DEF 14A 1 proxystatement2017.htm PROXY STATEMENT Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )
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Six Flags Entertainment Corporation
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SIX FLAGS ENTERTAINMENT CORPORATION
924 Avenue J East
Grand Prairie, Texas 75050
March 21, 2017
Dear Fellow Stockholder:
We are pleased to invite you to attend the 2017 Annual Meeting of Stockholders of Six Flags Entertainment Corporation to be held on Wednesday, May 3, 2017 at 2:00 p.m., Eastern Time, at The Yale Club of New York City, 50 Vanderbilt Avenue, New York, New York 10017.
Details regarding the business to be conducted at the Annual Meeting are described in the Notice of Internet Availability of Proxy Materials you received in the mail and in this proxy statement.
As in prior years, we have elected to provide access to our proxy materials over the Internet under the U.S. Securities and Exchange Commission’s “notice and access” rules. This process expedites stockholders' receipt of proxy materials, lowers the costs of delivery, and conserves natural resources.
On March 21, 2017, we began mailing our stockholders a notice containing instructions on how to access our proxy materials and vote online, by telephone or by mail, and to receive a printed copy of the materials by mail.
Your vote is important. Whether or not you plan to attend the Annual Meeting, we hope you will vote as soon as possible. You may vote over the Internet, by telephone or by mail. If you attend the Annual Meeting, you will be able to vote in person, even if you have previously voted. Please review the instructions on each of your voting options described in this proxy statement, as well as in the Notice of Internet Availability of Proxy Materials you received in the mail.
On behalf of the directors, officers and employees of Six Flags Entertainment Corporation, we would like to express our appreciation for your continued support.
Sincerely,
 
 
JOHN DUFFEY
President and Chief Executive Officer
 
JIM REID-ANDERSON
Executive Chairman



SIX FLAGS ENTERTAINMENT CORPORATION

NOTICE OF 2017 ANNUAL MEETING OF STOCKHOLDERS

Time and Date
 
2:00 p.m. Eastern Time, on Wednesday, May 3, 2017.
 
 
 
Place
 
The Yale Club of New York City, 50 Vanderbilt Avenue, New York, New York 10017.
 
 
 
Items of Business
 
(1) Election of eight nominees named in the Proxy Statement as directors;
 
 
 
 
 
(2) Approve the Long-Term Incentive Plan, as amended;
 
 
 
 
 
(3) Advisory vote to ratify the appointment of KPMG LLP as independent registered public accounting firm for the year ending December 31, 2017;
 
 
 
 
 
(4) Advisory vote to approve executive compensation;
 
 
 
 
 
(5) Advisory vote on the frequency of the advisory vote to approve executive compensation; and
 
 
 
 
 
(6) Consideration of such other business as may properly come before the Annual Meeting.
 
 
 
Adjournments and Postponements
 
Any action on the items of business described above may be considered at the Annual Meeting at the time and on the date specified above or at any time and date to which the Annual Meeting may be properly adjourned or postponed.
 
 
 
Record Date
 
You are entitled to vote only if you were a stockholder of the Company as of the close of business on March 8, 2017.
 
 
 
Voting
 
Your vote is very important. Whether or not you plan to attend the Annual Meeting, we encourage you to read the proxy statement and submit your proxy or voting instructions as soon as possible. For specific instructions on how to vote your shares, please refer to the instructions in the Notice of Internet Availability of Proxy Materials you received in the mail, the section titled "General Information" beginning on page 1 of the proxy statement, or if you requested to receive printed proxy materials, your enclosed proxy card.

By Order of the Board of Directors,
 
DANIELLE J. BERNTHAL
Secretary
 
 
 
Grand Prairie, Texas
March 21, 2017
 

Important Notice Regarding Internet Availability of Proxy Materials 
Our proxy statement is attached. Financial and other information concerning Six Flags Entertainment Corporation is contained in our 2016 Annual Report. The proxy statement and the 2016 Annual Report are available at www.investors.sixflags.com.




TABLE OF CONTENTS
 
 




GENERAL INFORMATION
This Proxy Statement is being furnished to holders of common stock of Six Flags Entertainment Corporation (the "Company" or "we" or "us") in connection with the solicitation of proxies by the Board of Directors for use in voting at the 2017 Annual Meeting of Stockholders (the "Annual Meeting") to be held on Wednesday, May 3, 2017, at 2:00 p.m., Eastern Time, at The Yale Club of New York City, 50 Vanderbilt Avenue, New York, New York 10017, and at any postponement or adjournment thereof.
Internet Availability of Proxy Materials
Pursuant to rules of the Securities and Exchange Commission ("SEC"), the Company is furnishing proxy materials to its stockholders primarily via the Internet instead of mailing printed copies of those materials to each stockholder. On March 21, 2017, the Company began mailing a Notice of Internet Availability of Proxy Materials to stockholders of record as of the close of business on March 8, 2017, other than to those stockholders who previously requested to receive electronic or paper delivery of communications. The Notice of Internet Availability of Proxy Materials contains instructions on how to access an electronic copy of the proxy materials including this Proxy Statement and the Annual Report for the year ended December 31, 2016.
This process is designed to expedite stockholders' receipt of proxy materials, lower the cost of the annual meeting, and help conserve natural resources. However, if you would prefer to receive printed proxy materials, please follow the instructions included in the Notice of Internet Availability of Proxy Materials. If you have previously elected to receive the proxy materials electronically, you will continue to receive these materials via e-mail unless you elect otherwise.
Quorum
The quorum requirement for holding the Annual Meeting and transacting business is a majority of the outstanding shares of common stock entitled to vote. The shares may be present in person or represented by proxy at the meeting. Abstention votes and broker non-votes (as described below) are counted as present for the purpose of determining whether a quorum exists for the Annual Meeting.
Required Vote
Proposal
Voting Requirement
Tabulation Treatment
Votes Withheld/Abstentions
Broker Non-Votes
Election of Directors
Plurality of votes cast to elect each director; the eight nominees with the highest number of affirmative FOR votes will be elected
Not counted for purposes of calculating approval percentage
Brokers do not have discretionary authority; not counted for
purposes of calculating approval percentage
Long-Term Incentive Plan, as amended
Majority of shares present at Annual Meeting
Treated as a vote against the matter for purposes of calculating
approval percentage
Brokers do not have discretionary authority; not counted for
purposes of calculating approval percentage
Advisory Vote to Ratify Appointment of KPMG LLP
Majority of shares present at Annual Meeting
Treated as a vote against the matter for purposes of calculating
approval percentage
Brokers have discretionary authority
Advisory Vote on Executive Compensation
Majority of shares present at Annual Meeting; not binding on Company
Treated as a vote against the matter for purposes of calculating
approval percentage
Brokers do not have discretionary authority; not counted for
purposes of calculating approval percentage
Advisory vote on frequency of advisory vote on executive compensation
Majority of shares present at Annual Meeting; not binding on Company
Treated as a vote against the choices for purposes of calculating
approval percentage
Brokers do not have discretionary authority; not counted for
purposes of determining outcome
With respect to Proposal 1 (election of directors), stockholders may vote FOR all or some of the nominees or stockholders may vote WITHHOLD with respect to one or more of the nominees. For the other items of business, other than Proposal 5, stockholders may vote FOR, AGAINST or ABSTAIN. With respect to Proposal 5 (advisory vote on frequency of

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advisory vote on executive compensation), stockholders may vote FOR Every Year, FOR Every Two Years, FOR Every Three Years, or ABSTAIN.
All properly executed proxies delivered pursuant to this solicitation and not revoked in a timely manner will be voted in accordance with the directions given and, for any other business that may properly come before the Annual Meeting, in the discretion of the persons named in the proxy.
A broker non-vote occurs when a broker or other nominee does not receive voting instructions from the beneficial owner and does not have the discretion to direct the voting of the shares. A broker is entitled to vote shares held for a beneficial holder on routine matters, such as the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm, without instructions from the beneficial holder of those shares. However, a broker is not entitled to vote shares held for a beneficial holder on certain non-routine items, such as the election of directors, absent instructions from the beneficial holders of such shares. 
In order to minimize the number of broker non-votes, the Company encourages you to provide voting instructions to the organization that holds your shares by carefully following the instructions provided to you by your broker, bank or other nominee.
Revocation of Proxies
Your proxy may be revoked at any time prior to the Annual Meeting. If you provide more than one proxy, the proxy having the latest date will revoke any earlier proxy. If you attend the Annual Meeting in person, you will be given the opportunity to revoke your proxy and vote in person. If you are a stockholder of record or hold shares through a broker or bank and are voting by Internet or telephone, your vote must be received by 11:59 p.m. Eastern Time on May 2, 2017 to be counted.
Record Date
Only stockholders of record as of the close of business on March 8, 2017 are entitled to notice of, and to vote at, the Annual Meeting or any postponement or adjournment thereof. As of March 8, 2017, the Company had issued and outstanding 91,488,506 shares of common stock, the Company's only class of outstanding securities entitled to vote at the Annual Meeting. Each stockholder of the Company will be entitled to one vote for each share of common stock registered in its name on March 8, 2017.
Proxy Voting Methods
If at the close of business on March 8, 2017, you were a stockholder of record or held shares through a broker or bank, you may vote your shares by proxy on the Internet, by telephone or by mail. You may also vote in person at the Annual Meeting. For shares held through a broker or nominee, you may vote by submitting voting instructions to your broker or nominee. To reduce the Company's administrative and postage costs, we suggest that you vote on the Internet or by phone, both of which are available 24 hours a day. You may revoke your proxies at the times and in the manners described above.
        If you are a stockholder of record or hold shares through a broker or bank and are voting by Internet or telephone, your vote must be received by 11:59 p.m. Eastern Time on May 2, 2017 to be counted.
INTERNET
If your shares are registered in your name:  Go to www.envisionreports.com/SIX and follow the online instructions. You will need the 15-digit control number included on your Notice or proxy card when you access the web page.
If your shares are held in a stock brokerage account or by a bank or other nominee:  Go to www.proxyvote.com and follow the instructions that you receive from your broker, bank or other nominee.
TELEPHONE
If your shares are registered in your name:  Call toll-free (800) 652-8683 and follow the recorded instructions. You will need the 15-digit control number included on your Notice or proxy card when you call.
If your shares are held in a stock brokerage account or by a bank or other nominee:  Vote your shares over the telephone by following the voting instructions that you receive from your broker, bank or other nominee.
MAIL
Request a proxy card by following the instructions on your Notice.
When you receive the proxy card, mark your selections on the proxy card.
Date and sign your name exactly as it appears on your proxy card.
Mail the proxy card in the postage-paid envelope that will be provided to you.

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The granting of proxies electronically is allowed by Section 212(c)(2) of the Delaware General Corporation Law. Whether or not you attend the Annual Meeting, your vote is important. You may vote your shares by proxy on the Internet, by telephone or by completing, signing and timely returning a proxy card. You may also vote in person at the Annual Meeting.
Householding
We have adopted a procedure called "householding," which the SEC has approved. Under this procedure, we deliver a single copy of the Notice and, if applicable, the proxy materials, to multiple stockholders who share the same address unless we received contrary instructions from one or more of the stockholders. This procedure reduces printing costs, mailing costs, and fees. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written request, we will deliver promptly a separate copy of the Notice and, if applicable, the proxy materials, to any stockholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy of the Notice and, if applicable, the proxy materials, stockholders may write or email us at the following address of our principal executive office and email address:
Six Flags Entertainment Corporation
924 Avenue J East
Grand Prairie, Texas 75050
Attention: Investor Relations
spurtell@sftp.com
972-595-5180
Stockholders who hold shares in street name through a broker, bank or other nominee may contact their broker, bank or other similar organization to request information about householding.
Solicitation of Proxies
This proxy solicitation is being made on behalf of the Company. The expense of preparing, printing and mailing this Proxy Statement is being paid by the Company. Proxies may be solicited by directors, officers, and employees of the Company in person, or by mail, telephone, e-mail or other electronic means. The Company will not specially compensate those persons for their solicitation activities.

