PRE 14A 1 a2018proxystatementprelim.htm PRE 14A 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 [●], 2018
Dear Fellow Stockholder:
We are pleased to invite you to attend the 2018 Annual Meeting of Stockholders of Six Flags Entertainment Corporation to be held on Wednesday, May 2, 2018, 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 [●], 2018, 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,
 
 
JIM REID-ANDERSON
Chairman, President and Chief Executive Officer
 
 



SIX FLAGS ENTERTAINMENT CORPORATION

NOTICE OF 2018 ANNUAL MEETING OF STOCKHOLDERS

Time and Date
 
2:00 p.m. Eastern Time, on Wednesday, May 2, 2018.
 
 
 
Place
 
The Yale Club of New York City, 50 Vanderbilt Avenue, New York, New York 10017.
 
 
 
Items of Business
 
(1)    Election of seven nominees named in the Proxy Statement as directors;
 
 
 
 
 
(2)    Approve an amendment to the Company's Restated Certificate of Incorporation, as amended, to increase the number of authorized shares of the Company's common stock from 140,000,000 shares to 280,000,000 shares;
 
 
 
 
 
(3)    Advisory vote to ratify the appointment of KPMG LLP as independent registered public accounting firm for the year ending December 31, 2018;
 
 
 
 
 
(4)    Advisory vote to approve executive compensation; and
 
 
 
 
 
(5)    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 7, 2018.
 
 
 
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 [●], 2018
 

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 2017 Annual Report. The proxy statement and the 2017 Annual Report are available at 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 2018 Annual Meeting of Stockholders (the "Annual Meeting") to be held on Wednesday, May 2, 2018, 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 [●], 2018, the Company began mailing a Notice of Internet Availability of Proxy Materials to stockholders of record as of the close of business on March 7, 2018, 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, 2017.
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 seven 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
Amendment to the Company's Restated Certificate of Incorporation
Majority of total outstanding shares of common stock entitled to vote at Annual Meeting
Treated as a vote against the matter for purposes of calculating approval percentage
Brokers have discretionary authority
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
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, stockholders may vote FOR, AGAINST 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.

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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 1, 2018 to be counted.
Record Date
Only stockholders of record as of the close of business on March 7, 2018 are entitled to notice of, and to vote at, the Annual Meeting or any postponement or adjournment thereof. As of March 7, 2018, the Company had issued and outstanding 84,631,653 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 7, 2018.
Proxy Voting Methods
If at the close of business on March 7, 2018, 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 1, 2018 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.
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.

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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 share the same address and are receiving separate copies of the Notice, and if applicable, the proxy materials, who want to receive a single copy of the Notice, and if applicable, the proxy materials, may write or email us at the address of our principal executive office and email address set forth above.
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. The Board held 8 meetings during 2017. 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 2017 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 2017. The Board currently has seven directors and all seven 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 seven 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. Each of these documents is available on the Company's website at investors.sixflags.com.
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 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 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, 2018, and the function of each committee, are described below.
Director
 
Board of Directors
 
Audit
Committee
 
Compensation
Committee
 
Nominating and
Corporate Governance
Committee
Kurt M. Cellar
 
ü
 
    Chairw
 
 
 
ü
Nancy A. Krejsa
 
ü
 
 
 
 
 
 
Jon L. Luther
 
ü
 
 
 
  Chair
 
 
Usman Nabi
 
ü
 
 
 
ü
 
 Chair
Stephen D. Owens
 
ü
 
ü
 
ü
 
 
James Reid-Anderson
 
Chair
 
 
 
 
 
 
Richard W. Roedel
 
ü
 
  üw
 
 
 
ü
Number of 2017 Meetings
 
8
 
8
 
6
 
4
___________________________
w 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 submissions 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. As part of the Audit Committee's oversight of risk assessment and risk management, it discusses data security risks.

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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 liabilities 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. In the event a 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 2017. 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 2017, 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 such 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 2017 were $92,407, and the aggregate fees paid to Deloitte for tax, international development and other consulting services to the Company during 2017 were $1,280,792.
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 2017.
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. All members of the Nominating and Corporate Governance Committee are independent within the meaning of the NYSE requirements.

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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. The Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee also meet regularly in executive session without management.
Board Leadership Structure
Currently, Mr. Reid-Anderson serves as the Company's Chief Executive Officer and as the Chairman of the Board. 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 Bylaws 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 July 2017, when Mr. Duffey retired as the Company's Chief Executive Officer, the Board determined that the most effective leadership structure for the Company was for Mr. Reid-Anderson, who was serving as the Company's Executive Chairman at the time, to serve as both Chairman and Chief Executive Officer, as he had prior to Mr. Duffey's tenure as Chief Executive Officer. The Board believes that this combined role provides strong unified leadership for the Company, enhances communication between management and the Board and enables management to more efficiently execute the Company's strategic initiatives and business plans. 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 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—Suggestions for director candidates nominated by a stockholder
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 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 Nominating and Corporate Governance Committee evaluates the qualifications of candidates properly submitted by stockholders in the same manner as it evaluates the qualifications of director candidates identified by itself or the Board.
Stockholder Recommendations and Nominations—Director candidates nominated by a stockholder
The Company's Bylaws permit a stockholder to nominate directors for election at an annual meeting. A nominating stockholder is required to provide written notice of that stockholder's intent to make the nomination 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 2019 annual meeting, notice of the nomination must be received by the Secretary of the Company on or after January 2, 2019 and on or before February 1, 2019. A nominating stockholder must provide the information required by the Company's Bylaws and each nominee must meet the qualifications required by the Company's Bylaws.
Stockholder Recommendations and Nominations—Proxy access candidates
In 2017, the Company received a stockholder proposal to adopt a proxy access bylaw. Upon management’s recommendations based on various factors including the positive engagement with the stockholder, the Board amended the Company's Bylaws in February 2018 to implement proxy access. As amended, the Company's Bylaws permit a stockholder or group of up to 20 stockholders, owning 3% or more of the Company’s outstanding common stock continuously for at least three years, to nominate and include in the Company’s proxy materials director nominees constituting up to two directors or 20% of the Board, whichever is greater, provided that the stockholder(s) and the nominee(s) satisfy the requirements specified in the Company's Bylaws. A nominating stockholder is required to provide written notice of that stockholder's intent to make the nomination to the Secretary of the Company not less than 120 days nor earlier than 150 days before the first anniversary of the date that the Company sent its proxy statement for the prior year’s annual meeting of stockholders. In order to be considered timely for the 2019 annual meeting, notice of the nomination must be received by the Secretary of the Company on

