FUN Cedar Fair LP

PROPOSAL THREE. ADVISORY VOTE ON OUR NAMED EXECUTIVE OFFICER COMPENSATION

We are seeking an advisory vote of our unitholders on the compensation of our named executive officers, which we are providing as required pursuant to Section 14A of the Securities Exchange Act of 1934, as amended. As recommended by our unitholders and approved by the Board, we provide this opportunity annually, and we anticipate holding the next unitholder advisory vote on the compensation of our named executive officers at our 2022 annual meeting. We encourage you to review the detailed information regarding our named executive officer compensation provided in the Compensation Discussion and Analysis section and the executive compensation tables and related narratives included in this proxy statement.

Cedar Fair has a long-standing tradition of delivering results for our unitholders, and we believe our compensation program is appropriately structured to support our continued growth and success and to incentivize our high-performing executive team. The compensation of our named executive officers for 2020 was significantly altered in response to the COVID-19 pandemic and 2020 operational restrictions. A summary of the impact of the COVID-19 pandemic on our business and actions taken in response is provided in detail in the Compensation Discussion and Analysis section.

The COVID-19 pandemic and 2020 operational restrictions nullified the retentive and incentive value of our traditional Adjusted EBITDA-based awards. As a result, the Compensation Committee re-examined its compensation strategy. We made changes to our program to provide incentives with goals directly tied to post-COVID-19 strategic objectives, while continuing to maintain a significant portion of compensation through performance-based components. Our priorities have been and continue to be focused on executive and unitholder alignment and retaining key talent in the short- and the long-term. In addition, during the COVID-19 pandemic, we have emphasized protecting the health and safety of our guests and associates, enhancing liquidity, and using metrics that account for COVID-19 disruptions. Our executive compensation decisions continue to reflect our desire to recognize, incentivize and retain critical talent and to align executive compensation with unitholders’ interests by emphasizing performance-based compensation, directly tying compensation to Company performance and increasing insider equity ownership. Our executive compensation decisions demonstrate our commitment to these goals, as further explained in this proxy statement.

We ask that you support the compensation of our named executive officers. Although this vote is advisory and non-binding in nature, the Board and the Compensation Committee value the opinion of our unitholders and will consider the voting results when determining our compensation policies, philosophy and arrangements in the future.

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BOARD MATTERS AND CORPORATE GOVERNANCE

Board Leadership Structure

The Board is committed to strong leadership and effective corporate governance, including appropriate oversight of management. We review and evaluate our Board leadership structure periodically and decided to modify it as part of our recent executive leadership transition process. Accordingly, following a robust review process led by the independent members of the Board, Mr. Hanrahan was appointed independent Chairman of the Board effective January 2020. Mr. Ouimet served as Executive Chairman and Ms. Smithart-Oglesby served as Lead Independent Director from January 2018 through the end of 2019, roles to which they were appointed to in connection with Mr. Zimmerman’s promotion to President and Chief Executive Officer. These transitions followed our successful and extended succession plan that was developed and implemented by the Board over the past several years. We believe this structure is optimal for our current circumstances and that it provides continuity of leadership and oversight of management by the Board. The Board continues to review and evaluate this structure and the appointment of the Chairman on a periodic basis.

As our Chairman of the Board, Mr. Hanrahan’s duties include:

Risk Oversight

The Board plays a direct role in monitoring and mitigating risks to the Partnership broadly and also administers its risk oversight role through its committee structure and the committees’ reports to the Board. The Board regularly reviews information regarding credit, liquidity and operational risk, and management identifies and prioritizes other material risks. The Board of Directors is kept abreast of each of the Committees’ risk oversight and other activities via regular reports of the Committee Chairs to the full Board. See Board Committees below for Committee descriptions and risk oversight activities.

The Board formally met 19 times in 2020 along with additional interactions between formal meetings. Committees of the Board met from time to time upon call of the Chairman of the Board or individual Committee Chairs. During 2020, each Director attended at least 75% of all of the meetings of the Board, inclusive of applicable committee meetings. Directors are expected to attend all meetings of the Board, meetings of the Committees on which they serve and the annual meeting absent occasional, unavoidable circumstances. All of the current board members, other than Mr. Carr who was appointed to the Board in November 2020, attended the 2020 annual meeting.

Executive sessions of all non-employee Directors are scheduled in conjunction with each regularly scheduled board meeting and were held 13 times during 2020. At least one of these executive sessions was attended by Independent Directors only. The Chairman of the Board presided at each executive session in 2020.

Board Committees

The Board has three committees: an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. Each Committee is composed entirely of independent Directors, as that term is defined in the NYSE listing standards and CFMI’s Corporate Governance Guidelines, and each member of the Audit Committee is independent as required under Section 301 of the Sarbanes-Oxley Act of 2002. Each Committee conducts an annual evaluation of its performance, and the Nominating and Corporate Governance Committee annually conducts an evaluation of the Board, its Committees and the Chairman of the Board. Furthermore, we periodically rotate committee membership and chairmanship. In 2020, we transitioned the Compensation Committee chairmanship from Mr. Hanrahan to Ms. Shanahan and transitioned the Nominating and Corporate Governance Committee chairmanship from Ms. Shanahan to Ms. Smithart-Oglesby.

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Director Nominations Process

The Nominating and Corporate Committee considers diversity of experience and background when selecting candidates. The Committee believes candidates for the Board should have the ability to exercise objectivity and independence in making informed business decisions; possess the highest integrity, as well as extensive knowledge, experience and judgment; maintain loyalty to the interests of the Partnership and its unitholders; and devote the extensive time necessary to fulfill a Director’s duties. Although CFMI does not have a formal policy on diversity in the selection of candidates for the Board, the Committee employs an inclusive and comprehensive approach designed to cultivate and recruit candidates with diverse backgrounds and experiences, including factors such as education, career and professional experience, independence, skills and personal characteristics, and understanding of and experiences in management, finance and marketing in the Partnership’s industry as well as other industries. The Committee reviews these factors as well as the other qualifications outlined above and strives to create a Board of Directors with a variety of complementary skills and experiences, both personal and professional.

The Nominating and Corporate Governance Committee will consider qualified nominees recommended by unitholders for membership on the Board. If a unitholder wishes to recommend an individual for membership on the Board, that recommendation can be sent to the attention of Duffield Milkie, Corporate Secretary, One Cedar Point Drive, Sandusky, Ohio 44870-5259. In addition, limited partners may nominate one or more persons for election or reelection to the Board at an annual meeting in accordance and compliance with the notice, procedural, informational and other requirements of our Partnership Agreement. See Unitholder Proposals and Nominations for the 2022 Annual Meeting for additional information.

Board Independence

In addition to the independence criteria contained in the NYSE listing standards, the Board has adopted additional standards to determine Director independence. These standards are located in our Corporate Governance Guidelines. The Board has affirmatively determined that current Board members Louis Carr, Gina D. France, Daniel J. Hanrahan, D. Scott Olivet, Carlos A. Ruisanchez, Lauri M. Shanahan and Debra Smithart-Oglesby, meet the independence criteria of the NYSE listing standards and our Corporate Governance Guidelines. The Board has determined Matthew A. Ouimet and Richard A. Zimmerman are not independent. Mr. Ouimet is a former executive officer of the Partnership, and Mr.  Zimmerman is a current executive officer of the Partnership.

Unitholder Engagement and Communication with the Board

Members of management and the Board practice and encourage ongoing engagement with our unitholders by meeting in person and over the telephone with our unitholders to discuss a broad range of topics, including governance and our compensation programs. As part of our unitholder engagement, we initiated meetings with and sought direct feedback from unitholders in December 2020, during which our Chief Executive Officer, Chief Financial Officer, Board Chairman, and Compensation Committee Chair directly engaged with holders of approximately 45% of our outstanding units. Investor perspectives shared during these conversations helped

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inform the Board’s thinking in a wide range of areas, including liquidity, capital allocation, expectations of management and executive compensation. Additionally, during 2020, management engaged with our unitholders through quarterly earnings calls and other channels of communication.

