Vail Resorts cuts wages in tough economy
Vail, CO Colorado
VAIL, Colorado ” In order to preserve jobs and cut costs amid an uncertain economic environment, ski resort operator Vail Resorts Inc. says it plans to reduce employee wages by up to 10 percent, a move that will affect everyone from the company’s top executives to lift operators.
The company will use a sliding scale to determine the reductions. Seasonal workers will have wages reduced 2.5 percent after the current ski season. All others will see wages reduced effective April 2, with executives taking a 10 percent cut. Mid-level, full-time employees can expect to see 4 to 5 percent wage cuts.
The cost cutting moves also included 34 layoffs, mostly in the company’s real estate division. A few more employees might be let go later this year as development projects finish up, said Chief Executive Officer Rob Katz. Katz declined to say how many additional jobs may be cut later this year.
The cuts came along with news that the resort netted $60.5 million in profits in the second fiscal quarter. However, the layoffs are in response to a slowing real estate market, said Katz.
The projects that brought much of the profits are closing on the last units, and other developments still in the planning phases are slowing down due to the economy, he said.
Katz also said that he’ll take no salary for one year, then will take a 15 percent cut the following year. Katz’s salary, which accounted for about a quarter of his total earnings last year, was more than $835,000 last year. He also receives stock, stock options, bonuses and other benefits. Katz earned a total of $3.36 million in the last fiscal year.
All outside board members will also reduce their annual cash retainer by 20 percent.
Also, full-time, year-round employees will receive stock incentives, increasing the number of employees owning stock from about 260 to over 2,500. The move allows many more employees to participate in ownership of the company and offsets some of the pay cuts, officials said.
The cuts are expected to save the resort about $10 million.
Despite the cuts, Katz said that service won’t suffer and that the resort plans to keep all parts of the mountains and all on-mountain activities open.
“We are going to open and keep available the entire mountain and the resort and all the amenities that people expect to be open,” Katz said. “People will know they are getting the whole experience, but we’re going to keep a tight lid on expenses.”
Katz said he does not expect that the resort will have trouble hiring or keeping employees due to the wage cuts. The company still offers attractive packages for seasonal employees, he said.
“They are provided medical benefits and other benefits not offered in other seasonal jobs,” Katz said. “They’re part of our family and we treat them as such. Right now is not a great market if you’re looking for a job, so from a hiring standpoint, it’s not a challenge for us at all.”
As the economy recovers, Katz said the company will try to increase pay.
“We’re committed that as the economy gets better, we’ll be as aggressive with raising wages as we are with cutting them today,” he said.
The fact that the resort ” the largest employer in the county ” is cutting wages and not jobs is a good sign, said Don Cohen of the Economic Council of Eagle County.
“If they’re focusing on wage cuts versus complete job cuts, that’s good,” he said. “It’s collective pain, but you get to keep your job. It’s certainly uncomfortable, but probably a really prudent move for any company.”
Broomfield-based Vail Resorts operates Vail, Beaver Creek, Breckenridge and Keystone in Colorado and Heavenly in the Lake Tahoe area.
Staff Writer Melanie Wong can be reached at 970-748-2928 or email@example.com.
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