8


or after October 21, 2018 and on or before November 20, 2018. Nominating stockholders and nominees must satisfy the requirements set forth in the Company's Bylaws.
Stockholder Engagement
The Company's relationship with its stockholders is an important part of the Company’s success and the Company believes it is important to engage with its stockholders and to obtain their perspectives. During early 2018, our stockholder outreach team, led by the Company's Senior Vice President, Investor Relations, and including the Company's Compensation Committee and Nominating and Corporate Governance Committee chairs and members of senior management, met with stockholders on a variety of issues. The Company's management team believes that this approach to engaging openly with the Company's stockholders on topics such as executive compensation and corporate governance drives increased corporate accountability, improves decision making and ultimately creates long-term value. The Company is committed to:
Accountability: Driving and supporting strong corporate governance and Board practices to ensure oversight, accountability, and good decision making.
Transparency: Maintaining high levels of transparency on a range of financial, executive compensation, and governance issues to build trust and sustain two-way dialogue that supports the Company's business success.
Engagement: Proactively engaging with stockholders in conversations on a variety of topics to identify emerging trends and issues to inform the Company's thinking and approach.
The Company holds meetings during the course of each year with many of its stockholders through in-person and teleconference meetings as well as by participating at various conferences. In addition, the Company's senior management team, including the Chairman, President and Chief Executive Officer, and the Chief Financial Officer, regularly engage in meaningful dialogue with the Company's stockholders through the Company's quarterly earnings calls and other channels for communication. Through these activities, we discuss and receive input, provide additional information, and address questions about our business strategy, executive compensation programs, corporate governance and other topics of interest to our stockholders. These engagement efforts allow us to better understand our stockholders’ priorities and perspectives, and provide us with useful input concerning our compensation and corporate governance practices. For example, this year stockholder feedback influenced the Company's implementation of proxy access and the specific terms adopted through an amendment to the Company's Bylaws.

9


2017 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 2017 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 the non-employee director compensation program. The Compensation Committee retained Deloitte to provide advice in connection with ongoing compensation matters related to the Company. Deloitte provided the Compensation Committee with an analysis of the competitiveness of the Company's non-employee director compensation program. The Nominating and Corporate Governance Committee and the Compensation Committee considered the market data, the amount and timing of past increases to the non-employee directors’ compensation, and the mix of cash and equity compensation, when determining the changes to non-employee director compensation.
Cash and Equity Compensation
The following table sets forth the annual compensation to non-employee directors in 2017. 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)
 
150,000

Lead Independent Director Retainer
 
30,000

Audit Committee Chairman Retainer(1)
 
25,000

Compensation Committee Chairman Retainer
 
15,000

Nominating and Corporate Governance Committee Chairman Retainer(1)
 
15,000

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 3, 2017, 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. Effective as of the Annual Meeting, the Board approved an increase in (i) the annual equity retainer to $160,000, and (ii) the annual cash retainer for the Compensation Committee Chairman to $25,000.
(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.

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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.
2017 Non-Employee Director Compensation
Employee directors do not receive any compensation in connection with their director service. During 2017, Messrs. Duffey and Reid-Anderson were the only employee-directors and their respective compensation as an employee is set forth in the 2017 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, 2017:
Director
 
Fees Earned
or Paid
in Cash($)(1)(2)
 
Stock
Awards($)(3)(4)
 
Total($)
Kurt M. Cellar
 
100,417

 
149,966

 
250,383

Nancy A. Krejsa
 
58,333

 
149,966

 
208,299

Jon L. Luther
 
114,951

 
149,966

 
264,917

Usman Nabi
 

 

 

Stephen D. Owens
 
92,500

 
149,966

 
242,466

Richard W. Roedel
 
89,951

 
149,966

 
239,917

_________________________
(1)
The following table sets forth the annual cash compensation earned by each non-employee director in 2017:
 
 
 
 
 
 
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
 
70,000

 

 
22,917

 

 
7,500

 
100,417

Nancy A. Krejsa
 
58,333

 

 

 

 

 
58,333

Jon L. Luther
 
69,951

 
30,000

 

 
15,000

 

 
114,951

Usman Nabi
 

 

 

 

 

 

Stephen D. Owens
 
70,000

 

 
12,500

 
10,000

 

 
92,500

Richard W. Roedel
 
69,951

 

 
12,500

 

 
7,500

 
89,951


(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 $70,000, which they each elected to defer pursuant to the director cash retainer deferral program. Accordingly, Messrs. Luther and Roedel were each granted 1,133 deferred stock units in 2017. In addition, Messrs. Luther and Roedel each received 343 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 2017. 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 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, 2017.
(4)
As of December 31, 2017, each non-employee director (other than Mr. Nabi) had 2,429 shares of restricted stock outstanding, which vest on May 1, 2018. Each non-employee director (other than Mr. Nabi) had only one unvested award

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outstanding as of December 31, 2017 and therefore, the grant date fair value of such award is reflected in the 2017 Non-Employee Director Compensation Table. There are no outstanding stock option awards for any non-employee director.
PROPOSAL 1: ELECTION OF DIRECTORS
At the Annual Meeting, seven 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 seven members but will review possible candidates for the two vacancies 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, 2018
 
Position with the Company
Kurt M. Cellar
 
48
 
Director
Nancy A. Krejsa
 
60
 
Director
Jon L. Luther
 
74
 
Director
Usman Nabi
 
43
 
Director
Stephen D. Owens
 
47
 
Director
James Reid-Anderson
 
58
 
Chairman, President and Chief Executive Officer
Richard W. Roedel
 
68
 
Director
Kurt M. Cellar has served as a director of the Company since May 2010. Since 1999, Mr. Cellar has served as a corporate director for many companies in a variety of industries. 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 in 2008. During his five year tenure as portfolio manager at Bay Harbour, the fund was recognized by Bloomberg as the top performing hedge fund in its class. Prior to Bay Harbour, Mr. Cellar was with the private equity firm Remy Investors. Before that, he was a strategy consultant at LEK/Alcar. Mr. Cellar is currently a director of Giraffe Holdings, Inc., Hawaiian Telecom Holdco, Inc., where he is Chairman of its Audit Committee and a member of the Nominating and Corporate Governance Committee, Home Buyers Warranty, where he is Chairman of its Audit Committee and U.S. Concrete Inc., where he is Chairman of its Compensation Committee and a member of its Nominating and Corporate Governance Committee. Mr. Cellar has had significant leadership roles in previous director assignments, including Chairman of the Board and chair roles of each committee. Within the last five years, Mr. Cellar was also a member of the Board of Directors of Horizon Lines, Inc., where he was Chairman of its Nominating and Corporate Governance Committee, Angiotech Pharmaceuticals, where he was Co-Chairman of its Board, and Edison Mission Energy Trust. He has many times, and, without exception, been asked to serve on board special committees.  He has been an invited speaker on various board issues over the years.  He has participated in many board related continuing education venues with the NACD and Harvard University.  Mr. Cellar has a Masters in Business Administration from the Wharton School of Business and a BA in Economics/Business from the University of California, Los Angeles.  Mr. Cellar is a former Chartered Financial Analyst. 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.
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 January 2009 and Chairman from March 2006 to January 2009. In January 2009, he assumed the role of

12


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 Tempur 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 Tempur 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 Chairman, President and Chief Executive Officer of the Company in July 2017. From February 2016 to July 2017 he served as Executive Chairman of the Company, and from August 2010 to February 2016, Mr. Reid-Anderson served as Chairman, President and Chief Executive Officer of the Company. 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 twelve times total stock return since joining the Company. 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 Dade Behring’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, as well as his extensive operational, international and financial background, make him especially qualified to serve as Chairman and lead the Company to operational and financial success.
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

13


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.