The Board also provides a formal process for unitholders and interested parties to send communications directly to the Board, including the non-employee independent Directors as a group or the presiding Director of such group. Shareholders and other interested parties may send mail communication addressed as follows:

Duffield Milkie, Corporate Secretary

One Cedar Point Drive

Sandusky, Ohio 44870-5259

The correspondence will be forwarded to the Chair of the Nominating and Corporate Governance Committee who will review the correspondence and take action accordingly. We also have a toll-free hot-line that is available to anyone, including unitholders, who wishes to bring a matter to the attention of the non-employee Directors. The telephone number of the hot-line is 800-650-0716. The Audit Committee of the Board of Directors is charged with reviewing information received and taking appropriate action as necessary.

Corporate Governance Materials

Our Corporate Governance Guidelines, Code of Conduct and Ethics, and the charters of the Board committees provide the framework for the governance of the Partnership.

The Corporate Governance Guidelines cover, among other things, the composition and functions of the Board, the qualifications and responsibilities of directors, director independence, the selection process for new directors, Board committees, compensation of the Board and the responsibilities of the Chairman of the Board.

We have adopted and maintain a Code of Conduct and Ethics that covers all directors, officers and employees of the Partnership and its subsidiaries. The Code of Conduct and Ethics requires, among other things, that the directors, officers and employees exhibit and promote the highest standards of honest and ethical conduct; avoid conflicts of interest; comply with laws, rules and regulations; and otherwise act in the Partnership’s best interest.

We intend to post amendments to or waivers from the Partnership’s Corporate Governance Guidelines and Code of Conduct and Ethics on our Investor Relations website at http://ir.cedarfair.com. No waivers have been made or granted prior to the date of this Proxy Statement.

Availability of Corporate Governance Documents

Our Corporate Governance Guidelines, Code of Conduct and Ethics, and charters of the committees of the Board are available on our Investor Relations website at http://ir.cedarfair.com. A printed copy of each of these documents is available, without charge, by sending a written request to: Cedar Fair L.P., One Cedar Point Drive, Sandusky, Ohio 44870-5259, Attention: Investor Relations, or by sending an email to investing@cedarfair.com.

Unit Ownership Guidelines

The Board maintains unit ownership guidelines for our Chief Executive Officer and his direct reports. The Chief Executive Officer is required to hold units having a value of at least four times his base salary, and his direct reports are required to hold units with a value of at least two times their base salaries. The Chief Executive Officer’s direct reports currently include the Chief Operating Officer, the Executive Vice President and Chief Financial Officer, the Executive Vice President and General Counsel, the Executive Vice President and Chief Marketing Officer, the Executive Vice President of Human Resources and the Senior Vice President, Corporate Strategy. Executives have five years from becoming an executive officer to gain compliance with the guidelines. The Board reviews compliance with the guidelines annually. As of March 26, 2021, the Chief Executive Officer and his direct reports were all in compliance with the guidelines or are expected to meet the guidelines in the prescribed time frame. Units held directly or beneficially owned, units held in benefit plans (e.g., in 401(k) accounts), performance units (as if earned at 100% of target), vested and unvested restricted units and phantom units will be counted for purposes of determining compliance with the unit ownership guidelines.

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The Board also maintains unit ownership guidelines for the Directors. The guidelines require Directors (excluding the Chief Executive Officer) to accumulate units equal to at least four times the annual cash retainer within four years of becoming a Director. The Chief Executive Officer is required to maintain ownership consistent with the executive requirements. As of March 26, 2021, all directors were in compliance with the guidelines or are expected to meet the guidelines in the prescribed time frame.

Anti-Hedging Policy

Certain forms of hedging or monetization transactions, such as zero-cost collars and forward sale contracts, allow a director, officer or employee to lock in much of the value of his or her unit holdings, often in exchange for all or part of the potential for upside appreciation in the unit. These transactions allow the director, officer or employee to continue to own the covered securities, but without the full risks and rewards of ownership. When that occurs, the director, officer or employee may no longer have the same objectives as the Company’s other unitholders. Therefore, directors, officers and employees are prohibited from engaging in any such transaction.

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EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis describes our compensation philosophy and objectives, the material elements of the compensation for our named executive officers, our methods for determining the elements and mix of executive compensation, and the reasons why we have elected to design our program around these particular elements of compensation. This information should be read in conjunction with the compensation tables, related narratives, and notes contained later in this proxy statement.

Following the summary is a detailed discussion of our philosophy and practices regarding the compensation awarded to, earned by, and paid to the following individuals, who were our named executive officers for 2020:

Summary

Cedar Fair had strong momentum coming into 2020. We achieved record 2019 results in net revenues, Adjusted EBITDA, attendance, in-park per capita spending and out-of-park revenues. We acquired Schlitterbahn Waterpark and Resort New Braunfels and Schlitterbahn Waterpark Galveston, two iconic water parks and one resort in Texas. We introduced a new WinterFest celebration at a sixth park, Canada’s Wonderland, opened the first Carowinds hotel and acquired Sawmill Creek Resort near Cedar Point. We also made other strategic investments in infrastructure, marketable new rides and attractions, resort facilities and immersive events. For the 2020 operating season, we were anticipating the introduction of a new world-class giga coaster at Kings Island, an extensive waterpark renovation at California’s Great America, renovations at the newly acquired Schlitterbahn water parks and Sawmill Creek Resort, and new attractions to enhance notable anniversaries at Cedar Point and Knott’s Berry Farm, celebrating 150 and 100 years, respectively. Our operating momentum that yielded record results in 2019 continued through early 2020.

The novel coronavirus (COVID-19) pandemic abruptly disrupted our 2020 operating season, continues to disrupt our business in significant ways, and will have a lingering and uncertain effect on our business performance and operations. We closed our properties in March 2020 in response to the spread of COVID-19 and government mandates. We pivoted our strategic focus to COVID-19 response and recovery initiatives. We focused on addressing near-term capital structure and liquidity concerns and adapting the business model to address near-term operating risks and longer-term disruption. We enhanced guest communication, leveraged technology, and heightened government relations and public advocacy. We temporarily reduced the CEO’s base salary by 40% and the base salaries of all other executives by 25% from the end of April until late July as part of our proactive measures to reduce operating expenses and cash outflow. We also suspended cash retainer fees for the Board of Directors during the same period. We began to resume partial operations at certain properties on a staggered basis starting in mid-June, and ultimately resumed partial operations at 10 of our 13 properties for portions of 2020.

Because our pre-COVID-19 compensation programs are primarily weighted toward Adjusted EBITDA performance, the incentive and retentive value for outstanding cash and equity grants for the management team was nullified. The awards had been made in late 2019 and those targets had been set assuming a typical operating calendar and environment for the year. There were no payouts under our named executive officers’ 2020 cash incentive awards, as the required business closures rendered it impossible for management to achieve the threshold Adjusted EBITDA goal.

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Consistent with our overall compensation philosophy and objectives, we re-examined our compensation strategy during the year in recognition of the extreme business disruption, related uncertainty and pivot to critical business response and recovery initiatives. We implemented changes and made incentive-based unit awards during the year to directly align executive compensation opportunities with the interests of our unitholders. We also took action to help retain critical talent and motivate our management team to achieve new strategic goals designed to optimize the Company’s position through the ongoing COVID-19 pandemic and drive the recovery expected to follow.

Compensation Philosophy and Objectives

Our compensation program is designed to incentivize our key employees to drive superior results, to give key employees a proprietary and vested interest in our growth and performance, and to enhance our ability to attract, retain and motivate exceptional leaders upon whom, in large measure, our sustained growth, progress and profitability depend. We believe our executive compensation programs should be directly tied to board-approved annual and long range plans and align with unitholder interests. Our program historically has been designed to both reward individual performance and to directly tie compensation to Company performance based upon the achievement of Adjusted EBITDA metrics as the key performance objective. Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization, other non-cash items, and adjustments as defined in our current credit agreement. We historically have used Adjusted EBITDA as the basis for our key performance measures because it tracks core operating performance closely across park operating units. Further, Adjusted EBITDA is widely used by analysts, investors and comparable companies to evaluate operating performance in our industry.

