Hearing calls for change, Kinzel resigns

Dick Kinzel is out as board chairman at Cedar Fair, though he'll stay on for nearly a year as CEO and president.
Tom Jackson
Jan 25, 2011

 

Dick Kinzel is out as board chairman at Cedar Fair, though he’ll stay on for nearly a year as CEO and president.

Kinzel, 70, resigned as chairman after unitholders voted in favor of Cedar Fair naming a new chairman.

The company announced the move Monday. Replacing Kinzel as chairman, the board chose C. Thomas “Tom” Harvie, who had already been serving as a Cedar Fair board member.

The board also said it will take another look at its cash Unitholders at a Jan. 11 special meeting at BGSU Firelands voted on two proposals forwarded by Q Investments, a Texas hedge fund.

One proposal asked the company to name a new chairman “who is not, and never has been, an officer of the General Partner and its affiliates.”

The other proposal asked the company to make cash distributions a higher priority than paying off Cedar Fair’s debt.

Cedar Fair confirmed Monday that the proposal to separate the roles of chairman and CEO were approved.

The cash-distribution proposal failed narrowly, but only because many investors didn’t vote.

Q Investments didn’t immediately respond Monday when asked if the company’s representatives were satisfied with Cedar Fair’s changes.

Kinzel’s contract as CEO, meanwhile, keeps him in that post until Jan. 3, 2012, when he retires.

The board is still searching for a replacement, though it said Monday it expects to name a new CEO by June. The incoming boss will then work with Kinzel until taking over next year.

The board said it has adopted the new policy requiring the chairman and CEO jobs to be separate.

“The appointment of a non-executive, independent chairman will be reviewed by the Board on an independent basis,” the board said.

In an SEC filing, Cedar Fair revealed Monday that about 54 percent of investors who voted were in favor of naming a new chairman. Only 12.6 percent voted against the proposal, while 0.28 percent abstained.

Votes were not cast for about one-third of the units. For approval, the proposal had to receive a majority of all potentially eligible votes.

The second question, to hike cash dividends, received about 49 percent “Yes” votes and 17 percent “No,” while 0.45 percent abstained. The board had asked unitholders to vote against both proposals.

Kinzel said the company will take another look at its cash distribution policies. It had planned to pay about 36 cents per unit in 2011 and then ramp up the distribution in 2012 and later years as debt was paid off.

“The board has agreed to review the distribution strategy during the 2011 first quarter in combination with our 2010 full-year results,” Kinzel said. “As part of that process, we will consider all options available under our current capital structure with respect to the payment of future distributions.”

 

Comments

Leland Wykoff

The Cedar Fair Board of Directors has been caught with its pants down.

Apparently the "disruption" caused by recent unitholder directives have exposed failures of the Board to engage in proper succession planning.

It appears the board must now begin at square one.  Likely this is due to several options recently being taken away from the Board:  Kinzel eliminated Jack as a contender for next CEO.  The Board had tapped Kinzel to be Chair(man) of the Board following his retirement.  One of the Kinzel Kids was under consideration for the CEO position.  Other CF inside candidates are no longer viable.

Now we have rumors of a Six Flag's merger.  These rumors can be tracked down to one location:  the Corporate Headquarters of Cedar Fair Entertainment.

Google, call industry folks, read the Wall Street Journal.  No one, other than Kinzel and Company, are speaking of such a combination.

If a Six Flag's Cedar Fair merger is possible, the Board must be careful in selection of the next CEO and Board Chair.  They must be able to blend with the changes. After last years fiasco merger attempt with Apollo it is clear the Company is not fundamentally opposed to merger consideration.

What is not clear is if the Company is opposed to merger attempts which reward unitholders rather than management. The sweetheart self-enriching management deals which characterized the Apollo attempt may not be available under a Six Flag's deal.  Perhaps that is why CF officers are nervous.

Mr. Kinzel and CF are attempting to put a "spin" on the news thus suggesting limited options.  Do not be taken in by this noise.

Cedar Fair Board of Directors must institute a real succession plan which does not rely upon nepotism, the further extension of Mr. Kinzel's contract, or installing Mr. Kinzel as Board Chair(man) upon his retirement.

In short, the Board must begin treating Cedar Fair as the Public Company it is, rather than as the "family business" they have been accustomed to.   

It will be interesting to see what fresh, new, leadership the Board taps to lead CF into it's bright future.

