zaslav and Ms. Fine are the current members of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee held four meetings during fiscal 2018 (in person or via teleconference) and took action via unanimous written consent one time. The Nominating and Corporate Governance Committee is governed by a written charter adopted by the Board which is available on our website at http://investors.lionsgate.com/governance/governance-documents , or may be obtained in

 

26    Lionsgate 2018 Proxy Statement

 

 

 

(cont.)				print, without charge, by any shareholder upon request to our Corporate Secretary, at either of our principal executive offices.   Pursuant to its charter, the duties and responsibilities of the Nominating and Corporate Governance Committee include, among other things, the following:   •    identifying individuals qualified to become members of the Board, consistent with criteria approved by the Board, including those recommended by our shareholders; •    considering and recommending to the Board the director nominees for each annual meeting of shareholders, the Board committees and the Chairpersons thereof; •    developing and recommending to the Board a set of corporate governance guidelines applicable to the Company; and •    overseeing the evaluation of the Board and management.   The Board nominates directors for election at each annual meeting of shareholders and elects new directors to fill vacancies when they arise. The Nominating and Corporate Governance Committee has the responsibility to identify, evaluate, recruit and recommend qualified candidates to the Board for nomination or election. In considering candidates for the Board, the Nominating and Corporate Governance Committee reviews the entirety of each candidate’s credentials. In particular, the committee’s assessment of potential candidates for election includes, but is not limited to, consideration of:   (i)  relevant knowledge and diversity of background and experience; (ii)   understanding of the Company’s business; (iii) roles and contributions valuable to the business community; (iv) personal qualities of leadership, character, judgment and whether the candidate possesses and maintains, throughout service on the Board, a reputation in the community at large of integrity, trust, respect, competence and adherence to the highest ethical standards; (v)   whether the candidate is free of conflicts and has the time required for preparation, participation and attendance at all meetings; (vi) compatibility with our Chief Executive Officer, senior management and the culture of the Board; and (vii)   other factors deemed relevant. With regard to diversity, the Company is committed to considering candidates for the Board regardless of gender, ethnicity and national origin.   The Nominating and Corporate Governance Committee assesses the Board’s current and anticipated strengths and needs based upon the Board’s then-current profile and the Company’s current and future needs, and screens the slate of candidates to identify the individuals who best fit the criteria listed above. During the selection process, the Nominating and Corporate Governance Committee seeks inclusion and diversity within the Board. Although we do not currently have a policy with regard to the consideration of diversity in identifying candidates for election to the board, the Nominating and Corporate Governance Committee recognizes the benefits associated with a diverse board, and takes diversity considerations into account when identifying candidates. The Nominating and Corporate Governance Committee utilizes a broad concept of diversity, including diversity of professional experience, employment history, prior experience on other boards of directors, and more familiar diversity concepts such as race, gender and national origin. These factors, and others considered useful by the Nominating and Corporate Governance Committee, will be reviewed in the context of an assessment of the perceived needs of the Board at a particular point in time. Prior to the nomination of a new director, the Nominating and Corporate Governance Committee follows prudent practices, such as interviews of the potential nominee conducted by members of the Board and senior management.

 

Lionsgate 2018 Proxy Statement     27

 

 

 

(cont.)				Additionally, the Board has not established term limits, as we believe that directors who have developed insight into the Company and its operations over time provide an increasing contribution to the Board as a whole. To ensure the Board continues to generate new ideas and operate effectively, the Nominating and Governance Committee evaluates individual Board member performance and takes steps as necessary regarding continuing director tenure.   For instructions on how shareholders may submit recommendations for director nominees to the Nominating and Corporate Governance Committee, see Shareholder Communications below.   The Board has determined that each member of the Nominating and Corporate Governance Committee qualifies as an “independent” director under the NYSE listing standards.   The nominees for the Annual Meeting were recommended for selection by the Nominating and Corporate Governance Committee and were selected by the Board. The Nominating and Corporate Governance Committee did not engage a third party to identify or assist it in identifying or evaluating potential nominees to the Board.
Strategic Advisory Committee				Number of Members		4
				Current Members		Hardwick Simmons, Chairman Gordon Crawford Michael T. Fries Mark H. Rachesky, M.D.
				Meetings held in fiscal 2018		2
				Messrs. Simmons (Chairman), Crawford, Fries and Rachesky are the current members of the Strategic Advisory Committee. The Strategic Advisory Committee held two meetings during fiscal 2018 (in person or via teleconference) and did not take action via unanimous written consent.   The Strategic Advisory Committee is responsible for reviewing the Company’s strategic plan, meeting with management on a periodic basis to review operations against the plan, as well as overseeing preliminary negotiations regarding strategic transactions and, when applicable, acting as a pricing and approval committee on certain transactions.   Each member of the Strategic Advisory Committee qualifies as an “independent” director under the NYSE listing standards.

 

 

Shareholder Communications

 

 

The Board recognizes the importance of providing our shareholders and interested parties with a means of direct communication with the members of the Board. Shareholders and interested parties who would like to communicate with the Chairman of the Board or our Non-Employee Directors as a group may do so by writing to the Board or our Non-Employee Directors as a group, care of our Corporate Secretary, at either of our principal executive offices. The complete text of our Policy on Shareholder Communications is available on our website at http://investors.lionsgate.com/governance/governance-documents . Our Corporate Secretary will log in all shareholder and interested party correspondence and forward to the director addressee(s) all communications that, in his or her judgment, are appropriate for consideration by the directors. Any director may review the correspondence log and request copies of any correspondence. Examples of communications that would be considered inappropriate for consideration by the directors include, but are not limited to, commercial solicitations, trivial, obscene, or profane items, administrative matters,

 

28    Lionsgate 2018 Proxy Statement

 

 

 

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

Shareholder recommendations for director nominees are welcome and should be sent to our General Counsel at 2700 Colorado Avenue, Santa Monica, California 90404, who will forward such recommendations to the Chairman of the Nominating and Corporate Governance Committee. Please see About the Annual Meeting—May I propose actions or recommend director nominees for consideration at next year’s annual general meeting of shareholders? for further information as to timing of submission of such recommendations. At the time a shareholder makes a recommendation the shareholder must provide:

 

•

the name and address of the shareholder making the recommendation and of the candidate(s);

•

all information about the candidate(s) that we would be required to disclose in a proxy statement in accordance with the Exchange Act and rules and regulation promulgated thereunder;

•

certification of whether the candidate meets the requirements to be

–

independent under the NYSE listing standards (including independent under the additional requirements for audit committee and compensation committee members);

–

a non-employee director under Rule 16b-3 of the Exchange Act, and

–

an outside director under §162(m) of the Internal Revenue Code;

•

proof of the candidate’s consent to serve on the Board if nominated and elected;

•

proof of the candidate’s agreement to complete, upon request, any questionnaire(s) customary for the Company’s directors; and

•

if a shareholder recommending a candidate is not a record holder, the shareholder must provide evidence of eligibility as set forth in Exchange Act Rule 14a-8(b)(2).

The Nominating and Corporate Governance Committee will evaluate candidates recommended by shareholders in the same manner as candidates recommended by other sources, including evaluating the candidate against any standards and qualifications set out in the committee’s guidelines and criteria approved by the Board from time to time.

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

 

 

Code of Conduct and Ethics

 

 

We have a Code of Business Conduct and Ethics that applies to all our directors, officers and employees that is available on our website at http://investors.lionsgate.com/governance/governance-documents , or may be obtained in print, without charge, by any shareholder upon request to our Corporate Secretary, at either of our principal executive offices. We will disclose on our website any waivers of, or amendments to, the code that applies to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer or persons performing similar functions.

 

 

Annual Director Evaluations

 

 

Pursuant to our Corporate Governance Guidelines and the charter of the Nominating and Corporate Governance Committee, the Nominating and Corporate Governance Committee oversees an annual evaluation of the performance of the Board, each of its committees and each director in order to assess the overall effectiveness of the Board and its committees, director performance and Board dynamics. The evaluation process is designed to facilitate ongoing, systematic examination of the Board’s effectiveness and accountability, and to identify opportunities for improving its operations and procedures. The effectiveness of individual directors is considered each year when the directors stand for re-nomination. In May 2018, detailed surveys were used for the evaluations conducted for the Board and each committee. The surveys were designed to provide information pertaining to the competencies, behaviors and effectiveness of the Board, the committees and the directors, and suggested areas for improvement. The Nominating and Governance Committee reviewed the results of the assessments, including comments provided, and shared them with the Board. Members of senior management who regularly interact with the Board and/or its committees are also surveyed to solicit their input and perspective on the operation of the Board and its committees, as applicable, and how each might improve its effectiveness.