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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, 2017.
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. 1301 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, 2017 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

15



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.
Name
 
Title
James Reid-Anderson
 
Chairman, President and Chief Executive Officer
John M. Duffey
 
Former President and Chief Executive Officer
Marshall Barber
 
Chief Financial Officer
Lance C. Balk
 
General Counsel
Brett Petit
 
Senior Vice President, Marketing
Catherine Aslin
 
Senior Vice President, Human Resources
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 2017 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.
2017 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 600 and Project 750 performance-based award programs described below. These unique 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 many large 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 enhanced descriptions of the performance awards as well as 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 incentives, long-term equity awards, and perquisites and benefits—that are designed to reward performance in a simple and straightforward manner.

16


The Company believes the compensation program for the named executive officers is instrumental in helping the Company achieve its strong financial performance. The Company's focused business strategy, proven management team, and highly customized compensation program work together to deliver results. Some of the Company's financial results for 2017 include the following:
Key Financial Metric
 
2017 Financial Results
Revenue
 
$1.359 billion (3% increase over 2016)
Investment in New Capital
 
$135 million (9% of revenue plus an incremental investment to open a new waterpark in Mexico)
1-year total stockholder return (TSR) (12/31/17)
 
16.0%
Cumulative 3-year TSR (12/31/17)
 
76.4%
Cumulative 5-year TSR (12/31/17)
 
175%
Dividend Per Share
 
$2.62 (10% increase over 2016)
Stock Repurchases
 
$499 million (8.4 million shares)
In July 2017, Mr. Reid-Anderson was reappointed as Chief Executive Officer and Mr. Duffey, the former Chief Executive Officer, retired from the Company. In connection with this CEO transition, the Compensation Committee recommended and the Board approved certain changes to compensation for Mr. Reid-Anderson. In recognition of the increase in Mr. Reid-Anderson's responsibilities from Executive Chairman to Chairman, President and Chief Executive Officer, Mr. Reid-Anderson's base salary was increased by $800,000 to $1,800,000. Mr. Reid-Anderson's annual incentive was increased to a target opportunity of 200% of his base salary, however, the Board determined that for the 2017 transition year Mr. Reid-Anderson’s actual annual incentive would continue to be determined based on the target opportunity of 100% of the base salary paid to Mr. Reid-Anderson in 2017. Mr. Reid-Anderson was also granted options to purchase 500,000 shares of common stock.
The Project 600 shares that Mr. Duffey forfeited upon his retirement, and as more fully described under "—Description of Employment Agreements of Named Executive Officers," were transferred back to Mr. Reid-Anderson, increasing Mr. Reid-Anderson's total target award under the Project 600 program by 185,000 shares. In addition, the target award of 150,000 shares under Project 750 that Mr. Duffey forfeited upon his retirement were transferred to Mr. Reid-Anderson. The primary rationale for making these changes to Mr. Reid-Anderson's compensation was to acknowledge his increased roles and responsibilities and to ensure his retention with the Company. The following table shows that the aggregate number of Project 600 and Project 750 shares awarded to Messrs. Reid-Anderson and Duffey did not increase in connection with the change in their roles during 2017:
 
 
CEO Target Shares of Stock under Project 600 and Project 750
 
 
Original Target Shares Awarded(1)
 
2016 CEO Transition(2)
 
2017 CEO Transition(3)
Project 600
 
 
 
 
 
 
James Reid-Anderson
 
500,000

 
250,000

 
435,000

John M. Duffey
 
120,000

 
370,000

 
185,000

Project 600 Total
 
620,000

 
620,000

 
620,000

Project 750
 
 
 
 
 
 
James Reid-Anderson
 

 

 
150,000

John M. Duffey
 
150,000

 
150,000

 

Project 750 Total
 
150,000

 
150,000

 
150,000

_________________________
(1)
Original grant for Project 600 and Project 750 were announced on October 24, 2014, and October 28, 2016, respectively.
(2)
Project 600 shares transferred to Mr. Duffey upon CEO succession on February 18, 2016.
(3)
Shares transferred to Mr. Reid-Anderson upon reappointment to CEO and retirement of Mr. Duffey on July 18, 2017. The Project 600 performance goal was not achieved in 2017. If the Project 600 Modified EBITDA goal is achieved in 2018, the maximum number of shares that participants will be entitled to receive is 50% of their target award.

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Stockholder-Aligned Company Practices
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
 
 
Annual Say on Pay Vote
 
 
Last Year's Say on Pay Vote and Stockholder Outreach
At the 2017 annual meeting, 56% of votes cast supported the advisory proposal on executive compensation. The vote was well-below the 92% approval level achieved at the 2014 annual meeting and this decline in stockholder support for the Company's executive compensation program was disappointing. The Board responded by engaging in stockholder outreach to better understand our stockholders' key concerns with the Company's executive compensation program. In February and March 2018, the Company invited 33 of its largest stockholders, representing approximately 84% of the Company's outstanding common stock, to participate in discussions regarding executive compensation, corporate governance or any other topics of interest. The Company met with 15 of those stockholders, representing approximately 49% of its outstanding common stock, to ensure that the executive compensation program was understood by the Company's stockholders and aligned to their expectations. A key aim of these discussions was to collect stockholders' feedback. The Compensation Committee and the Nominating and Corporate Governance Committee Chairs, together with members of senior management, participated in the meetings. The Company discussed how the Company's executive compensation programs directly tie into the history of the Company and the Company's current business strategy, and solicited stockholder views on the program design and other topics of interest to the stockholders. In addition to the 15 stockholders representing approximately 49% of the Company's outstanding common stock, the Company also received feedback from 3 other of its largest stockholders, representing more than 16% of the Company's outstanding common stock, that they fully understand and support the Company's executive compensation program and practices and that no call on the topic was necessary. Finally, the Company participated in discussions about its stockholder engagement and executive compensation practices with the stockholder advisory firms of Institutional Shareholder Services and Glass-Lewis.
During the discussions with the Company's stockholders, members of the Compensation Committee described the Compensation Committee’s rationale for the selection of the performance criteria for both the annual incentive program and the long-term incentive program. Historically the Company used many different measurements to evaluate performance, some of which were subjective, and the Compensation Committee felt this led to confused priorities and poor operating performance. The current annual incentive program has four objective metrics linked to both financial and operating performance, while the Projects component of the long-term performance program is based on Modified EBITDA, as described in more detail below.
Several stockholders inquired as to the Compensation Committee's consideration of other performance criteria to measure compensation such as the Company’s Total Stockholder Return, Return on Invested Capital, or Net Debt. Instead of incorporating these metrics directly into the long-term incentive program, the Compensation Committee designed the Projects with the goal that each of these metrics would improve if Modified EBITDA increased. These design parameters include the following:
If the Company spends more than the targeted 9% of revenue on capital or an M&A transaction, then the target Modified EBITDA would be adjusted upward based on the cost of capital; and

