Vail’s Business
March 11th, 2009Posted in Skiing Everywhere
The economic turbulence continues to impact the ski business. According an Associated Press report on the Denver post website Vail Resorts today announced it was cutting employee wages by up to 10% starting April 2 for non seasonal workers. This winter’s seasonal workers will not be affected. Executives will face the 10% cut and the percentage cuts for other workers will slide downward to 2.5% for seasonal workers. According to Forbes, these cuts will save the company more than $10 million. Following the announcement, Vail’s stock climbed 12.42% this afternoon to close at $18.56. Last spring the stock was trading at over $49.
I’ve often wondered how I’d react to tough times as an employee worried about my job. Individual circumstances would certainly play a big part, but I’d guess in a world where job security is fragile, and finding a new one is a scary thought, taking a pay cut could be a relief if the alternative was possibly losing a job, or seeing co-workers let go.
At least for full-time year-round employees, there may be a silver lining. Each employee in this classification 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. If Vail’s stock eventually climbs back up to last year’s levels, pay cut losses may be made up for.
According to the report, Vail’s Chief Executive Rob Katz said he will go without salary for a year and follow it with a 15.0% pay cut. Outside board members also agreed to reduce their annual cash retainer by 20.0%. Way to go Mr. Katz! It’s a refreshing change from the examples of continuing corporate extravagance and irresponsibility we read about daily by Wall Street bankers accepting taxpayer bailout money.
I’m curious to see how all this plays out. Following the recent announcement that Killington, the big cheese of eastern ski resorts, is cutting prices on next year’s season passes to boost its business prospects, it seems that the major players are worried. Are the medium and small sized resorts being equally impacted by the financial worries skiers face, which determine their spending on the sport? Or, are small operators doing better, perhaps because they are more affordable to stressed skiers?
Leave a Comment