Our unitholder-approved incentive plan allows us to provide a mix of compensation that drives our management team to achieve strong annual results and to deliver long-term value for all unitholders. Our compensation structure provides us with flexibility to evolve our compensation philosophy and program from year to year as the market, our business or the industry requires. We used this flexibility to respond to the impact of COVID-19 and rigorously and proactively considered many alternative compensation structures. We made changes to our program to provide short- and long-term incentives with goals directly tied to post-COVID-19 strategic objectives, while continuing to maintain a significant portion of compensation through performance-based components. Our priorities have been and continue to be focused on executive and unitholder alignment and retaining key talent in the short- and long-term. In addition, during the COVID-19 pandemic, we have emphasized protecting the health and safety of our guests and associates, enhancing liquidity, and using metrics that account for COVID-19 disruptions.

Impact of the COVID-19 Pandemic on our Business

The COVID-19 pandemic has had a material impact on our business. In March 2020, we closed our properties in response to the spread of COVID-19 and government mandates. Beginning in the second quarter of 2020, we resumed partial operations at eight properties on a staggered basis with opening dates starting in mid-June and continuing through mid-July. We also reopened operations at some of our out-of-park attractions at this time, such as hotel operations. Attendance upon reopening was impacted by the ongoing effects of the pandemic and was below original expectations. However, demand steadily increased from 20-25% of comparable prior-year attendance levels upon initially reopening up to 55% of comparable prior-year attendance levels in September 2020. Due to these soft demand trends upon reopening, park operating calendars were adjusted for the remainder of 2020, including reduced operating days per week and operating hours within each operating day. In addition, some of our reopened parks closed earlier than the park’s typical operating calendar. Two additional parks, Carowinds and Kings Dominion, reopened on weekends in November and December to host abbreviated versions of their traditional WinterFest events. Following March 14, 2020, Knott’s Berry Farm’s partial operations were limited to culinary festivals. We ultimately resumed only partial operations at 10 of our 13 properties in 2020.

Following the March 2020 closure of our properties and in response to the negative effects of the COVID-19 pandemic, we took action to secure additional liquidity and to obtain relief from certain financial covenants aimed at providing flexibility to weather the disruption of the business. In April 2020, we issued $1.0 billion of senior secured notes and amended our credit facility to suspend and revise certain financial covenants, and we increased the capacity of our revolving credit facility by $100 million to $375 million. In October 2020, in response to the continuing effects of the COVID-19 pandemic, we issued an additional $300 million of senior unsecured notes and

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further amended our credit agreement to further suspend and revise certain financial covenants, and to extend the maturity on $300 million of our revolving credit facility. We also suspended quarterly partnership distributions and a series of capital expenditures planned for the 2020 and 2021 operating seasons, and proactively reduced operating expenses and cash outflows, including temporarily eliminating nearly all of our seasonal and part-time labor costs and deferring 25% of the base salaries of all non-executive salaried employees while our operations were idled. We temporarily reduced the CEO’s base salary by 40%, reduced the base salaries of all other executives by 25%, and suspended cash retainer fees for the Board of Directors from the end of April until late July as part of these efforts.

As a result of the COVID-19 disruption, 2020 included only 487 operating days compared with 2,224 operating days in 2019. Consolidated net revenues for 2020 totaled $182 million, decreasing $1.3 billion, from $1.5 billion for 2019. This reflected the impact of a 25.3 million-visit decrease in attendance, a $1.94 decrease in in-park per capita spending, and a $101.3 million decrease in out-of-park revenues. For 2020, Adjusted EBITDA loss totaled $302.0 million compared with $504.7 million in Adjusted EBITDA for 2019. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation - Adjusted EBITDA on pages 22-23 of the Company’s Form 10-K for fiscal 2020 for additional information regarding Adjusted EBITDA, including how we define and use Adjusted EBITDA and a reconciliation from net (loss) income. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation - Results of Operations on page 23 of the Company’s Form 10-K for fiscal 2020 for additional information regarding attendance, in-park per capita spending and out of park revenues, including how we define those measures. See Note 5 to our Consolidated Financial Statements in the Company’s Form 10-K for fiscal 2020 for a reconciliation of those measures.

Our Pay Governance Reflects Best Practices

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Unitholder Engagement and Consideration of Last Year’s Advisory Unitholder Vote on Executive Compensation

At the 2020 Annual Meeting of Limited Partner Unitholders, approximately 91% of the units cast were voted to approve the compensation of the Company’s named executive officers. We also initiated meetings with and sought direct feedback from unitholders in December 2020, during which our Chief Executive Officer, Chief Financial Officer, Board Chairman, and Compensation Committee Chair directly engaged with holders of approximately 45% of our outstanding units. Investor perspectives shared during these conversations helped inform the Board’s thinking in a wide range of areas, including liquidity, capital allocation, expectations of management and executive compensation. Executive compensation themes from the feedback included consistently high confidence in management, support for motivating and rewarding management related to business recovery efforts and the consideration of potential, additional metrics to supplement Adjusted EBITDA.

The Compensation Committee believes that the strong unitholder support for and feedback on the Company’s pay practices was a clear endorsement of our performance-based approach and focus on long-term value creation. Accordingly, the Compensation Committee maintained a strong performance orientation in the Company’s executive compensation structure, while adapting the program to align with our COVID-19 recovery strategy. See 2021 Compensation Update below for further information. The advisory vote at this Annual Meeting and future advisory votes on executive compensation will serve as an additional tool, along with unitholder engagement, to inform the Compensation Committee in evaluating the alignment of the Company’s executive compensation programs with the interests of the Company and its unitholders.

Determining Executive Compensation

We combine the compensation elements discussed below in a manner that we believe will optimize each executive’s contribution to the Company. We recognize and consider many factors in assessing an individual’s total compensation potential. In general, we work within market-based ranges of base salary commensurate with the executive’s scope of responsibilities. We use our cash incentive and unit-based award programs to challenge the executive to achieve superior annual and long-term results for the benefit of the Company and its unitholders. Because a significant portion of this compensation is dependent on performance results, an executive’s actual total compensation can vary considerably if we have a year that exceeds, or fails to meet, expectations. We believe that this design effectively aligns our unitholders’ interests with our executives and appropriately motivates our executives to achieve peak corporate performance over both the near and long term. The range of targeted compensation varies by position and reflects the unique skills, expertise and individual contributions of each executive.

Role of the Compensation Consultant

The Compensation Committee engages an independent executive compensation consulting firm to provide information and advice on competitive practices and trends in our industry, to make recommendations regarding the design of our compensation program and to assist with the review of compensation practices and an assessment of the effectiveness of these practices. The compensation consultant is retained by and reports directly to the Compensation Committee and regularly attends and participates in Compensation Committee meetings.

Semler Brossy has been the Committee’s compensation consultant since 2018 and advised on our 2020 executive compensation program, including the mid-year review and evaluation of the additional incentive-based unit awards we made in August 2020 in light of the unprecedented effects of the ongoing COVID-19 pandemic. Semler Brossy provided significant information and advice on industry and peer COVID-19 responses, target creation in a time of uncertainty and modeling of many compensation alternatives to consider and ensure consistency with our overall philosophy. Semler Brossy also assisted with our most recent biannual peer group review conducted in 2019, prepared our most recent biannual executive compensation benchmarking study and assisted with a review and comparison of our director compensation practices to market practices in 2019. Semler Brossy did not perform any other material services for the Company or for management other than to provide advice and counsel to the Compensation Committee throughout the year in accordance with the Compensation Committee’s instructions. The Compensation Committee may in the future rotate or select other compensation consultants to provide information or advice on our compensation programs from time-to-time.

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Compensation Consultant Conflicts Assessment

The Compensation Committee assessed the independence of Semler Brossy in February 2020 and February 2021 in accordance with the Securities and Exchange Commission (“SEC”) rules and concluded that Semler Brossy’s work for the Compensation Committee is independent and does not present any conflicts of interest.

In accordance with applicable SEC rules, the Committee took certain factors, which it believes may affect the independence of a compensation consultant, into consideration when selecting Semler Brossy. In particular, the Committee considered: (i) whether any other services had been or were being provided by Semler Brossy to the Company, (ii) the amount of fees paid by the Company to Semler Brossy as a percent of Semler Brossy’s total revenues, (iii) Semler Brossy’s policies and procedures designed to prevent conflicts, a copy of which was provided to the Committee, (iv) Semler Brossy’s ownership of Company units, and (v) any business or personal relationships between Semler Brossy and any Committee members or the Company’s executive officers. Following the consideration of these factors, the Committee determined that Semler Brossy is independent.

