SEC filing lays out package for Carmike CEO after buyout

Some call it a golden parachute, others the golden handshake, while some simply use the term “severance package.”

No matter the phrase, it boils down to money and any other benefits received by top company executives in the event of a change of control in leadership. Quite often it is the result of a merger or takeover.

That’s the position Carmike Cinemas finds itself in following the early March announcement by it and AMC Entertainment Holdings that the latter plans to purchase and absorb Columbus-based Carmike into its own corporate operations. The deal, valued at $1.1 billion, is supposed to be completed by the end of this year pending approval by federal regulators and shareholders.

At the helm of Carmike is David Passman, who stands to pocket a healthy sum from the acquisition of his firm by AMC, which operates AMC Theaters and is based in Leawood, Kan., a suburb of Kansas City. Passman, who joined Carmike in 2009, turned the movie-theater chain around operationally and financially, putting it in prime position for this moment.

For his efforts, Passman would receive a payment totaling $7,523,375 — minus taxes, of course — which includes a severance of $2,960,000 and accelerated vesting of stock valued at $4,540,973, along with $22,402 in continuing benefits. That’s according to an April 15 proxy statement filing by Carmike with the U.S. Securities and Exchange Commission.

The filing cites the payment being given for “termination without cause or resignation for good reason, in each case in anticipation of a change in control or within two years after a change in control.”

That would not include additional common stock accumulated by the Carmike chairman and chief executive officer through the years. The SEC filing lists Passman’s ownership of 616,189 stock shares as of March 30, with a note indicating that total includes an option to purchase 340,000 shares, vested or vesting within 60 days of March 30.

Carmike’s stock, which is traded on the Nasdaq exchange, has been hovering in the vicinity of $30 per share since the acquisition announcement. That’s the price AMC has agreed to pay Carmike shareholders per share, which would be a nearly 20 percent premium from the $25.11 price the day the deal was unveiled.

At $30 per share, the 616,189 stock notes controlled by Passman would be worth nearly $18,500,000 — coming, of course, with a hefty capital gains tax.

Still, the overall total compensation package for the Columbus CEO after departing Carmike Cinemas would approach $26 million minus any taxes, certainly enough for Passman, who turns 64 in June, to do what he pleases moving forward.

He and wife Brigitte are rebuilding a house in the Columbus neighborhood known as Green Island Hills, a project that he has said won’t be completed until this summer. In an interview after the Carmike-AMC announcement, Passman said it’s “way too early to predict” if he will make Columbus a permanent home.

“We plan on spending some time there,” he said of the Green Island Hills dwelling. “Once the transaction actually closes … we’ll start taking a look at whether we can travel from here or that kind of thing. We definitely want to do some travel.”

As for a couple of Passman’s key right-hand men, they won’t be left out after the acquisition of the Columbus firm by AMC.

Chief Financial Officer Richard Hare, who joined Carmike in 2006, looks to receive just over $2.5 million after the change in control, according to the SEC filing. That includes a severance payment of $1,342,500 and accelerated stock vesting valued at $1,186,129. In addition, the 191,810 shares of common stock controlled by him, valued at $30 each, would be worth $5,754,300. That’s a total package of just over $8.3 million.

Chief Operating Officer Fred Van Noy, who has been with Carmike Cinemas more than 40 years, working as a district manager early in his career, would be in line for a change-in-control payment of $3,351,784, according to the filing. That would include severance of $1,517,500 and accelerated stock vesting valued at $1,808,246. He also controls 185,000 common stock shares, which at $30 apiece would be valued at $5,550,000. That’s a total package of about $8.9 million.

This story was originally published April 28, 2016 at 5:07 PM with the headline "SEC filing lays out package for Carmike CEO after buyout."