Leland Wykoff

In relation to Mr. Thomas Harvie's appointment as Chairman of the Board:

We do have good news: Kinzel "voluntarily" relinquished the Board Chairmanship, a relative new comer to the Board was appointed, and CF is telegraphing they understand the dividend must be raised.

CF also has sent out a subtle message concerning Mr. Harvie's tenure, "The appointment of the non-executive, independent chairman will be reviewed by the Board on a periodic basis." This suggests Mr. Harvie is a temporary Chair. Consider it another trial balloon CF has sent up.

Unitholders will continue to demand an outside Board Chair, just as they will demand an end to Mr. Kinzel's board membership following his retirement from the CEO position.  Kinzel's continuation on the Board will not be acceptable.

Let us hope the actions taken by the Board signal the dawn of a new relationship with the owners/unitholders of the company.  However, if todays quick actions develop as simply a spin tactic, rather than an indication of systemic change, it will bring a future frought with frustration for all concerned.

The optimist in me tends to think, "The message has sunk in. They get it."  

Cobbwebb12345

     What a shame!

     Cedar Fair, Cedar Point and Sandusky will suffer tremendoously as a result of this resignatiion.

     These "Q" outsiders will increase dividends immediately which will begin to drain the ability to pay off debt .

      Increased park prices will occur and  will dramatically and negatively impact attendence and with that, the share of revenue to Sandusky and Erie County will  dwindle.

     Yes., Mr. Kinzel makes more money than any of us, but I have never heard a complaint from Erie County residents, or elected officials. I have know Dick K. for many years, an honest, trustworthy man with a wife who does sooo much for the Red Cross and other U.W. agencies.

     Dick, I know you are tired of this infighting, and perhaps, at our ages, just do not the burden of these lies and promises to shareholders who now want someone who has "never" been affiliated with Cedar Fair (the best theme park in America) to become the new chairman. That is incredulous and scary.

     To my knowledge, I am very surprised that Sandusky City elected officials have not "loudly" supported you in this debacle. And also the Tourest people who should know exactly from where their  funding exists.

     Dick, I know the intensity you have about honor, self esteem, and that your efforts over the years have impacted, improved the quality of life for families of Sandusky and Erie County. Citizens, look at the growth in the past 10 years alone because of one tourest attraction ---  CEDAR POINT. Millions upon millions of dollars have  been invested in Erie County. You all know about that growth.  What now?

     This "Q" group will contribute to the demise of the tremendous strides made under the leadership of Mr. Dick Kinsel.  

       

    

 

lifetimeresident

Mr. Kinzel has served this community well.  Look at all the jobs he has provided to all the local youth paying for college and unfortunately to the adults now trying to get through this poor economy.  Take a much deserved retirement.

MoonDog44870

 Lifetime Resident. Kinzel loved Sandusky so much that he hires the college kids from Romania and Vietnam to work for him. Who did he create jobs for? Twenty years ago when I was a hot young dude from the prairies of Minnesota I came here to Sandusky to work at Cedar Point and I stayed. But this was a fun town when most of the workers were hott young dudes like me, we would waste half our paychecks Thursday night downtown and spent a good amount at the mall and Hills, and Ames buying stuff for back to school. Now these foreigners don't spend a dime all summer in this town and keep the money turning in our economy. Kinzel knew this would happen when he went and got all his Russians to undercut the local labor market. We should never forgive him.

WhatTheHeck

 Re: MoonDog

Thanks for an honest blog. Myself and many Sanduskians have thought this for years. Kinzel knew exactly what he was doing when he went in this direction.

Return of Dragon II

I also worked at Cedar Point before they started bringing in cheap labor.  Apparently, not paying overtime was not enough for management.  Bringing in the foreigners not only lowered the wages but eventually led to the end of the summer bonuses.  Cedar Point not only has become extremely greedy, but they don't give a crap about their employees. 

Browndog271

kinzel's bonus could have been used to pay that small bonus the kids got,  but no,  he needs the money.  his leadership is like a kid wrecking a car,  take away the keys

DEEPsix's picture
DEEPsix

 @ Mr Wykoff... EXACTLY... You have put the FUN issues, and their people right on target... Unfortunately, CF people will try to keep one of their "their" boy in power, and subsequently, the unit holders will suffer an even greater prolonging of useless paper!  

DK drove this company into the lake, and IF the unit holders don't wake up, when the next bubble HITS, they'll be holding $2 per share paper! Dividends will be 'postponed' for 6-8 years!