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The aspirational targets have historically required the Company to grow at twice the industry average in order to be achieved, which has directly led to exceptional stock performance.
The Compensation Committee believed that the aspirational targets appropriately motivated management, and the simplicity of having one measure for the Projects made them easily understood and tracked by the broad group of participating employees across all parks. Considering the design parameters of the Projects, this feature outweighed the potential benefits of including additional measures. Additionally, the minimum stock ownership guidelines ensure that the current named executive officers are properly aligned with the Company's stockholders.
Based on stockholder feedback, the Company has enhanced the disclosures in this Proxy Statement to more clearly define the Projects, describe how they are connected to the Company's strategy, and explain the selection of performance criteria. See "—Elements of Compensation—Long-Term Incentives" for enhanced disclosures on the Projects, including a table showing historical target values and actual stock issued under the Projects. The Compensation Committee will also consider incorporating additional metrics when designing future long-term incentives or Projects. The Company did not announce any new Projects in 2017 and does not currently anticipate doing so in 2018.
The Company is committed to engaging with its stockholders and intends to conduct ongoing stockholder outreach. 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."
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, annual 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 variable, at-risk, performance-based 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 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 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 2017 compensation for the Chief Executive Officer, and the entire Board ratified the 2017 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, Human Resources and her 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

19


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.
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 is 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 2017, 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

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Pay Element
 
Pay Philosophy
 
Component
 
Performance Element
 
 
 
 
 
 
 
Long-Term Incentives
 
Support long-term business strategy and promote retention by tying a significant portion of pay to long-term financial performance goals, or "Projects"
 
Stock
 
Rigorous Multi-Year Modified EBITDA Target
 
 
 
 
 
 
 
Support alignment with stockholders and promote retention by tying a significant portion of pay to stock price appreciation
 
Stock Options
 
4-Year Vesting
 
 
 
 
 
 
 
Annual Incentives
 
Motivate and provide recognition for achieving annual financial and operational performance goals with variable, at-risk performance-based pay
 
Cash or Stock
 
Adjusted EBITDA
 
 
 
 
 
 
 
Net Debt
 
 
 
 
 
 
 
Guest Satisfaction
 
 
 
 
 
 
 
Safety
 
 
 
 
 
 
 
Base Salary
 
Compensate for executive's responsibilities, experience and performance with fixed pay
 
Cash
 
Annual Review
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 to apply the approach to the facts and circumstances associated with each executive.
The following charts use a Black Scholes calculation for options and the fair market value of a share upon grant of awards in 2017 under the Projects multiplied by the target number of shares under such programs.
Our compensation is structured to provide a mix of fixed and variable, at-risk performance-based compensation for our named executive officers that is heavily weighted toward at-risk performance-based compensation. The following chart shows the balance among the mix of base salary, annual incentives and long-term incentives for 2017 at target for our current Chief Executive Officer (in the CEO role) and other named executive officers:
chart-c170e77399949d4b11da01.jpg

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For 2017, our fixed compensation versus performance-based compensation was structured as follows for our current Chief Executive Officer (in the CEO role) and other named executive officers:
chart-dab3eb8b1146e7c7b13.jpg
Our executive compensation program seeks to appropriately balance cash compensation with equity-based compensation. For 2017, our target annual compensation versus long-term equity-based compensation was structured as follows for our current Chief Executive Officer (in the CEO role) and other named executive officers:
chart-ec4d2857020976e8941a01.jpg
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 and based on the philosophies and factors described herein, 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 highly qualified executives to drive success based on the individual's responsibilities, performance and experience, internal equity, and business and industry conditions. For 2017, Messrs. Balk, Barber, and Petit, received salary increases ranging from 3% to 5%. Mr. Reid-Anderson’s salary increased as a result of becoming the Chief Executive Officer in July 2017.
The following table shows the annual base salary rate in 2017 for the named executive officers:
Executive
 
Base Salary Rate($)
James Reid-Anderson
 
1,800,000

John M. Duffey
 
1,120,000

Marshall Barber
 
525,000

Lance C. Balk
 
582,000

Brett Petit
 
490,000

Catherine Aslin
 
325,000

Annual Incentives
The Company's annual 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 tracks core operating performance more closely, is widely used by analysts and investors to evaluate performance in the Company's industry and is most directly related to stockholder value.
Unless Adjusted EBITDA for 2017 was more than $503.3 million, no annual incentive would have been earned. If more than the target $551.0 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 $551.0 million to $578.6 million. "Adjusted EBITDA" is defined as Modified EBITDA minus the interests of third parties in the Adjusted

22


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 Board determined that for the 2017 transition year during which Mr. Reid-Anderson began the year as Executive Chairman and then resumed the position of Chief Executive Officer, Mr. Reid-Anderson’s actual annual incentive would be determined based on the target annual incentive of 100% of the base salary paid to Mr. Reid-Anderson in 2017. For subsequent years while Mr. Reid-Anderson is Chief Executive Officer, his target annual incentive will be 200% of base salary pursuant to his employment agreement. Mr. Duffey's annual incentive was prorated in the 2017 fiscal year through his retirement effective date based on the target rate of 120% of base salary.
The following table shows the target annual incentive opportunities as of December 31, 2017 for the named executive officers (other than Messrs. Duffey and Reid-Anderson):
Executive
 
Target Annual Incentive
Marshall Barber
 
75% of base salary
Lance C. Balk
 
75% of base salary
Brett Petit
 
62.5% of base salary
Catherine Aslin
 
50% of base salary
No named executive officer may earn more than 200% of such named executive officer's target annual incentive. The named executive officers earn their respective target annual incentive based on achievement of the following four financial and strategic objectives.
Objective
 
Weight
 
Target Goal
Adjusted EBITDA
 
50.0%
 
$551.0 million
Net Debt Level
 
25.0%
 
Equal to or better than budget ($1,987 million, as adjusted)
Guest Satisfaction Scores
 
12.5%
 
 2017 guest satisfaction score exceeds 2016 guest satisfaction score or
 If 2017 guest satisfaction score is lower than 2016, but 2017 attendance increases, a weighted value assessment of the guest satisfaction score and attendance must increase by 3%
Success in fostering and maintaining a safe park environment
 
12.5%
 
 2017 guest safety perception score exceeds 8.0 and safety quality assessment review standards met (weighted 50%) and 
 2017 actual workers compensation claims lower than prior year annual workers compensation claim target (weighted 50%)
 
 
100%
 
 
Since more than the minimum Adjusted EBITDA of $503.3 million for 2017 was achieved, attainment of the weighted target annual incentive components is determined separately for each of the four objectives. With attainment of $519.2 million Adjusted EBITDA out of the target Adjusted EBITDA of $551.0 million, full achievement of the net debt level, guest satisfaction, and workers compensation claims objectives, and partial achievement of the safety quality assessment review objective, the named executive officers received below-target payouts for 2017. The named executive officers earned 63.6% of their target annual incentive under the annual incentive plan.
In February 2018, the Compensation Committee approved the following annual incentive awards for the named executive officers pursuant to the criteria of the annual incentive plan, which were paid upon completion of the Company's audit for 2017. The amounts paid pursuant to the annual incentive plan are set forth in the "Non-Equity Incentive Plan Compensation" column of the 2017 Summary Compensation Table because such amounts were paid pursuant to the pre-established criteria under the annual incentive plan.