 

Lionsgate 2018 Proxy Statement     29

 

 

 

 

 

Director Independence

 

 

It is the policy of the Board that, as required by the requirements of the NYSE listing standards, a majority of directors be “independent” of the Company and of the Company’s management. For a director to be deemed “independent,” the Board will affirmatively determine that the director has no material relationship with the Company or its affiliates or any member of the senior management of the Company or his or her affiliates. In making this determination, the Board will apply, at a minimum and in addition to any other standards for independence established under applicable statutes and regulations, the following standards, which are available on our website at http://investors.lionsgate.com/governance/governance-documents , and which may be amended or supplemented, from time to time:

 

•

A director who is, or has been within the last three years, an employee of the Company, or whose immediate family member is, or has been within the last three years an executive officer of the Company will not be deemed independent. Employment as an interim Chairman or Chief Executive Officer or other executive officer will not disqualify a director from being considered independent following that employment.

•

A director who has received, or who has an immediate family member who has received, during any twelve-month period within the last three years, more than $120,000 in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service), will not be deemed independent. Compensation received by a director for former service as an interim Chairman or Chief Executive Officer or other executive officer, and compensation received by an immediate family member for service as an employee (other than an executive officer) of the Company will not be considered in determining independence under this test.

•

(A) A director who is a current partner or employee of a firm that is the Company’s internal or external auditor; (B) a director who has an immediate family member who is a current partner of such a firm; (C) a director who has an immediate family member who is a current employee of such a firm and personally works on the Company’s audit; or (D) a director who was, or whose immediate family member was, within the last three years a partner or employee of such a firm and personally worked on the Company’s audit within that time will not be deemed independent.

•

A director who is, or whose immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of the Company’s present executive officers at the time serves or served on that company’s compensation committee will not be deemed independent.

•

A director who is a current employee, or whose immediate family member is a current executive officer, of an entity that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of such other entity’s consolidated gross revenues, will not be deemed independent. In applying this test, both the payments and the consolidated gross revenues shall be those reported in the last completed fiscal year. Contributions to tax exempt organizations shall not be considered payments for purposes of this test, provided, however, that the Company shall disclose either on or through its website or in its annual proxy statement that any such contributions made by the Company to any tax exempt organization in which any independent director serves as an executive officer if, within the preceding three years, contributions in any single fiscal year from the Company to the organization exceeded the greater of $1 million, or 2% of such tax exempt organization’s consolidated gross revenues. If this disclosure is made on or through the Company’s website, the Company must disclose that fact in its annual proxy statement, and provide the website address. The Board considers the materiality of any such relationship in determining director independence.

Pursuant to our Corporate Governance Guidelines, the Board undertook its annual review of director independence in July 2018. During the annual review, the Board considered transactions and relationships between each director or any member of his/her immediate family and the Company and its subsidiaries and affiliates, including those reported under the heading Certain Relationships and Related Transactions below. The Board also examined transactions and relationships with the Company between directors or their affiliates and members of the Company’s senior management or their affiliates. As provided in our Corporate Governance Guidelines, the purpose of this review was to determine whether any such relationships or transactions were inconsistent with a determination that the director is “independent.” The Nominating and

 

30    Lionsgate 2018 Proxy Statement

 

 

 

Corporate Governance Committee, with assistance from counsel, regularly reviews our Corporate Governance Guidelines to ensure their compliance with Canadian law, SEC and NYSE regulations. The full text of our Corporate Governance Guidelines is available on our website at http://investors.lionsgate.com/governance/governance-documents , or may be obtained in print, without charge, by any shareholder upon request to our Corporate Secretary, at either of our principal executive offices.

As a result of this review, the Board affirmatively determined that each of Messrs. Crawford, Evrensel, Fries, Grainge, Malone, Paterson, Rachesky, Sanchez, Simm, Simmons, Zaslav and Mmes. Fine and McCaw are “ independent ” under our Standards for Director Independence, Canadian standards, SEC rules and regulations (for Audit & Risk Committee members) and the NYSE listing standards. Each of these directors and director nominees meets the independence requirements adopted by the Board as set forth above and has no other material relationships with the Company that the Board, after considering all relevant facts and circumstances, believes would interfere with the exercise of independent judgment in carrying out such director’s responsibilities.

 

 

Director Compensation

 

 

Compensation Program . The Compensation Committee reviews and makes recommendations to the Board with respect to compensation of the Non-Employee Directors. The Board has final approval of such compensation.

Under our current program, the Non-Employee Directors receive (i) an annual retainer of $50,000, (ii) an award of restricted share units with a grant date value of $50,000 granted annually on the date of the Company’s Annual General Meeting of Shareholders (with $25,000 of the value based on the closing price of the Class A voting shares and $25,000 of the value based on the closing price of the Class B non-voting shares on the last trading day prior to the grant date and the number of units rounded to the nearest whole unit) (which award may instead be granted by the Board as a fixed amount of cash vesting in annual installments over three years following the date of grant) and (iii) the other retainers and fees set forth in the table below. The restricted share units vest in annual installments over three years following the date of grant and are paid in an equivalent number of Class A voting shares and Class B non-voting shares. Pursuant to the Company’s policies, directors are also reimbursed for reasonable expenses incurred in the performance of their duties.

 

Type of Compensation		Amount of Compensation
Annual Retainer		$50,000
Audit & Risk Committee Chair Retainer		$15,000
Other Committee Chair Retainer		$10,000
Committee Meeting Retainer		$1,400 per meeting
Chairman of the Board Retainer		$52,000
Annual Equity Grant Value		$50,000

The amount in the table above are annualized, except as noted. The retainers and fees for the Non-Employee Directors are paid, at the director’s election, in all cash, 50% in cash and 50% in the form of the Company’s common shares (with the 50% portion that will be paid in shares to be paid 50% in Class A voting shares and 50% in Class B non-voting shares), or 100% in the form of the Company’s common shares (with 50% to be paid in Class A voting shares and 50% in Class B non-voting shares). However, the Board retains discretion to provide for the retainers for one or more directors to be paid in a different mix of cash and the Company’s common shares (whether in Class A shares, Class B shares or a combination thereof) as it determines appropriate. Retainers are paid in two installments each year, with the number of the Company’s common shares to be delivered in payment of any retainer to be determined by dividing the dollar amount of the retainer to be paid in the form of the Company’s common shares by the average closing price of the Company’s common shares (either Class A shares or Class B shares, as applicable) for the previous five business days prior to payment, and are fully vested at the time of payment.

 

Lionsgate 2018 Proxy Statement     31

 

 

 

Education. The Company encourages the participation of all directors in continuing education programs, at the Company’s expense, that are relevant to the business and affairs of the Company and the fulfillment of the directors’ responsibilities as members of the Board and any of its committees.

Stock Ownership Policy . The Company requires that Non-Employee Directors maintain an ownership position in the Company of at least $150,000 of the Company’s common shares (which can be either through ownership of Class A voting shares, Class B non-voting shares or Class A voting shares and Class B non-voting shares on a combined basis). New directors have three years from their initial election to the Board to reach this ownership threshold.

Fiscal 2018 Director Compensation. The following table presents information regarding compensation earned or paid to each of our Non-Employee Directors for services rendered during fiscal 2018. Compensation paid to Messrs. Feltheimer and Burns is presented in the Summary Compensation table and the related explanatory tables below.

 

Name		Fees Earned or Paid in Cash ($)(1)					Stock Awards ($)(2)(3)					Option Awards ($)(3)					Non-Equity Incentive Plan Compensation ($)					Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)					All Other Compensation ($)					Total ($)
(a)		(b)					(c)					(d)					(e)					(f)					(g)					(h)
Gordon Crawford		$58,400					$49,996					$    —					$    —					$    —					$    —					$108,396
Arthur Evrensel		$67,000					$49,996					$    —					$    —					$    —					$    —					$116,996
Emily Fine		$65,400					$49,996					$    —					$    —					$    —					$    —					$115,396
Michael T. Fries		$80,667					$—					$    —					$    —					$    —					$    —					$80,667
Sir Lucian Grainge		$69,467					$—					$    —					$    —					$    —					$    —					$69,467
Dr. John C. Malone (4)		$72,267					$—					$    —					$    —					$    —					$    —					$72,267
G. Scott Paterson (4)		$72,000					$49,996					$    —					$    —					$    —					$    —					$121,996
Mark H. Rachesky, M.D.		$120,200					$49,996					$    —					$    —					$    —					$    —					$170,196
Daryl Simm		$71,200					$49,996					$    —					$    —					$    —					$    —					$121,196
Hardwick Simmons		$74,000					$49,996					$    —					$    —					$    —					$    —					$123,996
David M. Zaslav		$72,267					—					$    —					$    —					$    —					$    —					$72,267

 

 

 

(1)

The amounts reported in column (b) represent director annual retainer, chairman fees and meeting fees for fiscal 2018, paid, at the director’s election, either 50% in cash and 50% in the form of our common shares, 100% in the form of our common shares, or 100% in cash, as described above. The value of the common shares is calculated using the average closing price of our common shares for the last five business days prior to payment. Payments of common shares are made twice a year in April and October of each year. During fiscal 2018, our Non-Employee Directors who elected to receive 50% of their retainers and fees in the form of common shares received the following number of shares: Mr. Evrensel, 1,163 shares, Mr. Simm, 1,185 shares and Mr. Simmons, 1,388 shares. During fiscal 2018, our Non-Employee Directors who elected to receive 100% of their retainers and fees in the form of common shares received the following number of shares: Mr. Crawford, 2,279 shares, Ms. Fine, 2,315 shares, Mr. Paterson, 2,505 shares, and Dr. Rachesky, 4,602 shares. During fiscal 2018, our Non-Employee Directors who elected to receive 100% of their retainers and fees in the form of cash included Messrs. Fries, Grainge, Malone and Zaslav.