Peer Group and Peer Group Review

Compensation information from our peer group and broader industry surveys is one factor and reference point that the Compensation Committee considers in the executive compensation decision-making process. The Compensation Committee reviews the established peer group periodically, and undertook a peer group review in 2019 with the assistance of Semler Brossy. Following that review, we updated our peer group to remove three acquired companies (The Finish Line, Inc., Pinnacle Entertainment, Inc. and Regal Entertainment Group) and companies that did not meet certain qualitative criteria (The Buckle, Inc., DSW, Inc. and Marriott Vacations Worldwide Corporation). We also added five new companies to the group to replace the companies that we removed (Boyd Gaming Corporation, Churchill Downs Incorporated, Cracker Barrel Old Country Store, Inc., Eldorado Resorts, Inc. and Wyndham Hotels & Resorts, Inc.). Our updated peer group, which was approved by the Compensation Committee in 2019, was used for the benchmarking study that Semler Brossy conducted in 2019 in advance of decisions regarding pre-COVID-19 targeted compensation for 2020 and includes the following companies:

These peer group members were selected in a thorough review process, in consultation with Semler Brossy, that focused on the peer group we previously had in place, major business changes with respect to the peer group companies and potential companies to add. In establishing and updating our compensation peer group, we focus on U.S. publicly traded companies in family-oriented leisure, recreation and entertainment, with similar business models and markets to ours, with annual revenues between 1/2 to 2 1/2 times our revenues. We also review and reference market capitalization and employee counts and evaluate certain qualitative factors including seasonality, entertainment focus, multiple sources of revenues and meaningful capital investment. The goal was for peer group companies to meet the majority of these qualitative criteria in addition to the quantitative criteria. The Compensation Committee believes this peer group meets this goal, achieves the desired level of balance among the peer group companies in terms of revenues and market capitalization and provides a solid indicator of the executive compensation practices for businesses our size and in our industry. Accordingly, the Compensation Committee approved the above listed group of companies as the peer group for use in its ongoing compensation decisions.

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Market Analysis

The Compensation Committee periodically requests that the compensation consultant analyze the compensation of our executives relative to that of executives in similar positions at our peer companies and/or survey data, and generally requests the compensation consultant to compile that information at least biannually. While we review this peer group compensation information in our decision-making process, the information is one data point and the Committee exercises judgment and discretion when setting compensation levels. Our executive compensation program is more heavily weighted toward performance-based compensation, and our general objective is to provide base salaries within a competitive range at or near the 50th percentile of our survey data and peer group (where available for certain positions) and to provide total direct compensation opportunities that are between the 50th and 75th percentiles of our peer group and aligned with comparable survey data, subject to other individual considerations. Other factors we consider in setting compensation include: recent and projected Company performance, growth and returns to unitholders, the significant industry expertise of the team, recent individual performance, individual performance expectations, general industry practices, general economic conditions and external factors affecting our business, internal equity, retention and recruiting goals and transitioning of compensation in connection with leadership succession. The Committee does not rely on any single factor as a substitute for its own judgment in making compensation decisions, but instead applies its independent discretion and judgment in considering them in their entirety.

Following the review and update of the peer group in 2019, the Compensation Committee requested that Semler Brossy prepare an updated benchmarking study to assess the competitiveness of our executive compensation levels. The Semler Brossy review was completed in August 2019, and covered all components of target total direct compensation, including levels of base salary, target total cash compensation (i.e., base salary plus target bonus) and target long-term incentive compensation. The Semler Brossy study evaluated proxy data from our peer group companies and at Equilar Top 25 Executive Compensation Survey data. The Compensation Committee believes the Semler Brossy analysis further confirms that our executive compensation program is appropriately designed to achieve our general objectives. This updated peer and survey analysis provided context for and was one of the factors considered in our compensation decisions for 2020.

During 2020, Semler Brossy also provided significant information and advice regarding industry and peer responses to the disruption from COVID-19, future implications for executive compensation decisions and likely cadence of the market response to COVID-19 in executive compensation programs. This information helped frame the Committee’s discussions and compensation decisions in light of the shift to a business reset and recovery strategy.

Roles of the Board of Directors, the Compensation Committee and Our Chief Executive Officer

Although our Board makes the final compensation decisions for the named executive officers, the process of determining compensation is a collaborative one between the Board, Compensation Committee and the Chief Executive Officer. Our Chief Executive Officer dedicates time annually to formally review all of his direct reports, including the other named executive officers. He reviews each individual against targets and achievement of individual performance objectives established before the operating season begins (where applicable) and makes recommendations to the Compensation Committee regarding the compensation of each individual. The Compensation Committee, in consultation with the Chief Executive Officer and independent compensation consultant, makes compensation determinations and adjustments as it deems appropriate in accordance with the applicable compensation plans, and in turn, reports its recommendations to the Board for its approval. Decisions regarding the Chief Executive Officer’s compensation are made by the Compensation Committee, together with the Board of Directors, based upon its review of his performance relative to agreed objectives and in consultation with the independent compensation consultant.

The Board generally reviews compensation matters after the conclusion of the peak season and significant financial results are available. The Chief Executive Officer completes his evaluations of the other named executive officers’ performance against their established targets and achievement of their individual performance objectives and based upon that determination, prepares calculations with respect to cash incentive payouts and equity compensation awards for the current year, as well as recommendations for compensation adjustments for the coming year. The Chief Executive Officer generally presents this report to the Compensation Committee and to the Board in October, and provides a final review in February of the subsequent year when financial results have been

 

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finalized and final review of the achievement of individual goals has been completed. Based on Company performance, park performance and individual performance, the Compensation Committee makes final calculations with regard to cash incentive and equity compensation award payouts, subject to Board approval and final audited results.

The 2020 compensation process and program differed from a typical operating year because of the extreme business disruption and shift in strategic focus caused by COVID-19. While the pre-COVID-19 2020 compensation opportunities were established in the fall of 2019 in accordance with our typical process described above, we proactively adapted our compensation program in real-time as we evolved our strategies throughout the year to respond to COVID-19. This resulted in temporary salary reductions, additional unit-based incentive awards aligned around new strategic priorities in August 2020 and a shift in timing for establishing the 2021 compensation program and opportunities to March 2021.

Compensation Performance Measures

Our executive compensation program historically has been designed around the achievement of metrics based on Adjusted EBITDA as the key performance objective. Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization, other non-cash items, and adjustments as defined in our current credit agreement. In the compensation context, we use performance goals that compute performance achieved and targets using “functional currency Adjusted EBITDA,” which differs from the Adjusted EBITDA amounts we report in our earnings releases and financial reports because functional currency Adjusted EBITDA is calculated using the functional currency of the country where the income or loss was earned (i.e., the Canadian dollar for our Canadian operations). We believe it is appropriate to use functional currency measurement to determine incentive compensation because it eliminates unpredictable and artificial increases or decreases based solely on currency fluctuations. In addition, for our annual cash incentive awards, the targeted and actual performance calculations are based on earnings before incentive-based compensation expenses, which we compute by adding back the cash costs of our performance-based compensation programs to the functional currency Adjusted EBITDA amounts.

The Compensation Committee periodically considers and has the flexibility to use metrics other than Adjusted EBITDA. Our 2016 Omnibus Incentive Plan does not limit the performance criteria from which the Committee may choose in structuring awards. The COVID-19 pandemic and 2020 operational restrictions nullified the retentive and incentive value of outstanding Adjusted EBITDA-based awards during the disrupted period. As the Company and executive management team pivoted away from annual financial operational goals and turned their focus to response and recovery initiatives, the Committee revisited its compensation strategy during the year and made incentive-based unit awards designed to retain critical talent and motivate participants to align around and achieve our new strategic goals. The performance measures for these awards use a multi-pronged scorecard approach, with goals designed to improve the Company’s position in light of the pandemic in the following areas: (1) managing liquidity levels while balancing appropriate investment in key initiatives; (2) protecting the health and safety of Cedar Fair’s associates and guests in light of COVID-19; (3) developing a plan to position the Company for 2021 and beyond; (4) driving demand through business model innovations; and (5)  building a strong foundation for business sustainability and governance. See Elements of Executive Compensation - 2020 Back-Half Incentive Unit Awards below for further information.