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CORPORATE GOVERNANCE
The Board of Directors
The Company's business, property and affairs are managed under the direction of the Board of Directors of the Company (the "Board"). The Board is elected by stockholders to oversee management and to ensure that the long-term interests of stockholders are being served. The Board has responsibility for establishing broad corporate policies and for the overall performance of the Company. It is not, however, involved in operating details on a day-to-day basis. The Board is advised of the Company's business through discussions with the Chief Executive Officer and other officers of the Company, by reviewing reports, analyses and materials provided to them and by participating in Board meetings and meetings of the committees of the Board.
The Board has four regularly scheduled meetings during the year to review significant developments affecting the Company and to act on matters requiring Board approval. It also holds special meetings when an important matter requires Board action between regularly scheduled meetings. Directors are expected to attend all scheduled Board and committee meetings as well as the annual meeting of stockholders. During the year ended December 31, 2016, the Board held 5 meetings. Each of the directors of the Company attended at least 75% of the aggregate of the meetings of the Board and of the meetings of committees of the Board on which such director served. All of the then-current directors of the Company attended the Company's annual meeting of stockholders in 2016 and the Company expects that each director nominee will attend the Annual Meeting.
The Board only has one class of directors. As a result, all directors are elected each year by the Company's stockholders at the annual meeting. Directors may be removed with or without cause by the holders of a majority of the shares then entitled to vote at an election of directors.
Each director of the Company was elected at the Company's annual meeting of stockholders in 2016 except Ms. Krejsa who was appointed by the Board in February 2017 following Ms. Krejsa's retirement as Senior Vice President, Investor Relations of the Company. The Board currently has eight directors and all eight directors of the Company are being nominated by the Board at the Annual Meeting. See "Proposal 1: Election of Directors."
Stockholders and other interested parties may contact Jon L. Luther, the Lead Independent Director, and the other non-employee directors by writing to the Lead Independent Director c/o Six Flags Entertainment Corporation, 924 Avenue J East, Grand Prairie, Texas 75050.
Independence
The Board has affirmatively determined that five of the eight current directors, including all members of its Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, are "independent" within the meaning of the Company's director independence standards as set forth in the Company's Corporate Governance Guidelines. These standards reflect the independence standards adopted by the New York Stock Exchange ("NYSE"). The independent directors are Kurt M. Cellar, Jon L. Luther, Usman Nabi, Stephen D. Owens and Richard W. Roedel.
None of the independent directors, their respective affiliates or members of their immediate family, directly or indirectly, receive any fee or payment from the Company or its affiliates, other than the director compensation described below, or have engaged in any transaction with the Company or its affiliates or have any relationship with the Company or its affiliates which, in the judgment of the Board, is inconsistent with a determination that the director is independent. There is no family relationship among any of the directors or executive officers of the Company.
Corporate Governance Documents
The Company's Corporate Governance Guidelines, Code of Business Conduct and Ethics, Code of Ethics for Senior Management and the charters of the Board committees provide the framework for the governance of the Company.
Corporate Governance Guidelines
The Corporate Governance Guidelines cover, among other things, the functions of the Board, the qualifications of directors, director independence, the selection process for new directors, Board committees, compensation of the Board, the succession plan for the chief executive officer and other senior executives, and stock ownership guidelines for directors and senior executives.
Code of Business Conduct and Ethics
The Company has adopted and maintains a Code of Business Conduct and Ethics that covers all directors, officers and employees of the Company and its subsidiaries. The Code of Business Conduct and Ethics requires, among other things, that

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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 Company's best interest.
Code of Ethics for Senior Management
The Company has also adopted and maintains a separate Code of Ethics for Senior Management that imposes specific standards of conduct on members of senior management including persons with financial reporting responsibilities at the Company. Each member of the Company's senior management is required to annually certify in writing his or her compliance during the prior year with the Code of Ethics for Senior Management.
The Company intends to post amendments to or waivers from the Company's Corporate Governance Guidelines, Code of Business Conduct and Ethics and the Company's Code of Ethics for Senior Management on the Company's website at www.investors.sixflags.com. No waivers have been made or granted prior to the date of this Proxy Statement.
Availability of Corporate Governance Documents
The Company's Corporate Governance Guidelines, Code of Business Conduct and Ethics, Code of Ethics for Senior Management and charters of the committees of the Board are available on the Company's website at www.investors.sixflags.com. A printed copy of each of these documents is available, without charge, by sending an email to spurtell@sftp.com or by sending a written request to the Company at the following address: Six Flags Entertainment Corporation, 924 Avenue J East, Grand Prairie, Texas 75050, Attention: Investor Relations.
Board Committees
The Board has designated an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. The membership of the committees as of March 1, 2017 and the function of each committee are described below.
Director
 
Audit
Committee
 
Compensation
Committee
 
Nominating and
Corporate Governance
Committee
Kurt M. Cellar
 
    X*+
 
 
 
X
John M. Duffey
 
 
 
 
 
 
Nancy A. Krejsa
 
 
 
 
 
 
Jon L. Luther
 
 
 
  X*
 
 
Usman Nabi
 
 
 
X
 
  X*
Stephen D. Owens
 
X
 
X
 
 
James Reid-Anderson
 
 
 
 
 
 
Richard W. Roedel
 
  X+
 
 
 
X
___________________________
* Chairman
+ Audit Committee Financial Expert
Audit Committee
The overall purpose of the Audit Committee is to oversee the accounting and financial reporting process of the Company and the audits of the financial statements of the Company. In fulfilling this purpose, the Audit Committee's duties and responsibilities include, among other things, (i) the appointment, compensation, evaluation and oversight of the work of the Company's independent auditors; (ii) review and approval of the independent auditor's engagement including the pre-approval of all audit and permitted non-audit engagements; (iii) oversight of the independent auditor's independence; (iv) review of the results of the year-end audit; (v) review of the adequacy and effectiveness of the Company’s accounting and internal control policies and procedures; (vi) review of management’s financial risk assessment and financial risk management policies, and the Company’s major financial risk exposures and the steps taken to monitor and control such exposures; (vii) establishment of procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters; (viii) oversight of the Company's legal and regulatory compliance and the Company's safety programs as established by management; and (ix) review of the Company's information technology strategic objectives including network and data security.

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The Audit Committee held 9 meetings during 2016 and met in executive session without management as it deemed necessary. A copy of the Audit Committee charter is available to stockholders on the Company's website at www.investors.sixflags.com. All members of the Audit Committee are independent within the meaning of SEC regulations. In addition, the Board has determined that Messrs. Cellar and Roedel are each qualified as an audit committee financial expert under SEC regulations and that all members of the Audit Committee have the accounting and related financial management expertise required by the NYSE. The SEC has determined that the audit committee financial expert designation does not impose on the person with that designation, any duties, obligations or other liability that are greater than the duties, obligations or liabilities imposed on such person as a member of the Audit Committee in the absence of such designation. Members of the Audit Committee may not serve on the audit committee of more than four public companies, including the Company, except that in the event such member serves on more than three public company audit committees, the Board must determine that such simultaneous service would not impair the ability of such member to serve effectively on the Company's Audit Committee. None of the members of the Audit Committee serve on the audit committee of more than three public companies.
Compensation Committee
The Compensation Committee, among other duties, (i) is responsible for establishing and reviewing the Company's overall compensation philosophy; (ii) determines the appropriate compensation levels for the Company's executive officers (which includes the review and approval of corporate goals and objectives used in determining executive officer compensation); (iii) reviews all incentive compensation and equity-based compensation plans, benefit plans and new executive compensation programs and oversees the administration of such plans; (iv) grants awards of shares or stock options pursuant to the Company's equity-based plans; and (v) reviews employee salary levels.
The Compensation Committee may form and delegate any of its responsibilities to a subcommittee so long as such subcommittee is solely comprised of Compensation Committee members. No such delegation with respect to executive compensation was made in 2016. In addition, the Compensation Committee has the direct responsibility for the appointment, termination, compensation and oversight of any compensation and benefit consultants retained by the Company in respect of executive compensation. The Compensation Committee has retained Deloitte Consulting LLP ("Deloitte") to advise it in connection with ongoing compensation matters related to the Company. During 2016, Deloitte affiliates provided tax, international development, and other consulting services to the Company. The Company has reviewed the services provided by Deloitte and its affiliates and has approved the provision of such services. The Company does not believe that the non-compensation services impair Deloitte’s ability to provide independent advice to the Compensation Committee, or otherwise present a conflict of interest. The aggregate fees paid to Deloitte for executive compensation services to the Compensation Committee during 2016 were $26,895, and the aggregate fees paid to Deloitte for tax, international development, and other consulting services to the Company during 2016 were $873,902.
The Compensation Committee met 5 times during 2016. At every meeting, the Compensation Committee met in executive session without management. A copy of the written Compensation Committee charter is available to stockholders on the Company's website at www.investors.sixflags.com. The Board has determined that each member of the Compensation Committee is a "non-employee director" as defined in Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and meets the independence requirements of the NYSE and the "outside director" requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee serves, or has served, as an officer or employee of the Company. In addition, no interlocking relationship exists between the Board or the Compensation Committee and the board of directors or compensation committee of any other company, nor did any such interlocking relationship exist during 2016.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is responsible for recommending qualified candidates to the Board for election as directors of the Company, including the slate of directors that the Board proposes for election by stockholders at the Annual Meeting. The Nominating and Corporate Governance Committee also advises and makes recommendations to the Board on all matters concerning directorship practices, including recommendations concerning the functions and duties of the committees of the Board, and, in conjunction with the Compensation Committee, compensation for non-employee directors. The Nominating and Corporate Governance Committee developed and recommended to the Board the Company's Corporate Governance Guidelines and reviews, on a regular basis, the overall corporate governance of the Company.
The Nominating and Corporate Governance Committee met 4 times during 2016. At every meeting, the Nominating and Corporate Governance Committee met in executive session without management. A copy of the Nominating and Corporate Governance Committee's written charter is available to stockholders on the Company's website at www.investors.sixflags.com.

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All members of the Nominating and Corporate Governance Committee are independent within the meaning of the NYSE requirements.
Communications with the Board of Directors
Stockholders who wish to communicate with the Board may do so by writing to a specific director, including the Lead Independent Director, or to the entire Board at the following address: Board of Directors—Stockholder Communications, c/o Six Flags Entertainment Corporation, 924 Avenue J East, Grand Prairie, Texas 75050, Attention: Secretary. The Secretary will forward all such communications to the directors to whom they are addressed.
Meetings of Independent Directors
The Board schedules at least four meetings each year for the independent directors outside the presence of any member of management. The independent directors may meet in executive session at such other times as determined by the Lead Independent Director. At each executive session, the Lead Independent Director or, in his absence, one of the other independent directors will chair that executive session.
Board Leadership Structure
The Board does not have a policy on whether or not the roles of the Chief Executive Officer and Chairman should be separate and believes it should maintain flexibility to select the Company's Chairman and Board leadership structure from time to time. The Company's By-Laws provide that the Board may designate a Chairman. Accordingly, the Board reserves the right to vest the responsibilities of the Chief Executive Officer and Chairman in the same person or in two different individuals depending on what it believes is in the best interest of the Company. In 2016, the Board elected to split the Chairman and Chief Executive Officer roles when Mr. Reid-Anderson assumed the role of Executive Chairman of the Company and Mr. Duffey became the Company’s President and Chief Executive Officer. As Executive Chairman, Mr. Reid-Anderson remains involved in key strategic matters, such as long range strategic planning, corporate governance activities, organizational planning, international development, and merger and acquisition activities. Given his in-depth knowledge of the Company, the Board believes Mr. Reid-Anderson continues to be best positioned to develop agendas that ensure the Board's time and attention are focused on the most critical matters. His role ensures decisive leadership and ensures clear accountability.

The Board believes that there is no single Board leadership structure that would be most effective in all circumstances and therefore retains the authority to modify this structure to best address the Company's and the Board's then current circumstances as and when appropriate. The Board believes that this leadership structure, together with the role of the Lead Independent Director, is currently in the best interest of the Company and its stockholders. Mr. Luther serves as the Company's Lead Independent Director and his role helps ensure a strong independent Board. As the Lead Independent Director, Mr. Luther presides at meetings of the independent members of the Board and serves as the presiding director in performing such other functions as the Board may direct, including advising on the selection of committee chairs and advising management on the agenda for Board meetings.
Board Role in Risk Oversight
The Company's management is responsible for identifying, assessing and managing the material risks facing the business. The Board, and in particular, the Audit Committee, are responsible for overseeing the Company's processes for assessing and managing risk. Each of the Chief Executive Officer, Chief Financial Officer, General Counsel and Vice President of Internal Audit, with input as appropriate from other management members, report and provide relevant information directly to either the Board and/or the Audit Committee on various types of identified material financial, reputation, legal, operational, environmental and business risks to which the Company is or may be subject, as well as mitigation strategies for certain salient risks. In accordance with NYSE requirements and as set forth in its charter, the Audit Committee periodically reviews and discusses the Company's business and financial risk management and risk assessment policies and procedures with senior management, the Company's independent auditor and the Vice President of Internal Audit of the Company. The Audit Committee reports its risk assessment function to the full Board and the Board reviews and discusses such risks at a regularly scheduled Board meeting. With the oversight of the Board, the Company has implemented practices and programs designed to help manage the risks to which the Company is exposed and to align risk-taking appropriately with the Company's efforts to increase stockholder value. The Board believes that the leadership structure described above under "Board Leadership Structure" facilitates the Board's oversight of risk management because it allows the Board, with leadership from the Lead Independent Director and by working through committees, including the independent Audit Committee, to participate actively in the oversight of management's actions.

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Nomination Process
Role of the Nominating and Corporate Governance Committee
The Board has adopted a set of Corporate Governance Guidelines which includes qualification criteria that the Nominating and Corporate Governance Committee uses to identify individuals it believes are qualified to become directors. In making recommendations of nominees pursuant to the Corporate Governance Guidelines, the Nominating and Corporate Governance Committee believes that candidates should possess the highest personal and professional ethics, integrity and values and be committed to representing the long-term interests of the stockholders. The Nominating and Corporate Governance Committee also evaluates whether a candidate has an inquisitive and objective perspective, practical wisdom and mature judgment. With respect to diversity, the Nominating and Corporate Governance Committee and the Board as a whole broadly construe diversity to mean not only diversity of race, gender and ethnicity, but also diversity of opinions, perspectives, and professional and personal experiences. Nominees are not discriminated against on the basis of race, religion, national origin, sexual orientation, disability or any other basis proscribed by law. The Board believes that the backgrounds and qualifications of the directors, considered as a group, should provide a significant composite mix of experience, knowledge and abilities that will allow the Board to fulfill its responsibilities. The Board therefore considers diversity in identifying nominees for director but does not have a separate policy directed toward diversity. In assessing whether a candidate has the appropriate time to devote to Board service, the Nominating and Corporate Governance Committee will consider the number of boards of directors on which such candidate already serves. Although candidates must be committed to serving on the Board for an extended period of time, the Board does not believe that directors should expect to be routinely re-nominated annually.
After identifying the qualified individuals and conducting interviews, as appropriate, the Nominating and Corporate Governance Committee will recommend the selected individuals to the Board. The Nominating and Corporate Governance Committee uses the same process to evaluate all candidates whether they are recommended by the Company or by one of the Company's stockholders.
The Nominating and Corporate Governance Committee may retain a director search firm to help identify qualified director candidates.
Stockholder Recommendations and Nominations
Stockholders may recommend director candidates for consideration by the Nominating and Corporate Governance Committee by sending the name and supporting information in accordance with Rule 14a-8 of the Exchange Act and the information set forth in the Company's Corporate Governance Guidelines (available on the Company’s website at www.investors.sixflags.com) to the Secretary or Lead Independent Director, c/o Six Flags Entertainment Corporation, 924 Avenue J East, Grand Prairie, Texas 75050.
The Company's Amended and Restated By-Laws permit a stockholder to nominate one or more persons for election as directors at an annual meeting if written notice of that stockholder's intent to make the nomination has been given to the Secretary of the Company not less than 90 days nor earlier than 120 days before the first anniversary of the Company's previous annual meeting. In order to be considered timely for the 2018 annual meeting, notice of a stockholder's intent to make a nomination at the 2018 annual meeting must be given to the Company no earlier than January 3, 2018 and no later than February 2, 2018. The notice must include all information relating to such nominee that is required to be disclosed in a proxy statement including, without limitation, the name and address of the nominee, and the nominee's written consent to being named in the proxy statement as a nominee and to serving as a director if elected. The notice must also include, as to the stockholder submitting the nomination, the following information: (i) such person's name and address; (ii) the class and number of shares of the Company's capital stock that are owned beneficially and of record; (iii) a representation that the stockholder is entitled to vote at the meeting and intends to nominate the person; and (iv) a representation as to whether the stockholder intends, or is part of a group which intends, to deliver a proxy statement or otherwise solicit proxies from stockholders. The Company may require any proposed nominee to furnish other information as the Company may reasonably require to determine the eligibility of the proposed nominee to serve as a director of the Company.