(2)

Each Non-Employee Director then in office received a grant of 1,687 restricted stock units on September 12, 2017 at our annual meeting of shareholders (other than Messrs. Fries, Grainge, Malone and Zaslav, who receive cash in lieu of equity grants). Each grant consisted of 825 restricted stock units with respect to our Class A shares and 862 restricted stock units with respect to our Class B shares. The amounts reported in column (c) reflect the fair value of these awards on the grant date as determined under the principles used to calculate the value of equity awards for purposes of the Company’s financial statements. For a discussion of the assumptions and methodologies used to calculate the amounts referred to above, see the discussion of stock awards contained in Note 12 to the Company’s Audited Consolidated Financial Statements, included as part of the Company’s 2018 Annual Report filed on Form 10-K filed with the SEC on May 24, 2018.

 

32    Lionsgate 2018 Proxy Statement

 

 

 

(3)	The following table presents the number of unvested stock awards held by each of our Non-Employee Directors as of March 31, 2018. No Non-Employee Directors held any outstanding option awards as of that date.

 

Director		Number of Unvested Restricted Share Units as of March 31, 2018
		LGF.A		LGF.B
Gordon Crawford		1,855		1,892
Arthur Evrensel		1,855		1,892
Emily Fine		1,639		1,676
Michael T. Fries		-		-
Sir Lucian Grainge		-		-
Dr. John C. Malone		-		-
G. Scott Paterson		1,855		1,892
Mark H. Rachesky, M.D.		1,855		1,892
Daryl Simm		1,855		1,892
Hardwick Simmons		1,855		1,892
David M. Zaslav		-		-

(4)	Dr. Malone and Mr. Paterson are not standing for re-election at the Annual Meeting.

 

Lionsgate 2018 Proxy Statement     33

 

 

 

MANAGEMENT

 

 

Biographical Information

 

 

The following is a list of our executive officers followed by their biographical information (other than for Messrs. Feltheimer and Burns, whose biographical information appears above). Ages are as of July 20, 2018.

 

Name		Age		Position
Jon Feltheimer		66		Chief Executive Officer and Director
Michael Burns		59		Vice Chairman and Director
James W. Barge		62		Chief Financial Officer
Corii D. Berg		49		General Counsel
Brian Goldsmith		46		Chief Operating Officer
James W. Barge				Mr. Barge has been our Chief Financial Officer since October 2013. From October 2010 to November 2012, Mr. Barge served as the Executive Vice President, Chief Financial Officer of Viacom, Inc. (having served as its Executive Vice President, Controller, Tax and Treasury since January 2008), where he was responsible for overseeing all aspects of the company’s global finances and capital structure, as well as information technology, risk management and internal audit activities. Prior to joining Viacom, Mr. Barge served as Senior Vice President, Controller and Chief Accounting Officer (from October 2002 to December 2007) and Vice President and Controller (from February 2000 to October 2002) of Time Warner Inc., where he was responsible for the company’s overall financial planning, reporting and analysis, including budgeting and long range planning, and led several shared service and global process improvement initiatives. Mr. Barge joined Time Warner in March 1995 as Assistant Controller. Prior to joining Time Warner, Mr. Barge held several positions at Ernst & Young, including Area Industry Leader of the Consumer Products Group and National Office Partner, where he was responsible for the resolution of SEC accounting and reporting issues.
Corii D. Berg				Mr. Berg has been our General Counsel since June 2018. Prior to that, from September 2009 through April 2018, Mr. Berg served as Senior Executive Vice President, Business Affairs, Sony Pictures Television.
Brian Goldsmith				Mr. Goldsmith has been our co-Chief Operating Officer since October 2012, and served as our Executive Vice President, Corporate Development and Strategy, from September 2008 to October 2012. Prior to that, Mr. Goldsmith served as the Chief Operating Officer and Chief Financial Officer of Mandate Pictures, LLC, a wholly-owned subsidiary of the Company since September 2007.

 

 

Appointment of Executive Officers

 

 

Our officers are appointed and serve at the discretion of the Board. The employment agreements for the Named Executive Officers (as defined under Executive Compensation below) are described in Executive Compensation Information — Description of Employment Agreements below.

 

34    Lionsgate 2018 Proxy Statement

 

 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

 

Named Executive Officers

 

 

This Compensation Discussion and Analysis is designed to provide shareholders with an understanding of the Company’s executive compensation philosophy and objectives, as well as the analysis that the Compensation Committee performs in setting executive compensation. In doing so, it describes the material elements of compensation awarded to, earned by or paid to the individuals who served as our principal executive officer or our principal financial officer during fiscal 2018, and our three other most highly compensated executive officers for fiscal 2018 (the “Named Executive Officers”). The Named Executive Officers for fiscal 2018 include the following:

 

Name		Position
Jon Feltheimer		Chief Executive Officer and Director
Michael Burns		Vice Chairman and Director
James W. Barge		Chief Financial Officer
Brian Goldsmith		Chief Operating Officer
Steven Beeks		Former Co-Chief Operating Officer and Co-President, Motion Picture  Group
Wayne Levin		Former General Counsel and Chief Strategic Officer

 

 

Executive Summary

 

 

 

1

Goals of Our Compensation Program

We are a growth company. Many actions taken now are intended to drive long-term performance.

•

Attract and retain top executive talent

•

Align pay with performance

•

Align pay with strategy

•

Incentivize shareholder value creation

2

How Our Compensation Program Has Evolved

•

2016: Created a balanced approach to incentive bonuses based on corporate, divisional and individual performance

Adjusted OIBDA is a high-quality measure of underlying operating performance, reducing adjustments.

•

2017: Made Adjusted OIBDA 1 the primary performance metric

•

2018: Overhauled compensation structure to focus on granting of annual long-term incentives with achievement-based targets

•

No new equity awards granted to Named Executive Officers in fiscal 2018

 

 

1	For definition and reconciliation see Exhibit A .

 

Lionsgate 2018 Proxy Statement     35

 

 

 

3

Basic Compensation Program Principles

•

Balance components of compensation

We compete for executive and creative talent with media and entertainment platforms with global scale.

•

Be competitive within our industry

•

Maintain appropriate level of “at-risk” compensation

•

Maintain “clawback” policy to recover unjustified payments

•

Balance metric-driven and subjective decision-making

•

No gross-ups for tax exposure or personal benefit

•

No repricing of options or share appreciation rights (“SARs”)

•

No “single-trigger” change of control provisions

4

How the Compensation Committee Works

•

Takes counsel from Pay Governance, independent outside consultants

Some of the best measurements of performance don’t have dollar signs attached.

•

Company maintains proactive, ongoing and transparent dialogue with investors

•

Uses multiple operational, financial and intangible metrics

•

Uses peer group for compensation context

•

Links equity awards to long-term contracts

•

Sets targets for both our Chief Executive Officer and Named Executive Officers

•

Sets thresholds and caps for compensation awards

5

What the Program Incentivizes   Company-wide goals set for management include the following:

•   Achieve financial targets •   Build a strong balance sheet •   Scale and diversify global content platform

•   Generate premium content with lasting value •   Efficiently manage business operations •   Maintain growth trajectory

6

What Management Accomplished in Fiscal 2018 and How This was Evaluated by the Compensation  Committee

Achieve Financial Targets   •  Grew Adjusted OIBDA by 11% (on a pro forma combined basis) to a record $604 million. •  Continued to generate robust free cash flow of $330 million. •  Grew revenues by 29% to $4.1 billion. •  Fully diluted EPS was $2.15 versus $.09 in fiscal 2017. •  All business segments contributed to strong financial performance.

Build Strong Balance Sheet   •  Strengthened balance sheet, restructured debt to lock in lower interest rates and increase capacity, and continued to deleverage ahead of schedule. •  Reduced net debt by $650 million. •  Resumed quarterly cash dividend of $0.09 per share.