There continues to be significant uncertainty and challenges to setting a meaningful three-year Adjusted EBITDA target in light of the ongoing and potential future impact of the COVID-19 pandemic. As a result, for our 2021 performance awards, the Committee has moved to a milestone-based Adjusted EBITDA target approach that can be achieved over a longer period while motivating participants to attain and over-achieve objectives by as early as the third year. Taking into account unitholder feedback, the Committee also provided additional compensation opportunities based on achieving un-levered pre-tax free cash flow and leverage ratio reduction goals. Additionally, the Committee implemented a framework for the executives’ 2021 annual cash incentive opportunities which incorporates a combination of relative Adjusted EBITDA metrics and strategic goals, in order to re-establish annual financial operational goals as the primary metric while maintaining a focus on longer-term, critical initiatives. See 2021 Compensation Update below for further information.

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Elements of Executive Compensation

Overview

Our executive compensation program generally is designed around total direct compensation - that is, the combination of base salary, annual cash incentive awards and long-term incentive compensation. In setting targeted total direct compensation, the Compensation Committee seeks to establish each compensation element at a level that both is competitive and will retain, attract and motivate top talent while keeping overall pay levels aligned with unitholders’ interests and the executives’ job responsibilities. The original 2020 compensation opportunities were designed around total direct compensation consistent with this approach. The final 2020 compensation program included an additional equity-based incentive element for our named executive officers that we implemented part-way through the year to address the COVID-19 impact on the business and compensation strategy. The following table sets forth each element of our executive compensation program, principal objectives of these elements and certain recent highlights:

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Compensation Mix - 2020

We seek to balance the compensation for each executive in a manner designed to achieve our overall compensation objectives. In setting cash incentive and equity incentive components of compensation for each executive, we look to the relationship of those components to the executive’s salary and consider the total direct compensation that is represented by salary, cash incentive awards and unit-based awards. The mix of compensation and relative levels of each element is position dependent and may vary year-to-year, including changes in connection with promotions and leadership transitions.

The 2020 targeted compensation mix, established at the end of 2019, was similar to the named executive officers’ 2019 mix, with increased long-term incentive award opportunities for Messrs. Zimmerman, Witherow, and Milkie. We maintained our 60%/40% weighting of performance-based and time-based unit awards, and a majority of our 2020 targeted compensation mix was based on corporate performance. As discussed above, the impact of COVID-19 on the original awards, together with the temporary salary reductions and additional incentive-based unit awards that we made, significantly altered the final mix of compensation opportunities for 2020. The initial targeted direct compensation percentages for our named executive officers for 2020 and the targeted percentages reflecting the impact of the COVID-19 related changes are indicated below:

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The graphic below illustrates the 2020 targeted total direct compensation mix for Mr. Zimmerman after giving effect to his temporary base salary reduction from April– July 2020, his target 2020 Back-Half Incentive Unit Award, the lack of pay out on the annual cash incentive awards, and the assumption that performance will be below threshold and none of the potential 2020-2022 performance units will be earned.

The graphics that follow illustrate the 2020 targeted total direct compensation mix for our CFO and COO and the 2020 targeted total direct compensation mix for our Executive Vice President and General Counsel and our Executive Vice President and Chief Marketing Officer, after giving effect to their temporary base salary reductions from April – July 2020, their target 2020 Back-Half Incentive Unit Awards, the lack of payout on the annual cash incentive awards, and the assumption that performance will be below threshold and none of the potential 2020-2022 performance units will be earned.

Base Salary

We pay base salaries to provide a fixed amount of compensation that is not subject to performance-related risk commensurate with the executive’s scope of responsibilities, performance, current compensation levels, tenure with the Company and other experience. We do not consider the earnings of prior long-term incentive awards or retirement plans when determining base salary compensation. Base salaries may be reviewed and adjusted from time to time, subject to the terms of applicable employment agreements. Based on the factors identified above, the Compensation Committee reviews and recommends to the Board adjustments to the base salary for each of the named executive officers on an annual basis, in connection with promotions or a substantial change in responsibilities or as otherwise deemed appropriate. See Narrative to Summary Compensation and Grants of Plan Based Awards Tables - Employment Agreements for additional information on the terms of the employment agreements.

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The base salary for each named executive officer falls within a range, when considered together with the other elements of compensation, that the Chief Executive Officer and Compensation Committee believe is appropriate on an individual basis. In reviewing the named executive officer’s salary, the Compensation Committee generally considers, among other things:

In light of such considerations, the Board approved the following in 2019: an approximate 6% increase in Mr. Zimmerman’s 2020 base salary based upon recent accomplishments, time in position, and a review of peer and market data; approximately 7% increases in 2020 base salaries for Mr. Fisher and Ms. Semmelroth to recognize their recent accomplishments, including driving 2019 operating results and the introduction of new guest programs and initiatives, respectively and based upon time in position and a review of peer and market data; and 3.5% and 3% base salary increases for Messrs. Witherow and Milkie for 2020, respectively, to recognize their role in negotiating and completing the 2019 acquisitions, and based upon time in position and a review of peer and market data.

As part of our proactive measures to reduce operating expenses and cash outflow in response to COVID-19, we reduced Mr. Zimmerman’s base salary by 40% and the base salaries of all our other named executive officers by 25% from April 27, 2020 until July 19, 2020. We also did not make adjustments to 2020 pre-COVID-19 base salaries for 2021. The 2019 annual base salaries, pre-COVID-19 targeted 2020 base salaries, the actual 2020 base salaries earned, and 2021 annual base salaries for our named executive officers are indicated below:

Cash Incentive Awards

Our annual cash incentive awards provide a component of compensation that is contingent on the achievement of annual performance objectives and are designed to motivate and reward achievement of annual financial and operational goals. The performance objectives and percentage of base salary that may be earned as a cash incentive are determined for each named executive officer and generally are approved by the Compensation Committee and Board by March of the applicable year, unless otherwise provided in a written employment agreement. The performance objectives may vary for each position and individual, may be expressed in multiple measures of performance, including individual, business unit, management unit and Company performance, and may be weighted differently between positions and individuals. Our employment agreements generally require the executive to be employed at year end to receive a cash incentive for that year, but protect the executives against forfeiting these awards in qualifying termination scenarios. As a result, we believe these awards not only motivate performance but also encourage retention of key employees.

For a number of years, the Compensation Committee and the Board have used a short-term cash incentive award program that includes both individual performance goals and Company performance goals, and that requires that awards not be paid out if Company financial performance falls below a threshold level. For 2020, 85% of the target cash incentive awards for our named executive officers were based on a target of $564.1  million consolidated functional currency Adjusted EBITDA before incentive compensation expense for the year; for an explanation of functional currency and how we compute this measure, see Compensation Discussion and Analysis - Compensation Performance Measures above. The remaining 15% of the target awards were based on the achievement of individual performance goals.

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Payouts of the Company performance-based portion of the award were based on specified threshold, target and maximum levels of performance as compared to the targeted level of performance with interpolation for performance between those levels. The 2020 cash incentive awards were not eligible to be paid to the executives if functional currency Adjusted EBITDA before incentive compensation expense was below the 93% threshold level of performance or the Company was not able to pay a partnership distribution during the year due to loan covenants.

Without the ability to operate the parks as we would in a typical year due to the 2020 COVID-19 park closures, delayed openings and limited operations, executive management did not have the opportunity to achieve the established threshold Adjusted EBITDA target and performance was below the threshold. Accordingly no payouts were made under the 2020 cash incentive awards.