8


2016 NON-EMPLOYEE DIRECTOR COMPENSATION
The Nominating and Corporate Governance Committee and the Compensation Committee, consulting with each other, are responsible for recommending to the Board compensation and benefits for non-employee directors. In discharging this duty, the committees are guided by three goals: (i) compensation should fairly pay directors for work required in a company of our size and scope; (ii) compensation should align directors' interests with the long-term interests of stockholders; and (iii) the structure of the compensation should be simple, transparent and easy for stockholders to understand. Annual compensation for non-employee directors for 2016 was comprised of cash compensation (which can be deferred into stock units) and equity compensation in the form of restricted stock awards.
Description of Non-Employee Director Compensation
At least annually, the Nominating and Corporate Governance Committee and the Compensation Committee review non-employee director compensation and benefits. The Compensation Committee retained Deloitte to provide advice in connection with ongoing compensation matters related to the Company. Deloitte provided the Committee with an analysis of the competitiveness of the Company's non-employee director compensation program.
Cash and Equity Compensation
The following table sets forth the annual compensation to non-employee directors in 2016. The cash compensation is paid in equal quarterly installments at the beginning of each fiscal quarter.
 
 
Amount($)
Cash Retainer(1)
 
70,000

Equity Retainer(1)(2)
 
140,000

Lead Independent Director Retainer
 
30,000

Audit Committee Chairman Retainer(1)
 
20,000

Compensation Committee Chairman Retainer
 
15,000

Nominating and Corporate Governance Committee Chairman Retainer(1)
 
10,000

Audit Committee Member Retainer
 
12,500

Compensation Committee Member Retainer
 
10,000

Nominating and Corporate Governance Committee Member Retainer
 
7,500

_________________________
(1)
Effective as of May 4, 2016, the Board approved an increase in (i) the annual cash retainer for service as a director to $70,000 and (ii) the annual equity retainer to $140,000. Effective as of the Annual Meeting, the Board approved an increase in (i) the annual equity retainer to $150,000, (ii) the annual cash retainer for the Audit Committee Chairman to $25,000, and (iii) the annual cash retainer for the Nominating and Corporate Governance Committee Chairman to $15,000.
(2)
Granted in the form of time-vested (12 month) restricted stock awards determined by dividing the amount of the equity retainer by the closing price of the Company's common stock on the date of grant. The restricted stock vests in full on the earlier of the day immediately prior to the first annual meeting of stockholders of the Company after the date of grant or the first anniversary of the date of grant if the director continues to serve as a director through such date (or on the earlier of the death or disability of such director). 

Cash Retainer Deferral Program
The Company maintains a director cash retainer deferral program under the Company's Long-Term Incentive Plan. This program allows members of the Board to elect to receive stock units under the Long-Term Incentive Plan in lieu of the cash compensation for such member's services as a director. The cash compensation that a director may elect to receive in stock units is only the cash compensation that the director otherwise would receive for services as a director of the Company and does not include any cash compensation for being the lead independent director, or chairman or member of any committee of the Board. Each deferred stock unit accumulates dividend equivalents that are converted to additional deferred stock units annually. The conversion of stock units into shares and the distribution of such shares under this program will occur on the first business day following the thirtieth day after a director's service as a director terminates.

9


Stock Ownership Guidelines
To further the Company's objective of aligning the interests of directors with the Company's stockholders, the Board has adopted stock ownership guidelines for directors. Each director should seek to have a level of ownership of Company stock that has a value approximately equal to at least three times the director's annual cash retainer. For purposes of the guidelines, the annual cash retainer does not include any additional cash compensation paid for participation on any committee of the Board or for serving as Chairman of any such committee. The ownership level should be achieved within three years of (i) the effective date of the guidelines for directors serving as of the adoption of the guidelines or (ii) the date the person first becomes a director for newly appointed or elected directors. All of the directors are in compliance with the Company's stock ownership guidelines.
2016 Non-Employee Director Compensation
Employee directors do not receive any compensation in connection with their director service. During 2016, Messrs. Duffey and Reid-Anderson were the only employee-directors and their respective compensation as an employee is set forth in the 2016 Summary Compensation Table. Mr. Nabi previously advised the Board that he did not wish to receive any director fees because of his position with H Partners, LP, a significant stockholder of the Company. The following table sets forth compensation paid to or earned by each non-employee director for the year ending December 31, 2016:
Director
 
Fees Earned
or Paid
in Cash(1)(2)
($)
 
Stock
Awards(3)(4)
($)
 
Total
($)
Kurt M. Cellar
 
89,583

 
139,953

 
229,536

Charles A. Koppelman
 
90,833

 
139,953

 
230,786

Jon L. Luther
 
114,977

 
139,953

 
254,930

Usman Nabi
 

 

 

Stephen D. Owens
 
86,666

 
139,953

 
226,619

Richard W. Roedel
 
89,977

 
139,953

 
229,930

_________________________
(1)
The following table sets forth the annual cash compensation earned by each non-employee director in 2016:
 
 
 
 
 
 
Committees
 
 
Director
 
Retainer
($)
 
Lead Independent Director
($)
 
Audit Committee Chair / Member($)
 
Compensation Committee Chair / Member($)
 
Nominating Corporate Governance Chair / Member($)
 
Total Cash Amount
($)
Kurt M. Cellar
 
68,333

 

 
20,000

 

 
1,250

 
89,583

Charles A. Koppelman
 
68,333

 

 
12,500

 
10,000

 

 
90,833

Jon L. Luther
 
69,977

 
30,000

 

 
15,000

 

 
114,977

Usman Nabi
 

 

 

 

 

 

Stephen D. Owens
 
68,333

 

 
833

 
10,000

 
7,500

 
86,666

Richard W. Roedel
 
69,977

 

 
12,500

 

 
7,500

 
89,977


Mr. Koppelman resigned as a member of the Board effective November 8, 2016. Also in November 2016, Mr. Owens resigned from the Nominating and Corporate Governance Committee and joined the Audit Committee, Mr. Cellar joined the Nominating and Corporate Governance Committee, and Mr. Nabi joined the Compensation Committee.

(2)
Non-employee directors may defer all or a portion of their cash retainer in the form of stock units under the Long-Term Incentive Plan pursuant to the Company's director cash retainer deferral program. The amounts for Messrs. Luther and Roedel include $69,977 ($70,000 rounded to the nearest whole share value), which they each elected to defer pursuant to the director cash retainer deferral program. Accordingly, Messrs. Luther and Roedel were each granted 1,197 deferred stock units in 2016. In addition, Messrs. Luther and Roedel each received 272 deferred stock units representing accumulated dividend equivalents on their deferred stock unit account. See "—Description of Non-Employee Director Compensation" for a discussion of the Company's director cash retainer deferral program.
(3)
The dollar value represents the aggregate grant date fair value computed in accordance with stock-based accounting rules (Financial Standards Accounting Board ASC Topic 718) of the restricted stock awards granted to directors in 2016. Dividends on unvested restricted stock accumulate and are paid on or about the time that the shares of common stock underlying the restricted stock are delivered. The assumptions used in the calculation of these amounts are discussed in

10


Note 9 to the Company's consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016.
(4)
As of December 31, 2016, each non-employee director (other than Mr. Nabi) had 2,394 shares of restricted stock outstanding, which vest on May 2, 2017. Each non-employee director (other than Mr. Nabi) had only one unvested award outstanding as of December 31, 2016 and therefore, the grant date fair value of such award is reflected in the 2016 Director Compensation Table. There are no outstanding stock option awards for any non-employee director.
PROPOSAL 1: ELECTION OF DIRECTORS
At the Annual Meeting, eight directors are nominated for election to the Board to serve for the next year and until their respective successors are elected and qualified. At this time the Board believes it is appropriately sized at eight members but will review possible candidates for the one Board vacancy if and when circumstances merit. Each nominee has consented to be named as a nominee and to serve if elected. Should any of the nominees become unable to serve as a director (which the Board does not expect), the Board may designate a substitute nominee. In that case, the persons named as proxies will vote for the substitute nominee designated by the Board. Proxies cannot be voted for a greater number of persons than the number of nominees named in this Proxy Statement.
Information Concerning Nominees
Name
 
Age as of
March 1, 2017
 
Position with the Company
Kurt M. Cellar
 
47
 
Director
John M. Duffey
 
56
 
Director, President and CEO
Nancy A. Krejsa
 
59
 
Director
Jon L. Luther
 
73
 
Director
Usman Nabi
 
42
 
Director
Stephen D. Owens
 
46
 
Director
James Reid-Anderson
 
57
 
Executive Chairman
Richard W. Roedel
 
67
 
Director
Kurt M. Cellar has served as a director of the Company since May 2010. Since January 2008, Mr. Cellar has been the President of Corner Pocket Investors, LLC. He has also been a consultant to companies in a variety of industries as well as a private investor. From 1999 to 2008, Mr. Cellar worked for the hedge fund Bay Harbour Management, L.C. He was partner and portfolio manager from 2003 until his departure. Prior to Bay Harbour, Mr. Cellar was with the private equity firm Remy Investors. Before that, he was a strategy consultant at LEK/Alcar. He is currently a director of Angiotech Pharmaceuticals, Inc., Hawaiian Telecom Holdco, Inc., Home Buyers Warranty, and U.S. Concrete Inc. Mr. Cellar is the Chairman of the Compensation Committee of U.S. Concrete, and the Chairman of the Audit Committees of Hawaiian Telecom Holdco, Inc. and Home Buyers Warranty. Within the last five years, Mr. Cellar was also a member of the Board of Directors of Aventine Renewable Energy where he was a member of the Audit and Compensation Committees, Horizon Lines, Inc., where he was a member of the Audit Committee and Nominating and Corporate Governance Committee, The Penn Traffic Company where he was a member of the Compensation Committee, RCN Corporation, where he was a member of the Audit and Compensation Committees, Vertis Communications and Edison Mission Energy Trust. Mr. Cellar is well qualified to serve on the Board based on his significant accounting and financial experience and his other public company board experience.
John M. Duffey was named President and Chief Executive Officer, and a director of the Company in February 2016. From September 2010 to February 2016, Mr. Duffey served as Chief Financial Officer of the Company. Mr. Duffey previously served as Executive Vice President and Chief Integration Officer of Siemens Healthcare Diagnostics from November 2007 to January 2010, and was responsible for leading the integration of Siemens Medical Solutions Diagnostics and Dade Behring. Prior to Dade Behring’s acquisition by Siemens AG, from 2001 to November 2007, Mr. Duffey served as the Executive Vice President and Chief Financial Officer of Dade Behring, where he negotiated and led the company through a debt restructuring and entry into the public equity market. Prior to joining Dade Behring, Mr. Duffey was with Price Waterhouse in the Chicago and Detroit practice offices as well as the Washington D.C. National Office. Mr. Duffey holds a B.A. degree in Accounting from Michigan State University. Mr. Duffey’s experience and leadership as the Company’s Chief Financial Officer for more than five years and the Company’s current President and Chief Executive Officer has given him intimate knowledge of all aspects of the Company's business and will enhance his service as a director.