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Executive
 
Target Annual Incentive($)
 
63.6% of Target Annual Incentive($)
 
James Reid-Anderson
 
1,366,154

 
868,136

(1)
John M. Duffey
 
732,756

 
465,642

(2)
Marshall Barber
 
393,750

 
250,245

 
Lance C. Balk
 
436,500

 
277,415

 
Brett Petit
 
306,250

 
194,635

 
Catherine Aslin
 
162,500

 
103,276

 
_________________________
(1)
Target award listed reflects use of 100% of base salary paid to Mr. Reid-Anderson in 2017 for determination of the annual incentive in the 2017 transition year. The annual incentive for the portion of 2017 while Mr. Reid-Anderson was Executive Chairman was paid in stock and the annual incentive for the portion of 2017 while Mr. Reid-Anderson was Chief Executive Officer was paid in cash.
(2)
Mr. Duffey's annual incentive was prorated through the effective date of his retirement from the Company and paid in stock pursuant to the terms of his Retirement Agreement.
Long-Term Incentives
While the annual 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. 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 Mr. Reid-Anderson). The Compensation Committee granted stock options to Ms. Aslin in January 2017 and Mr. Reid-Anderson in July 2017 in connection with the changes in their respective positions with the Company. The Compensation Committee granted stock options to each current named executive officer (other than Mr. Reid-Anderson) in August 2017 as part of a general grant to employees to provide incentives.
Performance Awards—Projects Generally. Based on the Company's prior history of lacking clear and objective measurements to evaluate performance, and the need following a decade of severe underperformance to boost morale and attract, retain and incentivize employees with rigorous performance awards, the Compensation Committee designed unique performance awards, called "Projects," to reward participants for achievement of stretch goals based on Modified EBITDA, which is an objective and understandable measurement to evaluate the Company's operational performance and is a key driver of stockholder returns. To ensure a long-term and sustainable focus, the Company does not create new Projects each year, rather the Projects are intended to incentivize and retain participants over a multi-year period. The following table sets forth detailed information for each Project in the aggregate:

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Project Name
 
Project 350
 
Project 500
 
Project 600
 
Project 750
Target Achievement Year
 
2011
 
2015
 
2017
 
2020
Number of Shares at Target(1)
 
2,820,000
 
2,628,000
 
2,400,000
 
900,000
Market Value of Target Shares(2)
 
$24 million
 
$45 million
 
$88 million
 
$49 million
Actual Shares Earned(1)(3)(4)
 
2,829,580
 
2,825,100
 
N/A
 
N/A
Market Value of Earned Shares at Issuance
 
$87 million
 
$137 million
 
N/A
 
N/A
Stockholder Value Created(5)(6)
 
$1.519 billion
 
$4.682 billion
 
N/A
 
N/A
Project Period TSR(6)(7)
 
 
 
 
 
 
 
 
Six Flags
 
182%
 
225%
 
N/A
 
N/A
S&P 500
 
14%
 
79%
 
N/A
 
N/A
Annualized TSR(6)(7)
 
 
 
 
 
 
 
 
Six Flags
 
88%
 
34%
 
N/A
 
N/A
S&P 500
 
9%
 
16%
 
N/A
 
N/A
_________________________
(1)    All share amounts are adjusted for stock splits.
(2)
Amount calculated based on the closing price of the Company's common stock on the date each employee began participating in the applicable Project.
(3)    Amount excludes associated DERs.
(4)
Achievement of the Project 600 Target Modified EBITDA requires an 8% growth in Modified EBITDA in 2018 and would result in issuance of 50% of the target award. Achievement of the Project 750 Target Modified EBITDA requires a 10% compound annual growth rate in Modified EBITDA through 2020 and would result in issuance of 100% of the target award in 2020.
(5)
Amount reflects change in the Company's market capitalization plus value of dividends paid and shares repurchased.
(6)
For purposes of calculating stockholder value created and TSR, assumes a Project period of May 10, 2010 through December 31, 2011 for Project 350, and a period of December 31, 2011 through December 31, 2015 for Project 500.
(7)    Assumes dividend reinvestment in the Company's common stock.
Project 600. In order to motivate the Company's management team to continue to improve the Company's financial position, and due to the success of Project 350 and 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 was first announced in October 2014 pursuant to a Form 8-K filed with the SEC on October 21, 2014. Pursuant to the Project 600 program, the named executive officers would be issued shares of stock if the Company achieved $600 million of Modified EBITDA in a calendar year (the "Project 600 Target Modified EBITDA") by December 31, 2017.
Rigorous Test
The Compensation Committee believes that Modified EBITDA is the appropriate measurement because it is the most comparable measure to evaluate operational performance against other industry participants, incorporates the full range of the Company's business, and has a direct impact on the Company's stock price. The performance award is widely granted to the Company's employees, and Modified EBITDA is a simple measurement that enables employees to easily understand how they can contribute toward the target. Finally, it generally excludes the impact of extraordinary or non-routine events that can distort performance such as acquisitions and dispositions, and requires organic and sustainable growth to attain the target.
The Project 600 Target Modified EBITDA is a very difficult target for the Company to achieve. At the time the performance target was established in October 2014, the Company’s 2013 calendar year Modified EBITDA was $444.2 million, thus the Project 600 Target Modified EBITDA represented an increase of 35%. This goal was not reached in 2017. Given the degree of difficulty in achieving the Project 600 Target Modified EBITDA, the program

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provided that if at least $575.0 million of Modified EBITDA, but less than the Project 600 Target Modified EBITDA, was achieved in calendar year 2017, a partial Project 600 award could have been achieved. Participants would have been entitled to receive 75% of their 2017 Achievement/Target Award if a partial award was achieved in 2017, which it was not.
The Project 600 program provides a reduced award for late achievement to acknowledge the difficulty in reaching the significant goal. Therefore, if the Project 600 Target Modified EBITDA is achieved in calendar year 2018, participants will be entitled to receive 50% of their target award.
Number of Shares
The number of shares of stock that each named executive officer is eligible to receive under Project 600 is set forth below:
 
 
Shares of Stock
Executive
 
2017 Achievement/Target Award
 
2018 Achievement
James Reid-Anderson
 
435,000

 
217,500

John M. Duffey
 
185,000

 
92,500

Marshall Barber
 
52,500

 
26,250

Lance C. Balk
 
45,000

 
22,500

Brett Petit
 
40,000

 
20,000

Catherine Aslin
 
15,000

 
7,500

It is important to note that given the transition in leadership in July 2017, and as more fully described under "—Description of Employment Agreements of Named Executive Officers," Mr. Reid Anderson’s target award was increased by the 185,000 shares that Mr. Duffey forfeited upon his retirement from the Company, which had been previously forfeited by Mr. Reid-Anderson in 2016. The Compensation Committee believes this realignment of the number of target shares is consistent with the impact of Mr. Reid-Anderson's role in achieving the Project 600 Target Modified EBITDA.
Determination of 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. Pursuant to feedback that the Company received from its stockholders, the Compensation Committee determined that, since the incremental investment in the new waterpark in Mexico was not planned when the Project 600 Target Modified EBITDA was determined, the Project 600 Target Modified EBITDA should be increased by an amount based on the Company’s cost of capital times the incremental investment. The Project 600 Target Modified EBITDA was 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.
Eligibility to Receive Shares
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.
Project 750. Largely due to the Company's substantial progress toward Project 600 and to the success of Project 350 and Project 500 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 was first announced in October 2016 pursuant to a Form 8-K filed with the SEC on October 28, 2016.