The following sets forth the 2020 target award opportunities (in dollars and as a percentage of 2020 base salary) and the lack of payouts for 2020:

Had the threshold performance requirements been satisfied, payouts of the Company performance-based portion of the 2020 cash awards would have been calculated at the following scale (with amounts interpolated between the various levels):

Payout of the individual performance-based portion of the award was not made because the award threshold performance requirements were not satisfied. Payout of the individual performance-based portion of the award otherwise could have ranged from 0% to 150% of target depending on the level of achievement of three individual performance goals, each of which had an assigned weighting and with the total weighting adding up to 100%. Achievement for each goal could have ranged from 0% to 150% and was to be evaluated using a four point scale - did not meet expectations (0% - 40%); partially met expectations (41% - 80%); met expectations (81% - 120%); and exceeded expectations (121% - 150%) - with the final payout to be a weighted average of the performance achieved. Therefore, the weighted maximum payout of the cash incentive awards was limited to 192.5% of the target award.

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Cash Incentive Award Clawback Provisions

Our 2020 cash incentive opportunities for our Chief Executive Officer and his direct reports included a clawback provision with a 24-month look back and that would be triggered upon a financial restatement that results in lower bonus payouts than originally delivered. We may modify our clawback provisions at any time and we may be required to do so when final SEC rules and exchange listing standards are adopted to implement the clawback provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

Discretionary Bonuses

In consideration of our overall compensation objectives and the mix of different types of compensation that were awarded this year, no additional cash bonuses were paid to our named executive officers for fiscal year 2020.

2020 Back-Half Incentive Unit Awards

As discussed above, we proactively made additional incentive-based unit awards in August 2020 (our Back-Half Incentive Unit Awards) to directly align compensation opportunities with the interest of our unitholders, to retain critical talent, and to motivate participants to achieve new strategic goals designed to drive the recovery and optimize performance in light of the unprecedented effects of the ongoing COVID-19 pandemic. Our focus was on preserving liquidity, managing cash burn and positioning the Company for future post-COVID-19 success and long-term sustainability. We specifically designed the award goals to drive these objectives.

The target value for these awards was determined as a percentage of base salary and then converted to a number of units for each named executive officer, based on the unit price on the day before the grant date. The Compensation Committee and Board decided that the named executive officers’ awards would be made as unit-based awards in order to preserve cash and to align incentives with unitholder interests. The target dollar value of the units at grant represented 60% of the target 2020 cash incentive opportunity that each named executive officer did not have the opportunity to achieve due to COVID-19. The target reflected 50% of the target cash opportunity and an incremental percentage in light of the decision to make a unit-based award subject to an additional twelve-month holding, continuous employment and vesting period following the end of the performance period. The target dollar value at grant, target number of units, and final number of units earned under these Back-Half Incentive Unit Awards, subject to the continuous employment requirements of the awards, were as follows:

The number of units earned under these awards were determined by the Committee, and reviewed and approved by the Board, based upon its assessment of the level of attainment of various predetermined performance objectives over a six-month period that commenced on August 24, 2020 and ended on February 24, 2021. As a service period was incorporated for retention purposes, units earned under these awards will be payable within thirty (30) days following the one-year anniversary of the end of the measurement period. The awards require continuous employment through the February 2022 payment date, except in the cases of death, disability or a change in control.

Units earned under the awards could have ranged from 0%-125% of the target number of potential units and were dependent upon the level of achievement with respect to a scorecard approved by the Committee. The scorecard incorporated five categories of performance goals, each weighted equally at 20% and each with its own specified metrics and targets upon which to assess performance. The goals included: (1) managing liquidity levels while balancing appropriate investment in key initiatives; (2) protecting the health and safety of Cedar Fair’s associates

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and guests in light of COVID-19; (3) developing a plan to position the Company for 2021 and beyond; (4) driving demand through business model innovations; and (5) building a strong foundation for business sustainability and governance.

The level to which performance met or exceeded expectations for each goal was critically assessed with amounts for each specific goal and the overall weighted average for the aggregate achievement of all goals interpolated between the various achievement levels. Achievement for each goal could range from 0% to 150% and was determined using the following four-point scale: did not meet expectations (0%); partially met expectations (50%); met expectations (100%); and exceeded expectations (150%). The final payout was a weighted average of the performance achieved for the five goals, and the weighted maximum payout of the unit award was limited to 125% of the target. Achievement of a minimum liquidity target of $425 million as of the end of 2020 was also required to earn any payout under these awards. For purposes of this award, “Liquidity” is defined as cash on hand plus undrawn revolver after lines of credit.

The final weighted-average performance achievement based on the Committee’s comprehensive performance assessment was 114%, reflecting that management overall scored between met expectations and exceeded expectations relative to the scorecard goals. The executives accordingly each earned 114% of the target number of potential units for these awards, subject to the twelve-month service period, which would have represented 68.4% of the target 2020 cash incentive opportunities based on the grant date fair value of the units. In reaching the 114% weighted-average performance achievement level, the Committee determined that the five goals had been achieved at the following levels, and key accomplishments and other factors that drove the assessment included those listed below:

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Long-Term Incentive Compensation

We provide long-term incentive compensation awards to senior management. Outstanding awards have been made under our 2008 and 2016 Omnibus Incentive Plans. Our 2016 Omnibus Incentive Plan allows us to grant options, restricted units, unit appreciation rights, performance awards and other types of unit-based awards. We use these types of awards because we believe they give key employees a proprietary and vested interest in our growth and performance and align key employees’ interests with those of our unitholders. We also believe that the vesting schedule for these awards aids us in retaining executives and motivates superior performance over the long term.

Targeted 2020 Long-Term Incentive Compensation

Our long-term incentive program emphasizes a performance-based approach that aligns with unitholder interests. In furtherance of that performance-based approach, the 2020 unit-based awards to each named executive officer included a mix of performance unit awards and time-based restricted units. The target awards were allocated 60% to performance-based awards and 40% to time-based restricted units. The target long-term incentive award value was determined as a percentage of base salary and then converted to a number of units for each named executive officer, based on the unit price on the day before the grant date. The dollar values of targeted award opportunities for our named executive officers were higher than those in 2019 as a result of their increased salaries for 2020. The higher dollar values for Messrs. Zimmerman, Witherow and Milkie also reflected increases that we made to their targeted award opportunities as a percentage of base salary to acknowledge their personal contributions and accomplishments.

The long-term incentive award opportunities for the named executive officers’ 2020 targeted direct compensation opportunities granted in October 2019, prior to the COVID-19 disruption of our business, were as follows:

Because the grant date for the long-term incentive awards that were part of the executives’ direct compensation opportunities for 2020 was in 2019, the 2020 long-term incentive awards are included in the 2019 amounts in the Summary Compensation Table.

Our long-term performance-based awards for 2020 and prior years have rolling three-year performance periods and related cumulative functional currency Adjusted EBITDA targets. Payouts for the awards for the 2020 compensation cycle are based on the achievement of cumulative functional currency Adjusted EBITDA versus the target established for the 2020-2022 period. The 2020 time-based restricted units vest in annual increments over a three-year period. These performance unit awards and restricted unit awards generally require continuous employment through the payment date, subject to certain exceptions contained in employment and grant agreements that provide for continued vesting in qualifying termination or change in control situations. Restricted units are non-transferable during the restricted period. Under the performance awards, award recipients are eligible to receive up to a specified percentage of the target number of potential performance units for a particular performance period. The number of units payable is dependent on the level of attainment of the performance objectives specified for the performance period, as determined by the Committee, and no awards will be paid if the

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threshold level of performance is not achieved. We do not currently expect any units to be earned under the 2019-2021 or 2020-2022 performance unit awards due to the significant disruptions and impact of COVID-19.

2020 Restricted Unit Awards Granted in 2019

We awarded the time-based restricted unit component of our 2020 targeted total direct compensation to each of our executives in October 2019. The awards vest incrementally with one third of the award vesting each year over an approximate three-year period. The restricted period on each of the incremental portions of the award lapses upon the executive’s continuous employment through the identified restricted periods which lapse in February 2021, 2022 and 2023, respectively, and the awards will thereafter be unrestricted, subject to the employment and grant agreement provisions. These awards accrue distribution equivalents when we make partnership distributions, which will be paid out in cash upon the lapse of the restricted period along with the original awards. The 2020 time-based restricted unit awards granted in 2019 were as follows:

2020-2022 Performance Unit Awards

We granted the performance unit award portion of our 2020 total direct compensation to our executives in October 2019. The awards are subject to the achievement of the performance targets set by the Compensation Committee for the performance period of January 1, 2020 - December 31, 2022, and are based on the level of achievement of cumulative functional currency Adjusted EBITDA versus the target during that period. These awards accrue distribution equivalents when we make partnership distributions, which are deemed to be reinvested and paid out along with the original awards, subject to achievement of the same performance targets. If earned, the 2020-2022 awards would be paid after the end of the performance period only in units, consistent with our program’s focus on alignment with our unitholders. The target numbers of units for the 2020-2022 performance unit awards were as follows:

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Payouts of these awards would be at the following scale (with amounts interpolated between the various levels):

Because of the significant disruption to our business from the COVID-19 pandemic, and the impact of the 2020 Adjusted EBITDA loss on the possibility of achieving the cumulative targets for the 2020-2022 performance period, we do not currently expect any units to be earned under these awards.

