Cedar Fair, L.P. (FUN)

Long-Term Incentive Compensation

We provide long-term incentive compensation awards to senior management. These long-term incentive awards, together with current salary and cash bonus compensation, should achieve the total direct compensation level determined by the Board. We awarded phantom unit awards and performance based unit awards in 2008; we did not grant any option awards in 2008. We believe that the vesting schedule for these awards aids us in retaining executives and motivates superior performance over the long term because the awards are forfeited if the executive voluntarily leaves prior to the vesting date. We believe it is likely that the difficult market conditions we faced in 2008 will continue throughout 2009, and we believe that this strong management team is important in positioning us to meet these challenges. It may be increasingly difficult to appeal to budget-conscious consumers in 2009, and we anticipate that these long-term incentive awards will encourage these executives to remain in our employ for the next several years and motivate them to achieve superior results.

Long-Term Incentive Compensation

The Senior Management Long-Term Incentive Compensation Plan is intended to provide long-term deferred phantom unit awards to executives that, together with current salary and cash bonus compensation, will be sufficient to achieve the total direct compensation level determined by the Board. Provided that the executive continues in our employ, the phantom unit awards vest in the third and fourth year after grant. We believe that this vesting schedule aids us in retaining executives and motivating superior performance because the awards are forfeited if the executive voluntarily leaves prior to the vesting date.

In March of each year, the Board approves targets for executives that relate either to park or corporate-level performance or some combination of both. For park managers, the target is the operating profit budget numbers with 75% weight given to the specific park’s results and 25% weight given to the consolidated totals for the Partnership. For corporate participants, the target is the budgeted “cash available for distribution” amount, determined by the formula of operating profits, less cash interest, cash taxes, and capital expenditures, but excluding non-cash charges such as unit options and asset retirements. A participant’s ability to achieve stretch target level impacts the level of the phantom unit award. Although the plan contains guidelines relative to the percentages that must be achieved and the awards to be granted, the Compensation Committee has the discretion to grant the phantom unit awards as it deems appropriate. In general, however, if a participant achieves less than 80% of the target performance, the participant will not receive an award under this plan.

Awards under this plan are given in phantom units and are payable in either cash or units, or a combination of both, as determined by the Board, in two equal installments in the third and fourth year after the award is earned. For example, the 2007 awards indicated below will be payable in 2010 and 2011. The phantom unit awards accrue additional phantom units on the date of each quarterly distribution paid by us, calculated at the NYSE closing price on the date. In 2007, Messrs. Kinzel, Falfas, Crage and Decker received the following phantom unit grants: 40,883; 19,411; 15,243; and 4,316, respectively.

Our 2000 Equity Incentive Plan allows us to grant options, units, unit appreciation rights and other types of performance awards. However, for the past four years we have relied on our phantom unit grants to provide long-term incentives to our executive officers. With the change in accounting treatment of options, we, like many companies, reexamined the cost and competitive need for options. We determined at that time that phantom unit

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awards could provide similar incentives to executives while providing a more cost effective means of compensation for us. In addition, three of our named executive officers, including Mr. Kinzel, have a number of exercisable options. Therefore, we feel that the motivation meant to be provided by options – to give key employees a proprietary and vested interest in our growth and performance and to align key employees’ interests with that of our unitholders – is met by the phantom unit awards and the outstanding option awards previously granted.

Long-Term Incentive Compensation

The Senior Management Long-Term Incentive Compensation Plan is intended to provide long-term deferred phantom unit awards to executives that, together with current salary and cash bonus compensation, will be sufficient to achieve the total direct compensation level determined by the Board. Provided that the executive continues in our employ, the phantom unit awards vest in the third and fourth year after grant. We believe that this vesting schedule aids us in retaining executives and motivating superior performance because the awards are forfeited if the executive voluntarily leaves prior to the vesting date and are tied to the continued positive performance of the Partnership’s publicly traded units.

In March of each year, the Board approves targets for executives that relate either to park or corporate level performance or some combination of both. For park managers, the target is the operating profit budget numbers with 75% weight given to the specific park’s results and 25% weight given to the consolidated totals for the Partnership. For corporate participants, the target is the budgeted “cash available for distribution” amount, determined by the formula of operating profits, less interest, cash, taxes and capital expenditures, but excluding non-cash charges such as unit options and asset retirements. A participant’s ability to achieve stretch target level impacts the level of the phantom unit award. Although the plan contains guidelines relative to the percentages that must be achieved and the awards to be granted, the Compensation Committee has the discretion to grant the phantom unit awards as it deems appropriate. In general, however, if a participant achieves less than 80% of the target performance, the participant will not receive an award under this plan.

Awards under this plan are given in phantom units and are payable in either cash or units, or a combination of both, as determined by the Board, in two equal installments in the third and fourth year after the award is earned. For example, the 2006 awards indicated below will be payable in 2009 and 2010. The phantom unit awards accrue additional phantom units on the date of each quarterly distribution paid by us, calculated at the NYSE closing price on such date. In 2006, Messrs. Kinzel, Falfas, and Crage received the following phantom

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unit grants: 41,436; 16,575; and 11,740 respectively. These grants were made principally to adjust the executives’ total direct compensation to a market level compatible with their responsibilities after the acquisition.

Our 2000 Equity Incentive Plan allows us to grant options, units, unit appreciation rights and other types of performance awards. However, for the past four years we have relied on our phantom unit grants to provide long-term incentives to our executive officers. With the change in accounting treatment of options, we, like many companies, reexamined the cost and competitive need for options. We determined at that time that phantom unit awards could provide similar incentives to executives while providing a more cost effective means of compensation for us. In addition, four of our named executive officers have unvested options and significant amounts of exercisable options. Therefore, we feel that the motivation meant to be provided by options – to give key employees a proprietary and vested interest in our growth and performance and to align key employees’ interests with that of our unitholders – is met by the phantom unit awards and the outstanding option awards previously granted.