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Rigorous Test
Project 750 provides participants with an equity incentive for the Company to achieve $750.0 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 September 30, 2016 last twelve month Modified EBITDA was $531.6 million, thus the Project 750 target represents an increase of 41%.
Early Achievement
Achievement of the Project 750 Target Modified EBITDA requires the Company to increase Modified EBITDA by 34% from $558.4 million Modified EBITDA in 2017. 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.
Number of Shares
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 below) was previously earned:
 
 
Shares of Stock
Executive
 
2017 Achievement
 
2018 Achievement
 
2019 Achievement
 
2020 Achievement/Target Award
 
2021 Achievement
James Reid-Anderson
 
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

Catherine Aslin
 
18,900

 
18,900

 
16,100

 
14,000

 
7,000

It is important to note that given the transition in leadership in July 2017, and as more fully described under "—Description of Employment Agreements of Named Executive Officers," the 150,000 shares under the Project 750 program that Mr. Duffey forfeited upon his retirement were transferred to Mr. Reid-Anderson. The Compensation Committee believes this realignment of the number of target shares is consistent with the impact of Mr. Reid-Anderson's role in achieving the Project 750 Target Modified EBITDA.
Partial Awards
If at least $725.0 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 $725.0 million of Modified EBITDA can be credited to the next calendar year's achievement of $725.0 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
Determination of 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

27


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.
Eligibility to Receive Shares
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 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 600 and Project 750 awards with Dividend Equivalent Rights ("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 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 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.
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 2017 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 2017, 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 2017 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 and 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

28


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 Considerations
Section 162(m) of the Internal Revenue Code of 1986, as amended, imposes a $1 million limit on the amount that the Company may deduct for compensation paid to certain executive officers. Previously, this limitation did not apply to compensation that met the requirements under Section 162(m) for qualified performance-based compensation. This exemption from Section 162(m)’s deduction limit for certain performance-based compensation has generally been repealed, effective for years beginning after December 31, 2017 and the group of covered executive officers has been expanded to include the chief financial officer and certain former executive officers. Therefore, compensation (including performance-based compensation) paid to covered executive officers in excess of $1 million in calendar year 2018 and subsequent calendar years generally will not be deductible unless it qualifies for transition relief applicable to certain written binding contracts in effect on November 2, 2017 which are not modified in any material respect on or after such date. Since the scope of the transition relief is uncertain at this time, the impact of the elimination of the performance-based compensation exemption from Section 162(m) with respect to performance awards and arrangements outstanding on November 2, 2017 is not yet known.
Although the Compensation Committee has considered the impact of Section 162(m) as well as other tax and accounting consequences when developing and implementing the Company’s executive compensation programs, tax-deductibility was not the primary factor used by the Compensation Committee in setting compensation and the Compensation Committee expects that Section 162(m) will become less of a factor with the repeal of the performance-based compensation exemption. The Compensation Committee designs and administers compensation programs that it believes are in the best interests of the Company and its stockholders.
Stock Ownership, Clawback and 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

29


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.
All equity awards and annual incentives (both cash and stock) to executive officers have been made under the Company’s Long-Term Incentive Plan. The Company's Long-Term Incentive Plan contains clawback provisions that provide that the Compensation Committee, may, to the extent permitted by law, require the termination, rescission or repayment of awards and incentives previously awarded under the Company's Long-Term Incentive Plan if the granting, vesting or payment of such awards or incentives was predicated upon the achievement of certain financial results that were subsequently the subject of a material financial restatement, the executive officer (or any other participant in the plan) benefited from a calculation that later proves to be materially inaccurate or engaged in fraud or misconduct that caused or partially caused the need for a material financial restatement and a lower granting, vesting or payment would have occurred based on such conduct. 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, the Chief Executive Officer and the Chief Financial Officer 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 incentives 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.
Description of Employment Agreements of Named Executive Officers
In connection with Mr. Reid-Anderson’s appointment as Chairman, President and Chief Executive Officer, the Company entered into a new employment agreement with Mr. Reid-Anderson (the “2017 Employment Agreement”) that provides for, among other things, a base salary of at least $1,800,000 per year and an annual incentive with a target opportunity of 200% of his base salary and a maximum annual incentive opportunity of two times the target annual incentive. The Board determined that for the 2017 transition year during which Mr. Reid-Anderson began the year as Executive Chairman and then resumed the position of Chief Executive Officer, Mr. Reid-Anderson’s actual annual incentive would be determined based on the target opportunity of 100% of the base salary paid to Mr. Reid-Anderson in 2017. For subsequent years while Mr. Reid-Anderson is Chief Executive Officer, his target opportunity will be 200% of base salary pursuant to his employment agreement. Mr. Reid-Anderson was also granted options to purchase 500,000 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. The Project 600 shares that Mr. Duffey forfeited upon his retirement, as discussed below, were transferred back to Mr. Reid-Anderson. Accordingly, Mr. Reid-Anderson's total target award under the Company’s Project 600 program was increased by 185,000 shares for a total target award (including his existing award) of 435,000 shares. In addition, the target award of 150,000 shares under Project 750 that Mr. Duffey forfeited upon his retirement were transferred to Mr. Reid-Anderson.
The Company enters into employment agreements with its executive officers providing for base salary, annual incentive target opportunities and compensation upon certain terminations of employment as described above and in "—Potential Payments Upon Termination." The Company previously entered into employment agreements with Messrs. Balk, Petit and Barber. In January 2017, Ms. Aslin became the Senior Vice President, Human Resources, and the Company entered into an employment agreement with Ms. Aslin that provided for, among other things, a base salary of at least $325,000 and an annual incentive with a target opportunity of 50% of base salary. Ms. Aslin's employment agreement was amended in November 2017 when she became an executive officer of the Company to provide for, effective January 1, 2018, a base salary of at least $340,000 and an annual incentive with a target opportunity of 62.5% of base salary.
In connection with Mr. Duffey’s retirement, the Company entered into a retirement agreement (the “Retirement Agreement”) with Mr. Duffey in July 2017 setting forth certain terms relating to Mr. Duffey’s retirement from the Company.