Because of the significant disruption to our business from the COVID-19 pandemic, and the impact of the 2020 Adjusted EBITDA loss on the cumulative achievement for 2018-2020, three-year performance was below the threshold and none of the potential units would have been earned under these awards. The 2020 COVID-19 business disruption made the three-year performance targets impossible to achieve for reasons unrelated to management’s performance. Given that two full years of the program were completed and in order to retain executives and incentivize performance, our Compensation Committee and Board decided to allow management the opportunity to potentially earn an award and to evaluate performance after completion of the performance period taking into account actual 2018-2019 Adjusted EBITDA achieved and management’s performance relative to the Company’s strategic goals established during 2020. The Committee and Board conducted a rigorous review of management’s performance against those strategic objectives as further discussed above under “2020 Back-Half Incentive Unit Awards” but with a view to the entire year. While management exceeded expectations relative to the 2020 strategic goals, the Board and Compensation Committee approved payouts that take into account actual 2018-2019 Adjusted EBITDA and that are limited to those that would have been made if 2020 Adjusted EBITDA results had been at the level of our pre-COVID-19 forecast. We accordingly approved award modifications and payouts at 81.3% of the target number of units in February 2021. As a result of the modification, the numbers of units earned by our named executive officers under their 2018-2020 awards (including reinvested distribution equivalents) were as follows: Mr. Zimmerman (19,647), Mr. Witherow (8,642), Mr. Fisher (9,430), Mr. Milkie (5,630), and Ms. Semmelroth (4,375).

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Employment Agreements

We have entered into multi-year employment agreements with each of our named executive officers to attract, retain and motivate them. These employment agreements foster long-term retention while still allowing the Compensation Committee to exercise considerable discretion in designing incentive compensation programs. We entered into the current agreement with Mr. Zimmerman in 2017 that became effective in 2018 as part of our executive leadership transition process, and this agreement continues until Mr. Zimmerman’s employment is terminated as provided in the agreement. Each of our current agreements with our other executive officers automatically renewed in December 2019, and the executives’ employment under the agreements continues through December 31, 2021, subject to 24-month automatic renewal periods until one of the parties terminates the agreement.

Post-Employment and Change in Control Compensation

Each employment agreement provides for certain benefits in termination and change-in-control situations. In addition, certain of our incentive plans contain termination and change-in-control provisions. The agreements that would apply to our named executive officers in a termination and change-in-control situation are discussed in detail under the Potential Payments Upon Termination or Change in Control section below.

Retirement Programs

Our named executive officers participate in our tax-qualified Cedar Fair Retirement Savings Plan. This plan, or a similar plan, is available to all of our eligible employees and contains a 401(k) matching program as well as a profit-sharing component. The annual amount of the profit-sharing contribution is determined by the Board, after consideration of the Compensation Committee’s recommendation, in its sole discretion. Our contributions to this plan for our named executive officers are included in the “All Other Compensation” column of the Summary Compensation Table. In addition, Mr. Milkie has an account under our 2008 Supplemental Retirement Plan, which is described within the Pension Benefits for 2020 section. Additional contributions to this plan were discontinued several years ago, and we do not intend to have any other executive officers participate in this plan.

Perquisites

We provide perquisites to our named executive officers that we believe are reasonable, competitive and consistent with our overall compensation philosophy. We believe that these benefits generally enhance the competitiveness of our compensation packages and represent a small percentage of overall compensation. In 2020, we provided Messrs. Zimmerman, Witherow, and Milkie and Ms. Semmelroth with automobile allowances. We also reimbursed Mr. Zimmerman for the cost of an annual executive physical exam.

2021 Compensation Update

In December 2020, our Chief Executive Officer, Chief Financial Officer, Board Chairman, and Compensation Committee Chair initiated meetings and directly engaged with several of our top unitholders, representing approximately 45% of our outstanding units. Investor perspectives shared during these conversations helped inform the Board’s thinking in a wide range of areas, including liquidity, capital allocation, expectations of management and executive compensation. With respect to executive compensation, themes from the feedback included consistently high confidence in management, support for motivating and rewarding management related to business recovery efforts and the consideration of potential, additional metrics to supplement Adjusted EBITDA as the key performance objective. Due to the impact of COVID-19 on our business, and after considering various alternatives with our compensation consultant and the direct feedback we received as part of our proactive unitholder engagement, the Compensation Committee made several changes to our 2021 compensation program. These included changing the design used for our 2021 performance-based long-term incentive compensation and annual cash incentive awards in a manner consistent with views expressed by our unitholders in December. We also moved the approval of our 2021 targeted compensation opportunities and awards to March 2021 to allow the Compensation Committee sufficient time to thoroughly explore and evaluate alternative performance measures as well as alternative vehicles such as options and time-based awards. We ultimately chose to maintain a strong performance-based approach as further described below. The executives’ final compensation and mix for 2021 is subject to change, and the Compensation Committee may take additional actions related to 2021 executive compensation as it determines are warranted, including in response to any ongoing impacts from the COVID-19 pandemic.

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2021-2025 Performance-Based Long-Term Incentive Awards

Due to the continued uncertainty as to when we may be able to resume full operations at all of our amusement and water parks, as well as whether any future mandated or voluntary closures will occur as a result of the ongoing COVID-19 pandemic, the Compensation Committee determined it was in the best interests of the Company to move away from a specified three-year plan for our 2021 long-term performance-based awards. The Compensation Committee explored numerous alternative structures and performance measures for use in the long-term incentive compensation awards. Our goals included maintaining the strong pay-for-performance nature and other aspects of the current award structure, which has annually received high “say-on-pay” approval from our unitholders. We also sought to make adjustments to the structure in light of the ongoing COVID-19 pandemic and to provide additional meaningful performance-based compensation opportunities to address the significant impact of COVID-19.

The Compensation Committee approved the long-term incentive awards for 2021 total direct compensation opportunities in March 2021. We maintained a 60%/40% weighting of performance-based and time-based unit awards for our named executive officers other than Mr. Zimmerman. We increased the performance-based unit component of Mr. Zimmerman’s award, resulting in a 70%/30% weighting for our CEO. Value at grant (in dollars) for target long-term incentive award opportunities were increased for Mr. Zimmerman (by approximately 33%) and for Ms. Semmelroth (by 20%) and remained the same for our other named executive officers. The time-based unit award portion of the program provides for restricted units to vest incrementally as in prior years with one third of the award vesting each year over an approximate three-year period, subject to continuous employment except for certain qualifying terminations. The performance award continues to be designed, in part, around functional currency Adjusted EBITDA and to cap payout on the Adjusted EBITDA-based component at 200%, but moves to a milestone-based, functional currency Adjusted EBITDA target with opportunities to earn an award over a three to five-year period (as compared to a three-year goal). In order to retain and further motivate executives to drive the recovery and to align with our investors’ interests, the performance award also contains opportunities to earn an additional 50% of the target units based on achievement of un-levered pre-tax free cash flow targets and an additional 50% of the target units based on leverage ratio reduction targets. The total number of potential performance units that may be earned over the extended period will thus range from 0% to 300% of the target number of units. In order to retain and motivate over a longer period, performance will be measured starting in 2023, and the performance period is January 1, 2021 – December 31, 2025. The adaptations made to the design were intended to reflect the uncertainty of the timing of the U.S. recovery from the pandemic and return to normal attendance levels at our parks. They also are intended to motivate the achievement of strategically important milestones of Adjusted EBITDA, un-levered free cash flow and leverage ratio, consistent with the feedback received from our unitholders in December.

