Vail Furloughs Hourly Workers, Cuts Pay For Salaried Employees And Execs
(CBS4) - Vail Resorts is losing millions because of the coronavirus pandemic -- and everyone from hourly workers to executives and shareholders will be feeling the pain. Company officials say the closure order will cost them at least $180 million in lost profitability in the third quarter.
All year-round hourly employees will be furloughed for "at least the next one to two months," salaried employees and executives will face pay cuts of 5-25% for six months, and the CEO will give up his entire salary for six months. The company is also eliminating June and September dividends to shareholders.
"This crisis has hit the travel industry particularly hard," Vail Resorts CEO Rob Katz stated. "Currently, all of our mountains, lodging, retail, and transportation businesses are shut down and it is becoming less clear when things will start to reopen again."
Katz issued a letter to employees Wednesday and publicly announced new cuts. They include:
- Vail Resorts is furloughing nearly all of our U.S year-round hourly employees as of April 4, 2020, for at least the next one to two months, without pay, but with full healthcare coverage for any impacted employee currently enrolled (the Company will pay all premiums).
- Vail Resorts is implementing a six-month salary reduction for all U.S. salaried employees that starts at 5% for those up to Grade 27, 7.5% for Grades 28/29, 10% for Grades 30/31, and then rises up to a 25% reduction for our most senior executives.
- Vail Resorts CEO Rob Katz is giving up 100% of his salary during the next six months.
- Vail Resorts is eliminating 100% of the cash compensation for members of our Board of Directors for six months.
- Vail Resorts is suspending the Company's 401(k) match for the next six months.
- Vail Resorts is reducing capital expenditures by $80-$85 million, with the intention to defer all new chair lifts, terrain expansions and other mountain improvements, while protecting the vast majority of our maintenance capital spending.
- Vail Resorts is eliminating June and September dividends to shareholders, saving the Company more than $140 million.
Katz had special messages for the hourly and salaried employees.
"To our year-round hourly employees, I am so disappointed that the vast majority of you have not been able to work these past three weeks and I assure you we will end the furlough as soon as possible once we have clarity on our business reopening," Katz stated.
"To our year-round salaried employees, who are working from home, in many cases harder than ever, I truly am sorry to have to ask you to give even more by accepting a salary reduction - we are asking everyone to accept some sacrifice so that we weather this storm together and are ready to come back strong for next winter," Katz added.
Katz said the company has to consider that business might not be back to normal for months. Business during the off-peak seasons represents more than 20% of the company's total revenue.
"With the very real possibility that the global stay-at-home orders could be extended, and travel reduced regardless, our business in May through October is at risk," Katz stated. "I am very hopeful that both the economy and travel will return to normal by the time our North American winter season opens eight months from now."
Katz said he didn't know if there would be more cuts.
"I have made decisions over the last few weeks that I never could have anticipated in my nearly 30 years working in the ski business. I recognize the impact of today's decisions on you, and I do not take them lightly," Katz stated.
"It's possible that things could quickly improve. But it's also possible these challenges may force us to materially delay or cancel our upcoming summer season. In that case, more measures might be needed," he wrote.
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