 

36    Lionsgate 2018 Proxy Statement

 

 

 

						Scale and Diversify Global Content Platform Efficiently Manage Business Operations   •  Deepened film and television pipelines, added new series to Starz’s robust slate of original programming. •  Added over 600 titles to a 16,000–title film and television library. •  Doubled Starz’s over-the-top subscriber base and accelerated its international rollout as part of its continued transition into a global brand.		Generate Premium Content with Lasting Value   •  Transformed targeted properties like Wonder into global box office hits. •  Continued to grow key brands such as John Wick , Step Up , and Dear White People across multiple platforms. •  Began preparation of new franchises like The Kingkiller Chronicle . •  Grew leadership in serving African American, Latinx, and female audiences.
						Efficiently Manage Business Operations   •  Completed Starz integration ahead of schedule. •  Began developing and producing Lionsgate premium series for Starz, monetized rights to key Starz programming, and exceeded target operating and tax synergies. •  Sold interest in EPIX. •  Expanded platform with acquisition of Good Universe. •  After close of the fiscal year, acquired majority stake in 3 Arts Entertainment.		Maintain Growth Trajectory   •  Grew all key financial metrics including Adjusted OIBDA to record levels. •  Deepened key talent relationships. •  Extended global reach by rolling out Starz internationally, ramping up television business in the U.K. and launching Lionsgate India.

		7				The Peer Group
						The Compensation Committee considers the compensation programs of this group of peer companies, which include competitors focused on television programming, film production and digital content creation.   For the year ended March 31, 2018 and based on publicly available data, revenues of $4.129 billion would place the Company in the 45 th percentile of this group. The Company’s market capitalization of $5.042 billion would place it in the 25 th percentile of this group.   The Compensation Committee also takes into account the broader marketplace for executive and creative talent in the entertainment industry, which comprises many entities whose compensation programs are not publicly disclosed.		Company		2017 Revenue ($billion)*		2017 Market Cap ($billion)*
								AMC Networks		$2.8		$3.3
								Discovery		$6.9		$8.5
								Electronic Arts		$4.8		$32.3
								Live Nation Entertainment		$10.3		$8.9
								Netflix		$11.7		$83.2
								Scripps Networks Interactive		$3.6		**
								Sirius XM		$5.4		$24.3
								Take-Two Interactive		$1.8		$12.6
								Tribune Media		$1.8		$3.7
								*Third party source.  **Acquired by Discovery in March 2018.

 

Lionsgate 2018 Proxy Statement     37

 

 

 

8

The Components of Executive Compensation

Item

Nature

Purpose

Timing

Basis

Base salary

Fixed; Short-term

Retention

Annual

Competitive within peer and industry context

Cash bonus

At-risk; Short-term

Reward near-term performance; Promotion and contribution of business strategy

Annual

Corporate, divisional and individual performance, within defined payment range

Restricted Share Units

At-risk Long-term

Retention; Reward long-term performance; Alignment with interests of the Company

Annual; Award coincident with signing of long- term employment agreement

Time and performance- based annual vesting

Options/Stock Appreciation Rights

At-risk; Long-term

Retention; Reward long-term performance; Alignment with interests of the Company

Annual; Award coincident with signing of long- term employment agreement

Time and performance- based annual vesting

		9				Determination of Annual Cash Bonus For Fiscal 2018
						Annual cash bonus available to each executive has a defined range.   •    Minimum: No bonus paid unless fiscal 2018 Adjusted OIBDA is at least $300.6 million. This threshold was achieved. •    Maximum: Each executive eligible for maximum opportunity, as shown below. Within the defined range, bonus is determined as a percentage of the executive’s fiscal 2017 bonus, based on performance, as follows:		Corporate (one third)   •    Overall financial and operating performance of the Company. •    Based on its evaluations, the Compensation Committee assigned a percentage award of 100% for this component.
								Divisional (one third)   •    Overall financial and operational performance of each Company operating division. •    Based on its evaluations the Compensation Committee assigned a percentage award of 100% for this component.
								Individual (one third)   •    Individual achievements and contributions of each executive. •    Compensation Committee takes into account, among other elements: leadership, innovation, accountability, work with the Board, entrepreneurship, motivation and development of subordinates, management of external relationships and actions as spokesperson for the company or industry. •    The Named Executive Officers’ individual performance percentages for fiscal 2018 are noted below.

 

38    Lionsgate 2018 Proxy Statement

 

 

 

10

Actual Cash Compensation for Continuing Executives

Fiscal 2018

Jon Feltheimer

Michael Burns

James W. Barge

Brian Goldsmith

Base Salary

$1.5 m

$1.0 m

$0.925 m

$0.9 m

Maximum Cash Bonus Possible

$10.0 m

$10.0 m

$3.0 m

$3.0 m

Maximum Cash Possible

$11.5 m

$11.0 m

$3.925 m

$3.9 m

Corporate Bonus Component

100%

100%

100%

100%

Divisional Bonus Component

100%

100%

100%

100%

Individual Bonus Component

100%

100%

100%

165%

Bonus Awarded

$7.0 m

$5.0 m

$1.1 m

$1.1 m

Core Cash Compensation

$8.5 m

$6.0 m

$2.025 m

$2.0 m

		11				Stock Based Compensation for Continuing Executives
						Fiscal 2018		Jon Feltheimer				Michael Burns				James W. Barge				Brian Goldsmith
								LGF.A		LGF.B		LGF.A		LGF.B		LGF.A		LGF.B		LGF.A		LGF.B
						New RSUs Awarded		0		0		0		0		0		0		0		0
						New Options/SARs Awarded		0		0		0		0		0		0		0		0
						RSUs Vested (1)		36,871		36,871		15,553		16,250		10,416		35,416		18,751		18,751
						Options/SARs Vested (2)		497,478		497,478		98,268		98,268		51,180		263,680		41,354		41,354
						Options/SARs Exercised		0		0		0		0		0		0		0		0
						(1)   Number of shares subject to time-and performance-based RSUs previously granted that vested in fiscal 2018. (2)   Number of shares subject to time-and performance-based options and/or SARs previously granted that vested in fiscal 2018.
		12				Summary Compensation   For more information on the compensation of our Named Executive Officers, please see the Summary Compensation Table on page 58 of this proxy statement.

 

Lionsgate 2018 Proxy Statement     39

 

 

 

 

 

Shareholder Engagement

 

 

We believe that regular, transparent communication with shareholders is important to our long-term success, and we value and solicit shareholder input. We meet with shareholders on a regular basis to discuss corporate strategy, management performance, corporate governance and executive compensation.

Additionally, prior to the filing of our proxy statement, we reach out to our largest shareholders to discuss the Company’s performance, strategic focus and/or compensation practices, as well as to provide context regarding proxy voting guidelines. During shareholder voting, we follow up on previous conversations to discuss any other or outstanding issues. At our annual meeting, shareholders then vote on the various proposals included in the proxy statement. Directors and management are available to answer questions or address concerns regarding the Company, including executive compensation and our corporate governance programs. Immediately after our annual meeting, we hold a Board meeting to discuss, among other things, vote results on proposals included in the proxy statement and to consider our corporate strategy, governance polices and compensation plans. We then continue to meet with shareholders throughout the year at conferences, road shows and one-on-one meetings to identity areas of concern and update them on our corporate strategy and other matters they think deserve attention.

 

Annual meeting Analyst and Investor Conferences Road Shows and Other "Fireaide" Chats Proxy Engagement Outreach Shareholder Engagement

Our investor relations department crafts these strategies, manages our profile at investor conferences, spearheads investor marketing initiatives and directs daily communications with shareholders and analysts. In fiscal 2018, the Company:

 

✓

Launched its new Investor Relations Website at http://investors.lionsgate.com ;

✓

Included the Company’s stock in the Bloomberg Gender-Equality Index, which measures gender equality across internal company statistics, employee policies, external community support and engagement, and gender-conscious product offerings;

✓

Presented at nearly 20 investor conferences, including at the 26 th Annual Deutsche Bank Leveraged Finance Conference , 46 th Annual Cowen Technology, Media  & Telecom Conference , and the 2018 SunTrust Internet and Digital Media Conference ;

✓

Attended over 20 analyst road shows and other “fireside chats” with current and potential shareholders;

✓

Held more than 50 analyst and investor meetings, representing virtually all of the Company’s analysts and top 30 shareholders; and

✓

Engaged with holders of over 80% of the Company’s disinterested outstanding shares.