30


The Retirement Agreement provided that Mr. Duffey forfeit one-half of his target award under the Project 600 program on July 18, 2017, and continue to participate in the Project 600 program with respect to a target award of 185,000 shares even though Mr. Duffey retired. The Retirement Agreement also provided, among other things, that (i) Mr. Duffey is entitled to receive a prorated bonus, payable in shares of common stock of the Company and at the same time as other executive officers are paid the bonus for 2017, (ii) stock options that were scheduled to vest in the twelve month period following the effective date of Mr. Duffey’s retirement will vest and become exercisable and such stock options, as well as currently exercisable stock options, shall remain exercisable through the first anniversary of the effective date of Mr. Duffey's retirement, and (iii) the Company assumed the remaining seven months of lease obligations for Mr. Duffey’s apartment in Dallas, Texas. The Retirement Agreement also contains customary release provisions.
See "—Compensation Discussion and Analysis—Elements of Compensation" for additional information on the compensation of the named executive officers. The employment agreements 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."


31


2017 Summary Compensation Table
The following table summarizes the compensation paid by the Company to (i) the Company's former Chief Executive Officer, (ii) the Company's current Chief Executive Officer, (iii) the Company's Chief Financial Officer and (iv) the Company's other three most highly compensated executive officers serving as such at the end of the fiscal year ended December 31, 2017.
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
($)
James Reid-Anderson
 
2017
 
1,366,154

 

 
9,152,421

 
3,162,453

 
868,136

 
125,084

 
14,674,248

President and Chief
 
2016
 
1,065,385

 

 
970,094

 
1,500,006

 
1,020,940

 
201,807

 
4,758,232

Executive Officer
 
2015
 
1,546,154

 

 
955,604

 
2,174,000

 
3,232,800

 
160,502

 
8,069,060

John M. Duffey
 
2017
 
615,192

 

 
631,222

 
1,908,051

 
465,642

 
151,507

 
3,771,614

Former President and
 
2016
 
995,077

 

 
175,942

 
1,500,006

 
1,016,812

 
90,014

 
3,777,851

Chief Executive Officer
 
2015
 
637,500

 
94,095

 
141,894

 
151,198

 
828,405

 
52,820

 
1,905,912

Marshall Barber
 
2017
 
525,000

 

 
84,035

 
184,317

 
250,245

 
34,844

 
1,078,441

Chief Financial Officer
 
2016
 
473,192

 

 
38,818

 
535,748

 
296,524

 
33,089

 
1,377,371

Lance C. Balk
 
2017
 
582,000

 

 
108,203

 
184,317

 
277,415

 
40,789

 
1,192,724

General Counsel
 
2016
 
565,000

 

 
127,440

 
85,747

 
381,727

 
58,042

 
1,217,956

 
 
2015
 
570,385

 
84,150

 
94,596

 
100,798

 
740,850

 
47,191

 
1,637,970

Brett Petit
 
2017
 
490,000

 

 
92,278

 
154,353

 
194,635

 
32,181

 
963,447

Senior Vice President,
 
2016
 
475,000

 

 
99,537

 
85,747

 
267,434

 
42,302

 
970,020

Marketing
 
2015
 
440,577

 
54,187

 
94,596

 
100,798

 
477,063

 
37,059

 
1,204,280

Catherine Aslin(5)
 
2017
 
325,000

 

 
462,983

 
185,048

 
103,276

 
11,336

 
1,087,643

Senior Vice President,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Human Resources
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
_________________________
(1)
Each of the named executive officers (other than Ms. Aslin) deferred portions of their salary, bonus and/or non-equity incentive plan compensation into the Supplemental 401(k) Plan as set forth in the 2017 Non-Qualified Deferred Compensation Table and the numbers in the columns above are prior to any such deferrals. Effective July 18, 2017, (a) Mr. Reid-Anderson, formerly the Company’s Executive Chairman, assumed the role of President and Chief Executive Officer, and (b) Mr. Duffey retired as President and Chief Executive Officer of the Company.
(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, 2017. These awards were the DERs distributed to reflect the dividend equivalents that had accumulated with respect to stock options vesting during 2017.
Pursuant to SEC rules, the value of the Project 750 award to Mr. Reid-Anderson and Ms. Aslin on the date of grant is treated as zero for purposes of the Summary Compensation Table reporting because on such date the shares of stock under Project 750 were not considered to be probable of being earned. Any shares of stock under the Project 750 award will only be granted after completion of the Company's audit for the applicable years if the specified targets are met. The number of shares of stock that Mr. Reid-Anderson and Ms. Aslin can earn upon achieving the Project 750 Target Modified EBITDA 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 Project 750, calculated by multiplying the closing price of the Company’s common stock on the date Mr. Reid-Anderson and Ms. Aslin started to participate in the Project 750 program by the number of Project 750 award shares issuable upon achievement of the 2018 Early Achievement, the value is $11,544,525 and $1,077,489 respectively.
Pursuant to SEC rules, the value of the Project 600 award to Mr. Reid-Anderson is included because on the date of grant the Company had determined that partial achievement of the Modified EBITDA performance goal was probable in 2017. Likewise, the value of the Project 600 award to Ms. Aslin is included because on the date of grant the Company had determined that target achievement of the Modified EBITDA performance goal was probable in 2017. However, the performance goal was not achieved in 2017. If the Project 600 Target Modified EBITDA is achieved in calendar year 2018, the maximum number of shares that participants will be entitled to receive is 50% of their target award. See "—Compensation Discussion and Analysis—Elements of Compensation—Long-Term Incentives" for the number of shares of

32


stock that Mr. Reid-Anderson and Ms. Aslin can earn upon achieving the Project 600 Target Modified EBITDA as well as a discussion of the Project 600 and Project 750 programs.
In connection with Mr. Duffey's retirement, he forfeited 185,000 shares under the Project 600 program, which shares were used to increase Mr. Reid-Anderson's existing target award under the Project 600 program by 185,000 shares due to Mr. Reid-Anderson becoming President and Chief Executive Officer for a total target award (including his existing award) under the Project 600 program of 435,000 shares. In addition, the 150,000 shares under the Project 750 program that Mr. Duffey forfeited upon his retirement were transferred to Mr. Reid-Anderson.
(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, 2017. 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
($)
James Reid-Anderson
 
2,642

 
10,800

 
84,642

 
98,084

John M. Duffey
 
1,680

 
10,800

 
56,504

 
68,984

Marshall Barber
 
1,983

 
10,800

 
22,061

 
34,844

Lance C. Balk
 
2,240

 
10,800

 
27,749

 
40,789

Brett Petit
 
1,884

 
10,800

 
19,497

 
32,181

Catherine Aslin
 
536

 
10,800

 

 
11,336

The amount shown in 2017 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 2017 for Mr. Duffey includes (a) $6,923 for an automobile allowance, which he was entitled to pursuant to his employment agreement (a fixed automobile allowance of $1,000 per month), (b) $25,000 that the Company paid in lease payments in 2017 in connection with assumption of lease obligations for Mr. Duffey’s apartment in Dallas, Texas pursuant to Mr. Duffey's retirement agreement, and (c) $50,600 for health care coverage. 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)
Ms. Aslin became the Senior Vice President, Human Resources, in January 2017, and became an executive officer in November 2017.