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Nancy A. Krejsa was named a director of the Company in March 2017. Ms. Krejsa previously served as Senior Vice President, Investor Relations and Corporate Communications for Six Flags since October 2010. Prior to joining the Company, she served as Senior Vice President, Strategy and Communications for Siemens Healthcare Diagnostics from November 2007 to September 2010 following Siemens’ acquisition of Dade Behring. From 1994 to 2007 Ms. Krejsa held senior roles at Dade Behring as Senior Vice President of Communications and Investor Relations, Vice President of U.S. Operations, Treasurer, and Assistant Controller. Prior to joining Dade Behring, Ms. Krejsa held a number of financial management positions at American Hospital Supply and Baxter International, including Vice President, Controller of the Hospital Supply distribution business. Ms. Krejsa has a B.S. in Finance from Indiana University and an M.B.A. in Accounting from DePaul University. Ms. Krejsa’s six years of experience as a member of the Company’s senior leadership team has provided her a deep understanding of the Company’s business, and her 17 years of senior leadership roles in finance and operations at prior companies make her qualified to serve as a director for the Company.
Jon L. Luther has served as a director of the Company since May 2010. Mr. Luther served as Chief Executive Officer of Dunkin' Brands Group Inc., a quick-service restaurant franchisor whose brands include Dunkin' Donuts and Baskin-Robbins, from January 2003 to December 2009 and Chairman from March 2006 to January 2009. In January 2009, he assumed the role of Executive Chairman, and in July 2010, became the Non-Executive Chairman, a position he held until his retirement in May 2013. Mr. Luther is also a director and member of the Nominating and Corporate Governance Committee of Temper Sealy International Inc., a bedding provider, as well as a director of Arby's Restaurant Group, Inc., a privately held quick-service sandwich chain. Mr. Luther is also the Chairman of the Board of Directors of The Culinary Institute of America and also serves as Chairman of its Executive Committee. Within the last five years, Mr. Luther served as a director and member of the Compensation Committee and Nominating and Corporate Governance Committee of Brinker International, Inc., an owner and franchisor of certain restaurant brands and Mr. Luther served as Chairman for the International Franchise Association and was a member of its Executive Committee. Mr. Luther brings to the Board executive leadership experience and vast business experience and expertise in the food and beverage segment as well as in brand marketing.
Usman Nabi has served as a director of the Company since May 2010. Mr. Nabi is a Senior Partner at H Partners Management, an investment management firm. Prior to joining H Partners in 2006, Mr. Nabi was at Perry Capital, the Carlyle Group, and Lazard Freres. Mr. Nabi serves as a director and member of the Compensation Committee and the Nominating and Corporate Governance Committee of Temper Sealy International Inc. As a Senior Partner at H Partners Management, Mr. Nabi brings to the Board a keen business and financial sense and strong investment experience especially in the consumer sector.
Stephen D. Owens has served as a director of the Company since May 2010. Mr. Owens is co-founder and Managing Director of Staple Street Capital, a private equity firm. Prior to founding Staple Street Capital in 1995, Mr. Owens was a Managing Director at The Carlyle Group in the firm's U.S. Buyout team. While at Carlyle, Mr. Owens co-founded the firm's Global Consumer & Retail Group, was a senior member of the firm's Global Communications & Media Group, and executed and oversaw investments in the business services and transportation sectors. Previously, Mr. Owens was a principal investor and investment banker with Lehman Brothers in their New York and Hong Kong offices. Mr. Owens' business and finance experience, including helping to create value in multi-location consumer-facing businesses, qualifies him to serve on the Board.
James Reid-Anderson was named Executive Chairman of the Company in February 2016. From August 2010 to February 2016, Mr. Reid-Anderson served as Chairman, President and Chief Executive Officer of the Company and under his leadership the Company set a new strategic direction and achieved all time high guest and employee satisfaction ratings, significant operational improvements and a seven-fold increase in its share price. Mr. Reid-Anderson had previously served as Chairman, President and Chief Executive Officer of Dade Behring Inc., a manufacturer and distributor of medical diagnostics equipment and supplies, where he drove a tenfold increase in the company’s share price along with significant employee morale improvements and customer satisfaction increases, all achieving record levels. Mr. Reid-Anderson negotiated the sale of Dade Behring Inc. to Siemens AG, a worldwide manufacturer and supplier for the industrial, energy and healthcare industries, in 2007 and subsequently assumed various roles including becoming a member of Siemens AG’s managing board and Chief Executive Officer of Siemens’ $20 billion Healthcare Sector. Earlier in his career Mr. Reid-Anderson held roles of increasing responsibility at PepsiCo, Diageo and Mobil, and as adviser to Apollo Management L.P., a private equity firm. Mr. Reid-Anderson is a fellow of the Association of Chartered Certified Accountants, U.K. and holds a Bachelor of Commerce degree from the Birmingham University, U.K. Mr. Reid-Anderson’s prior experience as Chairman, President and Chief Executive Officer of Dade Behring, a restructured public company, and most recently Chairman, President and Chief Executive Officer of the Company, as well as his extensive operational, international and financial background, make him especially qualified to serve as Executive Chairman and continue to guide the Company strategically.

12


Richard W. Roedel has been a director of the Company since December 2010. Mr. Roedel is a director and Chairman of the Audit Committee of LSB Industries, Inc. as well as a director and Chairman of the Risk Committee of IHS Markit, Inc. Mr. Roedel is a member of the Audit Committee and is the Non-Executive Chairman of Luna Innovations Incorporated. Over the years, Mr. Roedel has been the chairman of several governance, compensation and special committees. Mr. Roedel served on the Board of Directors of Lorillard, Inc. from 2008 through 2015, when it was acquired by Reynolds American Inc. Mr. Roedel also served as Chair of the Audit Committee of Lorillard, Inc. as well as a member of its Nominating & Corporate Governance Committee. Mr. Roedel served on the Board of Directors of Sealy Corporation in several capacities, including Chairman of its Audit Committee, until March 2013 when Sealy was acquired by Tempur-Pedic International Inc. Mr. Roedel served on the Board of Directors of BrightPoint, Inc. in several capacities until October 2012, when it was acquired by Ingram Micro Inc., including Chairman of its Audit Committee, Chairman of its Compensation Committee and member of its Nominating and Corporate Governance Committee. Mr. Roedel was a director of Broadview Holdings, Inc., a private company, and was Chairman of its Audit Committee and a member of its Compensation Committees until 2012. Mr. Roedel was a director and Chairman of the Audit Committee of Dade Behring Holdings, Inc. from October 2002 until November 2007 when Dade Behring was acquired by Siemens AG. Mr. Roedel is a member of the National Association of Corporate Directors (NACD) Risk Oversight Advisory Council. Mr. Roedel recently served a three-year term on the Standing Advisory Group of the Public Company Accounting Oversight Board (PCAOB). From 1985 through 2000, Mr. Roedel was employed by the accounting firm BDO Seidman LLP, having been managing partner of its Chicago and New York Metropolitan area offices and later Chairman and CEO. As a result of these and other professional experiences, Mr. Roedel has extensive experience in finance, accounting and risk management and in public company board and committee practices, which make him well-qualified to serve on the Board.
Vote Required
A plurality of the votes cast is required to elect each director. If you own shares through a bank, broker, or other holder of record, you must instruct your bank, broker, or other holder of record how to vote in order for them to vote your shares so that your vote can be counted on this Proposal 1.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF ALL OF THE NOMINEES NAMED ABOVE.

13


AUDIT COMMITTEE REPORT
The members of the Audit Committee have been appointed by the Board. The Audit Committee is governed by a written charter that has been approved and adopted by the Board and that will be reviewed and reassessed annually by the Audit Committee. The Audit Committee is comprised of three independent directors.
The Audit Committee assists the Board in fulfilling its responsibility to oversee management's conduct of the Company's financial reporting process. It does so by reviewing (i) the financial reports and other financial information provided by the Company to any governmental body or to the public, (ii) the Company's systems of internal controls regarding finance, disclosure, accounting and legal compliance and (iii) the Company's auditing, accounting and financial reporting processes generally.
Management is responsible for the preparation and integrity of the Company's consolidated financial statements. The independent registered public accounting firm is responsible for performing an independent audit of the Company's consolidated financial statements in accordance with generally accepted auditing standards and for issuing a report thereon. The Audit Committee has independently met and held discussions with management and the independent registered public accounting firm.
The following is the report of the Audit Committee of the Company with respect to the Company's audited consolidated financial statements for the fiscal year ended December 31, 2016.
To fulfill its responsibility, the Audit Committee has done the following:
The Audit Committee has reviewed and discussed with management the Company's audited consolidated financial statements and management's assessment of the effectiveness of the Company's internal controls over financial reporting.
The Audit Committee has discussed with KPMG LLP, the Company's independent auditors, the matters required to be discussed by Auditing Standard No. 16 regarding the auditors' judgments about the quality of the Company's accounting principles as applied in its financial reporting.
The Audit Committee has received written disclosures and the letter from KPMG LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding KPMG LLP's communications with the Audit Committee concerning independence and has discussed with KPMG LLP its independence.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the Company's audited consolidated financial statements and management's assessment of the Company's internal controls over financial reporting for the fiscal year ended December 31, 2016 be included in the Company's Annual Report on Form 10-K for such year for filing with the SEC.
 
THE AUDIT COMMITTEE
 
Kurt M. Cellar (Chair)
Stephen D. Owens
Richard W. Roedel
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors of the Company has reviewed and discussed the Compensation Discussion and Analysis below with the Company's management and, based on such review and discussion, the Committee recommended to the Board of Directors that this Compensation Discussion and Analysis be included in this Proxy Statement.
 
THE COMPENSATION COMMITTEE
 
Jon L. Luther (Chair)
Stephen D. Owens
Usman Nabi

14



EXECUTIVE COMPENSATION
Overview
This section of the Proxy Statement contains information regarding our compensation programs, policies and objectives and, in particular, their application to a specific group of individuals that we refer to as our named executive officers. Our named executive officers include the Company's Chief Executive Officer, Executive Chairman, the Chief Financial Officer and the other executives named in this Proxy Statement. This section is organized as follows:
Compensation Discussion and Analysis.   This section contains a description of the specific types of compensation we pay, a discussion of our compensation policies, information regarding how those policies were applied to the compensation of the named executive officers for 2016 and other information that we believe may be useful to investors regarding compensation of the named executive officers.
Compensation Policies and Risk Management Practices.   This section describes the Company's compensation policies and practices as they relate to the Company's risk management.
Description of Employment Agreements of Named Executive Officers.   This section refers to the employment agreements between the named executive officers and the Company.
2016 Executive Compensation Tables.   This section provides information, in tabular formats specified in applicable SEC rules, regarding the amount or value of various types of compensation paid to the named executive officers and related information.
Potential Payments Upon Termination.   This section provides information regarding amounts that could become payable to the named executive officers following specified events.
The parts of this Executive Compensation section described above are intended to be read together and each provides information not included in the others. In addition, for information regarding the Compensation Committee and its responsibilities, please see "Corporate Governance—Board Committees—Compensation Committee" above.
Compensation Discussion and Analysis
Executive Summary
The Company's goals for its executive compensation program are to attract, motivate and retain a talented and experienced management team that will provide leadership for the Company's long-term success. The Company seeks to accomplish these goals in a way that rewards performance and is aligned with its stockholders' interests as exemplified by the Company's Project 500, Project 600 and Project 750 performance-based award programs described below. These programs provide long-term aspirational performance goals and are designed to incentivize early achievement of the goals and provide reduced incentives for late achievement. The Company has engaged meaningfully with certain major stockholders on the Company’s performance-based award programs and, based on such discussions, believes that stockholders favorably view these long-term aspirational performance goals and agree that they align Company performance with the interests of stockholders. This dialogue with stockholders has led to certain refinements to the methodology for determining achievement of one of the performance targets as described below.
The compensation for the named executive officers consists of four elements—base salaries, annual cash incentives, long-term equity awards, and perquisites and benefits—that are designed to reward performance in a simple and straightforward manner. Each of the named executive officers has an employment agreement with the Company that was negotiated at arm's-length and sets forth the initial basis for the executives' compensation.
The Company believes the compensation program for the named executive officers is instrumental in helping the Company achieve its strong financial performance. Some of the Company's financial results for 2016 include the following:
Key Financial Metric
 
2016 Financial Results
Revenue
 
$1.319 billion (4% increase over 2015)
Investment in New Capital
 
$129 million (10% of revenue)
1-year total stockholder return (TSR) (12/31/16)
 
14.2%
Cumulative 3-year TSR (12/31/16)
 
87.2%
Cumulative 5-year TSR (12/31/16)
 
270.8%
Dividend Per Share
 
$2.38 (11% increase over 2015)
Stock Repurchases
 
$212 million (3.7 million shares)

15



The following table highlights certain practices that the Company maintains and others that the Company has avoided or prohibited because the Company believes doing so enhances its pay for performance philosophy and further aligns executives' interests with those of the Company's stockholders:
Practices Maintained by the Company
 
Practices NOT Maintained by the Company
Objective performance metrics align interests of management with interests of stockholders
 
High percentage of fixed compensation
Stock ownership requirements
 
Hedging ownership of Company stock
Limited perquisites
 
Excessive perquisites
Double-trigger change in control severance
 
Excise tax gross-ups upon change in control
Equity awards with four year vesting to promote retention
 
Dividends on equity paid prior to vesting
Alignment of compensation with stockholder interests
 
Repricing of options without stockholder approval
Performance goals that drive long-term stockholder value creation
 
Guaranteed minimum payouts or uncapped award opportunities
Long-Term Incentive Plan contains clawback provision
 
 
Program administered by an independent committee
 
 
Compensation Committee retains independent compensation consultant
 
 
The Compensation Committee carefully considers feedback from the Company's stockholders regarding the Company's executive compensation program, including on its performance-based award programs and the results of the stockholders' advisory vote on executive compensation at the 2014 annual meeting, which was approved by approximately 92% of the votes cast. There is an advisory vote on executive compensation this year at the Annual Meeting (see "Proposal 4: Advisory Vote to Approve Executive Compensation"). There is also an advisory vote on the frequency of future advisory votes on executive compensation this year at the Annual Meeting. The Company is committed to being responsive and accountable to its stockholders and therefore is recommending that future advisory votes on executive compensation be submitted to stockholders every year. Stockholders are invited to express their views to the Board regarding executive compensation as well as other matters at any time as described in this Proxy Statement under the heading "Communications with the Board of Directors."
In connection with Mr. Reid-Anderson becoming the Executive Chairman, Mr. Duffey becoming the President and Chief Executive Officer, and Mr. Barber becoming the Chief Financial Officer, in February 2016, the Company entered into new employment agreements with each of Messrs. Reid-Anderson, Duffey and Barber.
Executive Compensation Philosophy and Objectives
The following are the objectives for the Company's executive compensation program:
Establish fair, competitive aggregate compensation including base salary, cash incentives and long-term incentives;
Closely align the interests of management with the Company's business objectives; and
Deliver an appropriate mix of fixed and at-risk compensation that is directly related to stockholder value and the Company's overall performance.
The Company's direct compensation program therefore consists of the following:
Base salary consistent with the executives' role and contributions to the Company;
Annual cash incentives for all executives tied to the Company's and the executives' performance;
A long-term incentive compensation program used to focus executives' efforts on longer-term performance that will enhance the value delivered to stockholders, including awards of stock options and other performance based equity awards; and
Perquisites and retirement benefits.
Administration of the Executive Compensation Program
The Compensation Committee of the Board is responsible for administering the compensation program for executive officers and certain other members of senior management of the Company. The Compensation Committee determines the appropriate compensation levels for the Company's named executive officers, evaluates compensation plans, policies and programs, and reviews benefit plans for officers and employees. Additional responsibilities of the Compensation Committee include, but are not limited to, reviewing the Company's executive compensation philosophy and strategy; participating in the