 

40    Lionsgate 2018 Proxy Statement

 

 

 

 

 

Our 2017 Say-On-Pay Vote

 

 

At the Company’s annual general and special meeting of holders of Class A voting shares held in September 2017, 67.1% of votes cast at that meeting voted in favor of the Company’s executive compensation program (referred to as a “say-on-pay proposal”), up from 53.9% in the previous year. As part of its assessment of the Company’s executive compensation programs, the Compensation Committee reviewed these voting results and considered other factors discussed in this proxy statement, including the alignment of our compensation program with the long-term interests of our shareowners and the relationship between risk-taking and the incentive compensation we provide to our Named Executive Officers. As a result, the Compensation Committee took the following steps in designing our executive compensation program in fiscal 2018:

 

•

Finalized post-merger harmonization of pay practices between Starz and Lionsgate;

•

Redesigned the Company-wide compensation structure to focus on annual grants of long-term incentives with achievement-based targets to generally be made in connection with entering into an employment arrangement with the Company;

•

Adopted an executive compensation program pursuant to which target and maximum bonus opportunities were established;

•

Adopted an executive compensation program pursuant to which an objective minimum performance target level for participation was established based on Adjusted OIBDA, the Company’s primary financial reporting metric; and

•

Utilized corporate, divisional and individual performance criteria to calculate fiscal 2018 annual incentive bonuses for the top 100 most highly compensated executives of the Company.

 

 

Key Features of Our Executive Compensation Program

 

 

The Compensation Committee believes that our executive compensation program includes key features that align the interests of the Named Executive Officers and the Company’s long-term strategic direction with the interests of our shareholders. Our program’s key features include:

 

•

Competitive pay using peer group data as background information for compensation decisions.

•

Significant pay is at risk:

○

The Company provides both annual incentive opportunities and long-term equity awards to motivate performance and constitute a substantial portion of each executive’s total compensation opportunity.

○

The Compensation Committee retains certain discretion in assessing performance and awarding payouts under the annual incentive plan and performance-based equity grants.

•

Compensation is balanced:

○

The compensation program provides a mix of fixed compensation and short- and long-term variable compensation to mitigate excessive risk taking behavior.

•

Limited benefits and perquisites are provided.

We have entered into employment agreements with each of our Named Executive Officers and believe these agreements have helped create stability for our management team. These agreements have been structured to incorporate a number of features that we believe represent best practices in executive compensation and are generally favored by shareholders. In particular, these agreements do not provide for any accelerated vesting of equity awards or other payments or benefits that are triggered solely by a change in control (i.e., there are no “single-trigger” benefits) or any rights for the executive to be grossed up for any taxes imposed on excess parachute payments in connection with a change in control or any other benefits. These agreements also do not include any right for the executive to voluntarily terminate employment in connection with a change in control and receive severance (other than certain “good reason” terminations that we believe would constitute a constructive termination of the executive’s employment).

As noted below, equity award grants are generally made to the Named Executive Officers in connection with the executive entering into a new or amended employment agreement with the Company. The Company typically does not grant equity-based awards to its executive officers at any other time, but may pay annual bonuses in cash and/or equity awards, and retains discretion to grant equity awards to executives at other times as the Compensation Committee may determine appropriate.

 

Lionsgate 2018 Proxy Statement     41

 

 

 

 

 

Program Objectives

 

 

The goal of the Company’s executive compensation program is to facilitate the creation of long-term value for the Company’s shareholders by attracting, motivating, and retaining qualified senior executive talent. To this end, the Compensation Committee has designed and administered the Company’s compensation program to reward its executives for sustained financial and operating performance, to align their interests with those of the Company’s shareholders, and to encourage them to remain with the Company for long and productive careers. To achieve alignment with shareholder interests, the Compensation Committee believes that the Company’s compensation program provides significant, but appropriate, rewards for outstanding performance. The majority of the Company’s senior executives’ compensation is “at risk” in the form of annual and long-term incentive awards that are paid, if at all, based upon performance.

 

 

Compensation Practices

 

 

Below are examples of (i) executive compensation practices the Company has implemented because the Compensation Committee considers them to be effective at driving performance and supporting long-term growth for the Company’s shareholders while mitigating risk and (ii) executive compensation practices the Company does not engage in because the Compensation Committee believes they are inconsistent with the Compensation Committee’s philosophy, best practices in corporate governance, and the interests of the Company’s shareholders.

 

Practices the Company Has Implemented						Practices the Company Does Not Engage In
✓   Pay for Performance: A significant portion of the Named Executive Officers’ total compensation is “at risk” in the form of annual and long-term incentive awards that are linked to performance and/or the value of the Company’s common shares.   ✓   Use Multiple Performance Metrics: The Company’s annual bonus and long-term incentive programs rely on diversified performance metrics, including individual and group contributions and the Company’s financial and operating performance.   ✓   Mitigate Undue Risk: The Company’s compensation programs include risk mitigation features, such as significant Compensation Committee discretion and oversight, a balance of annual and long-term incentives for senior executives and the use of multiple performance metrics.   ✓   Maintain a Clawback Policy: The Board maintains policies requiring the recoupment, under certain circumstances, of performance-based compensation paid to the Named Executive Officers.   ✓   Competitive Peer Group: The Company’s peer group generally consists of companies which we directly compete for executive talent and are generally similar to the Company in terms of revenues, market-capitalization and focus of its business.   ✓   Independent Compensation Consultant: The Compensation Committee retained Pay Governance LLC to serve as its independent executive compensation consultant for fiscal 2018.						✗  No Excise Tax Gross-ups: Employment agreements and other compensation arrangements with the Named Executive Officers do not provide for any gross-up payments to cover excise taxes incurred by the executive.   ✗   No Tax Gross-ups for Personal Benefits: No Named Executive Officer is entitled to receive gross-ups for taxes on personal benefits.   ✗   No Single-Trigger Change in Control Agreements: None of the Named Executive Officers’ employment agreements or arrangements provide benefits triggered solely by a change in control of the Company.   ✗   No Hedging/Pledging: The Company prohibits all directors and employees, including the Named Executive Officers, from certain collateral pledging and margin practices involving the Company’s common shares.   ✗   No Repricing of Options or SARs: The Compensation Committee may not reprice options or SARs without the approval of the Company’s shareholders.

 

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Process for Determining Executive Compensation

 

 

Role of the Compensation Committee

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

Role of Management

The Compensation Committee reviews information provided by management in order to help align the design and operation of the executive compensation program with the Company’s business strategies and objectives. At various times during fiscal 2018, our Chief Executive Officer and other executives were invited by the Compensation Committee to attend relevant portions of the Compensation Committee meetings in order to provide information and answer questions regarding the Company’s strategic objectives and financial performance that may be relevant to the Compensation Committee’s decisions. Generally, the Chief Executive Officer makes recommendations to the Compensation Committee with respect to base salary, bonus, and long-term incentive awards for other executive officers (other than himself and the Vice Chairman), taking into account competitive market information, the Company’s compensation strategy, his subjective assessment of the particular executive’s individual performance, and the experience level of the particular executive. The Compensation Committee discusses with the Chief Executive Officer his recommendations and either approves or modifies the recommendations in its discretion. The Compensation Committee is solely responsible for determining the compensation of the Chief Executive Officer and the Vice Chairman. None of the Named Executive Officers are members of the Compensation Committee or otherwise have any role in determining their own compensation. The Compensation Committee reports to the Board on all compensation matters regarding our executives and other key salaried employees.

Role of Compensation Consultant

The Compensation Committee retains the services of outside compensation consultants to assist in its review and determination of the Company’s executive compensation program. For fiscal 2018, the Compensation Committee engaged Pay Governance as its independent compensation consultant. Pay Governance assists the committee in the development and evaluation of the Company’s executive compensation program, policies and practices and its determination of executive compensation, and provides advice to the Compensation Committee on other matters related to its responsibilities. Pay Governance reports directly to the Compensation Committee and the Compensation Committee has the sole authority to retain and terminate the consultant and to review and approve the consultant’s fees and other retention terms.

Consultant Independence

During fiscal 2018, Pay Governance did not perform work for the Company other than pursuant to its engagement by the Compensation Committee. The Compensation Committee has assessed the independence of Pay Governance and concluded that its engagement of Pay Governance does not raise any conflict of interest with the Company or any of its directors or executive officers.

Peer Group Analysis

The Compensation Committee selects a peer group to make comparisons to the compensation of similarly situated executives in order to help ensure that the Company’s compensation packages are competitive with the broader market and aligned with shareholder interests while retaining and motivating such executives. The peer group is generally comprised of companies with whom we compete for executive talent. These companies include competitors focused on television programming, film production and digital content creation, which the Compensation Committee considers to be similar to the Company in terms of revenue, market capitalization and business focus.

