Friday, March 13, 2009

Vail Resorts Announces Companywide Wage Reduction Plan

Last Wednesday March 11, Vail Resorts announced the implementation of a companywide wage reduction plan designed to reduce labor costs while preserving as many jobs as possible in this uncertain economic environment. Under the plan, all affected employees of the Company will have their salaries reduced on a sliding scale from 2.5 percent for seasonal employees to 10 percent for executives. In addition, each full-time, year-round employee will receive a grant of stock-based incentive compensation with a value on a sliding scale from 1.5 percent of salary to 7.5 percent of salary for executives. This will increase the number of employees owning stock from approximately 260 to over 2,500, allowing many more employees to participate in ownership of the Company.Rob Katz, the Company’s chief executive officer, has decided to not take any salary for a 12-month period and then receive a 15-percent salary reduction. He will not participate in the stock issuance. Each outside member of the Company’s board of directors has also decided to reduce their annual cash retainer by 20 percent. Wage reductions for seasonal employees will be effective after the current winter season. The wage reduction for all other employees will be effective on April 2, 2009. This wage reduction plan, combined with certain other adjustments, is expected to result in expense savings of over $10 million on an annualized basis."I am very proud of the effort of our employees and our Company’s performance in this unprecedented environment", said Rob Katz. "However, it’s also clear that with the uncertainty that lies ahead, reducing cost is an imperative. We have chosen to address this situation by making the preservation of jobs and protecting the guest experience our highest priorities. By asking everyone to take less, starting at the top, we can continue to focus on our mission of extraordinary resorts, exceptional experiences".
Vail Resorts reported results for the second quarter of fiscal 2009 (ended January 31, 2009). Resort Reported EBITDA, which includes the Company's Mountain and Lodging segments, of $105.9 million in the second fiscal quarter decreased by $9.6 million, or 8.3%, from the prior year second fiscal quarter. Commenting second quarter fiscal 2009 results, Rob Katz, Chief Executive Officer said, "Our second quarter Resort segment results, which encompass the first part of the ski season, reflect the impact of the severe downturn in the economy. The Company's Mountain segment results were negatively impacted by lower destination visitation, which drove lower lift revenue and to a greater degree a decline in our ancillary business revenue, including ski school, dining and retail/rental (...)However, the Company remains in a strong position from a capital structure and balance sheet perspective which we believe will enable us to navigate through the current environment, even if prolonged, while still delivering on our mission of extraordinary resorts, exceptional experiences", Katz said.