16


performance evaluation process for the Chief Executive Officer; setting base salary and incentive opportunities for the Chief Executive Officer and other senior executives; establishing incentive compensation and performance goals and objectives for the Company's executive officers and other eligible executives and management; and determining whether performance objectives have been achieved. The Compensation Committee also recommends to the Board employment or consulting agreements and severance arrangements, and approves such agreements or benefits for the named executive officers. The members of the Compensation Committee are not current or former employees of the Company and are not eligible to participate in any of the executive compensation programs.
The entire Board (other than the Chief Executive Officer) ratified the 2016 compensation for the Chief Executive Officer, and the entire Board ratified the 2016 compensation for the other named executive officers.
Management Participation
The Company's human resources department is responsible for the ongoing management of the executive compensation program. The Senior Vice President, Administration and his staff serve as the primary management liaison to the Compensation Committee and propose compensation programs and policies to the Compensation Committee at the request of the Compensation Committee and the Chief Executive Officer. The Compensation Committee meets at least annually with the Chief Executive Officer and any other corporate officers as the Compensation Committee deems appropriate while it is determining the performance criteria and compensation levels of key executive officers. The Chief Executive Officer makes recommendations to the Compensation Committee regarding individual compensation, such as base salary changes and incentive compensation opportunities for executive officers other than himself. In addition, the Chief Financial Officer and his staff evaluate the financial implications of executive compensation proposals and financial performance measures in incentive compensation arrangements. The Compensation Committee regularly meets in executive session without management.
Compensation Consultants
The Compensation Committee has engaged Deloitte to provide advice to the Compensation Committee on an ongoing basis regarding executive compensation strategy and programs, including the compensation of the Chief Executive Officer, the design of its compensation program, the compensation practices of competitors, and legislation or regulations impacting the Company's executive compensation program.
Determining Executive Compensation
In making compensation decisions regarding executive officers generally, the Compensation Committee considers general market information, as well as business and industry conditions, the Company's strategic business objectives, and the executive's performance and experience. The Compensation Committee believes that market compensation data should only be used as a point of reference, not as the determining factor, in the executive officers' compensation. The initial compensation arrangements for the named executive officers were a result of arm's-length negotiations by the Company with the executives in connection with their hire or retention and do not correspond to a specific benchmark level of pay. The compensation for the named executive officers are reviewed annually by the Board, the Compensation Committee and the Chief Executive Officer. An analysis of overall Company performance, budget targets, achievement of individual performance goals and the direct reporting relationship to the Chief Executive Officer is undertaken regarding the compensation of each executive. The Compensation Committee makes compensation determinations and adjustments when determined to be appropriate in accordance with the Company's compensation philosophy and plans. In determining long-term incentive grants in 2016, the Company considered general historical market information on long-term incentive grants provided by Deloitte, along with past awards and company and individual performance, when making compensation recommendations to the Compensation Committee.
Components of Executive Compensation
The individual components of the Company's executive compensation program include:
Base salary
Annual incentives
Long-term incentives
Perquisites and benefits
In setting total compensation, the Compensation Committee applies a consistent approach for all executive officers. Although the Compensation Committee has a compensation approach, as described below, the Compensation Committee exercises appropriate business judgment in how it applies the approach to the facts and circumstances associated with each executive.

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As illustrated in the following charts (using a Black Scholes calculation for options and the fair market value of a share upon grant of awards under the Project performance programs multiplied by the target number of shares under such programs), and discussed in more detail below, more than 95% of the Chief Executive Officer’s target total direct compensation is variable / ‘at risk’ and tied to Company performance, while on average, more than 75% of the other named executive officers’ target total direct compensation is variable / ‘at risk.’
proxchart1.jpg
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Base Salary
Salaries are used to provide a fixed amount of compensation for an executive's work. Although initially established in each named executive officer's respective employment agreement, the salaries of named executive officers are reviewed annually, as well as at the time of a promotion or other change in responsibilities. The Compensation Committee strives to pay a base salary to attract and retain talented executive officers based on the individual's responsibilities, performance and experience, internal equity, and business and industry conditions.
In connection with Mr. Reid-Anderson becoming Executive Chairman, Mr. Duffey becoming Chief Executive Officer, and Mr. Barber becoming Chief Financial Officer, the Company entered into an employment agreement with each such executive in February 2016. Messrs. Balk, Hawrylak and Petit each entered into an employment agreement with the Company in 2010. The base salaries and other compensation for each of the named executive officers were determined as a result of the related individual negotiations, and based on the philosophies and factors described herein. For 2016, Messrs. Balk, Hawrylak and Petit received salary increases ranging from 2.7% to 11.8%. Messrs. Duffey and Barber received salary increases in connection with their promotions, and Mr. Reid-Anderson’s salary was adjusted downward based on the change in his position.
The following table shows the annual base salary rate in 2016 for the named executive officers:
Executive
 
Base Salary Rate($)
John M. Duffey
 
1,050,000

James Reid-Anderson
 
1,000,000

Marshall Barber
 
500,000

Lance C. Balk
 
565,000

Brett Petit
 
475,000

Walter S. Hawrylak
 
382,000


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Annual Incentives
The Company's annual cash incentive plan closely links pay and performance by providing all eligible full-time employees, including the named executive officers, an incentive compensation opportunity based on the Company achieving key business plan goals, with an emphasis on Adjusted EBITDA. The Company selected these goals because it believes successful performance against these measures promotes the creation of long-term stockholder value. The Company places more weight on Adjusted EBITDA because it believes that Adjusted EBITDA is most directly related to stockholder value.
Unless Adjusted EBITDA for 2016 was more than $472 million, no annual incentive would have been earned. If more than the target $507 million of Adjusted EBITDA had been attained, the amount earned for each incentive objective would have increased on a pro rata basis to a maximum of 200% of target as Adjusted EBITDA increased from $507 million to $532 million. "Adjusted EBITDA" is defined as Modified EBITDA minus the interests of third parties in the Adjusted EBITDA of properties that are less than wholly owned by the Company. “Modified EBITDA” is defined as the Company’s consolidated income (loss) from continuing operations excluding the following: the cumulative effect of changes in accounting principles; discontinued operations gains or losses; income tax expense or benefit; restructure costs or recoveries; reorganization items (net); other income or expense; gain or loss on early extinguishment of debt; equity in income or loss of investees; interest expense (net); gain or loss on disposal of assets; gain or loss on the sale of investees; amortization; depreciation; stock-based compensation; and fresh start accounting valuation adjustments.
The following table shows the target annual incentive opportunities as of December 31, 2016 for the named executive officers:
Executive
 
Target Annual Incentive(1)
John M. Duffey
 
120% of base salary
James Reid-Anderson
 
100% of base salary
Marshall Barber
 
75% of base salary
Lance C. Balk
 
75% of base salary
Brett Petit
 
62.5% of base salary
Walter S. Hawrylak
 
62.5% of base salary
_________________________
(1)
Due to the changes in the roles of Messrs. Duffey and Reid-Anderson in February 2016, each of their annual incentives were prorated in the 2016 fiscal year based on target rates in effect before (75% and 120%, respectively) and after the effectiveness of their respective employment agreements entered into in February 2016 as shown in the chart above. Mr. Barber's annual incentive was prorated in the 2016 fiscal year based on the proportion of an annual target bonus of $100,000 for the portion of the 2016 fiscal year before the effectiveness of Mr. Barber's employment agreement and the target rate in effect after the effectiveness of Mr. Barber's employment agreement.

No named executive officer may earn more than 200% of his target annual incentive. Each named executive officer earns his target annual incentive based on achievement of the following four financial and strategic objectives.
Objective
 
Weight
 
Target Goal
Adjusted EBITDA
 
50.0%
 
$507 million
Net debt level
 
25.0%
 
Equal to or better than budget ($1,470 million after adjustment for share repurchases)
Guest satisfaction
 
12.5%
 
2016 guest satisfaction score exceeds 2015 guest satisfaction score (within an immaterial statistical error threshold)
Success in fostering and maintaining a safe park environment
 
12.5%
 
 2016 guest safety score exceeds 8.0 and quality assessment review standards met (weighted 50%) and
 workers compensation claims lower than prior year annual workers compensation claim target (weighted 50%)

Since more than the minimum Adjusted EBITDA of $472 million for 2016 was achieved, attainment of the weighted target annual incentive components is determined separately for each of the four objectives. With attainment of $506.6 million Adjusted EBITDA out of the target Adjusted EBITDA of $507 million, full achievement of the net debt level objective and partial achievement of the other two objectives, the named executive officers received below-target payouts for 2016. The named executive officers earned 90.083% of their target annual incentive under the annual cash incentive plan.
In February 2017, the Compensation Committee approved the following annual incentive awards for the named executive officers pursuant to the criteria of the annual incentive plan that were paid upon completion of the Company's audit for 2016.

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The amounts paid pursuant to the annual cash incentive plan are set forth in the "Non-Equity Incentive Plan Compensation" column of the 2016 Summary Compensation Table because such amounts were paid pursuant to the pre-established criteria under the annual cash incentive plan.
Executive
 
Target Annual Incentive($)
 
90.083% of Target Annual Incentive($)
John M. Duffey
 
1,128,750

 
1,016,812

James Reid-Anderson
 
1,133,333

 
1,020,940

Marshal Barber
 
329,167

 
296,524

Lance C. Balk
 
423,750

 
381,727

Brett Petit
 
296,875

 
267,434

Walter S. Hawrylak
 
238,750

 
215,073


Long-Term Incentives
While the annual cash incentives are intended to reward the achievement of short-term financial goals, our executive compensation program emphasizes and rewards results over the long-term through equity incentives that have a substantial performance-based component and multi-year vesting schedules. The Company's long-term incentive awards are tied to the Company's performance and the value of its common stock over several years. These awards are intended to align the interests of the named executive officers with those of the Company's stockholders and to reward the named executive officers' contribution to the long-term growth and performance of the Company. The Compensation Committee also believes that it is appropriate to evaluate equity grant opportunities on a systematic basis at least annually. The Compensation Committee awards stock options or performance stock units, or a combination thereof, based on its determination of the relative value of each form of award at the time of grant and the performance and responsibilities of each named executive officer. These awards are granted under the Company's Long-Term Incentive Plan. The Compensation Committee has not granted any time-based restricted stock or restricted stock units to named executive officers since 2011. The Compensation Committee may, from time to time, based on individual circumstances, grant additional equity incentive awards to employees, including named executive officers, due to circumstances such as outstanding performance or in connection with a promotion.
Stock Options.   Stock options vest 25% on each of the first four anniversaries of the grant date. The stock options have a term of ten years and, in all instances, an exercise price of not less than the closing price of the Company's common stock on the date the stock options are granted. The Compensation Committee believes that stock options are appropriate because they are aligned with the long-term interests of stockholders, as the stock options have no value to the named executive officers unless the market value of the Company's common stock increases after the grant date. As discussed below under "Dividend Equivalent Rights," unvested stock options have DERs associated with them. The Compensation Committee granted stock options to Messrs. Barber, Duffey and Reid-Anderson in February 2016 in connection with the changes in their positions with the Company. The Compensation Committee granted stock options to the other named executive officers in August 2016 as part of a general grant to employees to provide incentives. In recognition of the strong performance of the Company in the fourth quarter of 2016, in February 2017, the Compensation Committee granted stock options to all employees (other than Messrs. Duffey and Reid-Anderson).

Performance Awards—Project 500.   In order to motivate the Company's management team to continue to improve the Company's financial position, the Compensation Committee established a performance award program, called Project 500, which provided participants with an equity incentive in the event the Company reached its goal of $500 million of Modified EBITDA in a calendar year by December 31, 2015. The Compensation Committee believed that Modified EBITDA, rather than Adjusted EBITDA, was the appropriate measurement because it is the most comparable measure to other industry participants and incorporates the full range of the Company's business. At the time the Modified EBITDA target was established in August 2011, the Company’s 2010 calendar year Modified EBITDA was $323 million, thus the Project 500 target represented an increase of 55%.
Given the significant degree of difficulty required to achieve the Project 500 target, an additional feature of the program allowed participants to earn a partial incentive if at least $475 million of Modified EBITDA but less than $500 million of Modified EBITDA was achieved in calendar year 2014, in which case a partial Project 500 award could be achieved.
As a result of the Company's achievement of $477 million of Modified EBITDA in calendar year 2014, in February 2015, each named executive officer earned shares of stock in accordance with the partial achievement

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award under Project 500 along with associated DERs as set forth in the 2015 Option Exercise and Stock Vested Table.
Since the Company achieved $520 million of Modified EBITDA in 2015 and only partial achievement awards were earned for 2014, participants in Project 500 were entitled to receive a partial award of additional shares of stock in February 2016. The following table shows the shares that were issued pursuant to the 2014 partial achievement award, as well as the 2016 partial award of additional shares as set forth in the 2016 Option Exercise and Stock Vested Table:
Executive
 
2014 Partial Achievement Award
 
2016 Partial Achievement Award
John M. Duffey
 
115,000
 
100,000

James Reid-Anderson
 
526,125
 
457,500

Marshall Barber
 
23,000
 
20,000

Lance C. Balk
 
57,500
 
50,000

Brett Petit
 
46,000
 
40,000

Walter S. Hawrylak
 
46,000
 
40,000

Performance Awards—Project 600. Largely due to the Company's substantial progress and the success of Project 500 in motivating the participants, the Compensation Committee determined that a new aspirational goal in the form of a similar program, called Project 600, would be beneficial to the Company and its stockholders. Project 600 provides participants with an equity incentive for the Company to achieve $600 million of Modified EBITDA in a calendar year (the "Project 600 Target Modified EBITDA") by December 31, 2017. Pursuant to Project 600, the named executive officers will be issued shares of stock if the Company achieves the Project 600 Target Modified EBITDA. At the time this performance target was established in October 2014, the Company’s 2013 calendar year Modified EBITDA was $444 million, thus the Project 600 target represented an increase of 35%.
Like Project 500, given the significant degree of difficulty required to achieve the Project 600 target, the program provided management with incentive to reach the Project 600 Target Modified EBITDA earlier than 2017 by providing early vesting of awards if certain targets were reached. However, these early vesting targets were not achieved. If the Project 600 Target Modified EBITDA is first achieved in calendar year 2018, and no early achievement bonus or partial award (as described below) was previously earned, participants will be entitled to receive 50% of their target award.
The number of shares of stock that each current named executive officer is eligible to receive is set forth below if the Project 600 Target Modified EBITDA is first achieved in the year specified and no partial award (as described below) was previously earned. It is important to note that given the transition in leadership in February 2016, and as more fully described under "—Description of Employment Agreements of Named Executive Officers," Mr. Reid Anderson’s target award was reduced by 250,000 shares and Mr. Duffey’s target award was increased by 250,000 shares. The Compensation Committee believes this realignment of the number of target shares is consistent with the impact of the executives’ roles in achieving the Project 600 Target Modified EBITDA. Also in February 2016, the number of shares that Mr. Barber could earn under his original Project 600 award was increased by 30,000 shares in connection with his promotion to Chief Financial Officer.
    