 

Lionsgate 2018 Proxy Statement     43

 

 

 

In October 2017, the Compensation Committee engaged Pay Governance to advise as to a review and update of the peer group used to assess executive compensation. Historically, the Company has utilized a group of companies consisting of both entertainment companies in the Towers Watson Entertainment Industry Survey and companies within the broader media industry as its peer group. Pay Governance reviewed the peer group using the following systematic screening process:

 

 

Global Industry Classifications Standards ("GICS") Screen Financial Screen (Review revenue) Financial Screen (Review market capitalization) Business reflects entertainment content, creation and distribution Peer GroupScreening Process to Determine Appropriate Peer Group Global Industry Classifications Standards ("GICS") Screen Financial Screen (Review revenue) Financial Screen (Review market capitalization) Business reflects entertainment content, creation and distribution Peer Group

First, Pay Governance reviewed companies that operate in similar GICS industries as the Company, which only includes U.S. publicly traded companies in the movies and entertainment, cable and satellite, broadcasting, home entertainment software and Internet software and services. Next, Pay Governance reviewed companies within a relevant range of the Company’s revenue and market capitalization at that time. Finally, using companies identified using this screening process, a peer group was selected based on the assessment of each company’s core business relative to the Company’s core business strategy of entertainment content and distribution, including key industry competitors. Based on its review, the Compensation Committee approved the following peer group of companies in October 2017:

 

AMC Networks		Discovery
Electronic Arts		Live Nation Entertainment
Netflix		Scripps Networks Interactive
Sirius XM		Take-Two Interactive Software
Tribune Media Company

Pay Governance suggested that the Company also utilize industry survey data to provide compensation data for studio or entertainment specific roles that may not be reflected within the peer group. The participants in this survey include, among others, NBC Universal, Paramount, Sony Pictures Entertainment, Twentieth Century Fox, Walt Disney Studios and Warner Bros. While most of the motion picture studios in the survey may have larger revenues than the Company, the Compensation Committee determined that it would be appropriate to consider this survey data for executive positions, as such companies reflect critical competitors for talent. In using this survey data, the Compensation Committee does not focus on any particular companies in the survey (other than the peer companies listed above). As used in this Compensation Discussion and Analysis , the term “market” as used for comparison purposes generally refers to the peer companies and the survey data described above.

Use of the Peer Group

Utilizing the data provided by Pay Governance with respect to the Company’s peer group, as well as industry survey data, the Compensation Committee evaluates the amount and proportions of base salary, annual incentive pay and long-term compensation, as well as the target total direct compensation value for a select number of the Company’s officers, including each of the Named Executive Officers, relative to the compensation of similarly situated executives among these companies. As noted below, the Company’s standard practice is to grant equity awards to the Named Executive Officers only in connection with the executive’s entering into a new or amended employment agreement with the Company (although the

 

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Compensation Committee does award annual bonuses from time to time in the form of equity awards and retains discretion to grant equity awards at other times as it deems appropriate). In assessing the executives’ compensation levels for market comparison purposes, the Compensation Committee allocates the grant date value of the equity awards over the term of the contract so that the executive’s compensation is not disproportionately high in the initial year of the contract and disproportionately low for the remaining years of the contract term.

In general, the Compensation Committee uses this data as background information for its compensation decisions and does not “benchmark” compensation at any particular level relative to the peer companies. Except as otherwise noted in this Compensation Discussion and Analysis , decisions by the Compensation Committee are subjective and the result of the Compensation Committee’s business judgment, which is informed by the experiences of the members of the Compensation Committee as well as analysis and input from, and peer group and survey data provided by, the Compensation Committee’s independent compensation consultant. The Compensation Committee believes that the compensation opportunities provided to our Named Executive Officers are appropriate in light of competitive considerations. The Compensation Committee continues to monitor current trends and issues in the Company’s competitive landscape and will modify its programs as it determines appropriate.

Employment Agreements

We have employment agreements with each of the Named Executive Officers, although we did not enter into any new or amended employment agreements with Named Executive Officers in fiscal 2018. Each employment agreement specifies the annual base salary that the executive will be entitled to receive during the term of the agreement, as well as the Company benefit plans in which the executive will participate and, in certain cases, perquisites that the executive will receive. In addition, each agreement sets forth the annual and long-term incentive compensation opportunities that the executive officer will be eligible to receive, with the amount of annual incentives and performance-based long-term incentives awarded, subject in all instances to the discretion of the Compensation Committee. Each agreement also specifies the post-termination benefits that will be received by each executive (including the treatment of any unvested equity awards) upon certain terminations of employment.

Each of these agreements was approved by the Compensation Committee and is described below under Description of Employment Agreements. We believe that it is in the best interests of the Company to enter into multi-year employment agreements with the Named Executive Officers. Such multi-year agreements, which are typical in the Company’s industry, assist in retention and recruiting efforts, foster long-term retention and promote stability among the management team, while still allowing the Compensation Committee to exercise considerable discretion in designing incentive compensation programs and rewarding performance.

For more information on the terms of these agreements, see Description of Employment Agreements below and the narrative descriptions accompanying Potential Payments upon Termination or Change in Contro l below.

 

 

Compensation Components

 

 

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

 

(1)

Base salary;

(2)

Annual incentive bonuses; and

(3)

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

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

 

Lionsgate 2018 Proxy Statement     45

 

 

 

Base Salary

We provide our executive officers and other employees with an annual base salary as a component of compensation that is fixed. Base salaries are established when we hire or otherwise enter into an employment agreement with an executive officer, based on negotiations with the executive and taking into account market compensation data for that position, and are generally not modified again until the end of the contract term. In determining base salary, the Compensation Committee primarily considers market data and compensation levels of executive officers of companies in competing businesses, an internal review of the executive’s compensation, both individually and relative to other executive officers, and the individual performance of the executive. Consistent with our philosophy that executive pay should primarily be based on performance, our practice has been to establish base salaries that are generally lower than the salaries of comparable positions at our peer companies at the time the contract is entered into, with the majority of the executive’s compensation being delivered in the form of performance-based incentive compensation that we believe helps create value for our shareholders.

Generally, base salaries along with perquisites and personal benefits are intended to attract and retain highly qualified executives. These are the elements of our executive compensation program where the value of the benefit in any given year is not dependent on performance and the marketplace. We believe that in order to attract and retain top executives, we need to provide them with certain predictable compensation levels that reward their continued service.

The Compensation Committee believes that the base salary levels of each of the Named Executive Officers are reasonable in view of the Compensation Committee’s assessment of peer group data for similar positions and the committee’s assessment of the Company’s overall performance and the contribution of those officers to that performance.

Annual Incentive Bonuses

Annual incentive bonuses are primarily intended to motivate the Named Executive Officers to achieve annual financial, operational and individual performance objectives and focus on promotion of and contribution to achievement of the Company’s business strategy. The Company has entered into employment agreements with each of the Named Executive Officers that generally provide for bonuses to be determined in the discretion of the Compensation Committee, as recommended by our Chief Executive Officer (other than for himself and the Vice Chairman), based on performance criteria established by the Compensation Committee. Annual incentive bonus payments are typically paid in June based on performance for the prior fiscal year.

2018 Executive Annual Bonus Program

In June 2017, the Compensation Committee approved a bonus plan, the Executive Annual Bonus Program (the “Executive Bonus Program”), to provide the terms of annual bonus opportunities to be granted to certain of the Company’s executive officers. Under the Executive Bonus Program, each Named Executive Officer is eligible to receive a bonus only if the Company achieves a target level of Adjusted OIBDA established by the Compensation Committee for that year. This minimum performance requirement is intended to include an objective performance component in the Executive Bonus Program. If the target level is not achieved, no bonuses will be paid under the plan for that fiscal year. If the target level is achieved, the executive is eligible to receive a bonus under the plan up to a maximum amount established by the Compensation Committee for each executive. The Compensation Committee then has the discretion to determine the actual amount of the bonus to be awarded to each executive for the fiscal year based on the executive’s target bonus amount for the year and such performance criteria as it may determine appropriate (subject in each case to the maximum bonus amount for that executive). The Executive Bonus Program provides that the executive generally must remain employed with the Company through the date on which bonuses are paid for a particular fiscal year to be eligible for a bonus for that year.

For fiscal 2018, the Compensation Committee determined that the target level of Adjusted OIBDA under the Executive Bonus Program would be $300.6 million. If this goal was not met, no bonuses would be paid under the program. The Compensation Committee selected Adjusted OIBDA, the Company’s new financial reporting metric, as the financial performance metric for fiscal 2018. The Company considers Adjusted OIBDA an important measure of the Company’s performance since this measure eliminates amounts we believe do not necessarily reflect the fundamental performance of

 

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the Company’s businesses, are infrequent in occurrence, and in some cases, are non-cash expenses. The Compensation Committee did not determine this target based on actual Adjusted OIBDA for fiscal 2017. Instead, the Compensation Committee set the target as an initial performance hurdle that could be met only with strong execution of the Company’s fiscal plan. Then, if, and only if, the initial hurdle was achieved, additional performance criteria would be evaluated in determining individual bonuses paid for fiscal 2018 (discussed below).