Performance against the Adjusted EBITDA portion of the award will be measured for each of 2023, 2024 and 2025 and will be based on performance against functional currency Adjusted EBITDA targets for each year that become incrementally higher each year. Payouts of the Adjusted EBITDA portion of the award will be based on the same scale as our 2020-2022 performance awards (see Elements of Executive Compensation - Targeted 2020 Long-Term Incentive Compensation for more information). Units under the Adjusted EBITDA portion of the award vest as they are earned starting with 2023 and become payable shortly after the end of the calendar year in which units are earned, subject to the executive remaining in continuous employment through the payment date except for certain qualifying terminations. To earn units under the Adjusted EBITDA portion of the award in calendar years 2024 and 2025, the calculated payout must be incrementally higher than the prior year(s) and the units earned in those years will be limited to the incremental difference, if any. See Compensation Discussion and Analysis - Compensation Performance Measures for an explanation of how we compute functional currency Adjusted EBITDA.

Performance against the un-levered pre-tax free cash flow and leverage ratio goals will be measured for each of 2023, 2024 and 2025, and the targets become incrementally more challenging each year. Each of these goals will be determined to have been achieved or not achieved for such year (with no interpolation for performance or payout). Payout for each of these metrics will be at 0% or 50% of the target number of potential performance units. Units under the un-levered pre-tax free cash flow and leverage ratio portions of the award can vest and be paid starting in 2025 (if goals are achieved in 2023 or 2024) subject to the executive remaining in continuous

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employment through the payment date and subject to certain qualifying terminations. Units earned in calendar year 2025 under these components will be payable shortly after the end of calendar year 2025 provided the executive remains in continuous employment through the payment date, except for certain qualifying terminations. For purposes of these awards, un-levered pre-tax free cash flow for each calendar year will equal consolidated Adjusted EBITDA for such calendar year less net cash used for investing activities (before any business acquisitions) for such calendar year, as recorded in the consolidated financial statements of the Company which are examined by the independent accountants for the Company. The leverage ratio will be computed as the ratio of (a) Net Debt (defined as Consolidated Total Debt per the Company’s Amended and Restated Credit Agreement less cash and cash equivalents as recorded in the consolidated financial statements of the Company), to (b) consolidated Adjusted EBITDA for the period of four consecutive fiscal quarters most recently ended on or prior to such date. These targets are in U.S. dollars, and “functional currency” will not be used to compute un-levered pre-tax free cash flow or leverage ratio performance.

2021 Annual Cash Incentive Awards

For the same reasons that it proved challenging to set meaningful targets for the 2021 long-term performance based awards, the Compensation Committee determined it would be best to utilize a framework for the 2021 annual cash incentive awards that incorporates a combination of relative functional currency Adjusted EBITDA metrics and strategic goals, in order to re-establish annual financial operational goals as the primary metric while maintaining a focus on longer-term, critical initiatives. For 2021, 70% of the target cash incentive awards for our named executive officers are based on consolidated functional currency Adjusted EBITDA before incentive compensation expense targets. In light of the ongoing pandemic and continued operating uncertainty, the targeted levels for Adjusted EBITDA performance are relative to and vary depending on the level of attendance that is achieved. The targets are intended to motivate and reward management for driving improvement over 2020 and to incentivize efficient operational performance within specified attendance ranges. Payouts of this portion of the award are based on the same scale as our 2020 cash incentive awards (see Elements of 2020 Executive Compensation – Cash Incentive Awards for more information), except that payout is capped at 125% if Adjusted EBITDA is negative. The remaining 30% of the target awards is based on the achievement of Company-level strategic objectives. The goal for this portion is to drive a comprehensive set of organizational, operational and consumer technology and innovation initiatives to build a strong foundation to enable future growth. Achievement of this goal could range from 0% to 200% and will be evaluated using a five point scale - did not meet goal (0%); partially met goal (50%); met goal (100%); exceeded goal (150%); and greatly exceeded goal (200%) with amounts interpolated between the various achievement levels. No cash incentive awards under either component of the 2021 program are eligible to be paid to the executives if a minimum liquidity target as of the end of 2021 is not achieved. In addition to these changes, we enhanced the 2021 cash incentive opportunities as a percentage of base salary for Messrs. Zimmerman and Fisher by 25%, while our other named executive officers’ 2021 opportunities are consistent with their 2020 cash incentive opportunities.

Risk Assessment Process

The Compensation Committee has reviewed our compensation programs and concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on us. This risk assessment process included a review of the design and operation of our compensation programs, consultation with our compensation consultants at Semler Brossy, review of a risk assessment matrix which aided us in the process of identifying and evaluating situations or compensation elements that may raise material risks, and an evaluation of the controls and processes we have in place to manage those risks. Because we provide different types of compensation, consider various factors in assessing Company and individual performance and, at the Compensation Committee level, retain discretion in certain compensation matters, we believe that our compensation program provides an effective and appropriate mix of incentives to help ensure the Company’s performance is focused on long-term value creation and does not encourage our executives to take unreasonable risks with respect to our business.

Impact of Tax and Accounting Considerations

In adopting various executive compensation plans and packages, as well as in making certain executive compensation decisions, particularly with respect to grants of unit-based long-term incentive awards, the Compensation Committee considers the accounting treatment and the anticipated financial statement impact of such decisions, as well as the anticipated dilutive impact on our unitholders.

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As a result of our status as a Partnership, Section 162(m) of the Internal Revenue Code does not apply to Cedar Fair.

Securities Trading Policy

Our Company has a policy that executive officers and non-employee directors may not purchase or sell our units when they may be in possession of nonpublic material information. In addition, this policy restricts short sale transactions and transactions involving put or call options relating to our securities, pledging of our securities, and holding of our securities in margin accounts.

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The 2020 amount for each executive includes the grant date fair value of the 2020 Back-Half Incentive Unit Awards granted in August 2020. The ASC Topic 718 grant date fair value of the 2020 Back-Half Incentive Unit Awards by executive assuming target and maximum levels of performance are as follows: Mr. Zimmerman - $637,497 (target), $796,865 (maximum); Mr. Witherow - $319,209 (target), $399,005 (maximum); Mr. Fisher - $360,000 (target), $450,015 (maximum); Mr. Milkie - $275,989 (target), $344,980 (maximum); and Ms. Semmelroth - $241,201 (target), $301,508 (maximum).

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The 2019 amount for each executive includes the grant date fair value of the 2020 restricted unit awards granted in 2019 and the performance unit awards for the 2020-2022 performance period granted in 2019, which we view as part of the executives’ targeted total direct compensation opportunities for 2020. The ASC Topic 718 grant date fair value of the 2020-2022 performance unit awards by executive assuming target and maximum levels of performance are as follows: Mr. Zimmerman - $1,530,004 (target), $3,060,008 (maximum); Mr. Witherow - $638,396 (target), $1,276,792 (maximum); Mr. Fisher - $720,002 (target), $1,440,004 (maximum); Mr. Milkie - $427,821 (target), $855,642 (maximum); and Ms. Semmelroth - $301,520 (target), $603,040 (maximum).

The 2018 amount for each executive includes the grant date fair value of the 2019 restricted unit awards granted in 2018 and the performance unit awards for the 2019-2021 performance period granted in 2018, which we view as part of the executives’ targeted total direct compensation opportunities for 2019. The ASC Topic 718 grant date fair value of the 2019-2021 performance unit awards by executive assuming target and maximum levels of performance are as follows: Mr. Zimmerman - $1,319,986 (target), $2,639,971 (maximum); Mr. Witherow - $555,203 (target), $1,110,405 (maximum); Mr. Fisher - $673,195 (target), $1,346,390 (maximum); Mr. Milkie - $361,764 (target), $723,527 (maximum); and Ms. Semmelroth - $281,160 (target), $562,319 (maximum).

Assumptions used in the calculation of these amounts are discussed in Note 10 to the Partnership’s audited financial statements for the fiscal year ended December 31, 2020, included in the Partnership’s Form 10-K filed with the Securities and Exchange Commission on February 19, 2021.

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