 
 
Shares of Stock
Executive
 
2016 Early Achievement
 
2017 Achievement/Target Award
 
2018 Achievement
John M. Duffey
 
425,500

 
370,000

 
185,000

James Reid-Anderson
 
287,500

 
250,000

 
125,000

Marshall Barber
 
60,375

 
52,500

 
26,250

Lance C. Balk
 
51,750

 
45,000

 
22,500

Brett Petit
 
46,000

 
40,000

 
20,000

Walter S. Hawrylak
 
46,000

 
40,000

 
20,000


Given the degree of difficulty in achieving the Project 600 Target Modified EBITDA, the program provides that if at least $575 million of Modified EBITDA, but less than the Project 600 Target Modified EBITDA, is achieved in

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calendar year 2016 or 2017, a partial Project 600 award can be achieved. The following table describes the number of shares that may be issued based on the year a partial award is achieved:
 
Shares of Stock
Achievement of Partial Award
 
No Partial Award in Prior Year
 
Partial Award in Prior Year
2016
 
75% of 2016 Early Achievement
 
N/A
2017
 
75% of 2017 Achievement
 
25% of 2017 Achievement

Modified EBITDA is determined after reviewing the Company's audited financial statements for the applicable year. As a general matter, Modified EBITDA will exclude the impact of extraordinary or infrequently occurring events such as acquisitions and dispositions and costs associated with the evaluation of strategic options. The Compensation Committee determined that, since the incremental investment in the new Mexico waterpark was not planned when the Project 600 Target Modified EBITDA was determined, the Project 600 Target Modified EBITDA will be increased by an amount based on the Company’s cost of capital times the incremental investment, prorated for the number of months in 2017 the waterpark is open less pre-opening expenses incurred in 2017. On this basis, the Project 600 Target Modified EBITDA has increased by $1.1 million to $601.1 million. Any shares under Project 600 will be issued after the Compensation Committee certifies the achievement of the Modified EBITDA after completion of the Audit Committee's review of the Company's audited financial statements for the applicable calendar year.

If a change in control (as defined under Project 600) occurs, then the Project 600 Target Modified EBITDA is deemed earned but no early achievement award would be considered earned (unless such Project 600 Target Modified EBITDA had already been earned by the time of the change in control) and instead if no partial awards were previously made the target award would be treated as earned.

To receive shares under Project 600, unless otherwise determined by the Compensation Committee, the executive must be employed by the Company on the first day of the calendar year immediately following the calendar year during which the requisite Modified EBITDA was achieved or the executive must be employed by the Company on the date of a change in control (as defined under Project 600), or have had such employment terminated in anticipation of such a change in control.
Performance Awards—Project 750. Largely due to the Company's substantial progress and the success of Project 500 and Project 600 in motivating participants, the Compensation Committee determined that a new aspirational goal in the form of a similar program, called Project 750, would be beneficial to the Company and its stockholders. Project 750 provides participants with an equity incentive for the Company to achieve $750 million of Modified EBITDA in a calendar year (the "Project 750 Target Modified EBITDA") by December 31, 2020. Pursuant to Project 750, the named executive officers will be issued shares of stock if the Company achieves the Project 750 Target Modified EBITDA. At the time this performance target was established in October 2016, the Company’s 2016 calendar year Modified EBITDA was $520 million, thus the Project 750 target represents an increase of 44%.
Given the difficulty of achieving the Project 750 Target Modified EBITDA, Project 750 provides management with incentive to reach the Project 750 Target Modified EBITDA earlier than 2020 by providing early achievement premiums (i.e., additional shares) if certain Modified EBITDA levels are achieved. The amount of shares issued pursuant to the performance award is based on a range linked to the year in which the goal is achieved. If the Project 750 Target Modified EBITDA is first achieved in calendar year 2021, and no early achievement bonus or partial award (as described below) was previously earned, participants will be entitled to receive 50% of their target award.
The number of shares of stock that each current named executive officer is eligible to receive is set forth below if the Project 750 Target Modified EBITDA is first achieved in the year specified and no partial award (as described

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below) was previously earned:        
 
 
Shares of Stock
Executive
 
2017 Early Achievement
 
2018 Early Achievement
 
2019 Early Achievement
 
2020 Achievement/Target Award
 
2021 Achievement
John M. Duffey
 
202,500

 
202,500

 
172,500

 
150,000

 
75,000

Marshall Barber
 
50,625

 
50,625

 
43,125

 
37,500

 
18,750

Lance C. Balk
 
23,625

 
23,625

 
20,125

 
17,500

 
8,750

Brett Petit
 
21,600

 
21,600

 
18,400

 
16,000

 
8,000

Walter S. Hawrylak
 
21,600

 
21,600

 
18,400

 
16,000

 
8,000


If at least $725 million of Modified EBITDA, but less than the Project 750 Target Modified EBITDA, is achieved in calendar year 2017, 2018 or 2019, a partial Project 750 award can be achieved and any over-performance above $725 million of Modified EBITDA can be credited to the next calendar year's achievement of $725 million of Modified EBITDA for purposes of determining if the remaining portion of the Project 750 award could be earned. The following table describes the number of shares that may be issued based on the year a partial award is first achieved (and an additional partial award may be available if one is achieved in a subsequent year):
Year Partial Award Achieved
 
Number of Shares Assuming No Partial Award in Prior Year
2017
 
75% of 2017 Early Achievement
2018
 
75% of 2018 Early Achievement
2019
 
75% of 2019 Early Achievement
2020
 
75% of 2020 Achievement

Modified EBITDA is determined after reviewing the Company's audited financial statements for the applicable year. As a general matter, Modified EBITDA will exclude the impact of extraordinary or infrequently occurring events such as acquisitions and dispositions and costs associated with the evaluation of strategic options. Any shares under Project 750 will be issued after the Compensation Committee certifies the achievement of the Modified EBITDA after completion of the Audit Committee's review of the Company's audited financial statements for the applicable calendar year.

If a change in control (as defined under Project 750) occurs, then the Project 750 Target Modified EBITDA is deemed earned but no early achievement award would be considered earned (unless such Project 750 Target Modified EBITDA had already been earned by the time of the change in control) and instead if no partial awards were previously made the target award would be treated as earned.

To receive shares under Project 750, unless otherwise determined by the Compensation Committee, the executive must be employed by the Company on the first day of the calendar year immediately following the calendar year during which the requisite Modified EBITDA was achieved or the executive must be employed by the Company on the date of a change in control (as defined under Project 750), or have had such employment terminated in anticipation of such a change in control.
Dividend Equivalent Rights
In order for stock option holders and Project 500, Project 600 and Project 750 participants to participate in the Company's quarterly dividend on its common stock, the Compensation Committee determined to grant holders of the Company's unvested stock options and Project 500, Project 600 and Project 750 awards with DERs. No DERs are paid to any holders with respect to any unvested awards until such awards vest. The stock option DERs provide for issuance of shares of stock to holders of unvested stock options in a value equal to any dividends on the common stock from the grant date through the date of option vesting and such shares are only paid once vesting occurs. Similarly, the Project 500, Project 600 and Project 750 DERs provide for issuance of shares of stock in a value equal to any dividends on the common stock from the award issuance date through the date shares, if any, are issued under Project 500, Project 600 or Project 750 and such shares are only paid to the extent that the shares pursuant to the underlying award vest. The Compensation Committee believes that the use of DERs was necessary to keep the executives aligned with stockholders as a significant part of the Company's total stockholder return is in the form of dividends.

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Perquisites and Benefits
The named executive officers receive the same health, welfare and other benefits provided to other Company employees. The Company provides limited perquisites to named executive officers such as a fixed automobile allowance for Messrs. Reid-Anderson and Duffey and a fixed tax planning and legal services allowance for Mr. Reid-Anderson. The "All Other Compensation" column of the 2016 Summary Compensation Table sets forth these perquisites in accordance with the requirements of the SEC. The Compensation Committee reviews the Company's policies on executive officer perquisites on an annual basis.
The Company has a contributory 401(k) Plan available to employees of the Company who meet the age and service requirements. The Company makes matching contributions. In 2016, the Company matched 100% of the first 3% of salary contributions and 50% of the next 2% of salary contributions made by employees (subject to tax law limits). The Company also has a Supplemental 401(k) Plan, which permits eligible participants to defer a portion of their compensation without such portion being limited by Internal Revenue Code restrictions applicable to the contributory 401(k) Plan and receive corresponding matching contributions. For a discussion of the Supplemental 401(k) Plan, see "—Fiscal 2016 Non-Qualified Deferred Compensation."
The Company maintains an employee stock purchase plan, which is made available to substantially all of the Company's employees, and allows participants to acquire the Company's common stock at a discounted price. The employee stock purchase plan was approved by stockholders at the Company's annual meeting in May 2011. The purpose of the plan is to encourage employees at all levels to purchase stock and become stockholders. The plan allows participants to buy the Company's common stock at a 10% discount to the lower of the market value of the common stock at the beginning or end of each successive six-month offering period. Under applicable tax law, no plan participant generally may purchase more than $25,000 in market value (based on the market value of the Company's common stock on the first trading day of each offering period) of the Company's common stock in any calendar year.
Compensation Upon Termination of Employment
In addition to the direct compensation program, the Company believes it is important to provide certain of the executive officers with competitive separation payments and benefits because it provides a measure of financial security for the executive officer and his family in the event of certain terminations of an executive officer's employment and also enables the Company to secure their cooperation following termination. Post-employment compensation consists primarily of two types—severance pay and benefits continuation. Under their respective employment agreements, the named executive officers are entitled to receive these benefits in the event of specified terminations of employment and as a consequence of a change in control. The agreements contain a double-trigger provision, which requires both a change in control and termination of employment in order for the executive officer to receive benefits under the change in control provision rather than a single-trigger provision under which benefits are triggered automatically by a change in control. The Company does not provide an excise tax gross-up in the event of a termination due to a change in control.
The separation payments and benefits are intended to provide the executives with a measure of financial support if their employment is terminated in certain circumstances through no fault of their own. The enhanced and accelerated benefits offered in connection with a change in control are designed to support the following business objectives:
Enhance the Company's value in a consolidation transaction by helping retain and stabilize the management team during periods of uncertainty.
Preserve the objectivity of the Company's management team if they are negotiating and executing a consolidation transaction.
Keep the management team focused on the Company's business instead of their personal financial situation.
The Company elects to provide post-employment compensation to the executive officers on a case-by-case basis as the employment market, the qualifications of potential employees and the Company's hiring needs dictate. See "—Potential Payments Upon Termination" for additional information on separation payments and benefits for the named executive officers.
Tax and Accounting Impact and Policy
The financial and income tax consequences to the Company of individual executive compensation elements are important considerations for the Compensation Committee when analyzing the overall design and mix of compensation. Section 162(m) of the Internal Revenue Code of 1986, as amended, imposes a $1 million limit on the amount that a public company may deduct for compensation paid to the Company’s Chief Executive Officer or the Company’s other named executive officers, other than the Chief Financial Officer, who are employed as of the end of the fiscal year. This limitation does not apply to compensation that meets the requirements under Section 162(m) for “qualifying performance based” compensation (i.e.,

24


compensation paid only if performance meets pre-established objective goals based on performance criteria approved by stockholders). Although the Compensation Committee may consider the impact of Section 162(m) as well as other tax and accounting consequences when developing and implementing the Company’s executive compensation programs, the Committee retains the flexibility to design and administer compensation programs that are in the best interests of the Company and its stockholders. In addition, due to the ambiguities and uncertainties as to the application and interpretation of Section 162(m) of the Code, no assurances can be given, that compensation even if intended by the Compensation Committee to satisfy the requirements for deductibility under Section 162(m) of the Code would, in fact, do so.
Other Policies