In December 2017, the Compensation Committee certified that target level was achieved as the Company’s estimated Adjusted OIBDA for fiscal 2017 was greater than $300.6 million at such time. Accordingly, each executive was eligible to receive a bonus for fiscal 2018 up to the executive’s maximum opportunity, as follows (the target amounts expressed in each case as a percentage of the executive’s base salary):

 

Name		Target Bonus Amounts					Maximum Bonus Amounts
Jon Feltheimer		100%					$10,000,000
Michael Burns		75%					$10,000,000
James W. Barge		50%					$3,000,000
Brian Goldsmith		50%					$3,000,000

Generally, the Compensation Committee makes such a certification at the end of the Company’s fiscal year. The certification was made in December 2017, however, because the Compensation Committee determined to pay a portion of fiscal 2018 bonuses prior to December 31, 2017. In doing so, and with the assistance of Pay Governance, the Compensation Committee noted that, as of December 2017:

 

•

The Company’s financial results were tracking well ahead of plan;

•

The Company would be celebrating its one-year anniversary of the acquisition of Starz, which the Company successfully integrated and was achieving and exceeding initial operating and tax synergy targets; and

•

Payment of a portion of fiscal 2018 bonuses could result in potential tax benefits for the Company as a result of newly enacted U.S. tax reform on state/local taxes and deductibility under Section 162(m) of the Internal Revenue Code.

Based on these factors, the Compensation Committee determined that it would be appropriate to pay a portion of fiscal 2018 bonuses to all employees of the Company in December 2017, rather than at the end of the fiscal year. Specifically, the Compensation Committee determined to pay 70% of each individual’s bonus paid for fiscal 2017, as the Company had completed approximately three quarters of its financial year at such time. Accordingly, the following bonus amounts were paid to Messrs. Feltheimer. Burns, Barge and Goldsmith in December 2017 (representing 70% of their bonuses paid for fiscal 2017):

 

Named Executive Officer		Fiscal 2017 Bonus		Portion of Fiscal 2018 Bonus     Paid in December 2017
Jon Feltheimer		$7,000,000		$4,900,000
Michael Burns		$5,000,000		$3,500,000
James. W. Barge		$1,100,000		$770,000
Brian Goldsmith		$900,000		$630,000

The balance of fiscal 2018 bonuses was determined by the Compensation Committee in June 2018. In determining the balance of the amount awarded to each executive for fiscal 2018, the Compensation Committee considered both the individual’s target bonus amount and the individual executive’s actual annual incentive bonus paid for fiscal 2017, the portion of the fiscal 2018 bonus already paid in December 2017, as well as market levels of compensation provided by Pay Governance, as noted below.

 

Lionsgate 2018 Proxy Statement     47

 

 

 

For each Named Executive Officer under the Executive Bonus Program, as well as for the top 100 most highly compensated executives of the Company, the percentage of the individual’s bonus paid for fiscal 2018 was evaluated by using three equally weighted criteria:

 

Corporate Performance		In determining the overall financial and operational performance of the Company in fiscal 2018, the Compensation Committee reviewed the Company’s fiscal 2018 performance noted herein, and performance compared to the Company’s fiscal 2018 plan and budget, approved by the Board in March 2017. Based on such results, the Compensation Committee determined that the top 100 executives of the Company, including all Named Executive Officers, would be awarded 100% for the corporate performance measure for fiscal 2018, as the Company exceeded its proposed financial plan and budget for fiscal 2018.
Divisional Performance		In determining the overall financial and operational performance of each executive’s applicable operating division in fiscal 2018, the Compensation Committee reviewed fiscal 2018 performance of Company divisions noted herein compared to such division’s proposed fiscal 2018 plan and budget, as well as individual contribution to the division, on a case-by-case basis. Based on such results, the Compensation Committee determined to award 100% for divisional performance, as each of the Company’s Motion Pictures , Television Production and Media Networks segments exceeded or achieved their proposed financial plan and budget for fiscal 2018.   In the cases of Messrs. Feltheimer and Burns, the Compensation Committee believed that it was appropriate to combine corporate and divisional performance measures, as the roles of Chief Executive Officer and Vice Chairman oversee all divisions within the Company. Based on the factors listed above, the Compensation Committee determined that Messrs. Feltheimer and Burns would be awarded 100% each for divisional and individual performance measures for fiscal 2018.

 

Individual Performance		In determining the individual achievements and contributions of each executive in fiscal 2018, the Compensation Committee took into account the executive officer’s leadership and execution with respect to the Company’s key strategic objectives. Within this context, achievements and performance that the Compensation Committee noted, are set forth below.

Fiscal 2018 Company Performance

Fiscal 2018 reflected a solid growth year for the Company. The Company had a strong year financially, growing Adjusted OIBDA, on a combined pro forma basis, by 11.2% ($542.8 million in fiscal 2017 versus $603.7 million in fiscal 2018) and continuing to generate strong free cash flow of $330 million which, combined with proceeds from the sale of its interest in EPIX, enabled it to reduce net debt by $650 million. The Company’s Motion Pictures segment profits increased by 36% to $179 million, on a combined pro forma basis (and will achieve ultimate profitability on over 90% of its fiscal 2018 theatrical releases), and the Company’s Media Networks segment revenues increased by 5% to $1.53 billion, on a combined pro forma basis, due to strong over-the-top (“OTT”) revenue growth (with segment profits increasing by 5% in the year to $469 million, on a combined pro forma basis), driven by a 101% increase in OTT subscribers during the fiscal year, along with revenues from worldwide digital media licensing arrangements. The Company also strengthened its balance sheet by paying off debt and reducing its leverage ratio ² ahead of plan to 3.4x (from a target of 3.5x-4.0x), restructuring its debt to provide for increased capacity and lower long-term interest rates, and resuming its quarterly cash dividend of $0.09 per share.

 

²    The ratio of Net Corporate Debt to the Company’s legacy Adjusted EBITDA. Net Corporate Debt represents total Corporate Debt, net of cash. Corporate Debt excludes capital leases, convertible notes and productions loans. See Exhibit A for additional information.

 

48    Lionsgate 2018 Proxy Statement

 

 

 

In fiscal 2018, the Company entered into partnerships with, among others, Paul Feig and his producing partner Jessie Henderson and television and film producer John Goldwyn through his John Goldwyn Productions banner. Additionally, with the acquisition of Good Universe in October 2017, a motion picture production and global sales company, the Company added key talent partnerships with Seth Rogen, Evan Goldberg and James Weaver’s Point Grey Pictures and Fede Alvarez’s Bad Hombre. After the end of the fiscal year, the Company entered into partnerships with Eugenio Derbez and producing partner Benjamin Odell’s 3Pas Studios, producers Eric and Kim Tannenbaum through their Tannenbaum Company production banner, and Salma Hayek Pinault along with her producing partner Jose “Pepe” Tamez under Ms. Hayek Pinault’s Ventanarosa Productions banner. Additionally, after the end of the fiscal year, the Company acquired a majority stake in 3 Arts Entertainment, a premier talent management and production company which creates a uniquely competitive platform combining a global distribution infrastructure, deep production expertise and prolific talent relationships.

In fiscal 2018, the Company also launched PANTAYA, a premium Spanish-language streaming video service with partner Hemisphere Media Group, and Laugh Out Loud, a streaming video service that serves as the exclusive home for all content created by Kevin Hart.

In the Company’s Motion Pictures segment, over 90% of the Company’s fiscal 2018 theatrical releases will achieve ultimate profitability. With releases such as Wonder (over $300 million in global box office) and Hitman’s Bodyguard , the Company’s calendar year 2017 box office was up 33% (from over $666 million in calendar year 2016 to over $885 million in calendar year 2017).

The Company also continued to build its portfolio of valuable brands and franchises by expanding existing franchises (such as John Wick) and developing new ones (such as Kingkiller Chronicle) . With respect to the John Wick franchise, in fiscal 2018: John Wick: Chapter Two more than doubled the box office of John Wick (with domestic box office at $92 million versus over $43 million, and worldwide box office over $171 million versus over $88 million); John Wick: Chapter Two became the biggest electronic sell-through title in the Company’s history (even surpassing The Hunger Games); John Wick: Chapter 3 started production for May 2019 release; the Company released John Wick Chronicles , an arcade style shooter game in virtual reality developed and published by Starbreeze (with additional games in development); and Starz announced that it has picked up the John Wick spinoff television series, The Continental . With respect to Kingkiller Chronicle, in fiscal 2018: Sam Raimi was announced to direct the feature film; Showtime announced that it has picked up a television series based on adaptation of The Kingkiller Chronicles ; Lin-Manuel Miranda was announced as executive producer of the television series; and the Company began production on several video games with three different partners based on the franchise.

