Industry News
In an email to employees, Aspen Skiing Co. (SkiCo) CEO Mike Kaplan announced the company would be cutting some employee benefits in an effort to balance the books for what is an uncertain year ahead.
In-line with many other companies in the industry SkiCo is expecting the global pandemic to have an impact on their bottom line, so is preparing for that uncertainty.
In the email, Kaplan highlighted three areas where salaried employees can expect changes to their compensation package: a suspension of 401(k) contributions, a one-week furlough, and no budgeted bonuses.
“All three of these things can still be earned and can hopefully be brought back. But it’s the responsible thing to do, given the uncertainty that we’re facing and the need to be proactive in addressing it.”
– Mike Kaplan in an interview with Aspen Daily News
Acknowledging that not matching 401(k) contributions will have the most financial impact on employees, he added that should the company have a good year, and do better than expected, they could then make the decision to contribute to employees 401(k).
“If we exceed our targets, we’ll at the end of the year say, ‘You know what? We hit our targets, and the uncertainty was clarified — it wasn’t as we thought it might be. It gets complicated, but at the end of the year, we could say, ‘We can do a lump sum into your 401(k).’”
– Mike Kaplan in an interview with Aspen Daily News
Explaining the other two changes on the cards, Kaplan said that the one-week furlough will be the third week in October. This compares to the end of season week off, their ‘spring break’ program, the company has implemented the last two years. The company hopes that the forewarning of this week off gives employees plenty of notice to plan and budget accordingly.
“The differences this year are the program will apply only to salaried employees, and we are asking employees to take the week off without the benefit of using paid vacation or personal days.”
– Mike Kaplan in an interview with Aspen Daily News
Regarding bonuses, Kaplan confirmed that salaried and/or full-time employees have more financial stability and should not expect bonuses (unless revenue targets are met). However, hourly and seasonal employees will continue to have their bonus pot funded.
None of these decisions were easy, according to Kaplan, but the company believes they have achieved the correct balance of least immediate damage while managing the books.
At the end of March, as the global pandemic was really taking hold and everything was an unknown, Vail Resorts CEO Rob Katz wrote to his employees, detailing the company’s benefit cuts, which were as follows:
- We are 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).
- We are 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.
- I am giving up 100% of my salary during the next six months.
- We are eliminating 100% of the cash compensation for members of our Board of Directors for six months.
- We are suspending the Company’s 401(k) match for the next six months. We are reducing our 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.
- We are eliminating our June and September dividends to shareholders, saving the Company more than $140 million.
