An investment firm with a stake in Vail Resorts has called for a major shakeup at the Colorado company, citing the ski giant’s “unacceptable” performance over the past five years.
In a letter issued Monday, Jan. 27, Late Apex Partners LLC outlined several demands following what it views as Vail Resorts’ “numerous failures across both operations and capital allocation.
“We believe Vail has world-class assets, a world-class heritage, and world-class financial potential,” the letter, signed by company founder Taylor Schmidt, said. “However, over the past five years, Vail’s performance has been unacceptable. We believe Vail is fixable, but the Board must act now to hold management accountable.”
The firm, which described its investment in Whistler Blackcomb’s parent company as its single largest position, called for the replacement of current CEO Kirsten Lynch, CFO Angela Korch, as well as a reset of the board, including the resignation of board chair and former CEO Rob Katz, who led the company through a period of significant growth and established its popular Epic Pass.
“We have nothing but the utmost respect for Katz’s historical track record in building Vail into a juggernaut. The Company is not here today without him,” the statement continued. “However, Katz’s continued role as executive chairman is now a hindrance, not a help, to Vail’s future. Katz has already sold over 80 per cent of his holdings, and we believe now is the time to step down to avoid the risk of destroying his legacy.”
The letter called on Vail Resorts to hire a proven CEO in place of Lynch with a “verifiable track record of leadership and innovation to reset the path forward.” The financial firm was also critical of Vail’s “insider” compensation incentives, which it said “are not aligned with value creation,” highlighting how Lynch made USD$19 million in the last three years “while shareholders have lost 47 per cent.”
“Management have no skin the game, signalling zero conviction in Vail’s future: Since becoming CEO, Lynch has not once purchased [company] shares, while CFO Korch owns less than $0.5M in stock,” the letter went on.
The letter also took issue with the public perception of the Vail Resorts brand, claiming the core skiing community has labelled the company the “Evil Empire.”
“Vail’s marketing reductions, and decision to centralize marketing under CEO Lynch has created significant gaps, been inauthentic, and cut out the heart of each mountain,” it said. “Management’s incredibly short-sighted actions have led to lost opportunities and destroyed brand value.”
Accompanying Late Apex’s letter was an 88-page presentation laying out what the firm sees as “a clear path to a valuation of $400 per share, or 140-per-cent equity upside,” through changes across Vail’s operations, management, governance, and capital allocation.
In particular, the firm wants Vail Resorts to cut its dividend by 80 per cent.
“Roughly 90 per cent of Vail’s [free cash flow] is paid out to shareholders through dividends. Instead, we believe that prioritizing internal reinvestment, fixing the balance sheet, and opportunistically buying back shares is a path to both immediately unlocking value, and growing Vail’s franchise value over the long-term,” the firm wrote.
Late Apex also identified what it sees as a “massive opportunity” to expand the number of ski areas that are part of Vail Resorts’ Epic network.
“A partnership-first focus will enable significant growth without [mergers and acquisitions], and make the business less capital intensive,” the firm said.
In December, Vail Resorts reported sales of its vaunted Epic Pass declined last year for the first time.
Asked for comment, a spokesperson for Vail Resorts said in a statement that Schmidt's letter was "the first communication the company had received from this individual. We engage frequently with our many different shareholders and value their feedback."
The shareholder letter comes on the heels of a wave of negative press for Vail Resorts stemming from a 13-day strike by Park City Mountain ski patrollers over the busy holiday period. A class-action lawsuit was filed in Utah District Court this month on behalf of anyone who purchased a Park City lift ticket over the duration of the strike, which led to major staff shortages, hours-long lift lines, and terrain closures.