The Company’s Television Production segment, which produces, syndicates and distributes nearly 90 television shows on more than 40 networks, greenlit the Company’s first series for Starz, The Rook (partnering with Liberty Global) (July 2017), began development on The Continental , expanded partnerships with streaming platforms to include six series for Netflix ( including Orange Is the New Black, Dear White People and The Joel McHale Show ), two series for YouTube Red ( Step Up: High Water and Kevin Hart: What the Fit ) and the first original series for Facebook Watch ( You Kiddin’ Me) , and continued to globalize its business in the U.K. by enhancing its television production efforts with nearly 20 television development projects (both in-house and through interests and strategic partnerships with television and film production company Kindle Entertainment, non-scripted television production company Primal Media, television drama company Potboiler Television, and film and television production company Bonafide Films).

The Company continued to expand its location-based entertainment and interactive ventures and games ancillary businesses by opening the first Lionsgate branded theme park zone in Motiongate Dubai, beginning development of several additional location-based entertainment properties around the world (including Lionsgate Entertainment World, an indoor theme park in Hengqin, China, Lionsgate Movie World, the first Lionsgate branded outdoor theme park in South Korea, and Lionsgate Entertainment City, smaller indoor branded entertainment centers in high traffic locations around the world such as New York and Madrid), preparing a slate of over 30 projects in varying stages of development, production and release in gaming, and invested in interactive storytellers Telltale Games, Finnish mobile game developer/publisher Next Games, live-streaming native mobile gaming platform Mobcrush, and leading eSports franchise Immortals, which includes the Los Angeles Valiant of The Overwatch League.

Moreover, the Company’s first full year of integration of Starz (acquired in December 2016) was completed ahead of schedule. Among other things, the combined companies achieved substantial cost and revenue synergies, consolidated their infrastructures, integrated content distribution businesses and collaborated on content opportunities. For instance, in fiscal

 

Lionsgate 2018 Proxy Statement     49

 

 

 

2018, significant incremental revenue synergies were achieved by monetizing the rights of the Starz series Power, Black Sails and Ash vs. Evil Dead through syndication arrangements. Additionally, Starz accelerated the international rollout of the Starz brand by partnering with Bell Media in Canada, launching its streaming service, STARZPLAY, on Amazon Prime Video Channels’ line-up in the UK and Germany, establishing a new content licensing agreement with Stan in Australia, and continuing to grow STARZPLAY in the Middle East and North Africa, which is approaching 1 million subscribers. Moreover, in fiscal 2018, Starz continued to grow a robust slate of premium programming targeted to key demographics, renewing series such as Power , Outlander and American Gods , announcing that it had picked up The Rook (produced by a partnership between the Company and Liberty Global), and readying the launches of new series such as Vida and Sweetbitter (both of which premiered in May 2018).

Fiscal 2018 Annual Incentive Bonuses

For fiscal 2018, the Compensation Committee approved the annual incentive bonuses to be awarded to each of the Named Executive Officers discussed below. In each case, the Compensation Committee used its discretion, as described above, to determine the bonuses based on the framework and its subjective assessment of the various performance achievements noted above. No other specific financial performance targets were established by the Compensation Committee for purposes of determining bonuses to be awarded to the Named Executive Officers. Rather, the Compensation Committee noted corporate performance, divisional performance and individual performance of the executive, as applicable, and made a subjective determination as to the level of that performance.

The Compensation Committee believes that this discretionary element is appropriate for the following reasons:

 

•

First, Lionsgate is a growth Company that attempts to execute strategic, accretive transactions that are expected to positively affect future financial results that the Company believes are not fully reflected in current or near-term corporate performance.

•

Further, the Company’s investments in new businesses supports a strategy of diversifying the company as a multiplatform global industry leader in entertainment that we expect will further generate significant long-term shareholder value, but may not be reflected in near-term and/or yearly corporate performance.

•

Moreover, intangible achievements reflecting the unique nature of the Company’s business significantly bolster the Company’s brand and standing in the creative community, but may not be directly reflected in yearly corporate performance.

•

Finally, awarding annual incentive bonuses solely according to overall corporate performance may penalize certain executives for financial results of other business units that may not have performed as well during the fiscal year.

Given these factors, the Compensation Committee believes that it is important to retain the discretion to recognize strong individual and divisional performance in awarding annual incentive bonuses, as is valuable and effective in motivating executives to achieve the Company’s business strategy.

Jon Feltheimer and Michael Burns

 

Name		Fiscal 17 Bonus					Corporate Performance (%)					Divisional Performance (%)					Individual Performance (%)					Total %    Average					Fiscal 18 Bonus
Jon Feltheimer		$7,000,000					100%					100%					100%					100%					$7,000,000
Michael Burns		$5,000,000					100%					100%					100%					100%					$5,000,000

For fiscal 2018, the Compensation Committee noted that Messrs. Feltheimer and Burns continued to demonstrate outstanding leadership in driving the Company’s execution on key strategic initiatives noted above, and led the Company in achieving overall strong financial performance. Messrs. Feltheimer and Burns also continued to improve the strength and reputation of the Company’s brands and businesses, diversified the Company’s global content platform, continued to deepen key talent relationships, and continued to build and develop the Company’s brands and franchises around the world. Additionally, under their leadership, senior management continued to foster a diverse and inclusive corporate culture.

 

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The Compensation Committee also engaged Pay Governance to assist it in assessing its proposed annual incentive bonus amounts for Messrs. Feltheimer and Burns. In its review, Pay Governance summarized highlights of the Company’s business and strategic performance achieved during fiscal 2018, reviewed the executives’ historic annual incentive bonuses relative to the Company’s financial performance, illustrated historic bonus pool information and as a percentage of the Company’s financial performance, illustrated the competitive position of Messrs. Feltheimer’s and Burns’ fiscal 2018 compensation relative to the Company’s peer group, and illustrated total return to shareholders relative to peer group companies with publicly available compensation information. Based on the foregoing, Pay Governance concluded that that it would be appropriate to reward Messrs. Feltheimer and Burns for the Company’s performance in fiscal 2018 with bonus payouts that were equal to fiscal 2017.

Accordingly, in June 2018, after consideration of Pay Governance’s analysis and in light of all of the performance achievements described above, the Compensation Committee approved a cash bonus of $7 million for Mr. Feltheimer for fiscal 2018 and a cash bonus of $5 million for Mr. Burns for fiscal 2018.

James W. Barge

 

Name		Fiscal 17 Bonus		Corporate Performance (%)		Divisional Performance (%)		Individual Performance (%)		Total % Average		Fiscal 18 Bonus
James W. Barge		$1,100,000		100%		100%		100%		100%		$1,100,000

For fiscal 2018, the Compensation Committee noted that Mr. Barge, as the Company’s Chief Financial Officer, provided solid leadership in executing the Company’s financial and operational goals. Mr. Barge drove improvements in the Company’s operations in 2018, and focused on strengthening the Company’s financial position by restructuring the Company’s debt portfolio, providing for increased capacity and lower long-term interest rates, and giving the Company additional financial flexibility. Mr. Barge also oversaw meaningful cost savings across the Company and maintained effective internal control over financial reporting and enhanced existing internal control processes. Mr. Barge successfully communicated an effective message to the investment community and achieved significant savings from strategic tax planning and restructuring. Mr. Barge also provided valued leadership and direction for the Company’s finance, accounting, tax, internal audit and participations departments.

Accordingly, in June 2018, based on its review and in light of all of the performance achievements described above, the Compensation Committee approved for Mr. Barge for fiscal 2018, a cash bonus of $1,100,000.

Brian Goldsmith

 

Name		Fiscal 17 Bonus		Corporate Performance (%)		Divisional Performance (%)		Individual Performance (%)		Total % Average		Fiscal 18 Bonus
Brian Goldsmith		$900,000		100%		100%		165%		122%		$1,100,000

The Compensation Committee noted that Mr. Goldsmith, as the Company’s Chief Operating Officer, provided exceptional leadership in fiscal 2018. Mr. Goldsmith led all corporate development activities during 2018, continuing to focus on executing the Company’s strategic growth initiatives domestically and throughout the world, including management of the Company’s joint ventures and investments. Mr. Goldsmith also effectively managed the Company’s general and administrative costs, reduced sourcing spend across the Company, and helped integrate Starz ahead of schedule, achieving substantial cost and revenue synergies, consolidated infrastructures, integrated content distribution businesses and collaborated on content opportunities.

Accordingly, in June 2018, based on its review and in light of all of the performance achievements described above, the Compensation Committee approved for Mr. Goldsmith for fiscal 2018, a cash bonus of $1,100,000.

 

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