To enhance alignment of interest between management and the Company's stockholders, the Company maintains stock ownership guidelines for executive officers and certain other members of senior management. Under the guidelines, each executive should seek to have a level of ownership of Company stock that has a value approximately equal to at least two times their annual base salary (and six times annual base salary for the Company's Chief Executive Officer). The ownership level should be achieved within three years of (i) the effective date of the guidelines for officers serving as of the adoption of the guidelines or (ii) the date the person first becomes an executive officer or member of senior management for new officers. All of the named executive officers are in compliance with the Company's stock ownership guidelines.
The Company's insider trading policy requires executive officers and directors to consult the Company’s General Counsel prior to engaging in transactions involving the Company's common stock. In order to protect the Company from exposure under insider trading laws, executive officers and directors are encouraged to enter into pre-programmed trading plans under Exchange Act Rule 10b5-1. The Company's insider trading policy prohibits directors and executive officers from hedging or monetization transactions including, but not limited to, through the use of financial instruments such as exchange funds, prepaid variable forwards, equity swaps, puts, calls, collars and other derivative instruments, or through the establishment of a short position in the Company’s securities.
The Company's insider trading policy limits the pledging of Company common stock to those situations approved by the Company's General Counsel. The Company’s General Counsel expects to approve pledging of stock on a case by case basis only in those situations where the individual is acquiring stock pursuant to Company compensatory programs and because of taxes and acquisition costs, the likely alternative to pledging of the stock being acquired is the sale of such stock.
The Compensation Committee does not employ any form of wealth tally; it believes that grants to executives should be made based on individual and Company performance factors and market compensation conditions at the time of grant, as described herein, and that it is in the interests of the Company's stockholders that executives not be penalized for their past successes.
The Company's Long-Term Incentive Plan, under which equity awards and annual cash incentives may be made, contains clawback provisions that require the repayment of compensation previously awarded under the Company's Long-Term Incentive Plan in certain circumstances (for example, the commission of fraud that caused or partially caused the need for a material financial restatement) and to the extent permitted under applicable law. In addition, under Section 304 of Sarbanes-Oxley, if the Company is required to restate its financial statements due to material noncompliance with any financial reporting requirements as a result of misconduct, Mr. Duffey and Mr. Barber must reimburse the Company for (i) any bonus or other incentive-based or equity-based compensation received during the 12 months following the first public issuance of the non-complying document, and (ii) any profits realized from the sale of securities during those 12 months.
Compensation Policies and Risk Management Practices
The Compensation Committee has reviewed the Company's policies and practices for all of the Company's employees, including non-executive officers, and determined that the policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. The Compensation Committee believes that the design of the Company's annual cash and long-term equity incentives provides an effective and appropriate mix of incentives to help ensure the Company's performance is focused on long-term stockholder value creation and does not encourage the taking of short-term risks at the expense of long-term results. The Company has discretion to reduce annual incentive payments (or pay no annual incentive) based on individual performance and any other factors it may determine to be appropriate in the circumstances.

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Description of Employment Agreements of Named Executive Officers
In 2010, the Company entered into employment agreements with each of the named executive officers other than Mr. Barber. See "—Compensation Discussion and Analysis—Elements of Compensation" for additional information on the compensation of the named executive officers pursuant to their respective employment agreements.
In February 2016, Mr. Reid-Anderson assumed the role of Executive Chairman of the Company, Mr. Duffey became the Company’s President and Chief Executive Officer, and Mr. Barber assumed the role of Chief Financial Officer of the Company.
In connection with Mr. Reid-Anderson’s appointment as Executive Chairman, the Company entered into an employment agreement with Mr. Reid-Anderson (the “2016 Reid-Anderson Employment Agreement”). Pursuant to the 2016 Reid-Anderson Employment Agreement, Mr. Reid-Anderson’s 2010 employment agreement with the Company terminated on February 19, 2016, and he agreed to serve as Executive Chairman for a term of two years with a base salary of at least $1,000,000 for the first year of the term and at least $500,000 for the second year of the term. In February 2017, the Compensation Committee noted the strong performance and momentum of the Company and determined to maintain Mr. Reid-Anderson's salary at the same level in 2017 as in 2016. Accordingly, the 2016 Reid-Anderson Employment Agreement was amended on February 10, 2017 to provide for an annual base salary of $1,000,000 for both years of the term. Mr. Reid-Anderson is eligible for an annual bonus with a target of 100% of his base salary, which was prorated in 2016 based on target rates in effect before and after the effectiveness of the 2016 Reid-Anderson Employment Agreement. The amendment to the 2016 Reid-Anderson Employment Agreement in February 2017 provided that Mr. Reid-Anderson's annual bonus, if any, for the 2017 performance year will be paid in shares of the Company's common stock. Also in connection with Mr. Reid-Anderson becoming Executive Chairman, Mr. Reid-Anderson forfeited one-half of his target award under the Company’s Project 600 Program. He will continue to participate in the Company’s Project 600 Program with respect to a target award of 250,000 shares.
In connection with Mr. Duffey’s appointment as President and Chief Executive Officer, the Company entered into an employment agreement with Mr. Duffey (the “2016 Duffey Employment Agreement”) that provides for, among other things, a base salary of at least $1,050,000 per year and an annual bonus with a target of 120% of his base salary, which was prorated in 2016 based on target rates in effect before and after the effectiveness of the 2016 Duffey Employment Agreement. In addition, on February 19, 2016 Mr. Duffey was granted options to purchase 250,000 shares of the Company’s common stock in accordance with a nonqualified stock option agreement under the Company’s Long-Term Incentive Plan, which vests in equal amounts on each of the first four anniversaries of the grant date. Also, given Mr. Duffey's role as President and Chief Executive Officer, the Project 600 shares that Mr. Reid-Anderson forfeited as discussed above were awarded to Mr. Duffey. Accordingly, Mr. Duffey's existing target award under the Company’s Project 600 Program was increased by 250,000 shares for a total target award (including his existing award) of 370,000 shares.
In connection with Mr. Barber’s appointment as Chief Financial Officer, the Company entered into an employment agreement with Mr. Barber (the “Barber Employment Agreement”) that provides for, among other things, a base salary of at least $500,000 per year and an annual bonus with a target of 75% of his base salary, which was prorated in 2016 based on the proportion of an annual target bonus of $100,000 for the portion of 2016 before the effectiveness of the Barber Employment Agreement and the target rate in effect after the Barber Employment Agreement was in effect. Also in connection with such appointment, Mr. Barber was granted options to purchase 75,000 shares of the Company’s common stock in accordance with a nonqualified stock option agreement under the Company’s Long-Term Incentive Plan, which vests in equal amounts on each of the first four anniversaries of the grant date, and an additional award under the Company’s Project 600 Program with a target award of 30,000 shares for a total target award (including his existing award) under the Company’s Project 600 Program of 52,500 shares.
The 2016 Reid-Anderson Employment Agreement, the 2016 Duffey Employment Agreement and the Barber Employment Agreement also contain provisions for separation payments and benefits upon certain types of termination of employment as well as customary non-competition, indemnification, confidentiality and proprietary information provisions. For a description of separation or change of control payments and benefits provided by these employment agreements, see "—Potential Payments Upon Termination."


26


2016 Summary Compensation Table
The following table summarizes the compensation paid by the Company to (i) the Company's former Chief Executive Officer (current Executive Chairman), (ii) the Company's Chief Executive Officer (former Chief Financial Officer), (ii) the Company's Chief Financial Officer and (iii) the Company's other three most highly compensated executive officers serving as such at the end of the fiscal year ended December 31, 2016.
Name and Principal Position
 
Year
 
Salary(1)
($)
 
Bonus
($)
 
Stock
Awards(2)
($)
 
Option
Awards(3)
($)
 
Non-Equity
Incentive
Plan
Compensation(1)
($)
 
All Other
Compensation(4)
($)
 
Total
($)
John M. Duffey
 
2016
 
995,077

 

 
175,942

 
1,500,006

 
1,016,812

 
90,014

 
3,777,851

President and Chief
 
2015
 
637,500

 
94,095

 
141,894

 
151,198

 
828,405

 
52,820

 
1,905,912

Executive Officer
 
2014
 
584,808

 
149,030

 
192,034

 
393,300

 
515,970

 
39,772

 
1,874,914

James Reid-Anderson
 
2016
 
1,065,385

 

 
970,094

 
1,500,006

 
1,020,940

 
201,807

 
4,758,232

Executive Chairman
 
2015
 
1,546,154

 

 
955,604

 
2,174,000

 
3,232,800

 
160,502

 
8,069,060

 
 
2014
 
1,200,000

 

 
1,710,684

 
3,620,500

 
1,693,440

 
129,720

 
8,354,344

Marshall Barber
 
2016
 
473,192

 

 
38,818

 
535,748

 
296,524

 
33,089

 
1,377,371

Chief Financial Officer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lance C. Balk
 
2016
 
565,000

 

 
127,440

 
85,747

 
381,727

 
58,042

 
1,217,956

General Counsel
 
2015
 
570,385

 
84,150

 
94,596

 
100,798

 
740,850

 
47,191

 
1,637,970

 
 
2014
 
529,808

 
82,540

 
128,023

 
262,200

 
467,460

 
37,658

 
1,507,689

Brett Petit
 
2016
 
475,000

 

 
99,537

 
85,747

 
267,434

 
42,302

 
970,020

Senior Vice President,
 
2015
 
440,577

 
54,187

 
94,596

 
100,798

 
477,063

 
37,059

 
1,204,280

Marketing
 
2014
 
404,808

 
142,325

 
106,686

 
218,500

 
297,675

 
26,943

 
1,196,937

Walter S. Hawrylak(5)
 
2016
 
382,000

 

 
99,537

 
85,747

 
215,073

 
35,432

 
817,789

Senior Vice President,
 
2015
 
383,654

 
47,175

 
94,596

 
100,798

 
415,325

 
30,545

 
1,072,093

Administration
 
2014
 
354,808

 
79,075

 
106,686

 
218,500

 
260,925

 
23,602

 
1,043,596

_________________________
(1)
Each of the named executive officers deferred portions of their salary, bonus and/or non-equity incentive plan compensation into the Supplemental 401(k) Plan as set forth in the 2016 Non-Qualified Deferred Compensation Table and the numbers in the columns above are prior to any such deferrals. Effective February 19, 2016, (a) Mr. Reid-Anderson, formerly the Company’s Chairman, President and Chief Executive Officer, assumed the role of Executive Chairman, (b) Mr. Duffey, formerly the Company’s Chief Financial Officer, assumed the role of President and Chief Executive Officer, and (c) Mr. Barber, formerly the Company’s Vice President of Business Planning, assumed the role of Chief Financial Officer.
(2)
The dollar amount represents the aggregate grant date fair value of the awards granted computed in accordance with the stock-based accounting rules (Financial Accounting Standards Board ASC Topic 718). The assumptions used in the calculation of these amounts are discussed in Note 9 to the Company's consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016. These awards were the DERs distributed to reflect the dividend equivalents that had accumulated with respect to stock options vesting during 2016.
Pursuant to SEC rules, the value of Project awards on the date of grant is treated as zero because on such date the shares of stock under the Project awards were not considered to be probable of being earned. Any shares of stock under the Project awards will only be granted after completion of the Company's audit for the applicable years if the specified targets are met. Under the Project 750 program, each named executive officer (other than Mr. Reid-Anderson due to his position with the Company and Mr. Hawrylak due to his retirement from the Company in February 2017) has a target number of shares of stock (plus DERs), which may be issued under the Long-Term Incentive Plan if the Company achieves the Project 750 Target Modified EBITDA in target calendar year 2020 and a higher number of shares of stock if the Project 750 Target Modified EBITDA is achieved in an earlier year and 50% of the target number of shares of stock if the Project 750 Target Modified EBITDA is achieved in 2021. Partial achievement awards are available. The number of shares of stock that a named executive officer can earn upon achieving Project goals is set forth in "—Compensation Discussion and Analysis—Elements of Compensation—Long-Term Incentives". For informational purposes, assuming the highest level of performance for a determinable award under the Project 750 awards, calculated by multiplying the closing price of the Company’s common stock on the date the executive officer started to participate in the Project 750 program by the number of Project 750 award shares issuable upon achievement of the 2017 Early Achievement, the value is $10,912,725, $2,728,181, $1,273,151, and $1,164,024 for Messrs. Duffey, Barber, Balk, and Petit, respectively. For informational purposes, the value of the additional Project 600 awards granted in connection with the promotion of Messrs. Duffey and

27


Barber, calculated by multiplying the closing price of the Company’s common stock on the date of grant of the additional shares by the number of additional Project 600 award shares, is $12,845,000 and $1,541,400 for Messrs. Duffey and Barber, respectively. See "—Compensation Discussion and Analysis—Elements of Compensation—Long-Term Incentives" for a discussion of Project 600 and Project 750.
(3)
The dollar amount represents the aggregate grant date fair value of the awards granted computed in accordance with the stock-based accounting rules (Financial Accounting Standards Board ASC Topic 718). The assumptions used in the calculation of these amounts are discussed in Note 9 to the Company's consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016. These amounts do not reflect whether the recipient has actually realized or will realize a financial benefit from the awards (such as by exercising stock options).
(4)
The dollar amount represents 401(k) Plan matching contributions of 100% of the first 3% of salary contributions and 50% of the next 2% of salary contributions (subject to tax law limits), Supplemental 401(k) Plan matching contributions and Company-paid life insurance premiums as follows:
Executive
 
Life Insurance
Premiums
($)
 
401(k) Plan
Match
($)
 
Supplemental
401(k) Plan
Match
($)
 
Total
($)
John M. Duffey
 
2,880

 
10,600

 
66,103

 
79,583

James Reid-Anderson
 
2,880

 
10,600

 
161,327

 
174,807

Marshall Barber
 
2,161

 
10,600

 
20,328

 
33,089

Lance C. Balk
 
2,442

 
10,600

 
45,000

 
58,042

Brett Petit
 
2,052

 
10,600

 
29,650

 
42,302

Walter S. Hawrylak
 
1,652

 
10,600

 
23,180

 
35,432

The amount shown in 2016 for Mr. Reid-Anderson includes $12,000 for an automobile allowance and $15,000 for a tax planning and legal services allowance. Mr. Reid-Anderson's employment agreement provides that Mr. Reid-Anderson is entitled to a fixed automobile allowance of $1,000 per month as well as a fixed tax planning and legal services allowance of $15,000 per calendar year. The amount shown in 2016 for Mr. Duffey includes $10,431 for an automobile allowance. Mr. Duffey's employment agreement provides that Mr. Duffey is entitled to a fixed automobile allowance of $1,000 per month. For additional information on contributions that the Company makes for the named executive officers under the 401(k) Plan, Supplemental 401(k) Plan and of perquisites and benefits that the Company provides to the named executive officers, see "—Compensation Discussion and Analysis—Elements of Compensation—Perquisites and Benefits."
(5)
Effective February 28, 2017, Mr. Hawrylak retired from the Company.