33


2017 Grants of Plan-Based Awards
The following table provides information on equity and non-equity awards granted in 2017, 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
(#)
James Reid-


2,192,329

4,384,658








Anderson
7/18/2017








500,000

57.01

3,162,453

 
7/18/2017







(2
)


2,817,111

 
7/18/2017(3)




92,500

185,000

92,500





 
7/18/2017(4)




75,000

150,000

202,500





John M. Duffey


732,756

1,465,512








 
2/23/2017








125,000

59.36

852,559

 
2/23/2017







(2
)


740,760

 
7/18/2017(5)








9,000

34.49

202,680

 
7/18/2017(5)








11,250

37.54

219,037

 
7/18/2017(5)








7,500

42.34

110,025

 
7/18/2017(5)








62,500

51.38

431,250

 
7/18/2017(5)








31,250

59.36

92,500

Marshall Barber


393,750

787,500








 
2/8/2017








5,000

60.80

34,497

 
2/8/2017







(2
)


30,731

 
8/30/2017








25,000

53.12

149,820

 
8/30/2017







(2
)


138,353

Lance C. Balk


436,500

873,000








 
2/8/2017








5,000

60.80

34,497

 
2/8/2017







(2
)


30,731

 
8/30/2017








25,000

53.12

149,820

 
8/30/2017







(2
)


138,353

Brett Petit


306,250

612,500








 
2/8/2017








5,000

60.80

34,497

 
2/8/2017







(2
)


30,731

 
8/30/2017








20,000

53.12

119,856

 
8/30/2017







(2
)


110,683

Catherine Aslin


162,500

325,000








 
1/3/2017








6,750

60.06

44,494

 
1/3/2017







(2
)


43,047

 
2/8/2017








3,000

60.80

20,698

 
2/8/2017







(2
)


18,438

 
8/30/2017








20,000

53.12

119,856

 
8/30/2017







(2
)


110,683

 
1/2/2017(3)




3,750

7,500

3,750





 
1/2/2017(4)




5,625

11,250

15,188





_______________________________
(1)
The target and maximum amounts for Mr. Reid-Anderson's annual incentive are based on his employment agreement while the Compensation Committee approved the actual annual incentive in the amount of $868,136 for the 2017 transition year. See "—Compensation Discussion and Analysis—Elements of Compensation—Annual Incentives" for details regarding the annual incentive.
(2)
On the grant dates of stock option awards, 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

34


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.
(3)
In connection with Mr. Duffey's retirement, he forfeited 185,000 shares under the Project 600 program, which shares were used to increase Mr. Reid-Anderson's existing target award under the Project 600 program by 185,000 shares due to Mr. Reid-Anderson becoming President and Chief Executive Officer for a total target award (including his existing award) under the Company’s Project 600 program of 435,000 shares. At the time these additional shares under the Project 600 program were awarded to Mr. Reid-Anderson in July 2017, the Company had determined that partial achievement of the Modified EBITDA performance goal was probable in 2017. However, the performance goal was not achieved in 2017. If the Project 600 Target Modified EBITDA is achieved in calendar year 2018, the maximum number of shares that participants will be entitled to receive is 50% of their target award. Ms. Aslin's existing target award under Project 600 was increased by 7,500 shares in connection with her promotion to Senior Vice President.

(4)
The date Mr. Reid-Anderson and Ms. Aslin (with respect to the additional amount awarded in 2017 in connection with her promotion) 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. The 150,000 shares under the Project 750 program that Mr. Duffey forfeited upon his retirement were transferred to Mr. Reid-Anderson. See "—Compensation Discussion and Analysis—Elements of Compensation—Long-Term Incentives" for a discussion of Project 750.
(5)
Pursuant to Mr. Duffey's retirement agreement, his stock options (with original grant dates ranging from August 2013 to February 2017) that were scheduled to vest in the twelve month period following the effective date of his retirement immediately vested. These awards were remeasured as of July 18, 2017 using a lattice option pricing valuation model in accordance with the applicable share-based payment accounting rules (Financial Accounting Standards Board ASC Topic 718). Of the original 125,000 stock option awards granted on February 23, 2017 (as shown in the table above), 93,750 shares were forfeited as of July 18, 2017 and the remaining 31,250 shares were included in the July 18, 2017 remeasurement.

35


2017 Outstanding Equity Awards at Fiscal Year-End
The following table provides information on the total outstanding equity awards as of December 31, 2017 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)
($)
James Reid-Anderson








217,500(3)

15,560,425

 








150,000(4)

10,186,500

 
2/19/2014


37,500


40.02

2/19/2024





 
2/19/2014






  (5)

340,125



 
8/24/2014


62,500


37.54

8/24/2024





 
8/24/2014






  (5)

508,125



 
2/19/2015


100,000


47.60

2/19/2025





 
2/19/2015






  (5)

662,000



 
2/19/2016


187,500


51.38

2/19/2026





 
2/19/2016






  (5)

828,750



 
7/18/2017


500,000


57.91

7/18/2027





 
7/18/2017






  (5)


670,000



John M. Duffey








92,500(3)

6,760,975

Marshall Barber








26,250(3)

1,899,938

 








37,500(4)

2,618,625

 
8/24/2013

2,250



34.49

8/24/2023





 
8/24/2014

2,500

2,500


37.54

8/24/2024





 
8/24/2014






  (5)

20,325



 
8/24/2015

4,000

4,000


42.34

8/24/2025





 
8/24/2015






  (5)

24,400



 
2/19/2016

18,750

56,250


51.38

2/19/2026





 
2/19/2016






  (5)

248,625



 
8/24/2016

3,750

11,250


50.39

8/24/2026





 
8/24/2016






  (5)

43,200



 
2/8/2017


5,000


60.80

2/8/2027





 
2/8/2017






  (5)

13,100



 
8/30/2017


25,000


53.12

8/30/2027





 
8/30/2017






  (5)

33,500



Lance C. Balk








22,500(3)

1,670,175

 








17,500(4)

1,222,025

 
8/24/2012

13,500



27.76

8/24/2022





 
8/24/2013

27,000



34.49

8/24/2023





 
8/24/2014

22,500

7,500


37.54

8/24/2024





 
8/24/2014






  (5)

60,975



 
8/24/2015

10,000

10,000


42.34

8/24/2025





 
8/24/2015






  (5)

61,000



 
8/24/2016

3,750

11,250


50.39

8/24/2026





 
8/24/2016






  (5)

43,200



 
2/8/2017


5,000


60.80

2/8/2027





 
2/8/2017






  (5)

13,100




36


 
8/30/2017


25,000


53.12

8/30/2027





 
8/30/2017






  (5)

33,500



Brett Petit








20,000(3)

1,484,600

 








16,000(4)

1,117,280

 
8/24/2013

5,250



34.49

8/24/2023





 
8/24/2014

6,250

6,250


37.54

8/24/2024





 
8/24/2014






  (5)

50,813



 
8/24/2015

5,000

10,000


42.34

8/24/2025





 
8/24/2015






  (5)

61,000



 
8/24/2016

3,750

11,250


50.39

8/24/2026





 
8/24/2016






  (5)

43,200



 
2/8/2017


5,000


60.80

2/8/2027





 
2/8/2017






  (5)

13,100