28


2016 Grants of Plan-Based Awards
The following table provides information on equity and non-equity awards granted in 2016, except as otherwise noted below, to each of the named executive officers:
 
 
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)
Estimated Future Payouts Under Equity Incentive Plan Awards
All Other
Stock
Awards:
No. of
Shares of
Stock or
Units
(#)
All Other
Option
Awards:
No. of
Securities
Underlying
Options
(#)
Exercise
or Base
Price of
Awards
($/Sh)
Grant
Date
Fair
Value of
Stock
and
Option
Awards
($)
Name
Grant
Date
Threshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Target
(#)
Maximum
(#)
John M. Duffey


1,128,750

2,257,500








 
2/19/2016








250,000

51.38

1,500,006

 
2/19/2016







(2
)


1,328,701

 
2/19/2016




(3
)
(3
)
(3
)




 
10/26/2016(4)




75,000

150,000

202,500





James Reid-Anderson


1,133,333

2,266,666








 
2/19/2016








250,000

51.38

1,500,006

 
2/19/2016







(2
)


1,328,701

 
2/19/2016




(3
)
(3
)
(3
)




Marshall Barber


329,167

658,334








 
2/19/2016








75,000

51.38

450,002

 
2/19/2016







(2
)


398,610

 
8/24/2016








15,000

50.39

85,747

 
8/24/2016







(2
)


72,852

 
2/19/2016




(3
)
(3
)
(3
)




 
10/26/2016(4)




18,750

37,500

50,625





Lance C. Balk


423,750

847,500








 
8/24/2016








15,000

50.39

85,747

 
8/24/2016







(2
)


72,852

 
10/26/2016(4)




8,750

17,500

23,625





Brett Petit


296,875

593,750







 
8/24/2016








15,000

50.39

85,747

 
8/24/2016







(2
)


72,852

 
10/26/2016(4)




8,000

16,000

21,600





Walter S. Hawrylak


238,750

477,500








 
8/24/2016








15,000

50.39

85,747

 
8/24/2016







(2
)


72,852

 
10/26/2016(4)




8,000

16,000

21,600





_______________________________
(1)
See "—Compensation Discussion and Analysis—Elements of Compensation—Annual Incentives" for details regarding the annual incentive.
(2)
On the August 2016 grant dates of stock option awards (and February 2016 for Messrs. Duffey, Reid-Anderson and Barber), DERs were also granted to each named executive officer with respect to the same number of shares as the number of shares underlying the stock option award granted. The number of shares of common stock that vest pursuant to the DERs is based on the conversion of cash DERs accumulated from the grant date through the date that the stock option vests.

29


(3)
In connection with Mr. Reid-Anderson becoming Executive Chairman, Mr. Reid-Anderson forfeited 250,000 shares of his target award under the Project 600 Program, which shares were used to increase Mr. Duffey's existing target award under Project 600 by 250,000 shares due to Mr. Duffey becoming President and Chief Executive Officer. Mr. Barber's existing target award under Project 600 was increased by 30,000 shares in connection with his promotion to Chief Financial Officer. As a result of these changes to the existing Project 600 awards, the current estimated future payouts for Messrs. Duffey, Reid-Anderson and Barber under the Project 600 Program are as follows:
 
 
Shares of Stock
Executive
 
Threshold
 
Target
 
Maximum
John M. Duffey
 
185,000

 
370,000

 
425,500

James Reid-Anderson
 
125,000

 
250,000

 
287,500

Marshall Barber
 
26,250

 
52,500

 
60,375

(4)
The date executive officers started to participate in the Project 750 program is set forth under the "Grant Date" column. Under the Project 750 program, each executive officer has a target number of shares of stock (plus DERs), which may be issued under the Company's Long-Term Incentive Plan if the Company achieves the Project 750 Target Modified EBITDA in calendar year 2020 and a higher number of shares of stock if the Project 750 Target Modified EBITDA is achieved earlier and a lower number of shares of stock if the Project 750 Target Modified EBITDA is achieved in 2021. Partial achievement awards are available. See "—Compensation Discussion and Analysis—Elements of Compensation—Long-Term Incentives" for a discussion of Project 750.

30


2016 Outstanding Equity Awards at Fiscal Year-End
The following table provides information on the total outstanding equity awards as of December 31, 2016 for each of the named executive officers:
 
 
Option Awards
Stock Awards
Name
Grant
Date
Number of Securities Underlying Unexercised Options (#)
Exercisable
Number of Securities Underlying Unexercised Options (#)
Unexercisable(1)
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
(#)
Option Exercise Price
($)
Option Expiration Date
Number of Shares or Units of Stock That Have Not Vested
(#)
Market Value of Shares or Units of Stock That Have Not Vested(2)
($)
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
(#)
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(2)
($)
John M. Duffey








370,000(3)

24,050,000

 








202,500(4)

12,271,500

 
8/24/2011

108,000



16.81

8/24/2021





 
8/24/2012

72,000



27.76

8/24/2022





 
8/24/2013

27,000

9,000


34.49

8/24/2023





 
8/24/2013






  (5)

66,330



 
8/24/2014

22,500

22,500


37.54

8/24/2024





 
8/24/2014






  (5)

123,975



 
8/24/2015

7,500

22,500


42.34

8/24/2025


 


 
8/24/2015






  (5)

78,300



 
2/19/2016


250,000


51.38

2/19/2026





 
2/19/2016






  (5)

450,000



James Reid-Anderson








250,000(3)

16,250,000

 
2/20/2013


62,500


33.45

2/20/2023





 
2/20/2013






  (5)

516,875



 
2/19/2014


75,000


40.02

2/19/2024





 
2/19/2014






  (5)

483,750



 
8/24/2014


125,000


37.54

8/24/2024





 
8/24/2014






  (5)

688,750



 
2/19/2015


150,000


47.60

2/19/2025





 
2/19/2015






  (5)

600,000



 
2/19/2016


250,000


51.38

2/19/2026





 
2/19/2016






  (5)

450,000



Marshall Barber








52,500(3)

3,412,500

 








50,625(4)

3,067,875

 
8/24/2013


2,250


34.49

8/24/2023





 
8/24/2013






  (5)

16,583



 
8/24/2014


5,000


37.54

8/24/2024





 
8/24/2014






  (5)

27,550



 
8/24/2015

2,000

6,000


42.34

8/24/2025





 
8/24/2015






  (5)

20,880



 
2/19/2016


75,000


51.38

2/19/2026





 
2/19/2016






  (5)

135,000



 
8/24/2016


15,000


50.39

8/24/2026





 
8/24/2016






  (5)

18,300



Lance C. Balk








45,000(3)

2,925,000

 








23,625(4)

1,431,675

 
8/24/2012

13,500



27.76

8/24/2022





 
8/24/2013

20,250

6,750


34.49

8/24/2023





 
8/24/2013






  (5)

49,748




31


 
8/24/2014

15,000

15,000


37.54

8/24/2024





 
8/24/2014






  (5)

82,650



 
8/24/2015

5,000

15,000


42.34

8/24/2025





 
8/24/2015






  (5)

52,200



 
8/24/2016


15,000


50.39

8/24/2026





 
8/24/2016






  (5)

18,300



Brett Petit








40,000(3)

2,600,000

 








21,600(4)

1,308,960

 
8/24/2013


5,250


34.49

8/24/2023





 
8/24/2013






  (5)

38,693



 
8/24/2014


12,500


37.54

8/24/2024





 
8/24/2014






  (5)

68,875



 
8/24/2015


15,000


42.34

8/24/2025





 
8/24/2015






  (5)

52,200



 
8/24/2016


15,000


50.39

8/24/2026





 
8/24/2016






  (5)

18,300



Walter S. Hawrylak








40,000(3)

2,600,000

 








21,600(4)

1,308,960

 
8/24/2013


5,250


34.49

8/24/2023





 
8/24/2013






  (5)

38,693



 
8/24/2014


12,500


37.54

8/24/2024





 
8/24/2014






  (5)

68,875



 
8/24/2015


15,000


42.34

8/24/2025


 


 
8/24/2015






  (5)

52,200



 
8/24/2016


15,000


50.39

8/24/2026





 
8/24/2016






  (5)

18,300



_________________________
(1)
The stock options awarded to all of the named executive officers vest 25% on each anniversary of the grant date with acceleration upon certain events as discussed in "Potential Payments Upon Termination of Named Executive Officers." As described in "—Compensation Discussion and Analysis—Elements of Compensation—Dividend Equivalent Rights," in connection with the dividend increase in 2012, the Board began granting DERs to holders of unvested stock options. On a quarterly basis as stockholders are paid cash dividends, the DERs accrue dividends which will be distributed to the named executive officers in shares upon the vesting of their stock option award.
(2)
The value set forth for DERs is based on the amount of cash dividend equivalents accumulated from the grant date through December 31, 2016.
(3)
Amount represents the target number of shares that may be issued under Project 600 if the Company achieves the Project 600 Target Modified EBITDA in calendar year 2017. See "—Compensation Discussion and Analysis—Elements of Compensation—Long-Term Incentives" and "—Compensation Discussion and Analysis—Elements of Compensation—Dividend Equivalent Rights" for a discussion of Project 600 and related DERs. See "—Description of Employment Agreements of Named Executive Officers" for a discussion of changes to the Project 600 awards for Messrs. Duffey and Reid-Anderson effective in 2016.
(4)
Amount represents the target number of shares that may be issued under Project 750 if the Company achieves the Project 750 Target Modified EBITDA in calendar year 2017. See "—Compensation Discussion and Analysis—Elements of Compensation—Long-Term Incentives" and "—Compensation Discussion and Analysis—Elements of Compensation—Dividend Equivalent Rights" for a discussion of Project 750 and related DERs.
(5)
On the grant date of the stock option awards, accompanying DERs were also granted to each named executive officer. The number of shares of common stock that vest pursuant to the DERs is based on the conversion of cash dividend equivalents accumulated from the grant date through the date that the stock option vests.

32


2016 Option Exercises and Stock Vested
The following table provides information regarding options exercised and stock vested for the named executive officers during 2016:
 
 
Option Awards
 
Stock Awards
Name
 
Number of Shares
Acquired on Exercise
(#)
 
Value Realized
on Exercise(1)
($)
 
Number of Shares
Acquired on Vesting(2)
(#)
 
Value Realized
on Vesting(3)
($)
John M. Duffey
 
146,960

 
5,668,247

 
120,375

 
6,181,804

James Reid-Anderson
 
292,500

 
4,478,088

 
553,468

 
28,435,076

Marshall Barber
 
15,250

 
291,216

 
24,155

 
1,240,391

Lance C. Balk
 
40,500

 
1,249,830

 
61,373

 
3,150,640

Brett Petit
 
26,250

 
489,720

 
48,984

 
2,514,747

Walter S. Hawrylak
 
26,250

 
428,382

 
48,984

 
2,514,747

_____________________________
(1)
The amount was calculated based on the difference between the market price of the Company's common stock on the date of exercise and the exercise price.
(2)
The amount represents the shares earned under Project 500 in 2016 based on calendar year 2015 performance as well as DERs associated with such shares earned under Project 500 and with the stock options that vested in 2016 as described in "—Compensation Discussion and Analysis—Elements of Compensation—Long-Term Incentives."
(3)
The amount was calculated based on the fair market value of the Company's common stock on the vesting date (or the previous trading day if the vesting date was not a trading day). The fair market value is determined based on the closing price of the Company's common stock on the applicable date and accumulated dividends/DERs.
Fiscal 2016 Non-Qualified Deferred Compensation
The Company maintains a Supplemental 401(k) Plan that covers selected employees including the named executive officers. The Supplemental 401(k) Plan provides participants the opportunity to defer a portion of their compensation without such portion being limited by Internal Revenue Code restrictions applicable to the Company's 401(k) Plan. In addition, the Supplemental 401(k) Plan provides participants who have made the maximum contribution under the Company's 401(k) Plan to be credited with matching contributions under the Supplemental 401(k) Plan to the extent allocations under the Company's 401(k) Plan were limited and to the extent of contributions to the Supplemental 401(k) Plan subject to an overall matching contribution limit. Aggregate matching contributions for a participant under the Supplemental 401(k) Plan and the Company's 401(k) Plan is limited to 4% of the participant's base salary and annual incentive compensation. Amounts credited to a named executive officer under the Supplemental 401(k) Plan, adjusted for earnings or losses, will generally be distributed on the last business day of the sixth month following the month in which the participant has a separation of service from the Company. The following table sets forth information concerning the named executive officers' participation in the Supplemental 401(k) Plan during fiscal 2016:
 
 
Non-Qualified Deferred Compensation
Name
 
Executive Contributions In Fiscal 2016(1)
($)
 
Registrant Contributions in Fiscal 2016(1)
($)
 
Aggregate Earnings (Loss) In Fiscal 2016
($)
 
Aggregate Withdrawals / Distributions
($)
 
Aggregate Balance At Fiscal 2016(2)
($)
John M. Duffey
 
252,029

 
66,103

 
95,877

 

 
1,201,721

James Reid-Anderson
 
83,453

 
161,327

 
126,662

 

 
1,396,854

Marshall Barber
 
38,486

 
20,328

 
3,894

 

 
96,159

Lance C. Balk
 
56,804